Supreme Court enters decisive judgement in relation to jurisdiction of Commercial High Court

A bench of the Supreme Court comprising Justices Mahinda Samayawardhena, Dr. Sobhitha Rajakaruna, and K.M.G.H. Kulatunga delivered judgement overturning an order of the Commercial High Court on 21 October, by which the Commercial High Court had dismissed an action at the pre-trial stage on the basis that there was insufficient evidence to establish the claim to satisfy the minimum monetary threshold of the Commercial High Court to hear a case.

According to the order of the Commercial High Court which was challenged, the position taken up by the Defendant that the Plaintiff’s claim had been artificially inflated to meet the jurisdictional threshold of the Commercial High Court was upheld by the Commercial High Court also with a finding that there was no evidence placed to support the claim. The Defendant in the case had initially raised a jurisdictional objection on the basis that the dispute was not a commercial dispute as there was no written contract or agreement between the parties. However, at the pre-trial stage, the Defendant had altered its objection and contended that the monetary threshold had not been met. Having considered the objections raised by the Defendant, the Commercial High Court dismissed the Plaintiff’s entire case in 2024.

The Plaintiff-Appellant, Kish International Ltd., thereafter preferred an appeal to the Supreme Court, contending that the transaction between the parties was intended to be in USD and that, cumulatively, the sums claimed in the Plaint including demurrage, loss of profits, and interest exceeded the statutory threshold required to file the case in the Commercial High Court as demonstrated in the Plaint. It was the Plaintiff-Appellant’s position that the Commercial High Court could not lawfully dismiss the action at the pre-trial stage on the ground of an alleged lack of evidence as the pre-trial hearing is not the stage at which evidence is led or evaluated. The Appellant further contended that the High Court Judge ought not to have permitted the Defendant to reformulate a jurisdictional objection that had not been pleaded in the original defence.

Justice Samayawardhena, in the judgement of the Supreme Court, specifically addressed, inter alia, the role of the pre-trial conference, which constitutes a pivotal stage in civil proceedings: “The purpose of the pre-trial conference is not to provide an opportunity for a party to introduce a new case outside the scope of the pleadings, to expand the scope of the dispute, or to prepare the case for a full-fledged trial.”

The Supreme Court further held that “jurisdiction cannot ordinarily remain in suspense throughout the proceedings and ultimately depend upon the result of the very adjudication which the Court assumed jurisdiction to undertake. If jurisdiction is properly attached when the action was instituted, a subsequent finding on the merits that the Plaintiff has proved an amount less than that claimed does not, for that reason, retrospectively divest the Court of jurisdiction.”

In addition, the Supreme Court, in its judgment, held that Parliament had used the word ‘including’, which should be given a wider interpretation, encompassing ‘commercial transactions’, and providing guidance as to the nature and breadth of the transactions that Parliament intended to bring within the jurisdiction of the Commercial High Court. It was held that the expression ‘commercial transactions’ must be given a broad and purposive interpretation, rather than being confined to the particular categories expressly enumerated in item 1 of the enacting act.

The Supreme Court observed in its judgement that the Commercial High Court Judge had required the Plaintiff, at the pre-trial stage and before the action had even been fixed for trial, to establish by evidence the several components of its claim which the Supreme Court contended was a matter for determination upon the evidence at the trial. It was held that the absence of evidence establishing a particular component of the claim at the pre-trial stage could not justify the conclusion that such amount should be excluded in determining the pecuniary jurisdiction of the Court.

The Supreme Court through this extensive judgement proceeded to set aside the impugned order of the Commercial High Court and awarded costs against the Defendant-Respondent in respect of both the proceedings before the Commercial High Court until the dismissal and the Supreme Court appeal. The Supreme Court further directed the Commercial High Court to proceed with the matter and to hear and conclude the case expeditiously.

On behalf of the Plaintiff-Appellant, Kish International Ltd., Counsel Nishan Premathiratne appeared with Vikum Jayasinghe and Manith Dasanayake on the instructions of Gamindu Karunasena.

The Commercial High Court was firstly established in 1996 by an Act of Parliament and it is presently holden in the Western Province to hear and determine disputes of a commercial nature above Rs. 50 million, including matters relating to intellectual property, admiralty, debt recovery and arbitral referrals.