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.