Indonesia Wins Legal Dispute against IMFA

Finance Minister Sri Mulyani Indrawati and Attorney General Prasetyo after giving a press statement, at the Attorney General’s Office, Jakarta, Monday (1/4), (Photo by: Ministry of Finance PR)

The Indonesian Government on 29 March 2019 won an arbitration lawsuit against Indian Metal Ferro & Alloys Ltd (IMFA) over the issue of overlapping Mining Business Permits (IUP).

The win saves USD469 million (Rp6.68 trillion) in state finance.

“We are very grateful to the Attorney General for not only preventing state losses but also returning our case fee,” Minister of Finance Sri Mulyani Indrawati said in a joint press conference with Attorney General Muhammad Prasetyo at the Attorney General’s Office on Monday (1/4).

For the record, the decision was made after a trial was held in the Hague, the Netherlands in September 2018.

In the meantime, Prasetyo stated that the IMFA has been required to return the costs incurred during the arbitration process to the Indonesian Government amounting to USD2,975,017 and GBP361,247.23.

“The Arbitrator Council in its decision has accepted the Indonesian Government’s rebuttal regarding temporal objection which states that the issues of overlapping mining permits and territorial boundary have occurred before the IMFA invested in Indonesia,” said Prasetyo.

According to him, should the IMFA exercised a proper due diligence, the IMFA should have known the issues. Therefore, the IMFA is not entitled to blame the Indonesian Government for the investor’s negligence, he added.

Meanwhile, Sri Mulyani said that the Government is committed to providing services to Indonesian investors, adding that the legal victory is not because the Government does not care about investors; yet a case where the Indonesian Government will indeed maintain its management.

To that end, Sri Mulyani also urged Ministry of Energy and Mineral Resources and Regional Governments to have various permits improved. In carrying out the cooperation agreement, she added, the rights and obligations as well as the provision of legal certainty in Indonesia must be carefully examined.

For the record, the lawsuit – filed by the IMFA on the Indonesian Government on 24 July 2015 – was filed due to an overlap of IUP owned by mining company PT Sri Rahayu Indah with seven other companies due to unclear boundaries. With the overlapping of the IUP, the IMFA claimed that the Indonesian Government had violated the India-Indonesia Bilateral Investment Treaty.

Land disputes and overlapping permits for plantations and mining operations are a common problem in Indonesia as various government agencies use different maps and data. (Ministry of Finance PR/ES)

Translated by: Muhardi

Edited by: M. Ersan Pamungkas