In a Petition filed in Case No. HC (Civil) WP 64/2013/ARB on 5 April 2013 in the High Court of Western Province by Delmege Forsyth & Co. Ltd. The Chairman of the Bribery Commission D.J. de Silva Balapatabendi had been disclosed to have presided over a private arbitral tribunal and made an Award on 20 February 2013, whist he was at the same time the Chairman of the Bribery Commission.
In an Application to set aside an arbitral award of Rs. 145.5 m, made against it in favour of YCC Exporters Ltd., describing such award as phenomenal and of conjecture, Delmege Forsyth & Co. Ltd. had filed a Petition in the above case through Deepani Wijesekera, Attorney-at-Law.
The Petition has stated that such award was against the public policy of Sri Lanka, in terms of the Arbitration Act No. 11 of 1995 and that it warranted such award to be set aside. Some of the relevant extracts of the Petition are set out below:
“It was highly scandalous and of serious odium for the Chairman of the Commission to Investigate Allegations of Bribery or Corruption, exercising executive and quasi-judicial power to investigate and prosecute offences of bribery and corruption, to have involved himself to have chaired private disputes settlements, leaving himself exposed to be compromised by private parties, who make payment for his such services, as Chairman of a private Arbitral Tribunal.
Unknown politition“The ‘public perception,’ which is vitally important of the independence of the Commission to Investigate Allegations of Bribery or Corruption, in the foregoing circumstances is susceptible to be seriously put in jeopardy. The foregoing was in serious conflict with the Public Policy of Sri Lanka, warranting the prompt setting aside, as ipso facto ab-initio null and void, the purported Arbitral Awards made on 20th February 2013 by the improperly constituted and functus Arbitral Tribunal. In terms of Section 18 of the Commission to Investigate Allegations of Bribery or Corruption Act No. 19 of 1994, the said Chairman of the Commission, D.J. de Silva Balapatabendi was deemed to be a ‘public servant’, within the meaning of the Penal Code, which at Section 19 thereof defined a ‘public servant’.
“The aforesaid Arbitral Tribunal as had been notified by Letter dated 4 August 2010 had commenced Arbitration Proceedings, with the Statement of Claim dated 31 August 2010 having been tendered, and had proceeded to sit on or about 11 days up to 30 March 2011, at which point of time the Inquiry had commenced with proceedings having been had on two days. Thereafter, the aforesaid improperly constituted and functus Arbitral Tribunal had regardlessly proceeded to continue to conduct the said Arbitration Proceedings, with the Inquiry being continued on 20 May 2011, after the Chairman of the Arbitral Tribunal, D.J. de Silva Balapatabendi had assumed Office on or about 13 May 2011, as a Member and the Chairman of the Commission to Investigate Allegations of Bribery or Corruption, as aforesaid.
“Thus, the improperly constituted and functus Arbitral Tribunal had sat on or about 18 days thereafter conducting the said Inquiry, recording evidence, receiving Written Submissions, hearing Oral Submissions, and consequently had made Awards on 20 February 2013, whilst the Chairman of the Arbitral Tribunal, D.J. de Silva Balapatabendi, was at the very same time, also the Chairman of the Commission to Investigate Allegations of Bribery or Corruption.
“The Petitioner is advised that in the foregoing circumstances, the said Chairman of the Arbitral Tribunal, D.J. de Silva Balapatabendi having assumed Office, as the Chairman and Commission Member of the Commission to Investigate Allegations of Bribery or Corruption, became a ‘public servant’, as aforesaid, exercising executive and quasi-judicial power, and was thus and thereby ipso facto disqualified from functioning, as Chairman of a private Arbitral Tribunal, involving commercial disputes between private parties, and receiving payments therefor from the private parties.
“The Petitioner ill-advisedly continuing to be a party in such Arbitration Proceedings, did not however or in any manner, whatsoever or howsoever, cure the aforesaid impropriety and the fact that the Arbitral Tribunal ipso facto became functus from around 13 May 2011 as aforesaid. It was the duty and obligation cast upon the said Chairman of the Arbitral Tribunal, D.J. de Silva Balapatabendi, a retired Supreme Court Judge, to have withdrawn from such Arbitral Tribunal immediately upon assuming Office, as Chairman and Commission Member of the Commission to Investigate Allegations of Bribery or Corruption.
“Sri Lanka had ratified the UN Convention Against Corruption on 31 March 2004, which encompassed both the public and private sectors, whereby Sri Lanka stands obliged to duly observe, perform and fulfil the duties and obligations on its part under the UN Convention Against Corruption; more so it is imperative on the part of the Commission to Investigate Allegations of Bribery or Corruption to respect and conform to the duties and obligations under the UN Convention Against Corruption.”
The arbitral award had been made on 20 February 2013 by Chairman of the Bribery Commission, D.J. de Silva Balapatabendi, as Chairman of the private arbitral tribunal, with another Arbitrator, former High Court Judge Dudley Karunaratne agreeing, as stated in the Petition had not taken into account interest payable of 19% p.a. on Loans of Rs. 24 m, advanced by Delmege Forsyth & Co. Ltd., to YCC Exporters Ltd. One Arbitrator, Kushan D’Alwis, P.C., had dissented with the above award made by Chairman of the Bribery Commission, D.J. de Silva Balapatabendi and had taken into reckoning the fact that 19% p.a. interest was payable on these Loans.
The Petition states that the controlling Shareholdings and management control of Delmege Forsyth & Co. Ltd. had been taken over from the former owners, who had entered into this Agreement on May 28, 2007 and had terminated the Agreement on 30 June 2010. Petition further states that Clause 2(4) of the Agreement had provide for the payment of US$ 2 m, which had been in contravention of the Exchange Control Act, thereby rendering the said Agreement to be an illegal contract, which was in conflict with Public Policy.
The Petition also states that no originals of the awards signed by the arbitral tribunal had been given to the Petitioner in contravention of Section 25(4) of Arbitration Act No. 11 of 1995, which stipulates that a copy of the award signed by the Arbitrators shall be delivered to each party. Instead, the Petition states that the Proceedings of 20th February 2013 has stated thus -“The Registrar of the Arbitration Centre is directed to send certified copies of the Award and the Dissenting Order to the parties concerned by the registered post,” and that therefore that the statutory validity of the Award was in issue and that the foregoing being contrary to the laws of Sri Lanka are further in conflict with the Public Policy of Sri Lanka.