Cotton importers challenged to use arbitration body
JAKARTA (JP): An associate director of the Britain-based Liverpool Cotton Association (LCA) yesterday challenged Indonesian cotton importers to file complaints against foreign exporters with the LCA's arbitration body.
Husein Aminuddin, also the chairman of the Indonesian Spinners' Association, denied yesterday that LCA's arbitration procedures were one-sided and lengthy.
"Who, among these claimants, has ever gone to the LCA for arbitration? They should try first and only then give their opinions," Aminuddin told The Jakarta Post.
He acknowledged there were set procedures before a claim could be legally taken to arbitration.
In cases on quality claims, the procedures include producing reports from a laboratory, approved by the two parties in dispute; both parties jointly appointing an independent surveyor to examine the validity of the claims; and both parties jointly deciding whether the samples taken for laboratory testing should be done to part (at least 10 percent) of a shipment, or to the entire shipment.
"Cotton importers that want to file a claim against exporters must do so according to the rules and conditions stipulated in the contract signed by both parties," he said.
Earlier this year, a number of textile companies claimed they had received imports of defective cotton from the United States.
The biggest company hit, PT Argo Manunggal, said some 4,700 bales of its California-Arizona cotton were infected by cavitoma, a type of fungus which was reportedly found in cotton shipments from October to December last year.
Almost all the affected companies said they were reluctant to go to the LCA for arbitration, saying the body would disadvantage them. They considered arbitration was a last resort.
Of the companies, PT Putra Sejati Spinning Mills has been the only one to consider taking a claim to arbitration at the LCA. As of July, however, no progress on Putra Sejati's case had been reported.
No agreement
Meanwhile, sources say that Argo Manunggal has failed to reach an amicable agreement with one of its U.S.-based suppliers.
Aminuddin said yesterday that if laboratory tests -- conducted under the rules stipulated by the LCA -- proved that cotton imports were defective, the importers would be able to sue the exporters.
"But you need to get test reports. Do that, and you have a solid case in your hands," he said.
Aminuddin also spoke on the need to include fiber strength as a factor that should be considered in cotton trade.
"Advances in technology, which have resulted in high-speed spinning and weaving machines, require the utilization of cotton which has a high degree of fiber strength," he said.
Aminuddin said the LCA should pay attention to this issue as it could easily result in disputes between cotton sellers and buyers. So far, he said, the LCA had no mechanism to resolve disputes over fiber strength at arbitration.
Fiber strength issues are currently facing spinning mills in Southeast Asia, South Korea, Hong Kong and Taiwan.
Cotton consumption in Southeast Asia has increased rapidly in the last couple of years. It will make up 4.4 million bales of total world consumption of 86.6 million bales in 1996/1997. (pwn)