Disputed Chinese fertilizer shipment: Court order preventing payment to be revoked?

The Colombo Commercial High Court’s decision on extending or revoking the interim order preventing the payment on Letter of Credit to the Chinese company that shipped a disputed consignment of organic fertilizer to Sri Lanka is expected to be delivered on January 06.

Accordingly, the relevant court order, which prevents the payment to the Chinese firm on Letter of Credit, was extended until next month.

A petition filed by the Colombo Commercial Fertilizers Ltd. was taken up before Commercial High Court Judge Pradeep Hettiarachchi this morning (December 23).

The Ceylon Fertilizer Company (CFC) had previously secured two enjoining orders from the Colombo Commercial High Court against Seawin Biotech, its local agent and the state-run People’s Bank, preventing the payment on Letter of Credit. 

The first court order against the Chinese firm in question was secured on October 23, blocking the People’s Bank from making any payment under a Letter of Credit opened in favour of the Chinese company.

During a previous proceeding, Additional Solicitor General Susantha Balapatabendi, who appeared on behalf of the CFC, told the court that China-based Qingdao Seawin Biotech Group Co., Ltd. had shipped a fertilizer consignment, which is a partial shipment worth more than a billion rupees that was procured through a tender process initiated by the Agriculture Ministry.

Although the said Chinese firm was required to ship sterile organic fertilizer under the tender contract, it had admitted in its shipping advice that the consignment may contain microorganisms, he had further told the court.

The National Plant Quarantine Services (NPQS), which tested the sample sent to them, had confirmed the presence of organisms, including certain types of harmful bacteria, the Additional Solicitor General had said, adding that, in this context, the Chinese firm in question had failed to complete the accepted terms of the tender.

As per the terms of the contracts, the payment for the controversial organic fertilizer shipment was slated to be made through a Letter of Credit established via the People’s Bank.