Beijing, Dec 8 (PTI) A Chinese firm has launched an international arbitration against Sri Lanka for rejecting a large consignment of its fertiliser after failing to reach a “constructive agreement” to resolve the issue, official media here reported on Wednesday, in a rare legal action against Beijing’s close ally.
A ship loaded with 20,000 tonnes of fertiliser from Shandong-based producer Seawin Biotech meant for export to Sri Lanka is on its way back after failing to reach any constructive agreement with Sri Lanka, despite relentless efforts to solve the dispute, state-run Global Times reported.
The ship is to arrive in Singapore, where the company has launched an international arbitration procedure to settle a growing dispute over a fertiliser export contract to Sri Lanka, the report said.
“A notice of arbitration has been issued to Sri Lanka about the international arbitration in Singapore, and the arbitration procedure has been initiated,” a company official told the daily.
The dispute centered on Sri Lanka’s rejection of the Chinese fertilisers, citing “what Chinese sources call shady claims of quality issues”, it said.
Another arbitration procedure will soon take place in Colombo, Sri Lanka, which together with the contract to be arbitrated in Singapore, is worth USD 49.7 million, the report said.
The row over the fertiliser turned into a major diplomatic spat between the two close allies.
Considering Sri Lanka’s geostrategic location, China has made billions of dollars of investments in the island nation. China’s acquisition of Hambantota port for a 99-year lease has raised alarm bells around the world over its debt diplomacy under its multibillion-dollar Belt and Road Initiative (BRI), especially in small countries over and above their capacity to repay.
Sri Lankan scientists questioned the quality of Chinese fertiliser consignment, saying that instead of helping, it could prove harmful to the crops.
“Our tests on the samples showed that the (Chinese) fertiliser was not sterile,” Dr Ajantha De Silva, director-general, Sri Lankan Department of Agriculture, told the BBC last month. “We have identified bacteria which are harmful to plants like carrots and potatoes.” They insist that since the cargo has implications for the bio-security of the country, it cannot be accepted.
The Chinese firm has accused Sri Lankan officials of backtracking on the deals and lacked any sincerity in solving the issues, even after it sought third-party certificates to prove the quality of its products, which prompted it to opt for arbitration in Singapore, the Global Times report said.
In a statement to the daily, the company claimed that the bidding involving the dispute over imported fertilizer from China was dubious and shady, and it involved breaking business rules and hiding the truth from the public.
“The Sri Lankan Ministry of Agriculture has backtracked and has no sincerity in solving the problem, therefore, enterprises can only use judicial and arbitration channels,” the report quoted an official of the Sri Lankan Embassy in Colombo as saying.
Seawin Biotech stipulated several conditions, such as having the Sri Lankan side pay 70 per cent of the claim besides a statement from the Sri Lankan agriculture ministry stating that the shipment was rejected because of an import permit dispute and not because of the quality of the fertiliser. But none of the conditions have been met by the Sri Lankan side so far, the report said.
“Because no discussed conditions have been met, we decided to take our ship back from Sri Lanka and head to Singapore for a lawsuit,” the person with the Shandong company told the daily.
Industry insiders fear that the recent trade dispute with the Chinese company is setting a very bad example for Sri Lanka’s future trade with China, not just in terms of fertilisers but beyond, the report said. PTI KJV ZH AKJ ZH ZH
