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Constitutional Jurisdiction cannot override Contractual Arbitration Clauses; Writ Petition is not maintainable

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Constitutional Jurisdiction cannot override Contractual Arbitration Clauses; Writ Petition is not maintainable --- Islamabad High Court, Islamabad

Islamabad 13-07-2024: The Islamabad High Court has dismissed a writ petition filed by M/s Northern Enterprises and another, challenging the termination of their lease agreement by the National Highway Authority (NHA). The petition, which sought to overturn a notice issued by NHA on June 20, 2019, was declared not maintainable due to the presence of an arbitration clause in the lease agreement.

The dispute arose from a lease agreement dated May 19, 2006, between the petitioners and NHA. The agreement, which was secured through a competitive tender process, was intended for the establishment of a CNG station. However, the petitioners claimed they never received possession of the leased land and later sought to change the lease purpose to the construction of a plaza. Despite ongoing communications and alternative site identification efforts, NHA issued a notice terminating the lease under clause 4.10.1, which permits termination for NHA's convenience with a 90-day notice period.

The petitioners, represented by M/s Saad M. Hashmi and Barrister Salman Hamid Afridi, argued that NHA's actions were unjust, given the alternative land available for commercial purposes. They contended that the termination notice was issued despite NHA’s prior requests to identify alternative sites and the petitioners’ subsequent compliance.

NHA, represented by Deputy Attorney-General Arshid Mehmood Kiani and Advocate Syed Masood Raza, maintained that the petition was not maintainable due to the arbitration clause in the lease agreement. They emphasized that the petitioners had alternative remedies through the agreement's dispute resolution mechanism and that the High Court's jurisdiction under Article 199 of the Constitution could not enforce contract provisions.

Mr. Justice Miangul Hassan Aurangzeb, after hearing arguments from both sides, upheld NHA’s stance. The Court noted that the lease agreement explicitly included a clause allowing NHA to terminate the lease for its convenience and outlined a clear arbitration process for resolving disputes. Given the existence of an arbitration clause, the Court determined that it could not adjudicate the contractual disputes and directed the parties to pursue arbitration.

The Court cited several precedents supporting the principle that disputes arising from contracts with arbitration clauses should be resolved through arbitration rather than constitutional petitions.

The Islamabad High Court dismissed the writ petition as not maintainable, emphasizing the need for the parties to adhere to the arbitration process outlined in their lease agreement. The decision underscores the judiciary's stance on enforcing alternative dispute resolution mechanisms in contractual matters.

This ruling leaves the broader issues surrounding the concession agreement award process by NHA to be addressed in other competent proceedings. The Court’s decision serves as a reminder of the importance of arbitration clauses and the limits of constitutional jurisdiction in contract enforcement cases.