UK firm regrets local court decision

JAKARTA (JP): Bankers Trust International PLC. of the United Kingdom has expressed dismay at a local court's refusal to honor the international arbitration court's ruling on its derivative case against publicly listed PT Mayora Indah.

Bankers Trust's lawyer Tony Budidjaja said on Wednesday the Central Jakarta District Court refused to enforce the decision of the London-based international arbitration court, which ordered Mayora to pay its US$50 million obligation.

The Central Jakarta District Court's rejection in February was based on the grounds that the London court's decision created confusion because Mayora filed a countersuit at the South Jakarta District Court.

Tony said the local court acted in violation of Law No. 30/1999 on arbitration, which stipulates that a decision made by an arbitration court should be immediately executed.

He added the court, under the existing arbitration law, had no jurisdiction to overturn a verdict by the arbitration court.

Bankers Trust and Mayora signed a derivative contract in 1997. Under the contract, Mayora was required to exchange $50 million to the rupiah at an agreed rate with Bankers Trust on a predetermined date in 1998.

Mayora failed to meet its obligation after the rupiah's value against the greenback plunged when the economic crisis struck in June 1997.

Mayora, following its payment default, accused Bankers Trust of being responsible and liable for not giving adequate financial advice.

The contract between the two stipulated that any dispute arising from the transaction would be mediated by the London Court of International Arbitration.

Bankers Trust filed suit against Mayora in the court in December 1998.

The court ruled for Bankers Trust last October and ordered Mayora to pay the $50 million. (udi)