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New arbitration law to enable virtual hearings 

13 Feb 2022

  • Cases to be concluded within two months 
The proposed new arbitration law will allow virtual arbitration hearings and is seeking to enable provisions that will reduce the period of arbitration to a maximum of two months, according to the Justice Ministry. Speaking to The Sunday Morning Business, Ministry of Justice Coordinating Secretary and Head of Reforms Shamir Zavahir said that the proposed arbitration law would allow virtual hearing of arbitration, enabling arbitrators to join in from anywhere in the world, while the seat of arbitration remained in Sri Lanka. He said that the existing arbitration act was “hopelessly outdated”. Zavahir said that in Sri Lanka technically arbitration hearings could be done virtually if both parties agreed to it, although the existing law did not have provisions for this. However, he noted that in most cases one party failed to agree to a virtual hearing.  Other amendments to the arbitration law include speeding up the hearing of cases, appointment of an emergency arbitrator which would allow a disputing party to apply for urgent interim relief before an arbitration tribunal has been formally constituted, and facilitating arbitrator autonomy more to ensure that the arbitrators could settle the matter outside the courts.  Zavahir said that typically arbitrations in Sri Lanka took one or two or even two-and-a-half years to conclude, whereas in countries like Singapore even the most complex arbitrations were concluded within three to four days. Therefore he noted that the new arbitration laws would be a game changer as the arbitration could be concluded within a maximum of two months through the new provisions. Last Tuesday (8), the Cabinet instructed the legal draftsman to draw up a new Arbitration Bill as recommended by the Commercial Law Reform Committee of the Justice Ministry. The committee has stated the need to impose provisions in the proposed Act to address existing barriers at the arbitration stage as well as at the enforcement stage of arbitration decisions to enable large-scale domestic and foreign investment in Sri Lanka. Sri Lanka’s Arbitration Act, which was partly influenced by the Draft Swedish Arbitration Act of 1994, was the first arbitration statute in South Asia to be based on the United Nations Commission on International Trade Law on International Commercial Arbitration, repealed the Arbitration Ordinance No. 15 of 1856 as well as the provisions of the Civil Procedure Code, which, until then, constituted statutory arbitral law in Sri Lanka. However, the ensuing lack of updates to the laws has affected the quality of arbitration in Sri Lanka over the past two decades. In October 2021, a Memorandum of Understanding (MoU) was signed between the Ministry of Justice and the Colombo Port City Economic Commission with a view to developing the Sri Lanka International Arbitration Centre as an International Commercial Dispute Resolution Centre for the Colombo Port City. Later the same month, the Cabinet approved the appointment of five subcommittees headed by reputed attorneys-at-;aw who are specialised in their fields to reform Sri Lanka’s existing laws.  Accordingly, subcommittees for infrastructure development, digitisation and court automation, criminal law reforms (criminal law), civil law reforms, and commercial law reforms were appointed under a special unit in the Justice Ministry. – By Imesh Ranasinghe 

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