Review of 300 commercial court verdicts reveals flaws
The Jakarta Post Jakarta
A government-appointed team found numerous flaws in 300 bankruptcy verdicts handed down between 1998 and Feb. 2002, lending weight to allegations that the country's nascent commercial court is not up to the task of reigning in wayward debtors.
Established as part of the International Monetary Fund (IMF)'s reform program, the team evaluated the quality of verdicts in the four years since the commercial court was created in 1998.
Numerous odd decisions were found among the 300 verdicts the team has sifted through since September last year, said team member Ricardo Simanjuntak on Monday.
"When judges hand down inconsistent verdicts in cases that are alike, that is when legal uncertainty sets in," he said during a press meeting. "They (judges) seem to issue verdicts on a whim and do so without providing legal arguments to justify them."
The team of lawyers and former judges had yet to issue a conclusion based on their findings. But Ricardo explained that the review, known as an annotation, should be seen more as an academic discourse rather than criticism of the court.
The annotation of a the 1999 case of Singaporean creditors Overseas-Chinese Banking Corporation Ltd and Industrial & Commercial Bank Ltd versus PT Aster Dharma Industri, questioned the court's decision to use Indonesian law when the contracts involved clearly stated that Singaporean law would apply in the event of a dispute.
In another case, Ricardo said, the judges overruled a decision by the majority of creditors to declare the debtor bankrupt.
By law, two-thirds of the creditors representing more than half of a company's debts are enough to declare the company bankrupt.
"This particular case had 80 percent creditors voting against the debtor, and still the court ignored them," Ricardo said.
The team is led by noted legal expert Kartini Muljadi and was established in August last year by the Commercial Court Steering Committee -- a body under the National Development Planning Board (Bappenas) that is aimed at improving the performance of the commercial court.
Commenting on public concerns about court mafias, Ricardo said his team had not gone so far as to investigate the suspicions.
"We only looked at the quality of the court's verdicts, but not the processes leading up to them," he said.
"We have left these processes up to the Ombudsman to question," he explained, referring to the National Ombudsman Commission, an independent body responsible for investigating complaints about public services.
Critics have taken particular exception to the rampant corruption plaguing the country's judiciary, and say that the bankruptcy court has merely provided another new cash cow to be milked by corrupt court officials and lawyers.
"This (review) isn't about confirming criticism of the court," said Center for Legal Studies' chairwoman Emmy Yuhassarie. "We wanted the commercial court processes to be speedy, fair and transparent."
Regardless of the corruption charges, the team's findings further confirm suspicions among creditors that the commercial court was ineffective as a tool for recouping money from recalcitrant debtors.
The Indonesian Bank Restructuring Agency (IBRA), which has been trying to recoup trillions of rupiah in taxpayers money from debtors with little success, stands as a testimony to the problems plaguing the court.
Consequently, debt restructuring talks have been the main medium used to settle creditors' claims. But analysts fear that without an effective bankruptcy court, creditors lacked the leverage to demand better restructuring deals from debtors.
Following concerns raised by investors as well as foreign lenders such as the World Bank and the IMF, Indonesia is revising its bankruptcy law.
Ricardo said the new bankruptcy bill promised better definitions on frequently disputed terms such as debtor, creditor and debt.