We represent a major global commodity trading group in a multi-million dollar dispute with a Pakistani purchaser. Both parties had entered a long-term supply contract that required each of them to provide the other security for their respective obligations in the form of an on-demand banking instrument for tens of millions of dollars. The contract required disputes to be resolved by international arbitration in London. A dispute arose under the contract, leading to the purchaser seeking to encash the security instrument provided by our client.
To avoid breaching the arbitration agreement, we filed an application under section 3 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, before the High Court seeking an order referring the parties to arbitration in accordance with the contract. By way of interim measures, we sought an order restraining the encashment of the security pending arbitration. As it happened, the purchaser filed civil proceedings the same day before the High Court to seek an interim injunction restraining the anticipated encashment of the security provided to our client. Both cases came up for hearing before the same learned Judge who, recognizing the urgency, heard and decided both applications for interim relief on the same day. A common order dismissed both applications passed later that day.
Our client sought to challenge such an order in an intra-court appeal we filed the following day. When our client’s application for interim injunction was heard, the foreign issuing bank had paid its correspondent bank in Pakistan, which was yet to make further payment to the purchaser. We obtained relief for the client requiring the correspondent bank to withhold the money from the purchaser until the dispute could be finally decided in arbitration.
Our team on this matter is led by Pakistan Partner Mayhar Mustafa Kazi and comprises Associate Partner Shahbakht Pirzada.
