BP West Java loses court lawsuit against supplier
BP West Java loses court lawsuit against supplier
Fitri Wulandari, The Jakarta Post, Jakarta
Energy firm BP West Java has lost a lawsuit against chemical
supplier PT Mestaco Swarnadwipa, in a verdict criticized by
foreign investors.
The South Jakarta District Court ruled in favor of Mestaco and
ordered BP West Java to pay US$2.037 million or about 3 percent
of the $70 million compensation demanded by Mestaco, Hafzan
Taher, a lawyer for BP West Java said.
The court also froze a bank account belonging to BP West Java
in Citibank Jakarta. Hafzan gave no details about the sum of
money in the account.
The case started when BP West Java, a subsidiary of BP
Indonesia, ended its business relationship with Mestaco, which
supplied the company with Halon 1301 -- a chemical used to
extinguish fires.
BP West Java found the product supplied by Mestaco was
contaminated by a liquid during an inspection in 2001.
Test results from the Indonesian Police Forensic Laboratory
and a Singaporean laboratory showed the substance contained
dicloromethane, an inflammable chemical that should not be used
to extinguish fires.
"This was an error that could put human life in danger and it
could not be tolerated," Hafzan said.
Mestaco filed the first lawsuit in November 2001 and demanded
compensation amounting to $650 million. However, the court
rejected Mestaco's demand.
This was the second lawsuit filed by Mestaco.
According to Hafzan, the court ruled in favor of Mestaco on
the grounds that the examination of the chemical was carried out
in the absence of the company.
Hafzan said his client would appeal to the high court over the
case.
The British Embassy in Jakarta regretted the ruling. It was
another example of a legal system which did not support foreign
investment, it said.
"It will be seen as continuing a sequence of a questionable
legal rulings, following the Manulife case in 2002," Faye Belnis,
press officer of British Embassy, told the Post.
Canada-based insurance firm Manulife Indonesia was declared
bankrupt by the Jakarta Commercial Court in 2002, despite the
fact the firm was solvent. Following protests from many parties,
including top government officials, the Supreme Court finally
cleared Manulife of the charges in the same year.
Belnis said the ruling would remind potential investors of the
risks in doing business in the country.
BP Indonesia is a unit of Anglo-American energy giant BP Plc.
It has several projects in Indonesia, including the giant Tangguh
liquefied natural gas (LNG) project in the Bird's Head area of
Papua.