August 26, 2019
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    Landmark Judgement:Singapore Court dismisses arbitration claim by Avant Garde Featured

    May 25, 2019

    In a landmark judgement delivered on May 10, 2019, the Court of Appeal of Singapore (which is the highest appellate Court in Singapore) allowed an appeal made by Rakna Arakshaka Lanka Ltd.This is to set aside an arbitral award given by an Arbitral Tribunal of the Singapore International Arbitration Centre (SIAC) for a sum of USD 5 million in favour of Avant Garde Maritime Services.

    In January 2015, a vessel named ‘MV Mahanuwara’ was detained by the Police and Navy while it was docked at the Galle harbour, in connection with investigations that were being carried out into the legitimacy of the Galle Floating Armoury Project.The MV Mahanuwara was chartered and operated by Avant Garde at that time.

    Avant Garde requested the Mutual Assistance of Rakna Lanka to obtain a ‘Letter of Clearance’ from the Defence Ministry to prove the legitimacy of the operation of said Floating Armoury quoting the Business Agreements with Rakna Lanka and Avant Garde. Thereafter Avant Grade began arbitration proceedings in Singapore against Rakna Lanka on the basis that Rakna Lanka had breached the Agreements between Rakna Lanka and Avant Garde.

    Rakna Lanka was unrepresented for the Arbitration process and the arbitral tribunal delivered its Final Award ex-parte on November 29 2016 where Rakna Lanka was ordered to pay Avant Garde USD 5 million. However, after considering the vulnerable repercussions of this arbitral award and the financial loss that can be occurred due to this, Rakna Lanka objected the enforcement of the said award and to moved to set aside such award.

    Taking the forgoing into consideration, in early 2017 the board Rakna Lanka decided to apply to the High Court of Singapore to set aside the award. In the said case Rakna Lanka principally challenged the Arbitral award of SIAC on three arguments namely Public Policy Challenge, Jurisdictional Issue and the breach of Natural Justice.

    The High Court of Singapore delivered judgement dismissing Rakna Lanka’s application on technical grounds of the case and affirmed the SIAC arbitral award on December 1, 2017. Thereafter, Rakna Lanka preferred an Appeal to the Court of Appeal of Singapore (CA/CA 240/2017) which is the highest appellant court of Singapore against the said arbitral award and the judgement of the High Court of Singapore.

    The case was argued on January 30,2019 before a bench of three Court of Appeal judges of Singapore comprising of the Chief Justice of Singapore. The Judgement of the appeal was reserved for three months and delivered only on May 10, 2019. By its Judgement the Court of Appeal of Singapore allowed the Appeal of Rakna Lanka and set aside the judgement of High Court of Singapore and the award of the SIAC Arbitral Tribunal which is US$ 5 million. Court also awarded costs to Rakna Lanka.

    The appeal between Rakna Lanka and Avant Garde is a landmark case in Singapore as well as in Sri Lanka. Allowing such appeal against an Arbitral decision made by SIAC is extremely rare in the Singapore Legal System. Rakna Arakshka Lanka Ltd was represented by Andre Arul of Arul Chew and Partners assisted by Counsel Chandaka Jayasundere PC and Pulasthi Rupasinha.

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