Court of Appeal extends interim order against Health Minister

• Status quo to be maintained in relation to “Suwa Siri Pura” Pharmaceutical Production Zone in Oyamaduwa, Anuradhapura until 5 September 

The Court of Appeal, on 22 July, extended the injunction which had been granted in March 2024 until 5 September 2024 in Application bearing No.: CA/INJ/3/2024. 

The matter was taken up for hearing yesterday in the Court of Appeal, on the Application which was preferred by Spectrum Pharmatech Lanka Ltd, the Zone Developer in the “Suwa Siri Pura” Pharmaceutical Production Zone in Oyamaduwa, Anuradhapura.  

In March 2024, the Court of Appeal had granted interim relief as prayed for by the Petitioner and injuncted the Health Minister and State Ministry of Production, Supply and Regulation of Pharmaceuticals State Minister, restraining them from taking any steps to act in contravention to the Development and Management Agreement, the agreement to arbitrate and altering the positions with the investor tenants in the Pharmaceutical Zone in Oyamaduwa, until the disputes were heard in Arbitration.

The intended Zone is expected to produce a substantial portion of Sri Lanka’s medicinal requirements and is expected to generate over 2,000 direct jobs and 5,000 indirect jobs. This project would be able to significantly reduce Government spending on medicines, which currently stands well above $ 700 million. It will also significantly contribute to the goal of the Government to achieve 60% of total medicine requirements to be fulfilled locally, where currently only 15% of the total requirement is sourced from local manufacturers.

During the hearing in Court, the Petitioner reiterated to Court the magnitude and seriousness of the project, and that it is a matter of national interest. The Petitioner submitted to Court that the Health Ministry had turned a blind eye to the requests of the Petitioner concerning the disputes which had arisen in respect to the development of the Zone, as the initially represented number of investors (above 20) who were to set up plants at the Zone had not done so, or have not paid the requirement payments to the Petitioner. It was also submitted to Court that the COVID-19 pandemic and the ensuing economic crisis caused serious impediments to the development activities of the Zone, where the costs of developing the Zone have risen by almost four-fold. The Petitioner submitted to Court that the Petitioner had, as a last resort, even written to the President to intervene to resolve issues. As there had been a deadlock situation, the Petitioner had no option but to resort to arbitration in the context where the Ministry had threatened to terminate the agreement with the petitioner and also to alter the agreements with the investors concerning the buyback agreements, effectively rendering the Oyamaduwa Zone nugatory.  It was further submitted that the lacklustre approach of the Ministry was also evident in that, even after sending the Notice of Arbitration in March 2024, the Petitioner also had to file another application in the Commercial High Court urging the Health Minister to appoint an arbitrator to commence arbitral proceedings as per such Notice of Arbitration. 

In the Commercial High Court, after a few days of the matter being mentioned, the Health Minister had agreed to appoint an arbitrator and the Court had already made an order regarding the same. The Petitioner, therefore, submitted that the interim order granted by the Court be extended until the arbitral tribunal can make a suitable order on maintaining the status quo.  Further, it was also appraised that most investors have already written to the Ministry expressing their inclination to continue to work with the Petitioner, and urging the Minister to take action to resolve the disputes with the Petitioner. 

On behalf of the Respondents, it was submitted to Court that the Petitioner had no right to invoke the jurisdiction of the Court of Appeal under Article 143 of the Constitution to seek an injunction, and that the Petitioner could have availed itself to reliefs from other Courts.

Furthermore, it was also submitted that the Zone Developer had delayed the development of the Zone, and therefore, that the Respondents are inclined to obtain the services of another developer to complete the rest of the development work in the Zone.  On these grounds, the Respondents submitted that the interim order should not be extended and that the Petition should be dismissed immediately. The Petitioner’s position was that all factual matters are to be dealt with at the arbitral proceedings as the parties have agreed to resolve all disputes by arbitration. 

Upon hearing both parties, Lordships in the Court of Appeal Justice M.C.B.S. Morais and Justice R. Gurusinghe extended the interim order granted until 5 September 2024 and reserved the matter for order. The Court is set to deliver the order concerning the further extension of the injunction on such date. 

On behalf of the Petitioner, Attorney-at-Law Counsel Nishan Sydney Premathiratne appeared with Attorneys-at-Law Sidath Gajanayaka and Nimashi Fernando on the instructions of Sarravanan Neelakandan Law Associates. On behalf of the Respondents, Deputy Solicitor General Manohara Jayasinghe.