People or Profit? - International Law Office

International Law Office

Company & Commercial - Sri Lanka

People or Profit?

February 19 2001

Background
The Case
Decision


The Supreme Court decision in the case of Bulankulama v the Secretary of the Ministry of Industrial Development highlights Sri Lanka's struggle towards sustained development and should have significant impact on foreign investment.

Background

In 1992 Freeport Macmoran Resource Partners, a large US based multinational company received state approval for a project to explore the rock phosphate reserves in Eppawela.

The petitioners in the case were residents from the area including dairy and paddy farmers and a priest whose temple was sustained by the paddy land in the area. They alleged that their rights to livelihood, freedom of movement and equality were being threatened by the mining venture, and that the foreign-invested activity should be stopped.


The Case

The 'exploration area' as described in the agreement encompassed the settlements of hundreds of people who had been resettled there following the implementation of the Mahaweli Hydro-electricity project. The court pointed out that residents of the ancient villages located in the area would also lose their homes.

The Supreme Court noted that the adverse effects on the irrigation systems of the area but also observed that the phosphate that was to be mined was a non-renewable natural resource and when confronted with the proposed rate of mining went on to stress the importance of sustainable development.

Decision

Therefore the Supreme Court held that there was an imminent infringement of the petitioners' fundamental rights to livelihood, freedom of movement and equality. The court ordered that the project be halted until a comprehensive and accurate feasibility study is performed and approval obtained from the Central Environmental Authority.

Both foreign and local investors would be well advised to heed the warnings from this case: sustainable development is a high priority. Businesses should strive to be more eco-friendly or face termination.


For further information on this topic please contact Simon Senaratna at Simon & Associates by telephone (+94 1 38 19 06) or by fax (+94 1 38 19 07) or by e-mail (simona@eureka.lk).


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