The Ministry of Religious Affairs, Government of Pakistan v. Dallah Real Estate and Tourism Holding Company

The Ministry of Religious Affairs, Government of Pakistan (the Ministry) (plaintiff) and Dallah Real Estate and Tourism Holding Company (Dallah) (defendant) signed a memorandum in July 1995. In September 1996, Dallah entered into a new agreement with the Trust, which was an entity created by Pakistani presidential decree and which was legally and financially independent from the Pakistan government. The 1996 agreement contained an arbitration clause. The 1996 agreement replaced the memorandum, so that the memorandum was no longer in effect. Shortly after the agreement was entered, two Ministry officials who were not connected to the Trust sent several letters to Dallah about operations under the agreement. In January 1997, the legal existence of the Trust ended because it was not renewed by presidential decree. Later in January 1997, a Ministry official sent a letter to Dallah using Ministry stationery. The letter stated that Dallah had failed to fulfill its obligations under the 1996 agreement and the Ministry considered that failure a repudiation of the 1996 agreement. The dispute was arbitrated, and an arbitral award was issued in favor of Dallah. The Ministry filed a claim in French court seeking annulment of the award. The Ministry argued that the arbitration clause contained in the 1996 agreement was unenforceable against the Ministry and that the arbitral tribunal had incorrectly applied transnational law to determine that it had jurisdiction over the Ministry. The Ministry argued that although it was a party to the 1995 memorandum, the memorandum was replaced by the 1996 agreement involving only Dallah and the Trust, which was an entity fully separate from the government. Therefore, the Ministry asserted, the acts of the Trust could not be considered the acts of the Ministry, and so the Ministry could not be considered part of the 1996 agreement and subject to an arbitral award given under it.