Liabilities rise sky-high for Hyatt following Court order

The liabilities of the Skyrise Grand Hyatt Colombo are seemingly rising sky high in light of its defeats in the Arbitration held in Singapore as well as in the court action instituted in local courts to enforce the Arbitral Award.

The dispute arose as far back as March 2015 in relation to the interior works of the Grand Hyatt Colombo, which was awarded to Interna Contract Spa, an interior works specialist, which has completed over 40 other Hyatt Projects around the globe. 

The developer of the Hyatt Project in Sri Lanka is Sinolanka Hotels & Spa Ltd., a company owned by Canwill Holding Ltd., whose shares are owned by Litro Gas, EPF and Sri Lanka Insurance Corporation. 

The contract awarded to Interna was wrongfully terminated by Sinolanka, pursuant to the change of its Board of Directors in March 2015. Interna, being the aggrieved contractor, resorted to arbitration to resolve the dispute, which was held under the ICC Rules of Arbitration and seated in Singapore. 

At the conclusion of the arbitral proceedings, a unanimous award was issued by the Tribunal on 29 September 2017, awarding Interna a sum of over 8.3 million euros as costs and damages, owing to the unlawful termination of the contract, which was found to be done as a policy decision by Sinolanka to terminate and retender all contracts, with no legally justifiable reason.

An application to set aside the award was made to the Singapore High Court by Sinolanka in late 2017, which was later dismissed by the High Court with costs awarded to Interna. Simultaneously, an application was made by Interna to the High Court of Colombo, seeking to enforce the arbitral award in Sri Lanka.

By judgment dated 31 January, High Court Judge M. Ahsan Marikar gave judgment recognising and enforcing the Arbitral award, and dismissing all objections raised by Sinolanka to the enforcement. 

In his judgment, the High Court referred to both the decisions of the Arbitral Tribunal and the Singapore High Court, and held that the enforcement of the Arbitral award was not contrary to the public policy of Sri Lanka, and further that there was no evidence of fraud or corruption relating to the procurement of the contract. 

The Arbitral award which was awarded in 2017 was awarded with interest as a result of which Sinolanka has accrued more than Euro 730,000 worth of interest alone, with Rs. 92,000 being accrued as interest with each passing day. 

Interna was represented in the Arbitration and in the enforcement proceedings in court by Avindra Rodrigo PC with Kasuni Jayaweera instructed by F. J. & G. De Saram, Attorneys-at-Law, whilst Sinolanka was represented by Chandaka Jayasundera PC with Chinthaka Fernando and Rukmal Cooray instructed by Continental Law Associates.