• Landmark decision grants interim injunction under Article 143 of Constitution
• Alusons secures relief for arbitration dispute with Ran Mal Holiday Resorts
• Decision fills lacuna in Arbitration Act No.11 of 1995

The Court of Appeal (CA) in a landmark decision last week granted Alusons Ltd. an interim injunction under Article 143 of the Constitution, pending the constitution of an arbitration tribunal which will in effect empower and improve the effectiveness of commercial arbitration in Sri Lanka.

In the matter bearing No.CA/INJ/05/2024, the Court of Appeal bench comprising Justice D.N. Samarakoon by himself on 25 March issued an interim injunction in favour of the Petitioner Alusons Ltd. – a leading provider of aluminium-related construction services in Sri Lanka – preventing Ran Mal Holiday Resorts Ltd. from encashing the advance payment guarantee submitted by Alusons.

Alusons had entered into a contract for the supply and installation of glass and aluminium work at the proposed hotel and banquet hall being built by Ran Mal Holiday Resorts in Moratuwa. However, due to the inception of several disputes between parties, a reference to arbitration had been made by Alusons. 

Pending the constitution of the arbitration tribunal, Alusons came before the Court of Appeal alleging that there existed a credible risk that Ran Mal Holiday Resorts would take steps to encash the advance payment guarantee before Alusons could obtain an interim order from the arbitral tribunal once it was constituted. 

In terms of the procedure laid out in the Arbitration Act No.11 of 1995, parties shall seek interim relief from the arbitral tribunal upon its constitution and then file an action under Section 13 of the Arbitration Act in the High Court of Sri Lanka to enforce the said interim relief.

A major lacuna in the Arbitration Act is that it does not provide a procedure to obtain immediate and urgent interim relief.

The importance of the judgment of the Court of Appeal in the matter bearing No.CA/INJ/05/2024 is essentially that the court has recognised the arbitration tribunal as a court of first instance and granted an injunction under Article 143 of the Constitution.

Article 143 of the Constitution provides: “The Court of Appeal shall have the power to grant and issue injunctions to prevent any irremediable mischief which might ensue before a party making an application for such injunction could prevent the same by bringing an action in any court of first instance.”

This marks a paradigm shift in Alternative Dispute Resolution (ADR) mechanisms in Sri Lanka and will prove to be an effective tool in guarding the rights of commercial entities.

Moreover, it will also in effect result in increased confidence in commercial arbitration in Sri Lanka. 

President’s Counsel Uditha Egalahewa and Attorney-at-Law N.K. Ashokbharan appeared on behalf of Alusons.