Monetary claims against BOI dismissed

By S.S.Selvanayagam

The Board of Investment (BOI) had some welcome news recently as two monetary claims made against the BOI amounting to a sum of approximately Rs. 47,000,000 and a further sum of US$ 21,000 was dismissed by Court.

In another similar case, Bonaventure Textiles Lanka Ltd. too instituted action against the BOI claiming a further sum of Rs. 36,385,186.  This claim too has been dismissed. The company, Bonaventure Apparels Lanka (Pvt) Limited had instituted this action originally in the District Court of Negombo against the BOI claiming the said monies.

 The application had been made to Court by the joint liquidators of the company, all of KPMG Thornton & Company.

The plaintiff  company instituted action to recover a sum of Rs. 46,790,396.37 and a sum of US$ 21,201.25 due to Bonaventure Apparels Lanka (Pvt) Limited, from the BOI.  The plaintiff as compensation for improvement claimed this money from the defendant.

The defendant BOI filed answer and pleaded that the Court had no jurisdiction to hear this case and that the plaintiff cannot maintain this action by virtue of the provisions of the Arbitration Act No. 11 of 1995 and in terms of clause Nos. 27 and 29 of the Agreement entered into between the parties.

The BOI thereafter filed a motion dated 12 June 2007 and had moved that the plaintiff’s action be dismissed.  

Thereafter the company had filed an application for interrogatories. However, the District Judge by his order dated 18.07.2008 did not answer to the issue of jurisdiction on reasons given therein that such issue of jurisdiction should be determined at the trial.  

Furthermore, the District Judge made order that interrogatories be answered and documents be produced.  An appeal was preferred against the said order of the District Judge of Negombo.

Thereafter, the BOI had appealed to the High Court of Civil Appeal – Gampaha and after hearing Justices S.W. Wickramaarachchi and S.R. Perera by judgment had made order in favour of the BOI that a Court has no jurisdiction to hear this case due to Section 5 of the Arbitration Act.  The Court held that an agreement between the parties had contained the words “all disputes in the agreement to be referred to arbitration”.

Accordingly, on a study of the legal authorities and the facts of this case that in terms of Section 5 of Arbitration Act that the defendant – BOI had raised objections to jurisdiction.

 Accordingly the Court held that the District Court had erred when it held that the issues of jurisdiction to be decided only at the trial stage. Accordingly the Court held that the District Court has no jurisdiction to hear these cases.

Subsequently the District Court of Negombo in pursuance to High Court order had dismissed the two claims filed against the BOI claiming these monies which aggregated to a sum of approximately over Rs. 80,000,000.

Hiran De Alwis with C. Jayamaha instructed by P.K. Walgama appeared for the defendant BOI. Dr. Harsha Cabral PC with Buddhika Ilangathilaka appeared for the plaintiff respondents