Commercial High Court orders AASSL to pay Rs 176 mn for unilateral termination of contract

By A.J.A. Abeynayake

The Colombo Commercial High Court has ordered Airport & Aviation Services (Sri Lanka) Ltd. (AASSL) to pay Rs 176 million, along with legal interest, to a private company for breaching a contract.

The court ruled that AASSL’s unilateral termination of an agreement to upgrade airport software systems—awarded to the private company—was unlawful. Additionally, the state-owned entity was directed to settle a Rs 24 million bank guarantee, including applicable interest. The ruling was delivered by Commercial High Court Judge K. Priyantha Fernando.

The plaintiff, E.W. Information Ltd., had secured the 2012 tender to modernise the airport’s operational systems in partnership with several foreign technology firms. The company successfully completed three project phases, including software installation and hardware integration, before handing over the system to AASSL.

However, despite a Cabinet directive granting an extension of 3.5 months for project completion, AASSL halted the extension, allegedly due to political influence. The plaintiff argued that such unjustified state interference undermined private enterprises and urged the judiciary to prevent similar unfair practices.

The court acknowledged that the project delays had been caused by AASSL’s own actions and that the contract timeline had been mutually extended. Furthermore, the defendant admitted that the plaintiff had successfully completed the initial three phases.

Judge Fernando ruled that the plaintiff had acted in compliance with civil contract regulations and that the damage claimed were reasonable, thereby upholding the compensation order.