Confusion surrounds arbitration of Fertilizer

Sri Lankan government acts only for their own interests - Qingdao Seawin Biotech Group

by Zulfick Farzan 07-12-2021 | 4:44 AM

COLOMBO (News 1st); Sri Lanka's Agriculture Minister Mahindananda Aluthgamage on Monday (6) said that Qingdao Seawin Biotech Group Co., Ltd. had agreed to pursue the arbitration process in Sri Lanka.

However, Qingdao Seawin Biotech Group Co., Ltd., the supplier of rejected Chinese Fertilizer says the statements from the ministry are false.

China’s Quingdao Seawin Biotech Company has sought a compensation of 8 million US dollars over its organic fertilizer deal with Sri Lanka.

The compensation has been sought from Colombo Commercial Fertilizers Ltd. through an arbitration center in Singapore.

The Chinese company says that Sri Lanka violated the agreement with regard to the purchasing of the Chinese Organic Fertilizer.

The company argues that Sri Lanka has violated the contract for the organic fertilizer purchase while the compensation sought by the company covers several costs including production, freight, and demurrages.

The Chinese company is also seeking an order for Sri Lanka to pay all arbitration costs, including its legal fees and other expenses.

The 8 million dollars sought by the company also includes an interest.

When contacted, Agriculture Minister Mahindananda Aluthgamage said that the two sides had agreed in the presence of the Attorney General to increase the Chinese company's $ 5 million deposit in Sri Lanka to US $ 8 million and then pay the Chinese company the amount stated in the letter of credit.

Anna Song, the Deputy General Manager of the Chinese company said that the local authorities could not be trusted again and that the arbitration would take place only in Singapore.

Qingdao Seawin Biotech Group Co., Ltd. says Sri Lanka placed the first bid for organic fertilizer with no microorganisms.

However, they point out that Sri Lanka did not specify the methodology for measuring the quality or how to sterilize the fertilizer.

The Chinese company says it informed Sri Lanka on September 12 and 14 that it could not provide bacteria-free fertilizer and agreed that there could be no harmful microorganisms.

Citing messages exchanged between a local company representative and a ministry official, the Chinese company said the secretary to the president had instructed that letters of credit could be opened tomorrow or so if fertilizer could be sent according to those criteria.

The Deputy General Manager of Qingdao Seawin Biotech Group Co., Ltd. further points out that the Sri Lankan government acts only for their own interests and that they do not care about the people of Sri Lanka.

The Hippo Spirit vessel which is carrying tonnes of rejected Chinese Organic Fertilizer is sailing to Singapore.

Qingdao Seawin Biotech Group Co., Ltd, the supplier of fertilizer, EXCLUSIVELY told News 1st that the ship is sailing to Singapore for arbitration in Singapore.

In addition, the ship is sailing to Singapore for sampling and arbitration, said Qingdao Seawin Biotech Group Co., Ltd.

The Bulk Carrier – Hippo Spirit:

The Hippo Spirit is carrying tonnes of rejected Chinese Fertilizer from Qingdao Seawin Biotech Group Co., Ltd to Sri Lanka.

Earlier, it is reported that the Hippo Spirit, the ship carrying Chinese Organic Fertilizer, did not return to China after the first samples were rejected by Sri Lanka.

Instead, the Hippo Spirit had sailed to Singapore and altered its course back to Sri Lanka, without returning to China.

On the 22nd of September, the Hippo Spirit ship carrying 20,000 metric tonnes of organic fertilizer left for Colombo from China’s Qingdao Port.

But the ship was diverted to Singapore after harmful bacteria was detected in the samples of this fertilizer shipment.

The Hippo Spirit ship that didn’t return to China had left Singapore declaring it would be heading to the Colombo Port.

But on the 14th of October, the automatic identification system (AIS) used to track the ship had been deactivated at the Malakka Strait.

Vessel trackers showed the last position of the ship as the Malakka Strait before it went out of range.

Data available online showed the Hippo Spirit ship in Hambantota on the 24th of October 2021 under the name Seiyo Explorer.

The Hippo Spirit and the Seiyo Explorer both share the same IMO number, and therefore it can be confirmed the Hippo Spirit is the Seioy Explorer.

The IMO Ship Identification Number is a unique seven-digit number that remains unchanged through a vessel’s lifetime and is linked to its hull, regardless of any changes of names, flags, or owners.

Pathogen Detected:

On the 17th of September Sri Lanka’s Minister of Agriculture confirmed that a microorganism identified as ‘Erwinia’ was discovered in samples brought down ‘unofficially’ to Sri Lanka and tested.

The supplier was the same, Qingdao Seawin Biotech Group Co., Ltd.

On September 29th, Sri Lanka’s Agriculture Minister Mahindananda Aluthgamage announced the suspension of organic fertilizer imports from China.

This was after Director-General of Agriculture Dr. Ajantha De Silva on 28th September confirmed that Harmful Bacteria was detected in a fresh sample (2nd batch) of Chinese Organic Fertilizer.

The Ceylon Fertilizer Company Limited had got a court order to block payment to Qingdao Seawin Biotech over the shipment of organic fertilizer which was contaminated.

The Colombo Commerical High Court had issued the order on October 22nd, against the Qingdao Seawin Biotech, its local agent, and the People’s Bank.

Blacklisting People’s Bank :

The People’s Bank of Sri Lanka was then blacklisted by the Economic and Commercial Office of the Chinese Embassy in Sri Lanka for failing to make the payment according to the Letter of Credit and the contracts between the two parties.

However, People’s Bank said that is it bound by an enjoining order issued by the Commercial High Courts of Sri Lanka with regard to the trade transaction in question, which precludes the bank from processing the payment.

People’s Bank also said that the temporary delay in processing the said payment pertaining to the LC is solely due to the bank’s obligation to be bound by the legal directions of the country, as a responsible corporate citizen.

Letter of Demand:

On the 7th of November Qingdao Seawin Biotech Group Co., Ltd., the Chinese Organic Fertilizer Manufacturer sent a Letter of Demand to the National Plant Quarantine Service.

The Letter of Demand seen Exclusively by News 1st notes that Qingdao Seawin Biotech Group Co., Ltd., has suffered significant loss and damage in a sum of US$ 8 Million and continues to suffer further loss and damage due to loss of reputation and goodwill as well as existing and potential business, due to the negligent conduct of the National Plant Quarantine Service.

The LOD noted that the NPQS make a payment of US$ 8 Million within 3 days from the date hereof for the loss and damage caused to Qingdao Seawin Biotech Group Co., Ltd.