Roche told to pay Rp 281b in compensation payments

JAKARTA (JP): The South Jakarta District Court issued a final verdict on Tuesday requiring multinational pharmaceutical company PT Roche Indonesia to pay Rp 281 billion (about US$33.05 million) in compensation payments to local distributor PT Perusahaan Dagang Tempo due to breach of contract.

"The breach of contract has caused loss of profit and goodwill to Tempo in the above said amount," presiding judge R. Soenarto said, reading the verdict.

Lawyer Harjon Sinaga, representing Roche Indonesia, regretted the court's decision saying, "the verdict goes against the mutually signed contract between Roche Indonesia and Perusahaan Dagang Tempo."

He said his client would file an appeal at the Jakarta High Court within two weeks.

He said the Distribution Agreement between principal Roche Indonesia and distribution agent Tempo, allowed the former to terminate the contract partly, while still continuing with the other uncanceled clauses of the contract.

The distribution contract outlines the distribution of Roche's pharmaceutical products by Tempo across Indonesia.

Roche's pharmaceutical product are broken down into two main divisions, namely, Over The Counter (OTC) Drugs and Prescribed Drugs.

"Roche, based on business considerations, decided to terminate the OTC clauses and continue with the Prescribed Drug clauses, and this is not against our contract," he said.

Plaintiff's lawyer Amir Syamsudin said Tempo deserved compensation from Roche's unilateral act of contract termination as the distributor company had done much in establishing a strong customer base for Roche.

"Tempo has built up a vast network of customers for Roche products across Indonesia. This is indeed good," Amir said.

He added that Tempo had been with Roche under the Distribution Agreement for many years.

"Tempo started from zero," he said adding that the sudden cancellation of Tempo's distribution rights after the company had distributed Roche's products for over 25 years was against business code of ethics.

Tempo filed a lawsuit against Roche at the South Jakarta District Court last October for annulling a contract appointing the former as a distributor of Roche's OTC drug products on the domestic market.

OTC products are drugs that can be purchased without a doctor's prescription.

The distribution contract, Roche earlier said, also had an arbitration clause signed by both parties stipulating that settlements of disputes must go through arbitration, not the court.

With such arguments, Roche then asked the court to turn down Tempo's lawsuit right from the outset.

"Roche and Tempo clearly stipulated in their distribution agreement that any dispute arising between them which could not be settled amicably should be settled by arbitration in the English language and held in Jakarta under the Rules of Arbitration of the Indonesian National Board of Arbitration (BANI)," the company then said.

However, Roche's demand was rejected with the issuance of a provisional ruling in November, which stated that the district court was entitled to handle the case.

The court also sequestered Roche's assets, including its land and factory in Cimanggis, Bogor; its machines and all manufacturing equipment on the land and in the factory; as well as spare parts and half-finished goods there.(udi)