U.S. judge denies GOSL motion to dismiss $257 million bond default case filed by Hamilton Reserve Bank

Colombo (News 1st) - A court in the United States has denied a motion by the Government of Sri Lanka to dismiss a lawsuit brought by Hamilton Reserve Bank following the default by the GOSL on a sum of more than $257 million of bonds and interest that Hamilton had invested in.

The case will therefore proceed, to decide on whether the GOSL must immediately pay the outstanding amount.
Denise Cote, Judge of the District Court of the Southern District of New York, on March 24 dismissed the motion filed by the law firm representing the GOSL, Clifford Chance US LLP. 

Based in the Caribbean nation of St. Kitts-Nevis, Hamilton Reserve Bank, which is being represented by the law firms of Bleichmar, Fonti & Auld LLP; and Jenner & Block LLP, brought the action for breach of contract, to recover the principal sum of $250,190,000 plus interest of 7,349,331.25 of the bonds. 

The 10-year bonds matured on July 25, 2022. The registered holder of the bonds are New York-based Cede & Co., while Hamilton Reserve Bank is the beneficial holder. Cede & Co. has authorized Hamilton Reserve Bank to take action on behalf of Cede & Co. to recover the amounts. The GOSL’s argument was that Hamilton Reserve Bank had no authority as the registered holder of the bonds is Cede & Co. 

In dismissing the motion, the court recognized the validity of Cede & Co’s authorization to Hamilton Reserve Bank.