SriLankan Airlines has won rights to carry out its own on-board duty free operations as the Commercial Court of Colombo last week refused interim injunctions sought by DFP Canada Ltd. against the national carrier.
The court also dissolved the enjoining orders previously issued. DFP Canada Ltd (DFP) filed action claiming that they were the actual company behind the Phoenix Duty Free Services (Phoenix) and that DFP had a right of first refusal and right to match an offer under the Supply and Concessionaire Agreement granted to Phoenix in 2012. The report of the Board of Inquiry headed by J.C.Weliamuna, PC heavily criticised the awarding of duty free supply and concessionaire contract to Phoenix violating the tender procedures of SriLankan and this transaction is currently being investigated by the law enforcement authorities.
SriLankan Airlines did not extend the contract with Phoenix upon expiry at the end of its five years’ term as the airline wanted to explore the best available options to improve the commercial returns to the company through its on-board duty free sales programme.
This decision of the company was also consistent with the findings of the Weliamuna report, which was highly critical on the process of awarding this on-board duty free sales contract to Phoenix.
SriLankan decided to operate its own on-board duty free programme as they did prior to 2012 as no duty free service provider submitted any bid for the tender carried out by the airline to appoint a duty free services supplier.
The plaintiff alleged that SriLankan had breached the said agreement when it decided to operate its own on-board duty free programme. DFP had obtained ex parte enjoining orders from the court compelling SriLankan Airlines to continue obtaining such services from Phoenix until the dispute as to the said rights is resolved through arbitration.
SriLankan Airlines denied DFP had such rights. One reason given by SriLankan Airlines was that it had an inherent right to do its own duty free operations after the contract ended. The court inter-alia held that on that basis no injunction ought to be granted. The Commercial High Court in its order, recognised that SriLankan Airlines doing its own duty-free operations is not in violation of any rights claimed by DFP.
Romesh de Silva PC with Harith De Mel, Attorney-at-Law instructed by Julius & Creasy appeared for the Plaintiff DFP Canada Ltd. Anil Tittawella PC with Milinda Jayatilaka Attorney-at-Law instructed by Srimal Weerakkody Attorney-at-Law appeared for SriLankan Airlines.
SriLankan Airlines has commenced its own on-board duty free programme from June 28, with a wide variety of luxurious items for sale on board the aircraft.