The Counsel

Afghan Transit Trade Agreement

After seven rounds of bilateral Joint Working Group meetings on trade and transit, the Commerce Ministers of Afghanistan and Pakistan signed the Afghanistan Pakistan Transit Trade Agreement (APTTA) on 29th October 2010.

Under the APTTA, Afghan trucks are allowed to carry Afghan transit export cargo to Pakistani ports and also to the Indian border. Pakistan will facilitate Afghan exports to India through the Wagah border crossing (near the city of Amritsar in Indian Punjab). Afghan trucks will be allowed to carry Afghan transit export cargo on designated routes to Pakistani sea ports and also up to the Indian border where Afghan cargo will be transferred on to Indian trucks. It was also agreed that no Indian exports to Afghanistan will be allowed through Wagah “at this stage”. However, it was decided that “a feasible proposal in this regard could be discussed at an appropriate time in the future”. For this purpose, “Pakistan will provide a side letter to Afghanistan giving this Understanding”. To make transportation economical on return, the Afghan trucks will be allowed to carry goods from Pakistan to Afghanistan. To tackle the issue of unauthorized trade, both countries have agreed to install tracking devices on transport units and customs to customs information sharing (IT data and others). In addition, it has been agreed that financial guarantees equal to the amount of import levies of Pakistan will have to be deposited by authorized brokers or customs clearing agents, which will be released after the goods exit Pakistan. Read more here...

Legal Updates

Digital World Pakistan (Pvt.) Ltd vs.
Samsung Gulf Electronics FZE and another 2010
Corporate Law Decisions 804 (Single Bench – High Court of Sindh)

Subject: Contract; ‘Joint Venture Agreements’ (JVAs); Assembly / Distributorship Agreement.

Key words: Enforcing JVAs; grant of temporary injunction.

Abstract: In this Suit, the plaintiff filed an interlocutory application for temporary injunction under Order XXXIX Rules 1 and 2 Civil Procedure Code (CPC) to restrain the defendants from appointing any person other than the plaintiff as an importer, manufacturer, assembler or distributor of “Samsung” brand colour television / parts in Pakistan. The plaintiff’s contention was that since its award of distributorship in the year 2000, the defendant had a negligible market and brand recognition in Pakistan. The parties entered into a distributorship with the understanding that they would enter into long term joint venture for the purpose of installing a factory / assembly unit in Pakistan for the manufacture of Samsung brand. To this effect, a letter of intent (LOI) was signed whereby the plaintiff was appointed as distributor for the defendants audio/video products. In 2002, the parties entered into a further agreement for assembling Samsung colour televisions under license (Assembly Agreement). Pursuant to the Assembly Agreement, the plaintiff was supplied with parts in semi or completely knocked down condition (CKD) for assembly in the plaintiff’s factory. To this end, the plaintiff invested Rs.360 million in land, plant and machinery and the plaintiff contended that its commercial relationship with the defendant was in substance a JVA, the aspects of which included: (a) importation of CKD kits as well as completely built up units (CBU) (b) investment in land, equipment, machinery, infrastructure, dealerships, advertising etc. and (c) exclusive distributorship for the sale of manufactured goods. In addition, the plaintiff’s bank exposures stood at Rs.1.6 billion and Rs.356 million receivable from the market. Clause 20 of the Assembly Agreement provided for termination for cause including, failing to meet quality standards, competing with interests of defendant, change of ownership and insolvency. The defendant submitted that as a licensee or agent, the plaintiff could not assert an eternal right to remain so and that the relationship was revocable at will. Further, the essence of joint venture meant carrying on business jointly for the purpose of earning profits and also sharing losses. In this case, all the kits, parts and built up units were purchased by the plaintiff for onward resale and cannot be construed as a JVA. Read more here...

M.V. “Goloz” Ex- M.V. “Mustafa Bey” vs.
Pacmar Shipping (Pvt.) Ltd. and another
2010 Corporate Law Decisions 660 (Division Bench – High Court of Sindh)

Subject: Admiralty law

Key words: Arrest of ship; Action in rem; transfer or ownership and beneficial title before writ issued and its effect; statutory lien of successive owner.

Abstract: This was an appeal filed against confirmation of arrest of the appellant ship in two related Suits (Suits No.17 and 21 of the 2009). The respondent No.1 had brought an action in rem against the appellant ship for their claim of services rendered to the ship for necessities (bunkers, food, water, provisions, spares, port-dues, pilot fees, launch hire, crew transportation, accommodation, communication, wharf handling and other such services). It was claimed that the cheques issued for these services were dishonoured. The respondent No.2 has supplied necessaries (lubricant oil) to the ship, which cleared the port without making payment for same. Accordingly, proceedings in rem were brought under Sections 3(2) of the Admiralty Jurisdiction of High Courts Ordinance, 1980 (Admiralty Ordinance). The ship, however, was sold to its new owners on 16.2.2009 and a provisional navigation certificate was issued by the Panama Maritime Authority on 28.5.2009 with the final registration effected and certificate issued on 29.12.2009. The latest warrant (in Suit No.21) for the ship’s arrest was served on 2.7.2009. The only question for determination was whether the transfer of ownership of the ship i.e., the beneficial interest, had passed to the new owner prior to the service of writ and the arrest so as to deprive the plaintiffs its action in rem leaving them with the only remedy to pursue their claims in personam against the previous owners of the ship. In other words, did the statutory lien travel with the ship despite its purported sale. Read more here...