RI not ready to face arbitration court: Experts<\/p>\n
Fitri Wulandari, The Jakarta Post , Jakarta<\/p>\n
Legal experts lamented the lack of awareness evident among
\nmany government officials and even the corporate community about
\nthe international arbitration court, which now plays a greater
\nrole in resolving commercial disputes.<\/p>\n
The recent loss suffered by state-owned oil and gas company PT
\nPertamina in a protracted legal battle with American power
\nproducer Karaha Bodas Co. came as the government faces another
\nmajor battle at an international arbitration court, along with
\nother similar cases.<\/p>\n
The legal battles will be costly for the cash-strapped
\ngovernment, especially if it loses its cases.<\/p>\n
"I am concerned that many people in Indonesia who claim to be
\naware of arbitration clauses, in fact, do not really understand
\nthem," lawyer Todung Mulya Lubis told The Jakarta Post over the
\nweekend by phone.<\/p>\n
"They only become aware when they lose the case, even though
\nnowadays, an arbitration court is a common tool to resolve
\ncommercial disputes," he added.<\/p>\n
He stressed that solid preparations were essential in facing
\nan international arbitration court, because its procedures were
\nmore rigid than those of local courts.<\/p>\n
"One cannot bribe the arbitration court and must abide by its
\nruling," said Todung, who is also an international arbiter for
\nthe Paris-based International Chamber of Commerce.<\/p>\n
Meanwhile, lawyer Luhut Pangaribuan said ignorance of the
\nworkings of international arbitration was exemplified in the
\ngeneral belief among businessmen that an international
\narbitration ruling did not have jurisdiction over Indonesia and
\nthus could not be executed.<\/p>\n
"Arbitration court ruling can be executed in any country,"
\nLuhut said.<\/p>\n
He urged companies to be well prepared when signing business
\ncontracts based on arbitration clauses, as their assets could be
\nseized if they lost at the international arbitration court.<\/p>\n
Pertamina lost its case against Karaha at the Geneva
\nArbitration Court in 2001, when the court ruled against Pertamina
\nfor a breach of contract and ordered it to pay Karaha US$261
\nmillion in compensation for canceling Karaha's local power
\nproject following the 1997-1998 financial crisis.<\/p>\n
Karaha then filed a motion at a U.S. court to freeze
\nPertamina's cash assets at U.S. banks, which Pertamina countered
\nby requesting an Indonesian court to nullify the arbitration
\nruling and by appealing to the U.S. court.<\/p>\n
On March 23, Pertamina lost its appeal and finally agreed late
\nlast week to compensate Karaha as ruled by the international
\narbitration court.<\/p>\n
Pertamina's loss came as the government faces another
\narbitration case involving Mexican cement maker Cemex S.A., which
\nwas not awarded a controlling stake in state-owned cement giant
\nPT Semen Gresik as agreed in a 1998 privatization deal with the
\ngovernment.<\/p>\n
Nine mining companies that have been banned from resuming
\noperations in a protected forest are also planning to file a
\nlitigation at an international arbitration court in what could be
\na multibillion-dollar lawsuit against the government.<\/p>",
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"sponsor": "Okusi Associates",
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