International Arbitration 2024 Comparisons

International arbitration is a popular method of resolving disputes in Sri Lanka.

Where a choice is available, domestic parties generally prefer to resort to litigation over international arbitration.

International arbitration is mostly used in Sri Lanka when an arbitration clause is included in the parties’ contract, usually at the request of the foreign party to the contract.

There were no particular industries that experienced significant international arbitration activity in Sri Lanka in recent years.

The arbitral institutions that are most used for international arbitration in Sri Lanka are the Sri Lanka National Arbitration Centre (SLNAC) and the CCC-ICLP International ADR Centre (IADRC). Both institutions administer ad hoc arbitrations and arbitrations under their own rules. They provide hearing room facilities, interpretation and transcription services and secretarial services, which make them a popular choice for international arbitrations.

No new arbitral institutions have been established in Sri Lanka in 2023–24.

The High Courts of Colombo, Jaffna and Kandy have been designated by the Minister of Justice to hear matters arising under the Arbitration Act, No 11 of 1995 of Sri Lanka. The courts’ jurisdiction covers both domestic and international arbitrations. The jurisdiction of the High Court of Colombo is presently exercised by the Commercial High Court.

Decisions of the High Court in the exercise of its enforcement or setting aside jurisdictions may be appealed to the Supreme Court by way of leave to appeal.

The Arbitration Act, No 11 of 1995 (the “Act”) is the national legislation governing international arbitration in Sri Lanka. The Act was based on the draft Swedish Arbitration Act of 1994, which was in turn influenced by the UNCITRAL Model Law of 1985. The Act could therefore be said to be indirectly based on the 1985 Model Law. In fact, many of the Act’s provisions are either identical to, or very close re-enactments of, the Model Law.

The Act diverges from the Model Law in that the Act applies to both domestic and international arbitration, whereas the Model Law applies only to international commercial arbitration. In addition, Articles 3, 4, 5, 9, 16(2), 22, 23(1), 26 and 32 of the 1985 Model Law have no corresponding provision in the Act.

The Act has not been amended to date. A draft new Arbitration Act intended to repeal and replace the Arbitration Act 1995 was prepared by a committee of experts appointed by the Minister of Justice and circulated for public comments in 2022. The draft act, which is yet to be enacted, will include features of the UNCITRAL Model Law 2006 and current international best practice.

The Act, in common with Article 7(2) of the 1985 Model Law, requires an arbitration agreement to be in writing for it to be enforceable. In addition, Section 4 of the Act requires that the arbitration agreement should not be in respect of a matter that is either contrary to public policy or not capable of determination by arbitration.

The Act does not specify any subject matters that may not be referred to arbitration. While arbitrability is a requirement under Section 4 of the Act (see 3.1 Enforceability), and lack of arbitrability is a ground for setting aside an award and for refusing recognition and enforcement of a foreign award, this area has not received the attention of the Sri Lankan courts. In common with other jurisdictions, it is likely that criminal matters, certain family law and employment matters and certain statutory claims (for example, shareholder remedies and applications to wind up a company) would not be arbitrable.

There are no reported decisions by Sri Lankan courts with respect to determining the law governing the arbitration agreement. Over the last 25 years, the Sri Lankan courts have moved from a pro-intervention approach to a pro-arbitration one. Arbitration agreements are usually enforced by courts, as seen in Elgitread Lanka (Pvt) Ltd v Bino Tyres (Pvt) Ltd (2010), where an arbitration clause that referred to a non-existent arbitration institution was enforced by the Supreme Court.

However, an exception was made by the High Court in The Garment Services Group Ltd v Aitken Spence & Co Ltd (2003), where it was held that an arbitration clause in a shareholders’ agreement did not preclude a shareholder from applying to court to obtain statutory remedies for oppression and mismanagement under the Companies Act. The High Court reasoned that the court’s jurisdiction under the Companies Act was an extraordinary one, which included the power to impose a just and equitable settlement on the parties. The court reasoned that an arbitrator cannot grant such relief. An application for leave to appeal against the judgment of the High Court was dismissed.

The cases of Unicorns Clearing and Forwarding (Pvt) Ltd v Murughasan Chandrika and Romav Ltd (2018) and K K D Aruna Chaminda v Janashakthi General Insurance Ltd (2019) underscore the importance of raising timely objection when a party institutes action in court in respect of a dispute covered by an arbitration agreement. These cases are discussed further in 5.6 Breach of Arbitration Agreement.

In Sri Lanka, an arbitral clause may be considered valid even if the rest of the contract in which it is contained is invalid. The rule of separability of arbitration agreements is contained in Section 12 of the Act, although there is no express provision to state that a finding that the contract is null and void will not necessarily entail the invalidity of the arbitration clause (as provided in Article 16(1) of the Model Law).

The Sri Lankan courts give full effect to party autonomy in the selection of arbitrators. This was reaffirmed by the Supreme Court in Wakachiku Construction Co Ltd v Road Development Authority (2013), where the court noted that parties may select arbitrators from any nationality or professional background.

Section 7(3) of the Act provides for the situation where an appointment procedure agreed upon by the parties fails, due to a party failing to act under such procedure or the parties or arbitrators being unable to reach a necessary agreement or a third-party appointing authority being unable to act. In such cases, a party may apply to the High Court to make the necessary appointment. Section 7(4) of the Act requires the High Court to have due regard to any qualifications agreed on by the parties, as well as the need to promote independence and impartiality, in making its appointment. The Act does not make any specific provision for multiparty arbitrations.

Under Section 7 of the Act, court intervention in the selection of arbitrators is confined to cases where the parties have either not agreed on an appointment procedure, or the chosen appointment procedure fails. In the former case, Section 7(2) provides that a party may apply to the High Court to appoint an arbitrator if the parties are unable to agree on a sole arbitrator or a party fails to appoint an arbitrator or the two arbitrators are unable to agree on the third arbitrator. In the latter case, the procedure referred to in 4.2 Default Procedures will apply.

The Act includes particular provisions governing the challenge or removal of arbitrators in Sections 8 to 10, which are broadly comparable with Articles 12 to 15 of the Model Law. Thus, Section 10(2) provides that an Arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to their impartiality or independence. Unlike Article 12(2) of the Model Law however, the Act does not include the failure to possess any qualifications agreed to by the parties as a ground of challenge.

Section 8(1) provides that the mandate of an arbitrator terminates if such arbitrator becomes unable to perform the functions of that office or for any other reason fails to act without undue delay, dies, withdraws from office or the parties agree on the termination. An application to remove an arbitrator on the ground of delay must be made to the High Court under Section 8(2).

Section 10(1) of the Act stipulates an initial and ongoing duty to disclose any potential conflicts of interest, using nearly identical language to Article 12(1) of the Model Law. The duty covers any circumstances likely to give rise to justifiable doubts as to the arbitrator’s impartiality or independence. Where the circumstances arise subsequently, the disclosure should be made “without delay” to all the parties “and to the other arbitrators” (not required in the Model Law), unless they have already been informed. Section 15(2) of the Act provides that an Arbitral Tribunal shall deal with any dispute submitted to it in an impartial, practical and expeditious manner.

As noted in 3.2 Arbitrability, the Act does not specify any subject matters that may not be referred to arbitration. In common with other jurisdictions, it is likely that criminal matters, certain family law and employment matters and certain statutory claims (for example, shareholder remedies and applications to wind up a company) would not be arbitrable.

The principle of competence-competence is given statutory recognition in Section 11(1) of the Act, where it is stated in somewhat broader terms than the corresponding Article 16(1) of the Model Law. According to Section 11(1), an arbitral tribunal may rule on its jurisdiction, including any question as to the existence or validity of the arbitration agreement, or (which is not found in Article 16(1)) as to whether such agreement is contrary to public policy or is incapable of being performed.

A court can address issues of jurisdiction of an arbitral tribunal in one of three situations in Sri Lanka. Under Section 11(1) of the Act, any party to the arbitral proceedings may apply to the High Court to determine a jurisdictional question instead of raising it before the arbitral tribunal. The court may also address issues of jurisdiction in proceedings to set aside an award under Section 32 or to refuse recognition or enforcement of a foreign arbitral award under Section 34, which correspond to Articles 34 and 36 of the Model Law. Under these provisions, an award may be set aside or refused recognition or enforcement upon proof that the arbitration agreement is not valid or that the award deals with a dispute outside the terms of the submission to arbitration, which are jurisdictional matters.

In Perera v China National Technical Imports & Export Corporation (2017), the High Court held that Section 11(1) requires a choice to be made between raising a jurisdictional question before the arbitral tribunal or the High Court. Once the parties have agreed to refer a jurisdictional question to the arbitral tribunal, a party cannot invoke the jurisdiction of the High Court to decide that question. The court held further that the Act did not provide for an appeal to the court against a preliminary ruling on jurisdiction by the arbitral tribunal, as in Article 16(3) of the Model Law. The only recourse available under the Act to a party who was dissatisfied with the arbitral tribunal’s ruling on jurisdiction was an application to set aside the final award under Section 32.

Sri Lankan courts have shown a general willingness to intervene in setting aside proceedings where it has been proved that the arbitral tribunal lacked jurisdiction. In Hatton National Bank Ltd v Atapattu and another (2013) the Supreme Court set aside part of the arbitral award that dealt with a dispute that had not been included in the parties’ notice of arbitration and response or in their subsequent statements of claim and defence. In doing so, the court described it as “trite law” that an arbitral tribunal’s mandate to decide any dispute is confined to the limits of the power conferred to it by the parties in express terms or by necessary implication.

In Perera v China National Technical Imports & Export Corporation (2017), the High Court held that negative rulings on jurisdiction by arbitral tribunals are not subject to review under the Act. Based on its finding that the only recourse available to a party was an application to set aside the award under Section 32, the court held that a negative ruling on jurisdiction would not qualify as an “award” under the Act, which defines an award to mean “a decision of the arbitral tribunal on the substance of the dispute”.

The Act does not prescribe a time limit for referring a jurisdictional question to the High Court under Section 11(1). An application to set aside an award is required to be made to the High Court within 60 days of the receipt of the award.

In Hatton National Bank Ltd v Atapattu and another (2013), the Supreme Court held that a challenge to the jurisdiction of the arbitral tribunal could be taken for the first time in setting aside proceedings under Section 32, at least where the alleged lack of jurisdiction was partial as opposed to total. The court held that the failure to take up such a jurisdictional objection at an earlier stage of the arbitral proceedings did not amount to a waiver of the right to challenge the award under Section 32. It is to be noted that the Act does not contain a provision corresponding to Article 16(2) of the Model Law, which requires any objection to jurisdiction to be raised not later than the submission of the statement of defence, or as soon as the tribunal has allegedly overstepped its authority.

The standard of judicial review for questions of admissibility and jurisdiction has not been specifically addressed by the Sri Lankan courts. The case law suggests that the courts adopt the de novo standard of review.

Section 5 of the Act is similar to Article 8(1) of the Model Law and provides that a court shall have no jurisdiction to hear and determine a matter covered by an arbitration agreement, if the party against whom the proceedings are brought objects to the court exercising jurisdiction in the matter. However, the Act is silent as to whether the court should stay the proceedings before it or terminate them, upon such an objection being successfully taken. This question was considered by the Supreme Court in Elgitread Lanka (Pvt) Ltd v Bino Tyres (Pvt) Ltd (2010), where it was held that the court in fact had a discretion, which was to be exercised according to the facts and circumstances of each case, either to dismiss the action or to grant a stay of proceedings. The court held further that in the vast majority of cases no useful purpose would be served by staying the proceedings, and the court will in the normal course dismiss the action or terminate the proceedings.

In Unicorns Clearing and Forwarding (Pvt) Ltd v Murughasan Chandrika and Romav Ltd (2018), the plaintiff filed action in court against the defendants upon certain bills of lading. The second defendant filed answer objecting to the court exercising jurisdiction in the matter on the basis that the bills of lading contained an arbitration clause. The second defendant also raised an issue at the trial as to the court’s lack of jurisdiction. However, the second defendant did not move court to decide the said issue as a preliminary legal issue, and instead allowed the court to proceed with the trial on the merits. The Supreme Court held that the second defendant’s conduct amounted to a submission to jurisdiction.

In a later case, K K D Aruna Chaminda v Janashakthi General Insurance Ltd (2019), the plaintiff sued the defendant in court upon an insurance policy. The defendant filed answer admitting the court’s jurisdiction, and the admission was also recorded at the start of the trial. At a later stage of the trial, the defendant sought to withdraw its admission as to jurisdiction and raised an issue challenging the court’s exercise of jurisdiction on the basis of an arbitration clause contained in the policy. The High Court dismissed the action and the plaintiff appealed to the Supreme Court. The Supreme Court held that the objection to jurisdiction had not been taken at the earliest opportunity and ordered the High Court to decide the case on the merits.

The Act does not provide any circumstances under which an arbitral tribunal may assume jurisdiction over third parties to the arbitration agreement. Since arbitration is a consensual process, it is difficult to conceive of such circumstances unless it is possible to invoke a legal principle such as agency or piercing the corporate veil. Sri Lanka has not recognised the group of companies doctrine and does not have a Contracts (Rights of Third Parties) Act.

Under Section 21 of the Act, the High Court may order a third party to the arbitration agreement to appear before court for examination or to produce a document or do anything required by the arbitral tribunal, where such party had earlier refused or failed to respond to a summons by the arbitral tribunal or to do such thing.

Section 13 of the Act authorises the arbitral tribunal to order interim measures of protection needed “to protect or secure the claim which forms the subject matter of the dispute”. The types of relief that can be awarded are not further elaborated in the Act.

Section 13(1) provides that such an order may in exceptional cases be made ex parte. The arbitral tribunal may also require the party seeking interim relief to deposit security.

Under Section 13(2), a party may apply to the High Court to enforce an order of an arbitral tribunal requiring the taking of interim measures.

In Sri Lanka, the courts play a role in preliminary or interim relief in arbitral proceedings in two circumstances. Firstly, under Section 13(2) of the Act, a party may apply to the High Court to enforce an order of an arbitral tribunal requiring the taking of interim measures. Secondly, pursuant to the Court of Appeal decision in Baksons Textile Industries Ltd v Hybro Industries Ltd (1997), a party may apply directly to court to obtain interim relief to maintain the status quo until such time as a final order resolving any dispute or an interim order is made by an arbitral tribunal.

There are no express legal provisions or reported judgments that recognise the courts’ power to grant interim relief in aid of foreign-seated arbitrations.

The Act does not allow the use of emergency arbitrators. The draft Arbitration Act of 2022 (see 2.2 Changes to National Law) recognises emergency arbitrators.

Under Section 13(1) of the Act, an arbitral tribunal may require a party seeking interim relief to provide security to the party ordered to take such measures for any expense, loss or damage that may be caused by reason of such interim relief. Section 29 of the Act provides that the arbitral tribunal may order the parties to deposit security for the payment of the arbitral tribunal’s compensation. Apart from these provisions, there is no provision in the Act authorising the arbitral tribunal to order security for a party’s own costs.

The court may order security where a party seeks to adjourn an application to recognise or enforce a foreign arbitral award pending the outcome of challenge proceedings brought before the courts of the seat of arbitration.

Section 17 of the Act provides that the parties are free to agree on the procedure to be followed by the arbitral tribunal, subject to any mandatory provisions of the Act. This allows the parties to agree on a set of institutional or ad hoc arbitration rules.

The Act does not set out any particular procedural steps that are required by law. Instead, as noted in 7.1 Governing Rules, the parties are given autonomy to agree on the procedural rules.

However, the Act prescribes certain overarching principles that will have to be observed by the parties and the arbitral tribunal in formulating the arbitral procedure. Under Section 15(1), an arbitral tribunal has a duty to deal with any dispute submitted to it in an impartial, practical and expeditious manner. Section 15(2) requires an arbitral tribunal to afford all parties an opportunity of presenting their respective cases in writing or orally and to examine all documents and other material furnished to it by the other parties or any other person. An arbitral tribunal is not bound to hold an oral hearing unless the parties have agreed for such hearing to take place.

Section 17 of the Act provides that an arbitral tribunal shall have the power to determine the admissibility, relevance and weight of any evidence. Section 22(2) provides further that an arbitral tribunal may administer an oath or affirmation to a witness unless the parties have agreed otherwise. Subject to any contrary agreement by the parties, an arbitral tribunal is not bound by the provisions of the Evidence Ordinance (Section 22(3)).

In the absence of a relevant designation by the parties, an arbitral tribunal has the power to determine the place of arbitration (Section 16(1)), the venue for hearings and for consultations (Section 16(2)) and the law applicable to the substance of the dispute (Section 24(2)). Other powers include the power to rule on its own jurisdiction (see 5.2 Challenges to Jurisdiction), to order interim relief (see 6.1 Types of Relief), to order security for the arbitral tribunal’s fees and expenses (see 6.3 Security for Costs) and to award interest (see 10.3 Recovering Interest and Legal Costs).

Unlike certain jurisdictions, an arbitral tribunal in Sri Lanka does not have the power to withhold an award for non-payment of its fees (Section 30).

As noted in 7.2 Procedural Steps, an arbitral tribunal has a duty to deal with any dispute submitted to it in an impartial, practical and expeditious manner (Section 15(1)) and to afford all parties an opportunity of presenting their respective cases in writing or orally and to examine all documents and other material furnished to it by the other parties or any other person (Section 15(2)).

Section 23 of the Act provides that unless the parties have agreed otherwise in writing, a party may appear before the arbitral tribunal personally or, where a party is a body of persons (whether corporate or unincorporated), may be represented by an officer, employee or agent of that body, and may in addition be represented by an attorney-at-law. The term “attorney-at-law” would be understood to mean an attorney-at-law of the Supreme Court of Sri Lanka. A foreign lawyer may appear as an agent of a party.

Section 22(1) of the Act provides that unless the parties have agreed otherwise, evidence before the arbitral tribunal may be given orally, in writing or by affidavit. Under Section 20(2), a witness who has been issued with summons to give evidence or produce a document in any arbitral proceedings shall not be compelled to answer any question or produce any document that they could not have been compelled to answer or produce in court.

The general approach followed in arbitrations in Sri Lanka is to file witness statements in the form of affidavits followed by oral cross-examination. Discovery and disclosure are rarely used in ad hoc arbitrations and in arbitrations under Sri Lankan institutional arbitration rules. Affidavits tendered as evidence should comply with the provisions of the Oaths and Affirmations Ordinance.

Section 17 of the Act provides that an arbitral tribunal shall have the power to determine the admissibility, relevance and weight of any evidence. Under Section 22(3), subject to any contrary agreement by the parties, an arbitral tribunal seated in Sri Lanka is not bound by the provisions of the Evidence Ordinance. However, as mentioned in 8.1 Collection and Submission of Evidence, rules of privilege applicable in court proceedings will also apply to arbitral proceedings.

Although an arbitral tribunal thus has considerable freedom, it will have to follow certain basic norms of the law of evidence, such as those relating to the burden and standard of proof. For example, in Atapattu v Janashakthi General Insurance Co Ltd (2013), the Supreme Court reviewed the arbitral tribunal’s approach to the standard of proof in relation to an allegation of fraud.

Sections 20 and 21 of the Act provide for court assistance in collecting evidence. Under Section 20(1), a party may, with the prior written consent of the arbitral tribunal, apply to the High Court for a summons requiring any person to attend before the arbitral tribunal and give evidence or produce any document or thing specified in such summons. Under Section 21(1), if a third party to the arbitration agreement refuses or fails to appear before the arbitral tribunal or to answer any question or produce a document or do any other thing required by the arbitral tribunal, the High Court may order such third party to appear before court for examination or to answer such question or produce such document or do such thing. An application to the High Court for an order under Section 21(1) may be made by a party to the arbitration proceedings with notice given to the other parties and the prior sanction or consent of the arbitral tribunal.

The Act is silent as to confidentiality of arbitral proceedings or their constituent parts (eg, pleadings, documents, the award). However, confidentiality obligations are included in the main institutional arbitration rules in Sri Lanka. Confidentiality is also often included as an item on the agenda of most preliminary hearings in arbitrations in Sri Lanka.

Court proceedings in Sri Lanka are in general open to the public and documents filed in support of enforcement or setting aside applications would ordinarily be accessible to the public.

Under Section 25 of the Act, an award should:

• be in writing;
• be signed by the arbitrators constituting the arbitral tribunal or by a majority of them, in which case the award should give the reason for any omitted signature;
• state the reasons upon which it is based, unless the parties have agreed to dispense with reasons or the award is an award on agreed terms under Section 14;
• be dated; and
• state the place of arbitration.

Under Section 25(4), an original signed copy of the award should be delivered to each party to the arbitration.

The Act does not prescribe any time limits for delivery of the award. However, most institutional arbitration rules specify time limits.

The Act is silent on the types of remedies that an arbitral tribunal may award. Remedies normally awarded by arbitral tribunals in Sri Lanka are declaratory relief, damages, specific performance, rectification, injunctions, interest and costs. Punitive damages are not available in Sri Lanka.

Section 28 of the Act provides that unless the parties have agreed otherwise, the arbitral tribunal may award interest on any principal sums ordered to be paid in the award. The power to award interest includes both pre-award and post-award interest. Interest shall be awarded at the rate agreed by the parties in the arbitration agreement or failing such agreement at the legal rate of interest.

The act is silent on awarding of legal costs. However, in the absence of any statutory indication to the contrary, arbitral tribunals in Sri Lanka normally assume a power to award costs. Such a power may also be conferred on the arbitral tribunal by the parties either explicitly or implicitly (as where both parties pray for costs in their pleadings). Typically, the general rule that costs follow the event applies, however if there is no clear winner and loser the arbitral tribunal will engage in some form of apportionment of costs. Arbitral tribunals will also consider whether the costs were reasonable and proportionate, the conduct of the parties (eg, whether any party engaged in any dilatory tactics) and any settlement offers.

An arbitral award is not subject to appeal in Sri Lanka. A party seeking recourse against an arbitral award is confined to the following remedies:

• correction of computational errors, clerical or typographical errors or similar errors (Section 27(1)(a)(i));
• modification of the award where part of the award is on a matter not referred to arbitration (Section 27(1)(a)(ii));
• interpretation of a specific point or part of the award (Section 27(1)(b));
• additional award as to claims presented in the arbitral proceedings but omitted from the award (Section 27(4));
• setting aside the award (Section 32); or
• refusing recognition or enforcement of a foreign arbitral award (Section 34).

The right to seek an interpretation of the award or an additional award is made subject to the agreement of the parties. In the absence of such agreement, these remedies will not be available. The remaining remedies are statutory and cannot be excluded by agreement.

The Act is silent as to whether parties can agree on additional appeal procedures before a second arbitral tribunal or before an arbitral institution. Such an agreement may run foul of Section 26 of the Act, which provides that subject to the provisions of Part VII of the Act (which deals with setting aside or refusing recognition or enforcement of awards), the award made by the arbitral tribunal shall be “final and binding on the parties to the arbitration agreement.”

The parties would not be able to expand the court’s power to set aside an award under Section 32 or refuse recognition or enforcement of a foreign award under Section 34. However, parties may enter into a written agreement to exclude any right of appeal from the High Court to the Supreme Court.

Under the scheme of the Act, the court is precluded from reviewing an award on the merits.

Sri Lanka signed the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards on 30 December 1958 and deposited its instrument of ratification on 9 April 1962. Sri Lanka has not formulated any reservations at the time of ratifying the Convention.

An application for enforcement of an award (including a foreign award) should be made to the High Court within one year after the expiry of 14 days of the making of the award. Such application shall be accompanied by:

• the original award or a duly certified copy thereof; and
• the original arbitration agreement or a duly certified copy thereof.

Where the award or the arbitration agreement is not in one of the official languages of the court or English, a duly certified translation of such document into such official language or English, shall also be filed.

Under Section 31(6), where an application has been made to enforce an award and there is no application under Section 32 to set aside the award or the court sees no cause to refuse recognition and enforcement of the award under Sections 33 and 34, the court shall proceed to file the award and give judgment according to the award on a day of which notice shall be given to the parties.

The grounds on which an award may be set aside under Section 32 or a foreign award may be refused recognition or enforcement under Sections 33 and 34 correspond to the grounds contained in Articles 34 and 36 of the Model Law and Article V of the New York Convention. An award made in Sri Lanka may be set aside on the following grounds:

• a party to the arbitration agreement was under some incapacity;
• the arbitration agreement was invalid;
• the respondent was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present their case;
• the award deals with a dispute outside the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration;
• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the parties’ agreement or the law;
• the award concerns a matter not capable of settlement by arbitration; or
• enforcement of the award would be contrary to public policy.

In addition to the grounds mentioned above, a foreign award may also be refused recognition or enforcement if the award has not yet become binding on the parties or it has been set aside or suspended by a court in the seat of arbitration. Since the words “may be refused” appear in the section, it would follow that even an award that has been set aside by the courts in the seat of arbitration could be enforced in Sri Lanka.

When a foreign award is subject to ongoing set-aside proceedings at the seat, the Sri Lankan court may adjourn the enforcement proceedings and may order the party resisting the enforcement application to provide security (Section 34(2)).

Sri Lanka is not a party to the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property. Sri Lanka follows the restricted theory of sovereign immunity in terms of which only acts jure imperii (acts of a state in its capacity as a state) would receive immunity. However, it is likely that a separate waiver would be necessary for enforcement measures to be taken against a foreign state.

The Sri Lankan courts have generally followed a strong pro-enforcement approach towards recognition and enforcement of arbitral awards. In particular, the courts have confined refusing enforcement on the ground of public policy to very strict limits. In Light Weight Body Armour Ltd v Sri Lanka Army (2007), the Supreme Court held that not every error of law on the face of the award would amount to a violation of public policy. The court held that instances such as corruption, bribery, fraud and similar serious cases would be grounds for setting aside an award on this basis. In Atapattu v Janashakthi General Insurance Co Ltd (2013) the Supreme Court reiterated that while public policy was a dynamic concept, it was important to exercise “extreme caution” when applying it.

The Act does not provide for class action arbitration or group arbitration. It may be possible to consolidate arbitration proceedings by application of some institutional arbitration rules.

Attorneys-at-law of the Supreme Court of Sri Lanka are subject to ethical standards prescribed by the Supreme Court, which are found in the Supreme Court (Conduct of and Etiquette for Attorneys-at-Law) Rules 1988. There are no separate ethical codes or professional standards that mandatorily apply to arbitrators in Sri Lanka.

The Act does not recognise third-party funding arrangements. Such arrangements are likely to breach domestic rules against maintenance and champerty. Accordingly, third-party funding arrangements are unlikely to be permitted in Sri Lanka.

There is no provision in the Act that authorises an arbitral tribunal or court in Sri Lanka to consolidate separate arbitral proceedings. This could be done if all the parties agree to it, or agree on a set of arbitration rules that permits consolidation.

See 5.7 Jurisdiction Over Third Parties.