SRI LANKA Law and Practice Contributed by: Amrit Rajapakse, Law Chambers of Amrit Rajapakse
tion and enforcement of a foreign award, this area has not received the attention of the Sri Lankan courts. In common with other jurisdictions, it is likely that criminal matters, certain family law and employment matters and certain statutory claims (for example, shareholder remedies and applications to wind up a There are no reported decisions by Sri Lankan courts with respect to determining the law governing the arbitration agreement. Over the last 25 years, the Sri Lankan courts have moved from a pro-intervention approach to a pro-arbitration one. Arbitration agree - ments are usually enforced by courts, as seen in Elgitread Lanka (Pvt) Ltd v Bino Tyres (Pvt) Ltd (2010), where an arbitration clause that referred to a non- existent arbitration institution was enforced by the Supreme Court. company) would not be arbitrable. 3.3 National Courts’ Approach However, an exception was made by the High Court in The Garment Services Group Ltd v Aitken Spence & Co Ltd (2003), where it was held that an arbitration clause in a shareholders’ agreement did not preclude a shareholder from applying to court to obtain statu - tory remedies for oppression and mismanagement under the Companies Act. The High Court reasoned that the court’s jurisdiction under the Companies Act was an extraordinary one, which included the power to impose a just and equitable settlement on the parties. The court reasoned that an arbitrator cannot grant such relief. An application for leave to appeal against the judgment of the High Court was dismissed. The cases of Unicorns Clearing and Forwarding (Pvt) Ltd v Murughasan Chandrika and Romav Ltd (2018) and K K D Aruna Chaminda v Janashakthi General Insurance Ltd (2019) underscore the importance of raising timely objection when a party institutes action in court in respect of a dispute covered by an arbitra - tion agreement. These cases are discussed further in 5.5 Breach of Arbitration Agreement . 3.4 Validity In Sri Lanka, an arbitral clause may be considered valid even if the rest of the contract in which it is con - tained is invalid. The rule of separability of arbitra - tion agreements is contained in Section 12 of the Act,
although there is no express provision to state that a finding that the contract is null and void will not neces - sarily entail the invalidity of the arbitration clause (as provided in Article 16 (1) of the Model Law).
4. The Arbitral Tribunal 4.1 Limits on Selection
The Sri Lankan courts give full effect to party autono - my in the selection of arbitrators. This was reaffirmed by the Supreme Court in Wakachiku Construction Co Ltd v Road Development Authority (2013), where the court noted that parties may select arbitrators from any nationality or professional background. 4.2 Default Procedures Section 7 (3) of the Act provides for the situation where an appointment procedure agreed upon by the parties fails, due to a party failing to act under such procedure or the parties or arbitrators being unable to reach a necessary agreement or a third-party appoint - ing authority being unable to act. In such cases, a party may apply to the high court to make the neces - sary appointment. Section 7 (4) of the Act requires the high court to have due regard to any qualifica - tions agreed on by the parties, as well as the need to promote independence and impartiality, in making its appointment. The Act does not make any specific provision for multiparty arbitrations. 4.3 Court Intervention Under Section 7 of the Act, court intervention in the selection of arbitrators is confined to cases where the parties have either not agreed on an appointment pro - cedure, or the chosen appointment procedure fails. In the former case, Section 7 (2) provides that a party may apply to the high court to appoint an arbitrator if the parties are unable to agree on a sole arbitrator or a party fails to appoint an arbitrator or the two arbitra - tors are unable to agree on the third arbitrator. In the latter case, the procedure referred to in 4.2 Default Procedures will apply. 4.4 Challenge and Removal of Arbitrators The Act includes particular provisions governing the challenge or removal of arbitrators in Sections 8 to 10, which are broadly comparable with Articles 12 to
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