Tuesday, 2 July 2013 00:00
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The price of LPG in 2003 was as fundamental to the cost-of-living then as it is today. The Government of that day, in an attempt to break the strangle-hold that Shell, the sole supplier nationwide of LPG, exercised over its consumers invited an international gas supplier Mundogas S.A. into the country with the goal of introducing competition into the market place.
For this purpose, Mundogas S.A. joined Master Divers, headed by prominent businessman Ariyaseela Wickremanayake, to form a joint venture company Mundogas Lanka (Pvt) Ltd. Mundogas chartered its storage barge “Formentera” to the new joint venture and despatched it to Galle to become the centre of the new operation under charter to Mundogas Lanka.
After a promising beginning, the local situation changed dramatically for the worst with the government changing and various legal actions being initiated by Shell against the fledgling operation thereby preventing sales of gas by its competitor. After a year of struggling, Mundogas Lanka became unable to meet its obligations and Mundogas S.A. took the difficult decision to place its Sri Lankan associate into liquidation.
Whilst it did not oppose the liquidation of the joint venture company, Master Divers also did not want the “Formentera” to depart from Sri Lanka and saw its opportunity in this regard in the form of the disastrous tsunami that hit the country on 26 December 2004. Galle had been devastated by the tsunami but the barge, safely moored inside the Port of Galle, remained undamaged. Master Divers presented a claim out of the blue stating that the tsunami had resulted in the barge breaking free from its moorings and that it was only saved from disaster by the courageous actions of its small tug fortuitously on the scene pulling the barge to safety and re-mooring it to its original pier. For this service, Master Divers claimed a salvage fee of $ 5 million (Rs. 500 million). The claim was supported by a personal affidavit from Ariyaseela Wickremanayake. Master Divers then applied for and succeeded in securing a court order arresting the barge to prevent it leaving the country.
To arrest a movable asset whilst a court considers the claims of opposing parties is not unusual. In most jurisdictions the court will take no more than two to three days to determine the merits or otherwise of the case because the cost of immobilising a valuable piece of equipment is very significant. However in this instance judgement was only given eight years after the arrest order. Such is the existing situation in the Sri Lanka courts that judgement was not given on the matter until 14 June, 2013. On that day, the High Court found that the personal affidavit given by Wickremanayake to be both false and fraudulent. It ordered that damages of Rs. 20 million be awarded the owners of the barge and as a final indictment of the actions of Master Divers, awarded the owners penal damages of five times its taxed costs of the action.
A spokesman for Mundogas S.A. said after the case that he was glad that a correct judgement had been finally given and justice done. He added however that the sad thing about the whole affair was that the people of Sri Lanka were never able to benefit from the opportunity of having a second gas supplier in the market and that Mundogas’ barge had so deteriorated as a result of the length of its enforced stay in Galle that most probably the only financially viable option was for it now to be sold for demolition.
Some way or another he added, a solution needed to be found to overhaul the legal system of dealing with cases similar to that of the “Formentera” so that the courts could take faster decisions thus denying opportunists from using the tardiness of the legal system for their own fraudulent purposes and preventing innocent parties such as himself from suffering financial hardship.
Mundogas S.A. was represented by Avindra Rodrigo with Shanka Guneasekera of FJ&G De Saram and Master Divers was represented by Suren de Silva of KP Law Associates.
