Standard Chartered had filed proceedings in London while Deutsche Bank has filed a case against Sri Lanka at International Centre for Settlement of Investment Disputes (ICSID) alleging violation of a bi-lateral investment protection treaty.
Attorney general Mohan Peiris said arbitration proceedings in Singapore will start on November 01 and take about 10 days.
"Prospects are good," Peiris said confidently. "We've been mis-sold (the derivatives) by the banks."
Peiris himself will be attending the proceedings along with other officials connected with the oil derivative purchases.
The total claimed from CPC by the five banks is 418 million US dollars, according to earlier official statements.
Citibank had sold contracts worth 400,000 barrels, Standard Chartered 300,000, People's Bank 100,000 (including 50,000 bought from Commercial Bank), and Commercial Bank 20,000 direct (and 50,000 via People's Bank).Sri Lanka entered into forward deals to 'hedge' oil prices following a government desire to 'fix' oil prices after abandoning a price formula which would have prevented imbalances from building up in the economy.
The CPC initially made profits on the derivatives when prices were rising, but when a commodities bubble burst in mid 2008, it had to make payments under the deals.
The so-called 'zero cost' over-the-counter contracts known as 'leveraged target redemption forwards' were built through a complex options position, where upside price caps and deal fees were paid for by 'leverage' or extra downside risk.
The banks which sold the derivatives also made large profits on the contracts, but have since had to provide for non-payment.
Even now retail prices of petroleum products are controlled by the state. Losses at energy utilities and 'circular debt' between CPC and state-run Ceylon Electricity Board are a key contributors to Sri Lanka's economic instability.
The International Monetary Fund has asked that the 'circular debt' be cleared and the entities to be made to break even to prevent further economic instability.