A Singapore-based international arbitrator’s dismissal of a Citi Bank claim against Sri Lanka's state-owned Ceylon Petroleum Corporation (CPC) on the payment of a hedging deal, was a triumph for the country’s legal team who defended the island nation’s position strongly before the arbitration panel, Attorney General Mohan Peiris told the Business Times.
The defence was able to prove beyond doubt that the entirety of the transaction is not right and bad in law, he added. The bank had demanded the CPC to pay US$192 million plus interest in payments it said it was owed.
The CPC entered into a hedging agreement with five local and international banks to buy crude oil at a capped price of $130 per barrel. The deal went against the country when the oil prices fell below US$ 50 in the world market and CPC stood to lose nearly US$ 500 million. The derivatives were sold by Standard Chartered, Deutsche Bank, Citibank and Sri Lanka's state-run People's Bank and Commercial Bank.
Mr. Peiris noted that the success in the Citi Bank claim case will be immensely helpful for the country to argue and make submissions in the upcoming appeal against the British Commercial High Court ruling last month that the CPC should pay nearly US$ 162 million plus interest to Standard Chartered Bank for non-payment of dues resulted from a failed hedging deal. He noted that the decision of the Singapore arbitration panel has placed the Corporation in a stronger position in the other oil hedge case filed by Deutsche Bank.
He expressed the belief that the Deutsche Bank case would be null and void on the grounds that the lawsuit was bad in law. The case will come up for hearing on August 24 in the US. He said that there was absolutely no case there as Deutsche Bank’s complaint did not hold weight on the grounds that it was a misrepresentation of facts. “There is absolutely no case because the government did not enter into any agreement with the Deutsche Bank,” he added. |
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