A court in the United States has denied a motion by the Government of Sri Lanka to dismiss a lawsuit brought by Hamilton Reserve Bank following the default by Sri Lanka on a sum of over $ 257 million of bonds and interest. 

On 24 March, Denise Cote, a judge at the District Court of the Southern District of New York, denied a motion made by Clifford Chance US LLP, the law firm representing the Government of Sri Lanka (GOSL), to dismiss a lawsuit brought by Hamilton Reserve Bank. 

The lawsuit was filed against the Government of Sri Lanka after it defaulted on a sum of more than $ 257 million, including bonds and interest, that Hamilton Reserve Bank had invested in. The court decided that the case would proceed to determine whether GOSL is obligated to immediately pay the outstanding amount.

Hamilton Reserve Bank, based in St. Kitts-Nevis, is being represented by the law firms of Bleichmar, Fonti & Auld LLP and Jenner & Block LLP. The bank filed the lawsuit for breach of contract to recover the principal sum of $ 250,190,000 plus interest of $ 7,349,331.25 of the bonds. The 10-year bonds matured on 25 July 2022, and the registered holder of the bonds is Cede & Co., based in New York, while Hamilton Reserve Bank is the beneficial holder. 

Cede & Co. authorised Hamilton Reserve Bank to take action on its behalf to recover the amounts. However, GOSL argued that Hamilton Reserve Bank had no authority as the registered holder of the bonds was Cede & Co.

The District Court recognised the validity of Cede & Co.’s authorisation to Hamilton Reserve Bank and dismissed GOSL's motion.