The oil hedging dispute which involves three foreign banks and the Ceylon Petroleum Corporation (CPC) shifts to a London court tomorrow when Standard Chartered Bank pushes its claim for US$161,733,500 in an issue where the government’s defence is that the CPC had no right to enter into these transactions.
A team of witnesses and officials including Senior Minister A.H.M. Fowzie who was formerly Petroleum Minister, Attorney General (AG) Mohan Peiris and former AG Shibly Aziz will be representing the government and the CPC. Former CPC Chairman Ashantha de Mel, cited as a witness, is also attending the hearing in the London Commercial High Court filed by Standard Chartered for non payment of dues which is expected to last between two to three weeks.
Standard Chartered was the lead bank in the hedging deals with the CPC which the government says the state agency had no authority to enter into and was outside its mandate. While Mr Aziz has been cited as an expert witness on Sri Lankan law on behalf of the government-CPC, Professor M.Sornarajah, a law professor based in Singapore has been hired by the foreign bank as an expert witness. A Sri Lankan who studied law at the Colombo university, Prof. Sornarajah has taught at several foreign universities and been counsel and arbitrator in several international law cases.
Attorney General Mr. Peiris told the Business Times that he and another legal officer will appear on behalf of the state adding that the government is strongly defending its position.
He revealed that the position taken by the Supreme Court was that the contract entered between the three foreign banks and the CPC was ultra-vires as it was against the instructions of the Central Bank. Referring to the Citi Bank arbitration case on the same issue, he noted that the order has been reserved by the Singapore Arbitration panel.
The third action has been filed by Deutche Bank in the Washington-based UN International Centre for the Settlement of Disputes (ICSD) which is against the Sri Lankan government on the grounds of a breach of an investment treaty. No date has been set for this hearing.
Next week’s case is different from the arbitration heard in Singapore. While the arbitration panel makes an award and there is no recourse to appeal in Singapore, in the London case, an appeal can be made in a higher court in the UK against an order. However when enforcing the rulings (in both instances) in Sri Lanka, aggrieved parties can resist the ‘enforcement’ action in court. -
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