Respect for contracts imperative

Respect for contracts imperative

By Bob P. Nainggolan

JAKARTA (JP): The machinations of the dispute between PT Roche
Indonesia as the accused and PT Perusahaan Dagang Tempo as the
plaintiff in a recent legal case has opened up discussion on a
number of important and far reaching points in regards to
contractual certainty in Indonesia.

This article is written as a reaction to the public
announcements that appeared in The Jakarta Post last month, in
which both parties' lawyers raised legal issues that demand
comprehensive attention and need to be studied further.

The issue has arisen as a result of PT Roche wishing to
terminate one division of its distribution network with PT
Perusahaan Dagang Tempo.

The remaining division, which still constitutes over 60
percent of the distribution contract, would still remain with
Tempo.

The issue seems to be a case where one company -- Roche
Indonesia -- is trying to diversify its distributor network,
while the distributor -- Perusahaan Dagang Tempo -- does not want
to give up their exclusive distributor relationship with Roche.

In the case itself, among the issues most interesting include
what the core legal issue in this case is: whether the conflict
settlement that has been promised by both parties in an agreement
through an Arbitrary institution can be rightfully examined by
the district court.

This right needs to be assessed in light of understanding that
based on Law No. 30/1999 the district court lacks the competence
to handle a case if each party has agreed to settle the matter
through an Arbitrary institution.

It would appear that based on the legal power of an agreement
between the parties and according to the rules of a civil case
(Chapter 1338 of the Civil Penal Code), proper contractual
processes should be carried out.

Additionally, based on Chapters 2 and 3 of Law No. 30/1999 on
Arbitrary and the Alternative for Conflict Settlement, it is
stipulated that if an agreement contains a clause of issue
settlement through Arbitration, then the settlement should
accordingly be implemented through the Arbitrary institution.

In Chapter 3 it is mentioned that the district court has no
authority to examine a case when it is bound to a settlement
through the Arbitrary institution.

If this is true, then the question needs to be asked why then
did this issue ever reach the district court?

Based on the two statements indicating the case and judicial
arguments forwarded by each party, we observe that the efforts
made by them can be categorized as deviating from the law and
risking the professional ethics that should be rectified by
professionals engaged in this sector.

This means that if they understand properly the regulation as
stipulated in Chapter 1338 and Law No. 30/1999, the appropriate
steps that should have been taken through an Arbitrary
institution and not by directly proposing a charge via court
proceedings.

In other words, whatever the reason, it is appropriate that
both the plaintiff and defendant are bound to an agreement.

Another aspect of interest from the two parties' recent public
announcements in this newspaper was that the South Jakarta
district court has, under the request, determined to confiscate
all assets owned by the accused so that it would be impossible
for the accused to run a business.

The problem with this is that the South Jakarta district court
did not pay attention to the applied law for it has not handled
the proposal of the plaintiff with the right law foundation,
which said that the South Jakarta court did not have the
authority to evaluate the case between the plaintiff and
defendant when they have committed themselves to solve their
dispute through an arbitration.

According to the statement announced by the plaintiff PT
Perusahaan Dagang Tempo, as the issue consisted of arguments
considered juridical and not business related, judicial
intervention was justified from the beginning.

Nevertheless, the juridical arguments were not the kind of
statements that facilitated juridical arguments for they were
based on a misinterpretation of an opinion of law expert Prof.
Subekti.

If Prof. Subekti's views were considered as a reference to the
arbitration dispute evaluation, then the roles of the experts --
the business experts -- would be highly necessary.

However, the opinions of the experts did not automatically
become the solution for the dispute.

The solution of a dispute should be based on the law.

In other words, there is a basic misunderstanding if the
accuser argues that the solution of the case via Arbitration
clause can only occur if the issue is business related and not
related to legal complications.

Settlements for solving cases through arbitration are highly
necessary.

Therefore the settlement of the dispute can only occur through
the Arbitration and not by the court system.

Consequently, where there is an arbitration clause, a dispute
settlement between a plaintiff and a defendant can only be
reached through arbitration, not through a judicial institution.

In conclusion, in order to allow both local and multinational
businesses to breathe a collective sigh of relief, it would
appear that the South Jakarta court should govern a temporary
indictment and declare itself incompetent to authorize the case.

If this was to occur, then both parties should then be aware
that efforts to uphold justice and legal procedures should be
paramount, including the settling of the dispute through the
institution of the BANI Arbitration as it has been agreed
previously.

The writer is current Chairman of the Advisory Board for the
Indonesian Advocate Association and former chairman of the
Indonesian Advocate Association.