July 12, 2011 (LBO) – Sri Lanka’s state-run Ceylon Petroleum Corporation has been asked to pay 162 million dollars to Standard Chartered Bank over oil derivatives it stopped payment on in 2008, according to a judgment by a London court. Extracts from the judgment:
¢ SCB’s case is straightforward: it is entitled to the remaining payments which are due under the terms of the Transactions. CPC entered into the Transactions as an arm’s length counter-party with SCB, knowing how they would respond to fluctuations in the oil price, wanting to acquire the benefits of the Transactions, and aware of the risks and rewards that they entailed. CPC was always aware that a fall in oil prices (which in this case was largely caused by the financial crisis) would cause it to became liable to make payments to SCB and there is no basis upon which it can now avoid its obligations.
¢ CPC’s case is that, when considered in its proper factual context, this is not a straightforward claim, as SCB contends, and that there is nothing standard about this case. On the contrary, this is a case concerning a publicly owned corporation, of critical importance to its national economy, with no experience