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High Court Claims Exclusive Jurisdiction in Pakistan Power Industry Dispute

If a commercial arbitration has its seat in London, the courts of England and Wales alone have jurisdiction to supervise the proceedings, no matter how little connection the underlying subject matter may have to this country. The point was clearly made by a High Court case concerning a state-owned national grid company.

The company, which was owned by the government of Pakistan, was engaged in a long-running dispute with a number of independent power suppliers, all of them registered in Pakistan. The relevant power supply agreements were governed by the laws of Pakistan, but any arbitration proceedings arising were to be conducted in English under the rules of the London Court of International Arbitration.

The suppliers submitted the dispute to an arbitrator in London, but the company subsequently launched proceedings in Pakistan. A court in Lahore made interim orders, restraining all parties from further participation in the arbitration, and the company informed the arbitrator that it could play no part in the proceedings. The arbitrator, however, found that the suppliers had validly opted for the seat of the arbitration to be in London and proceeded to rule in their favour.

In granting the suppliers an anti-suit injunction restraining the company from taking further steps in the Pakistan litigation, the High Court rejected the latter’s plea that the courts of Pakistan had at least concurrent jurisdiction to supervise the arbitration. The seat of the arbitration proceedings being in London, the power to supervise them rested exclusively with the courts of England and Wales.

The Court noted that the reason why a choice of seat necessarily gives rise to exclusive jurisdiction is that the alternative would be the highly unsatisfactory situation in which the courts of more than one country could entertain challenges to an arbitration award, giving rise to the obvious potential for conflicting decisions. The company’s alternative argument that the seat of the arbitration was in Lahore also fell on fallow ground and the Court found that it should be treated as bound by the arbitrator’s award.

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