BUSINESS

Taj TV warns against rights infringement

By Asgar Hussein

Taj Television Limited has stated they will not hesitate to take legal action against the Board of Control for Cricket in Sri Lanka (BCCSL) on the grounds of breach of contract if the board reaches an out of court settlement with WSG Nimbus by offering TV rights for the forthcoming English tour.

The BCCSL recently informed the media that they consider the contract with Nimbus (which was terminated by the interim committee under Vijaya Malalasekera in October 2001) as still valid.

However, by attempting to continue with the contract signed with Nimbus and thereby reduce damages claimed in arbitration, the board is opening itself to a major claim by Taj TV- the present TV rights holder.

Taj TV - which operates the sports channel Ten Sports - has stated they stand to lose their reputation if the contract with Nimbus is "reactivated." It was pointed out that they have already informed viewers that the forthcoming test and ODI series between England and Sri Lanka would be broadcast by their channel.

Ten Sports is broadcast to seven Asian countries, including Sri Lanka, India, Pakistan, UAE, Bangladesh, Nepal and the Maldives.

It is also reliably learnt that Taj TV has negotiated with Sky Sports to sell the English tour rights to them. The formal contract, however, is yet to be signed.

The contract signed between Taj TV and the interim commitee would continue until the South African tour in September 2004. Informed sources stated that in attempting to invalidate the interim committee's actions, the BCCSL is jeapordising the other contracts entered into by the interim committee. From April 2001 to April 2003 the committee had signed contracts with Dilmah, A.j. Clothings, SriLankan Airlines, Hotel Taj Samudra and Dialog GSM.

These contracts however have not been repudiated by the BCCSL, and questions were posed regarding the motive behind the "discriminary action" in the case of Taj TV.

Taj TV is also irked that todate not a single official communication had been sent to them by the board pertaining to the issue.

Informed sources said it appears that BCCSL President Thilanga Sumathipala is acting on the legal opinion given by Gamini Marapana PC, stating that all contracts and letters of appointment entered into during the period of the interim committee are invalid and are not binding on the BCCSL.

Marapana was of the opinion that the identity of the interim committee appointed in terms of Section 33 of the Sports Law (by Minister Kiriella) is quite separate and distinct from that of the BCCSL. "Therefore, the acts of, and the contracts entered into by the said interim committee do not bind the BCCSL," he had opined.

He also believed that minister Kiriella had no power to appoint an interim committee 'to manage the affairs of the BCCSL.'

On the contrary, a legal opinion sought by Taj TV from HL de Silva PC holds that the interim committee was legally appointed in terms of the Sports Law and regulations thereunder.

Silva, who has analysed the statutory framework of the regulating authority under the Sports Law to manage the sport of cricket, has stated in his opinion that the minister is empowered under Section 33 to "make interim arrangements for continuing the functions of a National Association of Sports under suspension or whose registration has been refused or cancelled." This is in view of the far-reaching effects and consequences which such a sudden stoppage of activity would cause in that sport, both nationally and even internationally.

Silva stated it was pursuant to this order that the minister appointed an "interim committee" following the order made and published in the gazette of March 28, 2001, cancelling registration of the BCCSL and directing its dissolution with immediate effect.

He concluded that the minister acted fully within the legal framework of the Sports Law and the activities of the interim committee, including the contractual obligations, are binding on the BCCSL.

Silva was of the opinion that "the validity of the appointment of the interim committee cannot now be challenged and the interim committee was competent to enter into this contract on behalf of the National Association for Cricket which is binding on the BCCSL."

It was also noted, " since the agreement was concluded that there had been performance of the agreement in respect of a substantial number of the tours scheduled under the agreement and matches played between November 2001 and May 2003 and Taj Television has paid into the bank account of the BCCSL considerable sums of money in excess of a million US $." It was further stated that payments amounting to US$ 37,750 have been received by the new BCCSL from Taj Television after it took office as part of the guaranteed sum of US$ 755,000 payable for the seven one day internationals in the triangular tournament between Sri Lanka, New Zealand and Pakistan.

The contract with Nimbus was terminated in October 2001 by the interim committee on the grounds of breach on their part. The then chairman of the interim committee Vijaya Malalasekera had obtained the opinion of the Attorney General who concurred with his view regarding the reason for this action.

Nimbus had continuously failed to make the required payments arising from the agreement (which gave them TV rights until the November 2003 English tour).

According to informed sources, Nimbus failed to make payments on time despite having the benefit of covering the most lucrative tours, leading to the termination of the agreement.

Taj TV on the other hand had always made payments on time despite the fact that they covered tours which were not lucrative such as the West Indies, Zimbabwe, Bangladesh and New Zealand tours.

The Sunday Leader is in possession of a letter written in June this year by BCCSL CEO Anura Tennakoon (who held the same post in the interim committee) calling on the Cricketers Benefit Fund Series (CBFS) of UAE to make the payment of the guarantee money of US$ 200,000 for the Sharjah tournament concluded in April 2003. Ironically, the contract with CBFS (upon which these monies are now being claimed) was also signed by the interim committee and while Tennakoon held office. The question then arises that if the BCCSL is taking the position that all contracts entered into by the interim committee do not bind the board, then how can they claim these monies.

The BCCSL had stated last week that they were attempting to reach an out of court settlement with Nimbus because if the damages claimed (before an arbitral tribunal in Singapore) were paid, the board would be crippled.

Nimbus had claimed US $ 11 million as damages for wrongful termination of their contract. The arbitral tribunal in Singapore is expected to decide on the quantum of damages shortly. The tribunal made an interim award called 'award on liability' dated May 12, 2003 for a smaller payment to Nimbus amounting to just over US $ 1 million. The balance damages payable was to be determined in a further hearing in September.

Although the BCCSL has implied that the damages awarded amount to US Dollars 11 million, only the interim award has been made thus far. Informed sources said there is a possibility that in the end the arbitral tribunal would award a sum much smaller than the entire amount claimed.

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