SriLankan wins right to run on-board duty free

• Court refuses injunction and dissolves previous orders slapped on National Carrier

Commercial High Court judge Ruwan Fernando has refused the interim injunctions sought by DFP Canada against SriLankan Airlines and also dissolved previously issued enjoining orders, allowing the National Carrier to conduct its own onboard duty free services. 

DFP Canada (DFP) filed action claiming that DFP was the parent company of Phoenix Duty Free Services and that DFP had a right of first refusal and right to match an offer under the Supply and Concessionaire Agreement granted to Phoenix Duty Free Services in 2012 in violation of standard tender procedures of SriLankan Airlines. 

The report of the Board of Inquiry headed by Attorney-at-Law J.C. Weliamuna heavily criticised the awarding of duty free supply and concessionaire contract to Phoenix violating the procedures of the company and the transaction is currently being investigated by the law enforcement authorities.

SriLankan Airlines did not extend the contract with Phoenix upon expiry at the end of its five-year term as the airline wanted to explore the best available options to improve the commercial returns to the company through on-board duty free sales program, the airline said in a statement on Friday. 

“The airline decided to operate its own on-board duty free program as it did prior to 2012 as no duty free service provider submitted any bid for the tender carried out by the airline to appoint a duty free services supplier,” the media statement said. 

The plaintiff alleged that SriLankan had breached the said agreement when it decided to operate its own on-board duty free program. DFP had obtained ex-parte enjoining orders from the court compelling SriLankan Airlines to continue obtaining such services from Phoenix until disputes as to the said rights are resolved through arbitration. SriLankan Airlines has denied that DFP has such rights. 

One reason given by SriLankan Airlines is that it has an inherent right to do its own duty-free operations after the contract ended. The Court inter-alia held on 23 June on that basis no injunction ought to be granted.

The Commercial High Court in its order recognised that SriLankan Airlines doing its own duty-free operations is not a violation of any rights claimed by DFP.

Attorneys-at-Law Romesh de Silva PC and Harith De Mel instructed by Julius & Creasy appeared for the Plaintiff DFP Canada Ltd.

Anil Tittawella PC with Attorney-at-Law Milinda Jayatilaka instructed by Srimal Weerakkody appeared for SriLankan Airlines. SriLankan Airlines has commenced its own on-board duty free program from 28 June with a wide variety of luxurious items for sale on-board aircraft. 

“The airline invites its passengers to patronise this unparalleled service on-board and enjoy amazing discounts and deals offered exclusively,” it added.