May 24, Colombo: The Singapore Court of Appeal has dismissed an arbitration claim made by Avant Garde Maritime Services Private Limited against Rakna Arakshaka Lanka Limited for a sum of US$ 5 Million.
The appellant, Rakna Arakshaka Lanka Ltd (RALL), is a Sri Lankan state company affiliated with the Ministry of Defense and specializing in providing security and risk management services.
The respondent, Avant Garde Maritime Services (Private) Limited (AGMS), another Sri Lankan company, is in the business of providing maritime security services to vessels at risk of piracy.
In January 2015, MV Mahanuwara, a vessel chartered and operated by AGMS, was detained by the Sri Lankan Navy while it was docked at Galle Port, in connection with investigations that were being carried out into the legitimacy of the Galle Floating Armory Project.
AGMS has claimed that that there was no illegality in the operation of the Galle Floating Armoury Project given that it was operated with the complete knowledge and approval of the Ministry of Defense (MOD) during the previous government and requested RALL to obtain a "Letter of Clearance" from the MOD and/or the government clearing the name of AGMS as the business was carried out under the public-private partnership with RALL and was legitimate
RALL replied to AGMS that its board had yet to be reconstituted after the government change.
AGMS then commenced arbitration proceedings against RALL at Singapore International Arbitration Centre (SIAC) for breaching the agreement and claimed US$20 million in liquidated damages.
Following litigation, on November 29th 2016, SIAC decided that RALL had breached the Master Agreement and ordered to pay AGMS US$ 5 million with interest at 5.98% for the breach.
RALL commenced proceedings in the High Court of Singapore to set aside the Award on 27 February 2017. The High Court Judge dismissed RALL's application to set aside the Award.
Following the High Court decision, RALL appealed to the Singapore Appeal Court against the Judge's decision on the jurisdictional ground and on the public policy ground.
In its ruling, the Appeal Court of Singapore dismissed the Singapore International Arbitration Centre award of US$ 5 million and also awarded costs to Rakna Arakshaka Lanka.