President concerned about Roche's case

JAKARTA (JP): President Abdurrahman Wahid has reiterated that Indonesia should honor the sanctity of contracts and abide by Law No.30/1999 on arbitration and alternative dispute settlement to woo back foreign investors and keep those already doing business in the country.

The President made the remark after he received detailed explanations about the dispute between Swiss pharmaceutical company PT Roche Indonesia and PT Perusahaan Dagang Tempo and a controversial ruling by the South Jakarta District Court on that case.

"We briefed the President on the utter injustice done to PT Roche by the South Jakarta District Court in connection with its dispute with Dagang Tempo," Roche's lawyer Todung Mulya Lubis told reporters.

PT Roche's president Dieter Garbade, accompanied by Swiss Ambassador Gerard Fonjallaz and Mulya, met Abdurrahman early this week to brief the President on the grave impact of the court's flawed handling of the dispute.

The meeting itself was a follow up to the complaint expressed by Swiss leaders at a meeting with President Abdurrahman during his February visit to Europe.

"The South Jakarta District Court decided to examine the dispute even though both Roche and Dagang Tempo had clearly stipulated in their distributorship contract that they should settle any dispute through arbitration," Mulya said.

Dagang Tempo filed a suit against Roche last October for annulling a contract that appointed the plaintiff as a distributor of Roche's generic and over-the-counter drug products in Indonesia.

"The court is actually incompetent to try the case as both parties are bound in an arbitration agreement," Mulya added.

Presiding judge R. Sunarto nonetheless decided in early November in favor of the plaintiff and issued a sequestration ruling on Roche's assets, including land and factory in Cimanggis, east of Jakarta, spare parts and stocks of goods and basic materials.

Sunarto has been notoriously popular over the last few days for his controversial ruling early this week that acquitted Djojoko Tjandra of all corruption charges in the high-profile Bank Bali corruption case.

Mulya argued that the court should have turned down the case right from the outset because Roche and Tempo have clearly stipulated in their contract that any dispute arising between them which cannot be settled amicably shall be finally settled by arbitration conducted in the English language in Jakarta under the Rules of the Arbitration of the Indonesian National Board of Arbitration (BANI).

"Still more strange was the fact that the court issued the sequestration ruling on Oct. 22 more than ten days before the first trial session on the case was held on Nov.4," he added.

More flabbergasting still, Mulya added, the sequestration decision was issued without first giving the chance to Roche to defend itself in the Nov.4 hearing of the case.

"This is entirely in violation of the principle of procedural law (audi ad alteram partem)," Mulya said.

Dagang Tempo's lawyer Amir Syamsudin, however, argued that inspite of their arbitration agreement Dagang Tempo could still file a lawsuit against Roche as long as the case pertained to purely juridical matter and not to business technical matters.

Mulya expressed grave concern that foreign investors would continue to shun Indonesia if the government could not establish certainty under law.

"Besides security and political stability, the supremacy of law and the enforcement of universal principles of business is the prerequisite to economic development," he added.

Mulya said the multi-dimensional crisis the nation is now suffering is the result of the utterly poor enforcement of law during Soeharto's authoritarian rule.

President Abdurrahman seems to be fully aware of the crucial importance of law certainty as he has put law enforcement on top of his priority programs.

"But the government should act quickly and firmly to reform the judicial system, otherwise we will remain mired in this crisis," Mulya pointed out.