Académique Documents
Professionnel Documents
Culture Documents
CHAPTER 25
The court cannot usurp the function of the tribunal once constitutedit
will be interventionist and against legislative intent as to the limited role
of court in respect of arbitral proceedings under the Arbitration Act
K Kanag-Iswaran2
Described as the pearl of the Indian Ocean, Sri Lanka is a unitary island
republic situated to the south of the Indian peninsula. It has a population
of about 20 million of which by ethnicity, 74 per cent are Sinhalese, 18
per cent are Tamils and the rest are Moors, Malays and Burghers. The vast
majority of the people, approximately 70 per cent are Buddhists, while 15
per cent are Hindus and the residue are Christians and Muslims. Sri Lanka
has an agricultural economy with a strong plantation sector and flourishing
tea estates. It also exports apparel, ceramics, leather products, diamonds,
gems, jewels, footwear and computer software.3 The political capital of Sri
Lanka is Sri Jayawardenepura, and the commercial capital is Colombo.
Sri Lanka achieved independence from British rule on 4 February 1948,
but continued as a commonwealth country despite achieving a republic
1 Honble Mr Justice Saleem Marsoof, PC is a senior Judge of the Supreme Court of Sri
Lanka. He also is a popular law teacher and author and his areas of interest include public
law, international trade law and arbitration.
2 Marsoof and Wigneswaran (eds) Some Fundamental Concepts and Principles in the Law
of Arbitration, in In Pursuit of Justice, 2008, p 109.
3 Ministry of Finance and Planning, Annual Report 2006, p 25.
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4 Constitution of the Democratic Socialist Republic of Sri Lanka 1978, art 18.
5 Ibid, art 9 read with art 14(1)(e).
6 Ibid, art 12.
7 Ibid, arts 2-3.
8 Ibid, art 2.
9 Ibid, arts 105-117.
10 Ibid, art 127 read with art 138.
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11 Arbitration Procedure, Law and Facilities in Sri Lanka, art 154P(3)(b) read with s 4 of the
High Court of the Provinces (Special Provisions) Act No 19 of 1990.
12 Constitution of the Democratic Socialist Republic of Sri Lanka 1978, arts 140-141.
13 Ibid, art 154P(4) read with s 7 of the High Court of the Provinces (Special Provisions) Act
No 19 of 1990.
14 Ibid, art 80 read with arts 121-122.
15 Civil Law Ordinance (also known as the Introduction of English Law Ordinance) No 5 of
1852, as subsequently amended.
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Sinhalese or Kandyan Law, Theswalamai law and Muslim law apply only
to the extent permitted by statutory provisions.16
Sri Lanka has a rich tradition of alternate dispute resolution going back
to two thousand five hundred years.17 A network of mediation boards provide
a system of pre-litigation compulsory mediation geared for the amicable
resolution of certain types of civil disputes, and the Mediation Boards Act
also makes it possible for a court to refer any civil matter for settlement by
mediation with the consent of parties.18 An elaborate system also exists for
the settlement of industrial disputes through conciliation or arbitration19
and co-operative sector disputes through arbitration.20 The Civil Procedure
Code, which was enacted in 1889, conferred power to the courts, on the
application of the parties to an action, to refer any dispute for arbitration.
The relevant legislation also provides a special mechanism for enforcing
the awards of the arbitrators.
The conduct of arbitration proceedings on the basis of a reference for
arbitration made by the parties through an arbitration clause in a contract
or a submission agreement was governed till 1995 by the provisions of the
Arbitration Ordinance of 1866,21 and the Civil Procedure Code provided
the mechanism for the enforcement of the resulting awards. The Arbitration
Ordinance and the relevant provisions of the Civil Procedure Code were
repealed and replaced by the Arbitration Act,22 the provisions of which
currently regulate the conduct of arbitration proceedings and provide for
the recognition and enforcement of foreign arbitral awards. The Act was
inspired by a draft of the Swedish Arbitration Act and the UNCITRAL
Model Law.
Sri Lanka has a comprehensive, contemporary and progressive legal
framework to support domestic and international arbitrations. Sri Lankan
arbitration laws, services, facilities and institutions are at par with many
counties known for maximum judicial support for arbitration and minimal
intervention.
16 See LJM Cooray, An Introduction to the Legal System of Sri Lanka, 1992.
17 See ARB Amarasinghe, Sri Lanka Arbitration Act in K Kanag-Isvaran & SS Wijeratne
(eds) Arbitration Law in Sri Lanka, 2007, p 13.
18 Section 8 of the Mediation Boards Act No 72 of 1988 (Sri Lanka) as subsequently
amended.
19 Under the Industrial Disputes Act No 43 of 1950 (Sri Lanka), as subsequently amended.
20 Co-operative Societies Act No 5 of 1972 (Sri Lanka), as subsequently amended.
21 Arbitration Ordinance No 15 of 1866 (Sri Lanka), as subsequently amended.
22 Arbitration Act No 11 of 1995 (Sri Lanka).
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(u) The tribunal may continue the proceedings ex parte and make an
award where a party fails to appear before it or comply with any
order without reasonable cause.40
(v) The tribunal must give its award without undue delay and a party
may apply under s 31 of the Act to have the award enforced as if
it were a decree of the high court, unless it is set aside by that
court under s 32. In State Timber Corporation v Moiz Goh (Pte)
Ltd, the Supreme Court highlighted the consensual nature of
arbitration proceedings as opposed to enforcement proceedings,
and stressed that the judicial proceeding for enforcement is not a
continuation of the arbitration proceeding.41
(w) An award shall be made by the majority of the arbitrators and
shall be in writing and signed at least by the majority where the
tribunal consists of more than one arbitrator.42
(x) An award is deemed to be final and binding on the parties
thereto, 43 and can be set aside only on the grounds specified
in s 32.
(y) The Act makes a provision for appeal to the Supreme Court (with
prior leave) against an order of the high court setting aside or
refusing to set aside an award.44
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The Act does not provide a mechanism for setting aside an award made
in an arbitration held outside Sri Lanka, but the high court has the power
to refuse recognition or enforcement of a foreign award upon objection
being taken on any of the grounds specified in s 34 of the Act which are
similar to those specified in the New York Convention. Recognition or
enforcement may also be refused if the high court finds that the subject
matter of the award was not capable of settlement by arbitration under the
law of Sri Lanka or if the award is contrary to the public policy of Sri
Lanka. Any provision of foreign law required to be proved in such
proceedings has to be proved as fact through expert testimony.45 A party
aggrieved by the decision of the high court may appeal to the Supreme
Court only on a question of law and with the leave of the Supreme Court
first obtained.46
45 Arbitration Act No 11 of 1995, s 34(1)(b). See also, Saleem Marsoof, Recognition and
Enforcement of Foreign Arbitral Awards: Some Salient Points, Law College Law Review,
2005, p 27.
46 Arbitration Act No 11 of 1995 (Sri Lanka), s 37.
47 Ibid, s 3(2).
48 UNCITRAL Model Law on International Commercial Arbitration, art 7(2).
49 Ibid, art 8(1).
50 Arbitration and Conciliation Act 1996, s 8.
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of the Model Law and s 30 of the Indian Act provide for the termination of
proceedings where the parties settle the disputes.
Once an award is made, the Model Law52 and the Indian Act53 provide
for any correction or interpretation of the award to be made within 30
days. The Sri Lankan Act provides only 14 days for this purpose.54 Similarly,
an application for setting aside an award has to be made within three
months in terms of art 34 of the Model Law and s 34 of the Indian Act,
whereas s 32 of the Sri Lankan Act gives only 60 days for this purpose.
Although the Model Law does not specify a time limit leaving the matter
in the hands of national legislatures, s 31 of the Sri Lankan Act requires
that an application for the recognition or enforcement of an award (whether
domestic or foreign) to be made within one year from the making of the
award. Section 36 of the Indian Arbitration and Conciliation Act 1996
provides for enforcement of domestic awards under the Code of Civil
Procedure 1908 in the same manner as if it were a decree of the court.
Section 33 of the Arbitration Act of Sri Lanka, which provides for the
enforcement of foreign arbitral awards, has been formulated along the lines
of art 35 of the UNCITRAL Model Law, and does not seek to distinguish
between enforcement of New York Convention Awards and Geneva
Convention Awards as does Pt II of the Indian Arbitration and Conciliation
Act 1996. In fact, under the UNCITRAL Model Law as well as the Indian
Act, only foreign awards arising from a commercial relationship are capable
of being recognised and enforced, whereas the distinction between
commercial and other arbitration is irrelevant under the Sri Lankan Act.
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Tips
In selecting the seat or place of arbitration for resolving disputes involving
foreign parties, an important consideration is whether the selected country
has adopted the UN Convention for the Recognition and Enforcement of
Foreign Arbitral Awards (New York Convention), as legal impediments
could arise in enforcing abroad an arbitral award made in a non-New York
Convention country. Colombo is an ideal place for arbitration in view of its
proximity to major Indian cities, frequency of flights, affordable hotel rates
and availability of facilities and resources for the conduct of arbitration. It
is important to consider the role played by the courts in Sri Lanka in
supporting (and not unduly interfering with) arbitration proceedings.
Parties should choose arbitrators and experts carefully. They can ask the
arbitrator or expert to provide information on following: (a) the number of
arbitration cases conducted as arbitrator or before arbitrators; (b) number
of cases conducted before courts; (c) nature of arbitration cases conducted
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and amount involved; (d) average time taken for disposal of the cases; and
(e) published works/judgments, etc. Information so provided can also be
verified from the relevant arbitration centre.
MODELS/SAMPLES
The ICLP Arbitration Centre, Colombo recommends the following model
arbitration clause for general use:-
Any doubt, difference, dispute, controversy or claim arising from, out of
or in connection with this contract, or on the interpretation thereof or
on the rights, duties, obligation, or liabilities of any parties thereto or on
the operation, breach, termination or invalidity thereof, shall be settled
by arbitration in accordance with the Rules of the Arbitration Centre of
the Institute for the Development of Commercial Law and Practice,
Colombo, Sri Lanka.
If it is the intention of the parties to expedite arbitration proceedings, the
following clause is recommended:
Any doubt, difference, dispute, controversy or claim arising from, out of
or in connection with this contract, or on the interpretation thereof or
on the rights, duties, obligation, or liabilities of any parties thereto or on
the operation, breach, termination or invalidity thereof, shall be settled
by arbitration in accordance with the Rules for Expedited Arbitrations of
the Arbitration Centre of the Institute for the Development of
Commercial Law and Practice, Colombo, Sri Lanka.
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