Wed, 09 Mar 2005

Court rejects Total bankruptcy petition

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

The Jakarta Commercial Court has ruled in favor of oil and gas producer Total E&P Indonesie on Tuesday over a bankruptcy petition filed by two of the company's contractors.

The panel of judges declared the bankruptcy petition to have no legal basis, citing the lack of evidence establishing a contractual relationship between Total and the first plaintiff, PT Istana Karang Laut (IKL).

The court also declared that the case should have been submitted to the district court as it was a civil suit that needed to prove that there was an outstanding debt owed by Total to the contractors.

"The bankruptcy petition is baseless. Therefore, the court has decided to reject it," presiding judge Agus Soebroto said, reading the verdict.

The court also rejected asset preservation orders requested by both contractors, saying the request was baseless as none of the assets belonged to Total.

The contractors' lawyer OC Kaligis said they would appeal to the Supreme Court.

"We will file an appeal over the ruling because an audit result from the Development Financial Comptroller (BPKP) has stated that Total still has debts to pay," he told The Jakarta Post over the phone. Kaligis himself was not present at the court.

Total was taken to court by its subcontractor IKL, as the first plaintiff, and contractor PT Sanggar Kaltim Jaya (SKJ) as the second plaintiff.

They both used BPKP audit results as the legal basis for their bankruptcy petition.

The contractors claimed that Total should pay them US$7.131 million to cover debts incurred in the construction of a gas platform and pipeline at Tunu and Peciko fields in East Kalimantan.

Total refused the claim saying it had completed all payments to the first plaintiff and that they did not have a contractual basis to demand compensation from the company.

The Indonesian unit of French-based Total SA also filed a report to the Indonesia National Board of Arbitration (BANI) to claim $12 million in liquidated damages caused by SKJ for failure to complete the project in due time.

Total's lawyer Todung Mulya Lubis said it would continue with the arbitration proceedings and it was currently in the process of selecting arbiters for the case.

In Paris, Total said it was "very satisfied" with the decision.

A Total spokesman was quoted by AFP as saying that Total was now waiting to see if the complainants would appeal the decision, or attempt to file another suit in a civil court. Total is also seeking damages for harm caused by the bankruptcy petition, he said.