Sri Lanka to appeal against UK court ruling over hedging deal

08:22, July 13, 2011      

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Sri Lanka is to lodge an appeal against a ruling by a British court which had said that the island's petroleum corporation owed nearly 162 million U.S. dollars plus interest to Standard Chartered Bank over a hedging deal.

Sri Lanka said Tuesday it has decided to appeal against the ruling on the hedging deal after a London court found that the state owned Ceylon Petroleum Corporation was in violation of payment of dues to the international bank.

According to Sri Lankan authorities the British judge sitting for the case has approved the decision to lodge an appeal against the ruling.

Sri Lanka has meanwhile objected to conditions mentioned by the Standard Chartered Bank for such an appeal to be filed.

Report said Monday that London High Court judge Justice Hamblen concluded Ceylon Petroleum Corporation must pay Standard Chartered Bank under the agreement reached between the two companies at the time the deal was signed.

Ceylon Petroleum Corporation which imported some 26 million barrels at a cost of two billion dollars in 2007, needed to hedge its purchases of crude oil and refined products on the international market. It was exposed to the record oil rally of 2008 when oil hit an all-time high above 147 dollars a barrel for U.S. crude in July before crashing to less than 40 dollars a barrel in December of that year.

However Standard Chartered Bank told court that Ceylon Petroleum Corporation had always been aware that a fall in oil prices would have made it liable to make payments to the bank.

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