Lanka Tractors Ltd plans to institute international arbitration at the Washington-based International Center for the Settlement of Investment Disputes against the state over its properties under recent expropriation laws, lawyers for the company said.
It has already given notice to the government prior to the legal action over the acquisition under the Revival of Underperforming Enterprises and Under-utilized Assets Act, they said.
The company has written to Treasury Secretary Dr P. B. Jayasundera, saying moves to take possession of the property is illegal, unlawful and contrary to international agreements. The company has strongly objected against the government’s move to offer its block of land in Narahenpita to a private consortium which has expressed interest, the lawyers said. The plan to hand over the land for a hospital project was reported in last week’s Business Times.
They noted that the property was not owned by the government or a government agency ‘within a period of 20 years prior to the date of this Act coming into operation’, a requirement under the new law.
According to documents filed at the Registrar of Companies, on September 20, 1991, Lanka Tractors Ltd was registered as a public company and incorporated under the Companies Act, No. 17 of 1982. In 1992, 60 % of the shares of the company were unsuccessfully offered for sale on the Colombo Stock Exchange. In 1993 the shares were re-offered for sale on tender, and on this occasion four offers were received.
After having examined the offers, the Cabinet-appointed Committee for the Divestiture of Shares of Lanka Tractors accepted the bid of Globe Commercial Trading Co. Ltd. In addition 10 % of the shares were given to the company’s employees, while it was agreed that the remaining 30 % of shares would be sold publicly. However the government had failed to publicly issue the remaining 30 % of the company shares, the lawyers said.
In 1998, Lanka Tractors Ltd and Globe Commercial Trading Co. Ltd. instituted action in the Commercial High Court of Colombo against the Attorney General (as a representative of the state) for the failure to honour its obligations undertaken in the original agreement.
The High Court then issued an order in favour of Lanka Tractors and awarded the company damages as appealed for. The lawyers said that the Secretary to the Treasury had failed to obey the court ruling, despite it being over a year and a half since the verdict.
They added that the company has not been able to develop its business due to prolonged litigation.
Owing to this delay, the company lost the opportunity of attracting foreign investors who had expressed willingness to implement projects ranging from hospitals and housing schemes to universities at the Narahenpita site.
The appeal against the verdict given by the Commercial High Court of Colombo filed by the Attorney General at the Supreme Court was also dismissed, they said, adding that the present action was a violation of the Supreme Court verdict.
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