Review of 300 commercial court verdicts reveals flaws

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.