CHEC threatens legal action against RDA

• RDA says contractor bypassed dispute resolution steps in contract
• Claim relates to Kottawa-Dodangoda section opened in 2011
• CHEC previously issued letter of demand, setting March ’25 deadline
• Cabinet in 2024 had approved a payment days before Presidential Election

China Harbour Engineering Company (CHEC) has threatened to initiate court proceedings against the Road Development Authority (RDA) in order to recover the allegedly owed payment of Rs. 7.91 billion related to the Southern Expressway without adhering to the dispute resolution mechanism provided in the contract between the parties, the RDA reveals. 

Speaking to The Sunday Morning Business, RDA Chairman T. Paskaran revealed that the RDA and the CHEC had failed to reach a settlement regarding the Rs. 7.91 billion payment claimed by the latter in respect of the construction work done on the Kottawa-Dodangoda section of the expressway, which was opened in 2011.

“We feel that they should follow the contract to claim any money. They have done something other than what is provided in the contract and now they say that they are entitled to the money. We do not agree to that,” he stated.

He further revealed that the dispute resolution mechanism in the contract between the RDA and CHEC required parties to first refer any dispute to adjudication. If parties still disagree, they can then seek to achieve an amicable settlement, failing which they shall refer the dispute to arbitration.

Accordingly, Paskaran claimed that CHEC had failed to refer its payment dispute to adjudication as required by the contract and was instead now threatening to institute court proceedings against the RDA.

Earlier this year, it was widely reported that CHEC had sent a letter of demand to the RDA, claiming that Rs. 7.91 billion remained unpaid for the construction of the Kottawa-Dodangoda section of the expressway, and demanding that payment be made by 31 March.

In 2024, just weeks ahead of the Presidential Election, the Cabinet led by then President Ranil Wickremesinghe swiftly approved a payment to CHEC. 

Eleven days later, a settlement was finalised between the Chinese company and then Secretary of the Ministry of Highways Ranjith Rubasinghe, who was also serving as the Acting Chairperson of the RDA.

Source : themorning