International Arbitration
“Above upload original content was Published on May 6, 2016 by Wolters Kluwer International Group, in the content Dr. Gary Born, chair of the International Arbitration Practice Group, discusses the past, present and future of international arbitration.”
The Colombo international Arbitration Centre will inspire the investors who may have numerous disputes with the local agents to seek immediate remedies for their complaints.
The court procedures in these matters take a very extensive time and foreign investors are hesitant to get tangled in rigid court procedures as these procedures hinder their movements. The American Arbitration Association, International Centre for Dispute Resolution, the London Court of International Arbitration and the Hong-Kong International Arbitration Centre are some places which take up cases on behalf of foreign investors.
We facilitate and advise on individual and corporate Dispute Resolution including, Litigation at all courts, Arbitration at all forums. We also advise on arbitration and regulatory matters, as well as on risk management. standard employment contracts for employers including disciplinary and grievance procedures, consultancy agreements, written terms of employment and employee handbooks.
ARBITRATION
What is arbitration?
Arbitration is a form of alternative dispute resolution where parties agree to resolve disputes outside the courts through a neutral arbitrator or tribunal.
Which law governs arbitration in Sri Lanka?
Arbitration in Sri Lanka is governed by the Arbitration Act No. 11 of 1995.
Does Sri Lanka recognize international arbitration agreements?
Yes. Sri Lanka recognizes and enforces arbitration agreements and arbitral awards, including international ones.
Is arbitration legally binding in Sri Lanka?
Yes. Awards made under arbitration are final and binding on the parties under the Arbitration Act.
Can the State enter into arbitration agreements?
Yes. The Arbitration Act explicitly binds the State if it is a party to an arbitration agreement.
Is court litigation barred where arbitration is agreed?
Yes. If there is a valid arbitration agreement, courts must refuse jurisdiction in favour of arbitration.
Can arbitration be used for commercial and investment disputes?
Yes. Any dispute that is capable of arbitration and not contrary to public policy may be resolved by arbitration.
ARBITRATION AGREEMENTS
What constitutes a valid arbitration agreement?
An arbitration agreement must be in writing — it can be a clause in a contract or a separate written agreement.
Are email or telecommunication exchanges acceptable for an arbitration agreement?
Yes, if they provide a record of the agreement in writing.
Can arbitration cover international cross-border disputes?
Yes. Arbitration agreements may cover disputes arising out of international commercial contracts.
Does Sri Lankan law limit what disputes can be arbitrated?
A dispute can be arbitrated unless it is contrary to public policy or incapable of determination by arbitration.
Can parties choose where arbitration takes place?
Yes. Parties are free to choose the seat or place of arbitration.
Can parties choose the governing law and procedures for arbitration?
Yes, parties can decide the substantive law and procedures guiding their arbitration.
Is confidentiality guaranteed in arbitration under Sri Lankan law?
The Arbitration Act is silent on confidentiality, but institutional rules or agreed terms usually include confidentiality.
ARBITRAL TRIBUNAL & PROCEEDINGS
How many arbitrators can there be?
Parties may agree on the number of arbitrators; otherwise, default rules apply under the Arbitration Act.
How are arbitrators appointed?
Parties nominate arbitrators or follow agreed appointment procedures.
Can an arbitrator be challenged?
Yes. An arbitrator can be challenged for valid grounds, such as bias or lack of impartiality.
Can the arbitrators decide procedural matters?
Yes. Arbitrators determine procedural rules where parties have not agreed otherwise.
Can arbitration proceedings be conducted in any language?
Yes, subject to parties’ agreement and practical translation requirements for enforcement.
Can parties obtain interim measures during arbitration?
Yes. The Act allows tribunals or courts to grant interim protection measures.
Can a settlement during arbitration become binding?
Yes, if parties record the settlement in writing and agree to its terms.
ARBITRAL AWARDS
What must an arbitral award contain?
An award must be in writing and signed by the arbitrators.
Are arbitral awards immediately binding?
Yes. Unless parties agree otherwise, awards are final and binding.
Can awards be corrected or clarified?
Parties may request correction or interpretation of awards under the Act.
What if an award contains clerical errors?
Arbitrators may issue additional awards to correct such errors.
Can interest be awarded in arbitration?
Yes, arbitrators may award interest where applicable.
Can an award decide unrelated issues?
No. Awards must stay within the scope of the disputes submitted to arbitration.
ENFORCEMENT OF ARBITRAL AWARDS
How do you enforce a domestic arbitral award in Sri Lanka?
A party can apply to the High Court for enforcement within one year after 14 days of the award.
Can foreign arbitral awards be enforced in Sri Lanka?
Yes. Foreign awards are enforceable under the Arbitration Act in line with the New York Convention.
What documents must be submitted for enforcement?
The original or certified copies of the award and arbitration agreement must be filed, with translations if necessary.
Is there a difference in enforcing domestic vs foreign awards?
No — the procedure is broadly the same under the Arbitration Act.
Can enforcement be refused?
Yes — on limited grounds such as incapacity, invalid agreement, improper notice, excess scope, or public policy.
Does Sri Lanka apply the New York Convention?
Yes. Sri Lanka acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 1962, giving effect to foreign awards.
SETTING ASIDE & JUDICIAL REVIEW
Can an arbitral award be set aside?
Yes. Parties may apply to set aside an award on narrowly defined statutory grounds.
Can courts review the merits of an award?
No. Courts do not review the merits — only whether valid grounds exist for setting aside.
Is public policy a ground to refuse enforcement?
Yes, but public policy objections are interpreted narrowly by Sri Lankan courts.
Can a foreign judgment setting aside an award affect enforcement?
Complex conflict-of-laws issues arise; courts consider recognition of the foreign judgment in Sri Lanka.
INTERNATIONAL ARBITRATION PRACTICE
Is Sri Lanka pro-arbitration in practice?
Yes. Courts generally support arbitration and minimise intervention, honoring party autonomy.
Can disputes involving government contracts be arbitrated?
Yes, where the government agrees to arbitration, the Arbitration Act binds the State.
Does Sri Lanka protect confidentiality in arbitration?
Confidentiality is usually ensured by agreement or institutional rules, though the Act itself is silent.
Can tribunal orders be enforced before the award?
Interim measures may be enforced through court assistance.
ARBITRATION AGREEMENTS IN BUSINESS CONTRACTS
Should arbitration clauses be included in contracts?
Yes — clear clauses help avoid court disputes and ensure enforceable arbitration.
What language should arbitration agreements be in?
They should be in writing and ideally in English or official contract language.
Can arbitration agreements be separate from the main contract?
Yes, arbitration agreements may be standalone if in writing.
Are multi-party arbitrations permitted?
Yes, subject to agreement on tribunal composition and procedures.
PRACTICAL CONSIDERATIONS
How long does arbitration take in Sri Lanka?
Duration varies by complexity, but arbitration is often faster than litigation.
Are arbitration costs recoverable?
Costs, including fees and legal costs, may be awarded as part of the award if provided in the agreement or rules.
Can parties agree on arbitrator qualifications?
Yes — parties often specify qualifications, expertise, or institutional rules.
Can awards be appealed?
Appeals on merits are generally not permitted; only setting aside applications on specific grounds.
What languages are commonly used in arbitration in Sri Lanka?
English is common, especially in international disputes, though other languages may be used with translation.
RELATED INTERNATIONAL INSTRUMENTS
What is the New York Convention?
An international treaty facilitating mutual recognition and enforcement of foreign arbitral awards.
Is Sri Lanka a party to the New York Convention?
Yes. Sri Lanka ratified the Convention in 1962.
Does the Convention influence Sri Lanka’s Arbitration Act?
Yes — the Act implements the Convention’s enforcement provisions domestically.
DISPUTE RESOLUTION STRATEGY
Should contracts choose international arbitration rules (e.g., ICC, UNCITRAL)?
Yes — incorporating institutional or UNCITRAL rules provides established procedural frameworks.
Is mediation an alternative to arbitration?
Yes — many contracts include mediation before arbitration.
Are arbitration awards final and enforceable like court judgments?
Yes — once enforced by the High Court, awards are treated like court judgments.
Can parties avoid Sri Lankan courts entirely in arbitration disputes?
Not entirely — courts still play a supportive role for interim measures and enforcement.
RISKS & ENFORCEMENT CHALLENGES
Can enforcement be delayed?
Yes — procedural requirements and objections may affect timelines.
Does Sri Lankan law support foreign arbitrations seated outside Sri Lanka?
Yes — foreign awards are enforceable under the Act and New York Convention.
Is legal representation necessary in arbitration enforcement?
Yes — expert legal advice ensures compliance with procedural and evidentiary requirements.