Upholding the law in the mining sector

The Constitutional Court's unanimous ruling last Thursday that Law No. 19/2004 on forestry is constitutional certainly disappointed and angered environmentalists as the ruling boils down to a license for a number of firms to conduct open-pit mining in protected forests.

The court's president, Jimly Asshidiqie, was quoted by the media as saying that the unanimous decision had been based on the overriding need to improve the investment climate in the mining sector.

The ruling has cleared up once and for all the seven-year imbroglio that had virtually halted new investment in the extractive industries sector (apart from oil and gas) since 2002 and threatened to immerse the government once again in messy and costly international litigation.

However, citing only the need for an improved investment climate as the grounds for the decision could lead some to believe that the court, which is the guardian of our Constitution and national conscience, had succumbed to the political wishes of the government.

We beg to differ with the environmentalists on this particular issue. Given the history of Law No.19/2004, we should even commend the Court for its consistency in upholding the Constitutional provision that prohibits the retroactive application of a statute.

This legislation originated as a government regulation in lieu of law, which was hurriedly issued in early 2004 and was eventually enacted by the House of Representatives as Law No.19/2004 in July, 2004, in an effort to correct the glaring error made by the framers of Law No.41/1999 on forestry, which was made retroactively applicable to mining contracts awarded before 1999.

Hence, the amendment essentially boiled down to the insertion of transitional provisions into Law No.41/1999, which stipulated that companies that had obtained mining contracts prior to 1999 could continue to engage in open-pit mining in protected forests until the expiry of their concessions.

After all, the insertion of transitory provisions is normal practice in legislation that introduces new rules of the game, or which repeals provisions contained in earlier legislation.

Law No.41 only stipulated that open-pit mining operations were entirely prohibited in areas designated as protected forests, but had nothing to say about the legal status of the 150 mining contracts the government had awarded prior to 1999 for open-pit mining operations in protected forests.

The problem was that many of the 150 mining contractors had invested hundreds of millions in their concessions, and unilaterally annulling their contracts would have plunged the government into highly expensive and protracted litigation, and resulted in a lack of legal certainty in the mining industry.

It was this very same principle of non-retroactivity that was applied by the Constitutional Court in its majority ruling in July 2004, which stated that the Antiterrorism Law (No. 16/2003) could not be applied retroactively to cases arising out of the terrorist attacks in Bali on Oct. 12, 2002.

Consistency in the upholding of all the articles of the Constitution is key to building up the public's confidence and trust in the court, and its own ability to perform its role as the guardian of the Constitution.

This isn't an easy task as the court has to tread a fine line between fulfilling popular aspirations for justice and the demands of political exigency, while all the time striving to avoid any whiff of arbitrariness in its rulings. A credible constitutional court, both as regards legal competence and integrity, is vital to rebuilding public trust in the judicial system as its ruling cannot be appealed.

We share the great concern of environmentalists about the damage that could be inflicted on our forests by greedy miners. The dilemma, though, is that the sanctity of a legal contract must be honored, otherwise our economy will collapse into total chaos.

Law No.19/2004 seems to be the best compromise that could be struck between the objective of protecting our forests and that of maintaining legal certainty for investors and the public in general.

First of all, this legislation does not open wide the gates of our protected forests to open-pit miners as it permits only 13 concessions in such forests. Moreover, the concessionaires involved were selected by a special team made up of representatives of the government and the House on the basis of the level of investment already made, the commercial volumes of the mineral deposits already found and the potential benefits of their operations to the national economy.

We should respect the Constitutional Court's ruling. Our task now is to help oversee the enforcement of the legislation to ensure that no more companies, besides the 13 existing ones, are awarded open-pit mining concessions in protected forests and that the 13 mining companies strictly abide by the prevailing mining and forestry regulations.