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HC orders CEB to pay billions of rupees to Japanese joint venture
View(s):A Sri Lankan High Court has upheld an arbitral award requiring the state-owned Ceylon Electricity Board (CEB) to settle billions of rupees in unpaid contract fees, costs and interest to a Japanese joint venture that built the second phase of the Japan International Cooperation Agency-funded Upper Kotmale Hydropower Project (UKHP).
The sums owed by CEB to Maeda Corporation and Nishimatsu Co. Ltd include Sri Lankan rupees 592.3mn; Japanese Yen 193,229,738 (Rs. 363.6mn) and US dollars 117,208 (Rs. 34.13mn) in principal payments, arbitration costs and a security deposit. The sums do not include interest, which continues to accrue as of date.
The Maeda Nishimatsu joint venture (MNJV) carried out the main civil works of the second phase of UKHP. The HC judgment was delivered last month in an arbitration which commenced in November 2004. Hearings occurred over four-and-a-half years (from 2015 to 2019) at the Colombo International Arbitration Centre in Sri Lanka and were administered by the Institute for Development of Commercial Law and Practice (ICLP Arbitration Centre.) The
The MNJV contract with the CEB was twice amended to revise the contract price. It was initially JPY 7.317bn and Rs. 120mn. It was amended in February 2012, raising it to JPY 7.726bn and Rs. 5.6bn. The second amendment to the contract in September 2014 increased it to JPY 8.76bn and Rs. 7.4bn.
Thus, the MNJV referred a total of 14 disputes to arbitration. They were deemed not entitled to sums specified in respect of 11 of these. In May 2021, the CEB filed an application in the HC to set aside the arbitral award. In October that year, MNJV filed a separate application seeking to enforce the award.
After hearing both together, the Court dismissed the CEB’s setting aside application and allowed the enforcement of the arbitral award, 20 years after the arbitration was initiated. The utility can now seek the leave or permission of the Supreme Court to appeal against the HC judgment.
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