Qingdao Seawin and NPQS in stinking legal battle
Posted on November 17th, 2021

By Sulochana Ramiah Mohan Courtesy Ceylon Today

Peoples’ Bank in both cases bearing Numbers CHC 213/2021/MR and CHC 214/2021/MR informed and recorded in Court that the documents submitted by the Seller/supplier namely Qingdao Seawin Biotech Group Co. Ltd., were in compliance with the Letter of Credit and that they are obliged to make payment on the LCs to Qingdao Seawin Biotech Group Co Ltd, its Director Song Hai Mei said. 

Currently, the Chinese have filed a lawsuit against the National Plant Quarantine Service (NPQS) over the allegations that their consignment of Organic fertiliser was ‘purportedly’ rejected citing it was contaminated. Over the pressure applied by China, the Joint Technical Professional Association of the Department of Agriculture of which the NPQS is a part held a protest and stand by their testing calling it credible. 

Also, the People’s Bank has been blacklisted by the Chinese government and it’s almost two weeks since the Bank is struggling to resolve the issue. The NPQS also said the Law is that no third party sample test is acceptable, (in this case, the Schutter Group test) by the Department of Agriculture. Yet, Mei stated that the Certificate of Quality, Quantity and Analysis by Schutter Group dated 23 September 2021 as the nominee of the Sri Lanka Standards Institution submitted to the Bank by the Supplier is in compliance with the conditions set out in the Letter of Credit. 

Therefore, the payment in respect of the subject consignment of Fertiliser ought to be made in compliance with the express terms of Letter of Credit and the Buyer/Purchaser cannot now seek to introduce new conditions to the said Letters of Credit. Mei further noted that any and all disputes with regard to whether the fertilizer is compliant or not as raised by the Buyer/Purchasers ought to be resolved amicably between the parties or by arbitration as per the dispute resolution Clause in the underlying Contracts between the Buyer and Seller. 

If the buyer’s requirement and that cannot accept our organic fertilizer, I am sure no other manufacturer can supply to their expectations. So the best we can do is, control E-coli Group, Ascaris Egg Mortality and Salmonella with the abovementioned standards and if the buyer cannot accept this, we will be forced to withdraw PG and cancel this cooperation peacefully,” she said. However, on September 27 the National Plant Quarantine Service (NPQS) released its report stating that two samples of Organic Fertiliser were tested.

 The first sample OR/ IMP/2021l 05 was from load port-Pack (Seaweed) and the second sample was OR/ IMP120211/06 (Sample from production line Bottle). Test whether the sample is sterilised and it contains harmful microorganisms to plants. Sample No. 5, received in a sealed polythene pack and sample No. 6 were received in a sealed plastic bottle. The NPQS said that the samples have been subjected to microbiological analysis to test the sterility of samples and to find out the presence of any harmful microorganisms to plants. 

The preliminary test including Agar Plate Culture Technique, Gram Staining Technique, Biochemical Tests, Pathogenicity Test on Carot revealed that both samples have been contaminated with gram-positive and gramnegative bacteria. Thus, the NPQS said that the samples are suspected to be contaminated with several bacterial species including Erwinia sp and Bacillus sp cannot be considered as sterile. 

This report refers specifically to the samples submitted. When the NPQS said no third party tests would be taken into consideration, Qingdao Seawin said the test reports of Schutter Group dated 14 September 2021 as the nominee of the Sri Lanka Standards Institution clearly establish inter alia that subject samples of the product of Qingdao Seawin Biotech Group Co Ltd namely Seaweed Organic Granular Fertilizer obtained from the ‘production line’ and ‘Load Port’ do not state that the consignment is contaminated with Erwinia. Since the said reports indicate that ‘Coliform Bacteria is ‹ 10’, Qingdao Seawin obtained clarification from Schutter Group.

 The Schutter Group by their report dated November 8 2021 clarified that ‘‹ 10’ in the said earlier reports means ‘absent or zero’ and it has been so indicated as per the relevant ISO Standard. (Reports of Schutter group as attached.) The said Reports by Schutter Group dated September 14, 2021, were communicated to the Sri Lanka Standards Institution by electronic mail on the same day. In a further letter dated September 16, 2021, Qingdao Seawin informed the purchasers that the consignment could contain ‘harmless microorganisms’.

 It is upon the said communications made by the parties that the two local Companies Ceylon Fertilizer Co and Colombo Commercial Fertilizer and Qingdao Seawin opened the subject Letter of Credit by including therein the product specification relating to ‘Physical\ Requirements’, ‘Chemical Requirements’ and ‘Limits for Toxic elements’ expressly set out in the Sale and Purchase Contract whilst deliberately and intentionally leaving out the purported requirement with regard to ‘Living Organism and/or Zero Living Organism’. On September 27 2021, the NPQS SL issued a report saying it suspected that there was Erwinia in the test samples.

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