SRI LANKA Law and Practice Contributed by: Amrit Rajapakse, Law Chambers of Amrit Rajapakse
tion to set aside the award under Section 32, the court held that a negative ruling on jurisdiction would not qualify as an “award” under the Act, which defines an award to mean “a decision of the arbitral tribunal on the substance of the dispute”. 5.3 Timing of Challenge The Act does not prescribe a time limit for referring a jurisdictional question to the high court under Section 11 (1). An application to set aside an award is required to be made to the high court within 60 days of the receipt of the award. In Hatton National Bank Ltd v Atapattu and another (2013), the Supreme Court held that a challenge to the jurisdiction of the arbitral tribunal could be taken for the first time in setting aside proceedings under Sec - tion 32, at least where the alleged lack of jurisdiction was partial as opposed to total. The court held that the failure to take up such a jurisdictional objection at an earlier stage of the arbitral proceedings did not amount to a waiver of the right to challenge the award under Section 32. It is to be noted that the Act does not contain a provision corresponding to Article 16 (2) of the Model Law, which requires any objection to jurisdiction to be raised not later than the submission of the statement of defence, or as soon as the tribunal The standard of judicial review for questions of admis - sibility and jurisdiction has not been specifically addressed by the Sri Lankan courts. The case law suggests that the courts adopt the de novo standard of review. 5.5 Breach of Arbitration Agreement Section 5 of the Act is similar to Article 8 (1) of the Model Law and provides that a court shall have no jurisdiction to hear and determine a matter covered by an arbitration agreement if the party against whom the proceedings are brought objects to the court exercis - ing jurisdiction in the matter. However, the Act is silent as to whether the court should stay the proceedings before it or terminate them, upon such an objection being successfully taken. This question was consid - ered by the Supreme Court in Elgitread Lanka (Pvt) Ltd has allegedly overstepped its authority. 5.4 Standard of Judicial Review for Jurisdiction/Admissibility
v Bino Tyres (Pvt) Ltd (2010), where it was held that the court in fact had a discretion, which was to be exercised according to the facts and circumstances of each case, either to dismiss the action or to grant a stay of proceedings. The court held further that in the vast majority of cases no useful purpose would be served by staying the proceedings, and the court will in the normal course dismiss the action or terminate the proceedings. In Unicorns Clearing and Forwarding (Pvt) Ltd v Murughasan Chandrika and Romav Ltd (2018), the plaintiff filed action in court against the defendants upon certain bills of lading. The second defendant filed answer objecting to the court exercising jurisdiction in the matter on the basis that the bills of lading con - tained an arbitration clause. The second defendant also raised an issue at the trial as to the court’s lack of jurisdiction. However, the second defendant did not move court to decide the said issue as a preliminary legal issue, and instead allowed the court to proceed with the trial on the merits. The Supreme Court held that the second defendant’s conduct amounted to a submission to jurisdiction. In a later case, K K D Aruna Chaminda v Janashakthi General Insurance Ltd (2019), the plaintiff sued the defendant in court upon an insurance policy. The defendant filed answer admitting the court’s jurisdic - tion, and the admission was also recorded at the start of the trial. At a later stage of the trial, the defendant sought to withdraw its admission as to jurisdiction and raised an issue challenging the court’s exercise of jurisdiction on the basis of an arbitration clause contained in the policy. The High Court dismissed the action and the plaintiff appealed to the Supreme Court. The Supreme Court held that the objection to jurisdiction had not been taken at the earliest oppor - tunity and ordered the High Court to decide the case on the merits. 5.6 Jurisdiction Over Third Parties The Act does not provide any circumstances under which an arbitral tribunal may assume jurisdiction over third parties to the arbitration agreement. Since arbitration is a consensual process, it is difficult to conceive of such circumstances unless it is possible to invoke a legal principle such as agency or piercing
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