Court finds KOICA has immunity

District Court Judge Amali Ranaweera considered matters pertaining to diplomatic immunity in a recent Court Order delivered by the District Court of Colombo. 

The case between  Sripali Contractors Ltd. (Plaintiff) and Korea International Cooperation Agency (KOICA) as well as Seylan Bank PLC (Defendants) is in connection with a bid submitted by the Plaintiff to KOICA for the construction of the National College of Education and Teacher Training System for Technology Stream in Sri Lanka.

The Plaintiff sought to restrain KOICA from making a demand under the bid security provided in the form of a bank guarantee submitted by the Plaintiff with their bid document. 

KOICA is attached to the Embassy of Republic of Korea in Sri Lanka as the Grant Aid Division of the Embassy of Republic of Korea in Sri Lanka and is the executing Agency in Sri Lanka for grant aid and technical cooperation of the Government of Korea, under and in terms of the Framework Arrangement entered into between the Government of Republic of Korea and the Government of Sri Lanka around 9 December 2009. 

KOICA invited eligible bidders for international competitive bidding for the selection of a contractor for the construction works of the National College of Education and Teacher Training System for Technology Stream in Sri Lanka, which is one of the grant aid programs/projects that is being conducted under the Framework Arrangement between the two States.

Plaintiff furnished KOICA with a Bid Security issued by Seylan Bank, pursuant to which the Plaintiff submitted their bid documents. The Plaintiff was selected as the successful bidder and subsequent to the Plaintiff being notified as the successful bidder, the Plaintiff failed to execute the Contract within the prescribed period, which allowed KOICA to encash the Bid Security. 

Prior to KOICA making a demand, the Plaintiff filed the aforesaid Action in the District Court and supported their application ex parte on 1 October 2019. Court issued the Enjoining Orders sought by the Plaintiff and restrained KOICA from making a demand on the bid guarantee and further restrained Seylan Bank from making any payments to KOICA on the bid guarantee.

Subsequently KOICA filed their objections to the Plaintiff’s application raising an objection to this action being maintained against KOICA on account of KOICA having diplomatic immunity. Parites filed their written submission and made further oral submissions in Court as the matter was heard expeditiously due to the bid guarantee expiring on 11 November 2019.

President’s Counsel Avindra Rodrigo argued that KOICA has diplomatic immunity drawing Court’s attention to a letter issued by the Secretary to the Ministry of Foreign Affairs under the Diplomatic Privileges Act No. 09 of 1996 which recognises KOICA’s diplomatic status. Counsel further argued that in any event the Court cannot interfere with the performance of a bank guarantee, which is a separate and an independent contract between the bank and the beneficiary (KOICA in this instance) unless the Plaintiff has alleged and established fraud on the part of the beneficiary.

Hearing submissions made by counsel for both parties Court concurred with the submissions made by counsel for KOICA and held that the letter issued by the Secretary to the Ministry of Foreign Affairs under the Diplomatic Privileges Act No. 09 of 1996, is conclusive evidence that KOICA is immune from civil and administrative jurisdiction of Sri Lanka. 

Court further held that the Court cannot interfere with the performance of a bank guarantee, which is a separate and an independent contract between the bank and the beneficiary especially when the Plaintiff has not alleged or established fraud on the part of KOICA. The Interim Injunctions sought by the Plaintiff were therefore refused and the Enjoining Orders granted previously were vacated enabling KOICA to enforce the bid guarantee. 

Counsel Nihal Fernando, PC with Harshula Seneviratne and Manendra Madawa instructed by Lanka Dharmasiri appeared for the Plaintiff while Counsel Avindra Rodrigo PC with Rozali Fernando and Oshani Wijewardena instructed by F.J. & G De Saram appeared for KOICA.