Indonesian bank seeks to settle bitter dispute with Indian firm
Indonesian bank seeks to settle bitter dispute with Indian firm
Agence France-Presse, Singapore
An Indonesian bank has started arbitration proceedings here against an Indian software firm after a bitter business dispute that marred relations between the two countries.
Bank Artha Graha (BAG) said in a press statement that it sought arbitration in January after Polaris Software Lab Ltd. of India failed to deliver its contractual obligations.
Polaris chairman Arun Jain and senior vice president Rajiv Malhotra were arrested in Indonesia on Dec. 13 and held for almost a week before being freed amid a public outcry in India.
The contract between the two states that any disputes must be settled through the Singapore International Arbitration Center, BAG said in a statement issued in Singapore late Wednesday.
Polaris was awarded a contract worth at least US$1.3 million in 2001 to install a banking application for BAG.
It had promised the new system could go "live" within four months after work commenced in January, the bank said.
"However, BAG realized that this promised timeline of four months could not be met at all," it said.
Despite extending the system integration dateline to September 2002, Polaris was still unable to set the system up properly, BAG said.
"Therefore, BAG, in accordance with its rights under the agreements, issued a letter to Polaris on Nov. 27, 2002 terminating the agreement with immediate effect," the bank said.
Under the terms of the contract, the bank is entitled to a refund of 662,000 dollars by Dec. 4, 2002 for terminating the agreement due to default or failure of the system, BAG said.
The bank also said it was entitled to claim damages for Polaris' breach of the agreements.
Polaris chairman Jain said after returning to India that he planned legal action against the Indonesian bank, whose complaint had led to their arrest.
"We had gone there with the intention to resolve the commercial dispute between Polaris and the Artha Graha Bank. But unfortunately the turn of events led to an unwilling detention for us. Also the bank sought compensation across the table," Jain said on Dec. 25 in Madras.
"The Polaris board will take into consideration all these events and take appropriate legal action including a defamation suit against the bank for our harrowing experience these last 12 days," he said.