Sri Lanka has potential for International arbitration hub

By Lalin FERNANDOPULLE

Sri Lanka has huge potential to be an international hub for arbitration which is a multi-million dollar industry, arbitration experts, said.

Arbitration

They said that the potential of the industry has not been fully tapped due to lack of awareness of its benefits to the legal profession and the economy of the country.

Sri Lanka National Arbitration Centre (SLNAC) CEO, Hiran de Alwis said that developing Sri Lanka as a regional and international hub would benefit all professions and will be a boost to export professional services and enhance Colombo as a financial hub.

Legal experts said that Sri Lanka’s hub status for international arbitration will be a golden opportunity to expedite efforts to transform Sri Lanka into an economic hub in the region.

“Lack of infrastructure and knowledge of the benefits of arbitration for the corporate sector has been a major hurdle to position the country in the global arena”, legal experts said.

SLNAC said that the legal fraternity has a golden opportunity and the responsibility to make a collective effort to realise the potential of the multi-million dollar sector towards the community and the economy.

Arbitration is a popular dispute resolution mechanism in the commercial sector. A large number of global disputes between corporates is resolved through arbitration. Cost effectiveness and confidentiality are hallmarks of arbitration.

Disputes arising in sports and the construction sector are resolved through arbitration.

Arbitration laws specify that any dispute where the parties have agreed to submit to arbitration under an arbitration agreement may be determined by arbitration unless the matter in respect of which the arbitration agreement is entered into is contrary to public policy or is not capable of determination by arbitration.

A party who seeks to challenge an arbitrator shall, unless the parties have decided that the decision shall be taken by some other person, first do so before the tribunal, within 30 days of his becoming aware of the circumstances which give rise to doubts about the arbitrators’ impartiality or independence.

SLNAC has proposed a 10-year road map to make Sri Lanka a centre for arbitration in the world which recognises the country’s potential to transform into a location for arbitration.

Legal experts believe, that while recognising the contribution of legal professionals measures should be taken to improve arbitration culture in Sri Lanka.

“Similar to cricket which reached the pinnacle when we became world champions in 1996, arbitration which is a service industry is poised to achieve global acclaim’, de Alwis said.

K. Kanag-Isvaran, an eminent President’s Counsel in his address to the National Law Conference of the BASL in 1995 said “ A modern law of arbitration was a sine qua non for facilitating and promoting arbitration in general and for the promotion and establishment of Sri Lanka as the regional centre for arbitration in the emerging South and South East Asian region’.

Legal experts said that with the major impediment to peace and economic growth has been cleared the arbitral and legal institutions should focus on developing the infrastructure to achieve global status for arbitration in Sri Lanka.

Arbitration envisages expeditious disposal of commercial disputes under the due process of law.

As stated by a British legal luminary ‘Arbitration is no more and no less than litigation in the private sector....”

Direct benefits of setting up Colombo as an international hub would enhance foreign investments and income flows that generate from professional services and expertise, income from facilitation and hosting services for foreign arbitrations of multi-national companies and spin-off such as business tourism.

According to experts the need for international dispute resolution will increase with the revival of global trade.

The easing off of the global economic crisis has stimulated economic growth and worldwide investments.

Legal services account for about US$ 1.3 billion of Hong Kong’s GDP in 2007 and S$ 1.3 billion in Singapore the same year.

The inter-relation between arbitration and growth of Asian economies is inseparable. The reason for India and China burgeoning is the increase in international commercial disputes.

‘SLNAC hopes to attract international arbitrations to Sri Lanka as a service provider and to make commercial dispute resolution by arbitration expeditious and cost-effective”, de Alwis said.