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Extracts from the address to the new entrants to the legal profession on "The Commercial High Court" established under the Act. No. 10 of 1996 by K. T. Chitrasiri, High Court Judge

The court commonly known as the Commercial High Court was established under the High Court of the Provinces (Special Provisions) Act. No. 10 of 1996. This Act provides this court to exercise jurisdiction to hear and determine certain civil actions.

Article 154(P) of the Constitution of the Democratic Socialist Republic of Sri Lanka provides for the establishment of the High Courts in the island. This article was introduced by the 13th Amendment to the Constitution by which the High Courts were established for the respective provinces.

The Parliament enacted the High Court of the Provinces (Special Provisions) Act, No. 10 of 1996 enabling the High Courts to exercise jurisdiction over some civil matters in specifically identified areas. These areas cover disputes in respect of high value commercial transactions and of the matters falling into the categories such as litigation under the Intellectual Property Law and a few matters under the Companies Act.

The establishment of this court was necessitated with the increasing number of business transactions both in the national and international arena. Unless there is a sound and speedy system to resolve disputes in the commercial world, the proper functioning of the system will not be possible.

Consequently the business community will show a reluctance to invest and thereby the development of the country will invariably be affected.

At a time when there were less business transactions and the people concentrated mostly on agriculture, all civil disputes were resolved in a court similar to the level of a district court. Therefore even, the matters that are now being heard in the Commercial High Court were heard in the respective District Courts.

I will now deal with the matters that are coming under the purview of this Commercial High Court in detail. Section 2 (1) of the High Court of the Provinces Act, No. 10 of 1996 stipulates that: '2 (1) Every High Court established by Article 154(P) of the Constitution for a Province shall, with effect from such date as the Minister may, by Order published in the gazette appoint, in respect of such High Court have exclusive jurisdiction and shall have cognisance of and full power to hear and determine, in the manner provided for by written law, all actions, applications and proceedings specified in the First Schedule to this Act, if the party or parties defendant to such action resides or reside, or the cause of action has arisen, or the contract sought to be enforced was made, or in the case of applications or proceeding under the Companies Act. No. 17 of 1982 the registered office of the Company is situated, within the Province for which such High Court is established.'

The matters mentioned in the first schedule are itemised into 3 categories. Item one refers to the actions where the cause of action has arisen out of commercial transactions and it states thus:

'(1) All actions where the cause of action has arisen out of commercial transactions (including causes of action relating to banking, the export or import of merchandise, services affreightment, insurance, mercantile agency, mercantile usage, and the construction of any mercantile document) is which the debt, damage or demand is for a sum exceeding one million rupees or such other amount as may be fixed by the Minister from time to time, by notification published in the gazette, other than actions instituted under the Debt Recovery (Special Provisions) Act. No. 2 of 1990.'

Therefore the actions that are filed under this provision should be on disputes arisen on commercial transactions of which the value exceeds Rs. one million. However before the commencement of the functioning of this court, the Minister by gazette notification increased the value Rs. 3 million.

The attorneys who file actions must bear this in mind thoroughly. When filing actions special attention must be paid to this matter. There will not be a problem in determining the value of the action. The value of the action is decided on the basis of the claim of the plaintiff.

Then the question arises as to the jurisdiction when the value in a counter claim of the defendant exceeds Rs. 3 million. If the claim of the plaintiff does not exceed Rs. three million the case should be filed and heard in the District Court.

The cases filed on this basis will remain in the district court although the counter claim of the defendant may exceed Rs. three million.

Therefore no applications will be allowed to transfer cases to the Commercial High Court merely because the value of the counter claim is more than Rs. three million. This is clearly stated in Section 8 of the High Court of the Provinces Act. Therefore when the cases are filed, the value of the action is decided solely on the claim of the plaintiff.

The other requirement when a case is filed in the Commercial High Court is that the dispute between the parties must fall into the category of a "Commercial Transaction". There is no definition given in the Act to the words, "commercial transactions. This issue was argued in the case of Cornel and Company Limited Vs. Mitsui and Company Limited and ten others, {SC Appeal No. 36/98 - H.C. Civil No. 1/98(2)}.

In the Supreme Court judgement, Justice Mark Fernando, comparing the Sinhala and the English texts of the High Court of the Provinces Act, has given a wider meaning to the words "Commercial transactions". In this case the Learned Judge of the High Court has held that the Commercial High Court has no jurisdiction to hear and determine this action because the dispute in this case does not fall into the category of a Commercial Transaction. The Supreme Court overruling this decision made order that the matter in dispute does fall within the meaning of a Commercial Transaction mentioned in the High Court of the Provinces Act.

However, the question of interpretation of the words "commercial transaction" will arise only when there is a doubt as to the nature of the transaction. Therefore, the matters such as land disputes can be ruled out at the outset and such applications cannot be entertained in this court even though the values of such actions exceed Rs. 3 million.

The matters coming under the Debt Recovery (Special Provisions) act No. 2 of 1990 are also specifically excluded from the jurisdiction of this court although these matters are ex-facie fall into the category of a commercial transaction. This is clearly mentioned in the first schedule to the High Court of the Provinces Act.

Therefore it is necessary to identify specifically the areas where this court has no jurisdiction. The first schedule to the Act gives a list of instances falling within the ambit of a commercial transaction.

The matters mentioned in this Schedule are the actions relating to banking, the export or import of merchandise, services affreightment, insurance mercantile agency, mercantile usage and the constructions of any mercantile document. Therefore these instances can be made use of as a guideline in deciding what the commercial transactions are. You will now realize that the value of the action and the proper understanding of the words "commercial transactions" are the two main important criteria in filing actions in the commercial High Court.

However it is suggested that it is much more appropriate if all the matters that come under the Companies Act are allowed to be made in the Commercial High Court. There have been some complications in instituting actions on this matter.

There were instances where two applications have been made by the same party both in the Commercial High Court and in the District Court for similar reliefs. Therefore it has become necessary to have these complications resolved without delay.

The other actions filed in the Commercial High Court are the actions under the Intellectual Property Act No. 36 of 2003. Item: 3 of the first schedule to the High Court of the Provinces (Special Provisions) Act No. 10 of 1996 were repealed by Section 205 of the Intellectual Property Act Section 205 stipulates that all proceedings required to be taken under the Intellectual Property Act shall be taken in the Commercial High Court.

May I now refer to some of the statistics pertaining to this court. In the year 1996, 274 cases and 1997, 263 cases were filed in this court.

These included the cases that were transferred from the District Courts of the Western Province which were pending at the time of the commencement of the Commercial High Court. Thereafter 197 cases were instituted in the years 1998 and 187 cases in the year 1999, 290 cases in the year 2000, 353 cases in 2001, 379 cases in 2002 and 388 cases in the year 2003.

Therefore you will see that there has been a considerable increase in the cases that were instituted in this court.

On a physical verification made on the 20th April 2004 there had been 720 pending cases in the two Commercial courts functioning in Colombo. Of those 720 most of the cases filed in the previous years have been disposed of by now. Although there were 308 cases filed in the year 2003, there were only 243 cases pending out of these 388 cases by the 20th April 2004.

Therefore it is interesting to note that around 40 per cent of the cases that were filed in the year 2003 have been disposed of by 20th April 2004. Only 7 cases that were instituted in the year 1996 and only 11 cases instituted in the year 1997 and only 13 cases instituted in the year 1998 are pending by that date i.e. 20.04.2004.

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