Foreign company complains over court's handling of case
Foreign company complains over court's handling of case
Urip Hudiono, The Jakarta Post, Jakarta
Amid the government's efforts to improve Indonesia's investment
climate, another commercial dispute involving a foreign company
has been dealt with by the courts in a way that could once again
cause investors to question the level of legal certainty here.
PT Kangar Consolidated Industries (KCI), a subsidiary of U.S.-
based packaging giant Owens Illinois, has been sued by PT Multi Inti
Trada in the East Jakarta District Court for an alleged wrongful
termination of a distribution agreement between the two
companies.
But what is making KCI extremely concerned, a source close to
the case told The Jakarta Post, is that the trial procedures
appear to be rife with irregularities, including the court's
disregard of a pre-trial mediation process and an immediate order
to freeze KCI's assets.
This asset preservation order, in particular, has jeopardized
KCI's ongoing operations and has forced the company to postpone
any further consideration of business expansion and investment.
Owens Illinois is the world's largest glass packaging
manufacturer. It is publicly listed on the New York Stock
Exchange, and has since 1971 been operating in Indonesia through
KCI, investing some US$100 million in the process.
The firm had been planning to invest another $30 million to
expand next year, prior to the case.
Explaining KCI's discontent regarding the case, the source
mentioned how the panel of judges had neglected Supreme Court
Regulation No. 2/2003, which obliges the court to order
contesting parties to undertake mediation before the case goes to
trial.
KCI also considered the panel of judges to have violated
Supreme Court Circular No. 5/1975, as they issued an asset
preservation order when the evidence and proofs necessary for
such a course of action -- such as KCI management fleeing the
country -- had not been met.
The source also mentioned KCI's disquiet about that fact that
Rp 30 billion (about US$3 million) in mostly non-material damages
was being claimed by Multi Inti Trada, which was grossly in
excess of the amount Multi Inti Trada could reasonably expect to
earn under the distribution agreement.
The court issued the asset preservation order on July 26, two
months after Multi Inti Trada filed its civil suit on May 26,
with no mediation attempt in between.
KCI was only permitted to address the court on Aug. 3, after
the ruling was issued. On Aug. 29, it filed a complaint about the case
with the court and reported the alleged irregularities to the
Supreme Court and the Judicial Commission.
The judges hearing the case are Damsuri Nungtjik, Ewit
Soetriadi and Sumardiyatmo.
Laywer Zaky Tandjung of Hiswara Bunjamin & Tandjung, which
represents Multi Inti Trada, denied any irregularities in the
case, which appeared to be proceeding in his client's favor.
Zaky explained that Multi Inti Trada had repeatedly sought an
amicable settlement of the dispute, but received no response from
KCI.
"The asset preservation order is also normal in the
circumstances, and is stipulated in the Civil Law Procedures
Code," he said.
The trial has been adjourned until Nov. 15, with both sides
having submitted their concluding arguments during the last
hearing on Oct. 18. The court is now expected to hand down its
verdict in the case.