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.