Monday, 2 December 2013


Indonesia was still firm about bilateral commitment with other countries investing in Indonesia based on bilateral treaty. The Government still referred to the clausules already signed in treaty including assurance to foreign investors in Indonesia. But the consequences was that each time there was dispute or claim brought to arbitration, Indonesia always lost. “Such as claim of Churchil Mining claim to arbitration, in any court at all we lost.” The director General of Law and International Agreement, Ministry of Foreign Affairs Linggawati Hakim disclosed to Business news.

Churchil Mining brought their claim to the International Centre for Settlement of Investment Dispute, Washington, USA. The company complained that their mining permit was cancelled by the Regency of Kutai in East Kalimantan. “Contract made by the Regional Government, this is a typical mistake. Contract must not be made by the local Government because in case of sue, the Target is the Central Government, not the local Government” Hakim remarked

The Ministry of Foreign Affairs felt the need for coordination and consultation between the Central and local Governments; this was the one point not understood by the local Governments. Churchill’s sue was not the only case, there were many other foreign investors who sued for rights. Pursuant to that matter, the Ministry of Foreign Affairs of RI was fostering collaboration with South Center to support capacity building of developing countries. “Capacity of building is most important for Indonesia and the developing countries. We act as co-host in meetings with negotatiors who are mostly lawyers of around 50developing countries.”

The Ministry of Foreign Affairs saw that developing countries had no better bargaining position, particularly in times when foreign investors made their claims. It was the point that made developing nations skeptical about the Investor-State Dispute Settlement [ICSID/UNICITRAL]. “There is more loss thain gain. Many developing nations refuse to go to ICSID” Hakim concluded.

Scepticism was even beginning to haunt developing countries like America and Australia. Many aspects made developing countries skeptical such as objectivity of Arbitration judges. The Minister of Foreign Affairs saw that the judges were no longer pro developing nations. Some developing nations were unwilling to sign any treaty which tend to give privileges to foreign investors. “We have dissected the matter, as Indonesia is not too far different from other countries. At least in the forum there are recommendations for developing countries”

The Minister still saw that every international collaboration agreement was indeperable from ISDS/ICSID; but if there was any clausule which gave to much privilege to investors, the Ministry saw the need of amendments. Besides, every international agreement had expiry dates. If the agreement was overdue, the Government of RI would not prolong it. “We need not to prolong it; such is one alternative next to amendment and revision.”: Hakim remarked.

Indonesia had not decided whether to improve treaty with foreign investors countries. The Ministry of Foreign Affairs had considered several alternatives to maintain foreign investments, without disadvantaging the Government. Other alternative way was through mediation process by involving a third party to bridge communication for win-win solution. “Mediation is a long and winding process, while investors believed that time is money. They would not be involved in a long process. Very ofter the process of mediation is mis-communication.” 

Business News - November 13, 2013

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