UK and France intervene for Sri Lanka favourably in Hamilton Bank case
By: Staff Writer
Colombo (LNW): Hamilton Reserve Bank’s actions delay Sri Lanka’s debt restructuring program while other creditors face financial adjustments, possibly paving the way for significant profits.
The timing of their court case filing immediately following Sri Lanka’s declaration of bankruptcy raises concerns about hidden agendas.
The U.S. Attorney General’s office’s intervention underscores international unease, with Britain and France also supporting Sri Lanka in the New York Court.
However, Sri Lanka’s refusal to accept any conclusions or recommendations regarding economic crimes remains a significant challenge. The lack of prosecutions further exacerbates this issue.
The United Kingdom and France joined the United States of America to intervene in a New York court case filed by the mysterious St Kitts Bank (Hamilton Reserve Bank) against Sri Lanka over its ISB (International Sovereign Bond) default.
The London Financial Times reported that the two countries filed a joint “amicus curiae” petition to the New York Southern District judge hearing the case, arguing in favour of Sri Lanka’s request for a six month freeze on any litigation.
According to the intervening petitions, both the UK and France support Sri Lanka’s request for a stay of proceedings to safeguard the ongoing debt restructuring process for Sri Lanka and the country’s efforts to restore the sustainability of its economy. The US intervened earlier.
Amicus briefs are filed by people, organisations or countries that are not themselves party to any legal case, but have a strong opinion on how it should go.
“France is naturally interested in the Sri Lanka lawsuit as it hosts the so-called Paris Club, where government-to-government debts are restructured.
The UK is part of the Paris Club, but presumably cosigned the amicus brief because it historically oversaw the London Club, the less formal group for private creditors to negotiate with sovereign borrowers,” the FT report added.
The co-signatories want the judge to grant Sri Lanka the six-month stay it has requested, because they worry that the lawsuit by the Hamilton Reserve Bank’s chief, Chinese-American investor Benjamin Wey, could wreck the ongoing restructuring talks.
A judgement in favour of the plaintiff Hamilton before the completion of the debt restructuring process would risk disrupting the ongoing negotiations by creating an incentive for holdout creditors, thereby jeopardising the comparability of treatment between different categories of creditors, the report said.
This principle is at the core of all sovereign debt restructuring processes, as it is key to secure the consent of all creditors.
A disruption would lead to delays in the negotiations, delaying the cash disbursement by the IMF to the debtor country and resulting in significant costs for Sri Lanka and the official creditors’ taxpayers.