Judgment of 17 February 2011, Government of Pakistan, Mininistry of Religious Affairs v. Dallah Real Estate & Tourism Holding Co.

In February 1995, Dallah Real Estate & Tourism Holding Co. (Dallah) (plaintiff) approached The Government of Pakistan, Ministry of Religious Affairs (MORA) (defendant). Dallah informed MORA the King of Saudi Arabia had entrusted Dallah with the maintenance for the Holy Sites of Mecca. Dallah then offered MORA with long-term leases for housing complexes to host religious pilgrims. In July 1995, Dallah and MORA entered a Memorandum of Understanding (MOU) where Dallah would build the housing complexes on the plots of land leased by the Government of Pakistan and would provide financing for the project. In July 1995, Dallah and MORA officials signed a memorandum of understanding (MOU). In February 1996, however, the government of Pakistan announced that the Awami Hajj Trust (the Trust) would have funding for the terms of the MOU. The Pakistani Minister of Religious Affairs, the secretary of the MORA, and the Minister of Finances served on the board of the Trust. In September 1996, Dallah signed an agreement, with the Trust as the named Pakistani party, containing an arbitration clause. In December 1996, the Trust ceased to exist legally, as the government of Pakistan did not reissue the presidential decree that founded the Trust. In January 1997, the secretary of the MORA accused Dallah of repudiating the terms of the MOU by failing to abide by the terms. Dallah referred the matter to arbitration, with MORA named as a counterparty. The MORA argued Dallah could not invoke the arbitration clause from the Agreement of September 1996. The arbitral tribunal disagreed, finding the arbitration clause granted the tribunal jurisdiction over the matter and over MORA as a signatory of the MOU from July 1995. MORA appealed to the Paris Court of Appeal, asking the court to set aside the award on jurisdiction by the arbitral tribunal. The MORA argued that the Trust negotiated the Agreement and the included arbitration clause with Dallah and that the actions of the Trust cannot be attributed to the MORA.