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.