Karaha Bodas dispute lingers, until when?

Todung Mulya Lubis, Jakarta

Reports about Karaha Bodas have resurfaced as Pertamina has been ordered to pay the company compensation resulting from the  cancellation of the construction of the Karaha Bodas Geothermal Power Plant in Garut, West Java in 1997.
The amount of the claim to be paid is reportedly over US$300 million, which is not an insignificant amount for Pertamina, a company that is actually not fully financially sound. As time passes, this amount of money will continue to rise as interest and a penalty are imposed on any late payment.
It is strange that until today Pertamina and the government are still in disagreement about the payment of Karaha Bodas’ claim. On the one hand, Pertamina has refused to pay the claim and at the same time it is reviving the plan for an investigation into the crime allegedly committed by Karaha Bodas personnel.
On the other hand, the government has stated that it will make this payment although it falls short of mentioning the source of the money so that several House members have urged the government to be transparent about this financial source.
This debate has been going on for years without any
decision being made. Unfortunately, those involved in
this debate may not realize that Karaha Bodas has had several of Pertamina’s bank accounts — at the Bank of New York and Bank of America — frozen.
My advice to Pertamina and the government is that they should immediately pay Karaha Bodas’ claim because the ruling of the International Arbitration Institute in Switzerland in favor of Karaha Bodas is final and binding. No matter how many legal efforts have been and will
be made, the fact that
the  International Arbitration Institute found against Pertamina will stand.
On the basis of the international legal doctrine, an appeal cannot be made against a ruling at international arbitration, which is actually the choice of the disputing parties, and, in addition to this, there is only a very small opportunity for this ruling to be nullified. International legal theory and practices are too standardized to be contested with a national legal effort that will nullify a ruling of the International Arbitration Institute.
Law No. 30/1999 on Arbitration and Dispute Settlement Options  explicitly recognizes rulings at international arbitration. Here one can demand that a ruling at international arbitration be implemented through the Central Jakarta District Court. If the district court rejects it, an appeal may be made to the Supreme Court.
It must be noted that, by law, a request can be made to have a ruling at international arbitration nullified but such a request is rarely met.
On the other hand, in many cases an international arbitration panel has ignored the ruling of a domestic court nullifying a ruling at international arbitration.
In this context, it should also be noted that Indonesia, by virtue of Presidential Decree No. 34/1981, is committed to the Convention on the Recognition and Enforcement of Foreign Arbitral Award. As Indonesia has ratified this convention, its obligation to enforce a ruling
at international arbitration
is inevitable.
Perhaps my advice to Pertamina to pay the claim will be considered as lacking in nationalism. However, this is not a matter of being a nationalist or otherwise. When Indonesia consciously chose to be an active member of
an international community committed to transparency, a commitment to international legal norms became one of the rules of the game. Indonesia has not chosen the way of North Korea, Cuba or Myanmar, which ignore international legal norms.
The Karaha Bodas case is a very valuable but expensive lesson. From a legal perspective, I’m one of those people who believe that this geothermal power plant project may be fraught with corruption, nepotism and cronyism as well as excessive mark-up practices. In short, this is an unfeasible project.
However, alleged corruption, nepotism, cronyism and mark-up practices have never been investigated and proven so they cannot be used
as an effective weapon for self-defense during the arbitration process.
In fact, if these dishonest practices had been probed, it would not be impossible to see Karaha Bodas undergoing investigation in the United States for violating the Foreign Corrupt Practices Act. Just take a look at what has happened to Monsanto, which went through an investigation in the United States for alleged corruption, cronyism and nepotism in its transgenic cotton project in Indonesia. Instead of losing the case at arbitration, Karaha Bodas may be penalized in the United States.
Where lies the mistake? Honestly, I cannot answer this question. Of course, the blame may be laid upon Pertamina’s attorneys but the main mistake lies with Pertamina and the government.
The arbitration strategy adopted by Pertamina and the government has failed in the face of a claim made by Karaha Bodas, which is better prepared and is supported by convincing documentation and argumentation.
In fact, the Karaha Bodas geothermal power plant project was canceled as a result of the regional economic crisis that affected this country to the extent that all infrastructure projects were canceled.
This crisis was a force majeur condition and was beyond the capacity of the parties to overcome. This was an undeniable fact, a prima facie evidence that should have been used as a very strong defense.
I really cannot understand why Pertamina and the government have been unable
to mobilize all strong evidence and arguments to nullify the claim made by Karaha Bodas. Is this the result
of a cover up of for vested-interest groups, although Pertamina and the government must be sacrificed?
The stakes are high if
the claim made by Karaha Bodas fails to be settled. The perception that the Indonesian government has failed to honor international law will become stronger and this will surely be a constraint discouraging foreign investors to invest in Indonesia.
If this is the case, the foreign investment road shows made by both President Susilo Bambang Yudhoyono and Vice President Jusuf Kalla in many countries will be rendered useless.
The government must have the courage to make an unpopular decision even at the risk of being labeled as lacking in nationalism.

   The writer is an arbiter at the International Chamber of Commerce (ICC) and the National Arbitration Agency (BANI).

Poverty, not weapons, the real killer

Emmy Fitri, The Jakarta Post, Jakarta

It may sound like hyperbole if people are said to be dying for not having enough food to eat or enough money for health care.
But the sad fact is that it’s not being melodramatic to say people are dying every day for shortages of nearly everything. Poverty is lethal and will continue to kill unless there is some intervention and aggressive efforts on the part of policy-makers, caregivers, just plain givers and the
better off.
With little fanfare, poverty has discreetly and callously killed more people than all the wars and guns. Poverty can kill slowly and painfully, or it can kill in an instant.
Insecure world leaders and greedy politicians may wage bloody wars to stoke their egos and line their pockets and the pockets of their friends and arms dealers. Millions of people may die from guns, grenades and missiles. But the World Health Organization has officially listed the 10 biggest killers and they do not include war.
They are diseases, all of which are prevalent in impoverished countries in Africa and Southeast Asia.
Lower respiratory infections kill more than four million people each year and AIDS claims three million lives a year, with about 40 million people in the world living with HIV.
Malaria causes between one and five million deaths each year, followed by diarrhea which kills around 2.2 million a year.
Thanks to aggressive global campaigns, one of the world’s oldest scourges, tuberculosis, is now “only” killing about two million people every year.
Measles comes next with 1,400 people, mostly children, dying of the disease each day. Rounding out the top 10 killers are pertusis, or whooping cough, with 200,000 to 300,000 victims each year; tetanus with 214,000 deaths a year; meningitis with 174,000 deaths a year, and syphilis, which kills 157,000 a year.
Immunizations and vaccines have been invented to prevent the spread of these communicable diseases. Prescriptions and medical technologies are continually advancing in response to the huge challenge of saving lives.
So why are so many people still dying of these diseases every year? The answer
is poverty.
Wherever poverty prevents people from obtaining adequate health care, disease will flourish, being an opportunistic killer. So while those with money can, for the most part, afford to shield themselves from these killers, the poor are left defenseless.
In general the poor are less educated than the rich, and lack knowledge about hygiene, nutrition, good health practices and where to go for specific medical services. The result is that even where free health care is available, the poor are less likely to seek help.
These killer diseases prevail in rural areas and urban slums, where people live in overcrowded conditions or rundown shanties, with limited access to clean water.
Subsistence lifestyles, where eating is simply about survival, are also a contributing factor. Parents who earn less than US$2 a day are going to worry simply about affording enough food to feed their children, without considering the nutritional value of that food.
Many poor children do not die because they have picked up some horrible virus or harmful microbe; they are killed by severe malnutrition.
Of course, Indonesia is not alone in this battle. Throughout the world there are serious disparities in health services for the rich and the poor.
In the latest issue of the Washington-based World Population Bureau’s journal, it was written: “The disparities are particularly noticeable in many of the poorest countries, where millions of people suffer from preventable illness such as infectious diseases, malnutrition, and complications of childbirth, simply because they are poor.”
The 2006 World Bank report said close to 40 percent of Indonesia’s 220 million population was above the national poverty line but still lived on less than $2 a day. Any small changes in prices, incomes and health status can throw families into poverty, at least temporarily.
Being poor is closely associated with restricted access
to what should be basic rights: adequate education, sufficient health care and proper housing.
The majority of the blame should go to policy-makers for failing to produce pro-poor policies, caregivers for not being willing to go the extra mile to reach the ailing poor and lawmakers for not doing enough to promote the interests of the poor.
In his 1961 inaugural speech, U.S. president John F. Kennedy said if a free society could not help the many who were poor, it could not save the few who were rich.
This is a reminder from the past that is still true today.
The UN-sponsored Millennium Development Goals to make poverty history, hopefully, are not simply words. Saving the poor can very well mean saving us all.

The author is a staff writer of The Jakarta Post.