Three-tier ADR in the works to boost investor confidence: BOI

• Says the progressive approach will allow disputes to be addressed in stages, prioritising amicable settlement even before resorting to arbitration
• Asserts the effort reflects Sri Lanka’s determination to provide investors with confidence, neutrality, and enforceability
• Acknowledges the reforms are critical as Sri Lanka seeks to sustain renewed investor confidence following US$ 1 billion in FDI inflows over the past year
• Stresses the importance of regional collaboration

By Shabiya Ali Ahlam

Sri Lanka is overhauling its investor agreements with a three-tier dispute resolution mechanism, negotiation, mediation, and arbitration, as part of efforts to strengthen foreign investor confidence, the Board of Investment (BOI) announced yesterday.

Arjuna Herath

This progressive approach will allow disputes to be addressed in stages, prioritising amicable settlement even before resorting to arbitration, according to BOI Chairman Arjuna Herath.

“It reflects Sri Lanka’s determination to provide investors with confidence, neutrality, and enforceability, while maintaining a balanced, rules-based system that also protects the state’s interests,” Herath said, delivering the key note address at the regional ADR workshop in Colombo yesterday. The two-day event saw the participation of regional ADR centres from Bangladesh, Hong Kongsm Malaysia, Mumbai, the Maldives, Nepal, Pakistan, Singapore, and Thailand.

Herath noted that every BOI agreement already carries arbitration clauses, enforced “transparently and reliably” by the agency’s legal department, and the new mechanism aims to make dispute resolution even more flexible and investor-friendly.

He acknowledged the reforms are critical as Sri Lanka seeks to sustain renewed investor confidence following US$ 1 billion in FDI inflows over the past year. 

“Having achieved macroeconomic and political stability in the very recent past, we have begun to witness renewed investor confidence. Over the last 12 months, Sri Lanka attracted US$ 1 billion in Foreign Direct Investment, a remarkable achievement for a country of just 22 million people and a GDP of around US$ 90 billion,” he told the fully packed audience.

The BOI chief said the surge in investment was driven by “clean government, zero tolerance for corruption, and investment approval decisions based purely on commercial merit rather than political or geopolitical considerations,” creating “a climate of rapidly progressing, genuine investment interest.”

Sri Lanka’s accession to the Singapore Convention on Mediation and corresponding domestic legislation further aligns its dispute resolution framework with international standards. 

“These developments send a clear message: Sri Lanka is committed to providing businesses and investors with a modern, transparent, and internationally credible environment for resolving disputes,” Herath said.

Sri Lanka is aiming to become a regional hub for alternative dispute resolution, leveraging its English-speaking talent pool, strong connectivity, digital adoption, and cost advantages. According to the BOI head, timely, efficient, and credible dispute resolution is no longer an optional feature of Sri Lanka’s legal systems as it is a critical enabler of growth and a cornerstone of investor confidence.

Herath also stressed the importance of regional collaboration while stating that the strength of the regions lies in cooperation, learning from one another’s experiences, and building systems that are nationally effective but regionally coherent. Such efforts would allow South Asia and ASEAN to emerge as “a truly international, independent ADR hub, capable of resolving investor disputes in the host country itself with confidence, reliability, and speed.”

“Ultimately, this effort is about more than improving access to justice, important as that is. It is about creating the conditions for economic growth, for innovation, and for sustainable development across our region. A robust dispute resolution regime is part of our economic infrastructure, as essential as ports, highways, or energy systems,” he noted.

SL, S’pore ADR bodies forge arbitration link

SIAC  CEO  Gloria Lim  (left) and  IADRC Director & Secretary General  Dhara Wijayatilake  inking the MoU Pic by Pradeep Pathirana

The CCC - ICLP International ADR Center Sri Lanka (IADRC) entered into a Memorandum of Understanding (MOU) with the Singapore International Arbitration Centre (SIAC) yesterday to promote international arbitration as an effective method of dispute resolution for resolving international disputes and to strengthen ties, promoting efficient dispute resolution through ADR mechanisms.

The IADRC and SIAC have similar objectives in the field of ADR. The IADRC is a leading ADR service provider in Sri Lanka, providing arbitration and mediation services. SIAC is renowned for the services it provides to the international business community as a neutral, efficient, and reliable institution for dispute resolution in Asia.

Under the MOU, IADRC and SIAC will jointly organise in-person, hybrid, or virtual conferences, seminars, and workshops on international arbitration in Singapore and Sri Lanka, and will invite key members of their local arbitration community to attend and participate in major events organised by IADRC in Singapore or by SIAC in Sri Lanka.

The MOU also contemplates that IADRC will, subject to the terms of the MOU, extend the use of IADRC´s hearing facilities at preferential rates for SIAC arbitration hearings that are held in Sri Lanka, and SIAC will, subject to the terms of the MOU, assist to request the use of hearing facilities in Maxwell Chambers at preferential rates for IADRC arbitration hearings that are held in Singapore.

Gloria Lim, CEO of SIAC, signed on behalf of SIAC and Dhara Wijayatilake, Director & Secretary General of IADRC signed on behalf of IADRC.