East Kalimantan govt has no legal standing to sue KPC: Lawyer
East Kalimantan govt has no legal standing to sue KPC: Lawyer
Moch. N. Kurniawan, The Jakarta Post, Jakarta
The East Kalimantan provincial administration has no legal
standing to sue coal mining firm PT Kaltim Prima Coal (KPC) over
delays in divestment programs, company lawyer Todung Mulya Lubis
said on Tuesday.
He said the East Kalimantan administration was not one of the
signatories of the mining Contract of Work.
Speaking at a press conference after KPC was summoned by the
South Jakarta District Court, Todung said the contract stipulated
that only the central government could take legal action against
the company if there was a dispute regarding the divestment
program.
"And it's never been stated that the central government has
handed over its authority in dealing with KPC to the East
Kalimantan government," he said.
The East Kalimantan government filed a lawsuit against KPC,
demanding the firm pay US$776 million in damages and legal costs,
asking the court to seize company assets due to delays in the
divestment program.
The claim has also been made against KPC shareholders, some of
its directors and legal advisers.
KPC, which is equally owned by Anglo-Australian mining group
Rio Tinto and British-American oil and gas firm BP, is obliged to
divest a 51 percent stake to local investors. So far, the only
bidder is the East Kalimantan administration, which receives
priority as the company operates a vast mining site in the
province's Sangatta area.
But the divestment program has been delayed several times for
various reasons -- the latest being a disagreement between KPC
and the East Kalimantan government over the selling price. This
has forced the government to delay the divestment deadline till
March 2002 from the earlier December 2001 deadline.
KPC has set the price for its 51 percent stake at $448
million, while the East Kalimantan provincial administration is
only willing to pay $319 million.
Todung explained that in accordance with Indonesian law, even
if the central government filed a lawsuit against the firm, it
could only be resolved through international arbitration.
"The South Jakarta District Court doesn't have jurisdiction
over this case," he said.
According to him, the case would be a big test for the
country, which had hardly been trying to improve its poor image
in the investment community.
The company would remain committed to proceed with its
divestment program despite the lawsuit, he said.