A Sri Lankan state-owned company has blocked a US$4.9 million payment under a letter of credit (L/C) to a Chinese company to prevent the unloading of a cargo of fertiliser believed to be contaminated by harmful bacteria.

Ceylon Fertiliser Company (CFC) obtained a commercial high court order to block an existing L/C in favour of China's Quingdao Seawin Biotech (QSB).

The order also blocks any payment made to the Chinese company and the local agent under any L/C.

Order discrepancies

The order states that the Chinese firm should have shipped sterile organic fertiliser as specified in the tender it had won from CFC, which imports, produces and distributes fertiliser to Sri Lankan farmers.

But its shipping documents say that the consignment may contain micro-organisms so the ship carrying QSB's fertiliser was not allowed to unload its cargo.

Disputed claim

Sri Lanka's National Plant Quarantine Services tested a sample sent to them and confirmed the presence of organisms, including certain types of harmful bacteria according to a statement issued by the Sri Lankan president's office.

China's embassy in Sri Lanka had disputed the government's claim earlier this month.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.