Roche told to pay Rp 281b in compensation payments

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)