Historical Perspective Sri Lanka being a multiracial and multilingual country the legal systems reflect the customs

of the various communities which go to form Sri Lankan Society. As in other ancient legal systems the conventions, customs, sanctions and the main concepts of law though not concretely formulated, have over the passage of years been established, especially with judicial pronouncements made from time to time. 1.2. Personal and Territorial Legal Systems of Sri Lanka The personal laws that govern the various sections of our community are, Kandyan Law, Thesawalamai and Muslim Law. Kandyan Law applies as a personal law to Kandyan Sinhalese. Likewise Muslim Law applies to Muslims as their personal law. Thesawalamai is, essentially, a customary law which is both territorial and personal in character. The former characteristic of this law manifests itself by the fact that it is applicable to all lands situated in the Northern Province (whether such land is owned by a Sinhalese, Tamil, Muslim or Burgher). The latter characteristic, on the other hand, results in Thesawalamai being applicable, as a personal law, to Tamils who have an inhabitancy in the Northern Province. Various tests are applied to determine whether these personal laws affect those claiming to be governed by them. Persons subject to any of these three personal laws are governed in other respects by the Roman Dutch Law, which is the Common Law of the country. However the impact on the Common Law System derived from the English Law has had a much greater influence on the Laws of Sri Lanka than the Roman tradition. Yet, the Roman Dutch Law remains the residuary or the common law of Sri Lanka. Needless to say the Common Law has been modified in many directions, both expressly and by necessary implication by our statute law and also by judicial decisions. Criminal Law and Procedure in Sri Lanka is governed by the Penal Code and the Criminal Procedure Code. Civil cases are governed by the Civil Procedure Code, which shows the influence of Indian, English and American rules of procedure. The Constitutional and Administrative Law of Sri Lanka has been derived predominantly from the Anglo-American System while the Commercial Law of Sri Lanka is almost wholly based on the principles of English Commercial Law. The influence of the Roman-Dutch Law is to be found in the areas of the law relating to succession, persons, property and obligations. It is specially noteworthy that the Law of Delict (that is the law governing civil wrong-doing) is predominantly based on the Roman-Dutch Law. 1.3 Structure of the Courts The hierarchy of Courts of first instance in Sri Lanka is set out in Section 2 of the Judicature Act No. 2 of 1978. Primary Courts, Magistrate's Courts, District Courts and High Courts are Courts of first instance. High Courts exercise appellate and review jurisdiction in some matters. The Court of Appeal and the Supreme Court are the Appellate Courts. 1.4. Primary Courts and Magistrate's Courts The Primary Court is the lowest Court of first instance. It has limited powers to impose a sentence of imprisonment and of fines. This Court has limited jurisdiction both in relation to civil and criminal disputes. One of the most important subjects, which is very frequently invoked in a Primary Court is

Section 66 of the Primary Courts Procedure Act which deals with inquiries into disputes affecting land, where a breach of the peace is threatened or is likely. The monetary jurisdiction of a Primary Court does not exceed one thousand five hundred rupees. The Magistrate of the area acts also as a Primary Court Judge. Magistrate's Courts exercise original jurisdiction in criminal cases subject to limitations on their powers to impose punishments. They also conduct non-summary proceedings before indictment to the High Court. There is a right of appeal and revision from a Magistrate's Court to the High Court in the first instance and thereafter to the Court of Appeal or the Supreme Court in the second instance. In some cases where appeal is made to the Court of Appeal an appeal lies from the order of the Court of Appeal to the Supreme Court if leave is obtained. A Magistrate's Court can impose a sentence of imprisonment for a period not exceeding eighteen months and impose a fine not exceeding one thousand five hundred rupees; Several offences under various statutes are also triable by the Magistrate's Courts.

[Although the law has been amended creating Small Claims Courts to replace the Primary Courts and to exercise jurisdiction in small claims and offences, those provisions of the law have not been brought into operation.] 1.5. DISTRICT COURTS A District Court has unlimited civil jurisdiction in all civil, revenue, trust, insolvency and testamentary matters. The jurisdiction of the District Courts in relation to family matters was removed and Family Courts were established to deal with such matters. With the enactment of the Judicature (Amendment) Act No.71 of 1981, the District Courts are deemed to be the Family Courts. The jurisdiction in respect of causes of action arising out of commercial transactions and a few matters under the specified provisions of the Code of Intellectual Property Act and the Companies Act is now vested in the Commercial High Court (please see paragraph 1.7 below). There is a right of appeal and revision from orders and judgments of District Courts to the Court of Appeal and an appeal thereafter, with leave obtained, to the Supreme Court. 1.6. HIGH COURTS The High Court of Sri Lanka established under the Constitution has power and authority to hear, try and determine all prosecutions on indictment. It has criminal and admiralty jurisdiction and also jurisdiction in regard to offences committed aboard aircraft and within the territorial air space. A High Court trial can be either by the High Court Judge alone or with a jury. It also can hold a Trial-At-Bar where three Judges nominated by the Chief Justice sit in judgment. A party aggrieved by a decision of the High Court can appeal to the Court of Appeal and the Appeal is heard by a Bench of not less than two judges. The High Court is empowered to pass death sentence, life imprisonment and impose fines and give other redress as laid down. In addition to the High Court of Sri Lanka originally established under the Constitution the 13th Amendment to the Constitution also established a High Court for each province designated as the High Court of the relevant Province and such High Court is now vested with (a) Original criminal jurisdiction in respect of offences committed within the Province; (b) appellate and revisionary jurisdiction in respect of convictions, sentence and orders made or imposed by Magistrate's

or Primary Courts within the Province; (c) such other jurisdiction and power as the Parliament may provide by law; (d) power to issue Orders in the nature of Habeas Corpus in respect of persons illegally detained within the Province; (e) power to issue Orders in the nature of Writs of Certiorari, Prohibition, Procedendo, Mandamus and Quo Warranto in respect of any matter set out in the Provincial Council List; and (f) power to inspect and report on the administration of any Court of first instance within the Province as may be delegated by the Judicial Service Commission. (Please also see paragraph 1.7. and 1.12. below). 1.7. COMMERCIAL HIGH COURT The High Court for the Western Province is vested with exclusive jurisdiction in respect of some specified commercial matters in terms of the High Court of the Provinces (Special Provisions) Act, No. 10 of 1996 and it was ceremonially opened by the Minister of Justice and Constitutional Affairs on 11th October 1996.The Western Provincial Commercial High Court is vested with Provincial jurisdiction in respect of the following matters with effect from 11th October 1996:

* All actions where the cause of action has arisen out of commercial transactions including causes of action relating to Banking, Export or Import of merchandise, services affreightment, insurance, mercantile agency, mercantile usage, and the construction of any mercantile document in which the debt, damage or demand is for a sum exceeding Rs.3 Million; * All applications and proceedings under sections 31, 51, 131, 210 and 211 of the Companies Act No. 17 of 1982 i.e. actions to relieve a Company of the consequences of non compliance with the conditions constituting it a private company - s.31, actions to make irregular allotments void and actions to recover loss, damage or costs incurred as a result of such irregular allotments - s. 51; actions for a Court to order a meeting of a Company to be held as specified where compliance with the Articles of the Company or the provisions of the Companies Act is impracticable - s.131; applications complaining against oppression in the conduct of the affairs of a company - s.210; applications complaining of mismanagement - s. 211. * All proceedings under the Code of Intellectual Property Act No.52 of 1979 other than proceedings required to be taken in terms of this Act in the District Court of Colombo.

This Court however will not have jurisdiction in respect of actions instituted under the Debt Recovery (Special Provisions) Act No.2 of 1990.

The new court will have jurisdiction In respect of the aforementioned matters where the defendant/defendants resides/reside or the cause of action has arisen or the contract sought to be enforced was made or the registered office of the Company is situated within the Western Province.

[The High Court of the Provinces (Special Provisions) Act No. 10 of 1996 also includes provision for the Minister to make an Order vesting in the Western Provincial High Court all island jurisdiction in respect of actions seeking an injunction against the Registrar of Companies or the Securities Exchange Commission all proceedings required to be taken in the District Court of Colombo under the Code of Intellectual Property Act No. 52 of 1979 and all appeals required to be made under Section 17 of the Fair Trading Commission Act No. 1 of 1987. The making of an Order for this purpose by the Minister in the Gazette appears to have been deferred as the Ministry wishes to assess the working of the new Court and then decide on that aspect.] The appeals against the orders and judgments of this Court can be made directly to the Supreme Court.

1.8 COURT OF APPEAL

The Court of Appeal established by Chapter XV of the Constitution is constituted of not less than six and not more than eleven judges. It has appellate jurisdiction for the correction of all errors of fact or law which shall be committed by any Court of first instance and also revisionary powers and powers relating to restitutio in integrum. It also has the power to issue Writs of Certiorari, Mandamus, Prohibition, Procedendo Quo Warranto, and Habeas Corpus and also to issue injunctions and examination of records of courts of first instance. It also tries parliamentary election petitions. There is a right of appeal from this Court to the Supreme Court (subject to the provisions in Article 128 of the Constitution) with leave had and obtained.

1.9. SUPREME COURT

The Supreme Court is the highest and final appellate court of the Republic of Sri Lanka consisting of the Chief Justice and not less than six and not more than ten other judges. It has jurisdiction in respect of Bills and interpretation of the Constitution; final appellate matters; fundamental rights; sole jurisdiction in relation to Presidential Election Petitions, validity of referendums and breach of privileges of Parliament; and consultative jurisdiction on matters referred to it by His Excellency the President. Both the Supreme Court and the Court of Appeal have the power to punish for contempt of such Court and the power to punish for contempt of any other court, tribunal or institution.

1.10. ADMINISTRATIVE TRIBUNALS

Apart from this hierarchy of the Courts as set out above there are a number of Administrative Tribunals such as the Rent Board of Review, Rent Boards, Ceiling on Housing Property Board of Review, Land Acquisition Board of Review, Quazis and Boards of Quazis, Agricultural Tribunals, Court Martials, Labour Tribunals, which perform functions of a quasi-judicial nature. Their decisions are capable of revision by the Appellate Courts by way of Writs or appeals as provided by the various enactment's by which each of these Tribunals have been established.

1.11. MEDIATION BOARDS

By the Mediation Boards Act No. 72 of 1988, Parliament has established Mediation Boards in various areas in Sri Lanka. A Commission appointed under this Act appoints a panel of mediators who have been vested with power to mediate on certain criminal and certain civil matters, where the State, a public officer or the Attorney General is not involved as a party. The Mediation Boards have the power to issue certificates, non settlement without which no Court of first instance could entertain any action in relation to movable or immovable property, debt, damage or demand which does not exceed Rs.25,000/- in value, matters not specified in the third schedule to the said Act or offences failing within those specified in the second schedule to the Act. The main function of Mediation Boards is to act like a mediator to settle disputes amicably.

1.12. ARBITRATION ACT

The Parliament enacted the Arbitration Act No. 11 of 1995 which came into operation on 1st August 1995 as a measure providing for a comprehensive infrastructure for resolving commercial disputes, domestic as well as international, through arbitration. This Law was enacted honouring Sri Lanka's obligation to give effect to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. An application for recognition or enforcement of an arbitral award - local or foreign - can be made to the appropriate High Court within one year after the expiry of 14 days of the making of the award.

In view of this Act if a party to an arbitration agreement institutes legal proceedings in a Court against another party to such agreement in respect of a matter agreed to be submitted to arbitration in such an agreement; the Court will have no jurisdiction to hear and determine such matter if the other party objects to the Court exercising jurisdiction in respect of such matter.

There are two Arbitration Centres in Sri Lanka. One is known as the Sri Lanka National Arbitration Centre and the other the Institute of Commercial Law and Practice, Centre (ICLP). The second Institute has its own rules governing arbitrations but in both the Centres parties could conduct arbitration proceedings under other rules agreed upon by parties,

The Courts give full recognition to arbitration clauses by not permitting its jurisdiction to be invoked unless parties consent or parties only confine it to obtaining interim orders pending the arbitration proceedings.

The Arbitration rules mostly accepted in international transactions are the ICC rules and the UNCITRAL rules of arbitration. However the local enterprises prefer ad hoc methods of arbitrations in local contractual matters.

1.13. ENFORCEMENT OF FOREIGN JUDGMENTS

Judgments entered by Courts in some foreign countries can be enforced under the Reciprocal of Enforcement of Judgments Ordinance.

Those covered by the Reciprocal Enforcement of Judgments Ordinance are United Kingdom of Great Britain, Northern Ireland, Hongkong, Mauritius, New South Wales, Straits Settlements; Tanganyika, Uganda, Victoria, Federation of Malaya, Australian Capital Territory, Northern Territory of Australia, New Zealand (including the Cook and Nicue Islands) and the Trust Territory of Western Samoa, Queensland, Western Australia, South Australia and Tasmania.

1.14. LEGAL RATE OF INTEREST

Section 192 of the Civil Procedure Code (as amended by the Act No. 6 of 1990) provisos that -

"When an action instituted for recover of a sum of money due to the plaintiff, in that action the Court may in the decree order interest according to the rate agreed on between the parties by the instrument

sued on, or in the absence of any such agreement at the legal rate, to be paid, on the principal sum adjudged from the date of action to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the action, with further interest at such rate on the aggregate sum so adjudged from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit."

For the purposes of this section 192 "the legal rate" is defined to mean the rate per centrum per annum determined by the Monetary Board established by the Monetary Law Act, by Notification published in the Gazette, having regard to current rates of bank interest.

Where such decree is silent with regard to the payment of further interest on such aggregate sum as aforesaid from the date of the decree to date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate action therefor shall not lie

We give below a summary of the changed in the legal rate of interest :-

No. Legal Rate of Interest Effective date Relevant Act / Gazette 1. 5% p.a. 1944 onwards Civil Procedure Code 2. 12% p.a. 11. 12.1980 - 05.03.1990 Civil Procedure Code (Amendment) Act No. 53 of 1980 3.

18% p.a. 06.03.1990 - 31.12.1996 Civil Procedure Code (Amendment) Act No. 6 of 1990 and Gazette Extraordinary No. 613 dated 4.6.1990 4. 12.7% p.a. 01.01.1997 - 31.12.1997 Gazette Extraordinary No. 954111 dated 20.12.1996 5. 11.5% p.a. 01.01.1998 - 31.12.1999 Gazette Extraordinary No. 100518 dated 10.12.1997 6. 9.1% p.a. 01.01.2000 - 31.12.2000 Gazette Extraordinary No. 111211 dated 28.12.1999 7. 9.21% p.a. 01.01.2001 - 31. 12.2001 Gazette Extraordinary No. 116416 dated 29.12.2000 8. 11.11%

01.01.2002 - 31.12.2002 Gazette Extraordinary No. 121615 dated 26.12.2001 9. 9.58% 01.01.2003 - onwards Gazette Extraordinary No. 126818 dated 26.12.2002

Please note that the legal rate of interest was 5% upto 11th December 1980 as provided for in the said Section 192 which was amended by the Amendment Act No. 53 of 1980 which increased the rate to 12%. On the 6th March 1990 the Section 192 was amended enabling the Monetary Board to determine from time to time having regard to current rates of bank interest.