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Indonesian Version
Marcell Sihombing, Kartini L. Makmur
Indonesia has had to endure more than its fair share of investment disputes over the years and a substantial number of claims have come before various international-arbitration institutions, including The International Centre for the Settlement of Investment Disputes (ICSID). Most of these arbitration claims are filed by foreign corporations who allege that the government has damaged their interests through the introduction of new regulations or policies.
In the case of PT Newmont Nusa Tenggara, for example, the company filed a claim against the Indonesian government on 2014 owing to the fact that the Mining Law set out an obligation for mining companies to build smelters in the country. Prior to this case, Churchill Mining filed a claim against the Indonesian government after alleging that it had issued double licenses which covered identical mining concessions.
Commenting on the issue, Rachmi Hertanti from Indonesia for Global Justice (IGJ) leveled criticisms at the country’s investment-agreement and dispute-resolution mechanisms. Hertanti firmly believes that these mechanisms offer investors too much protection in the context of Indonesian laws and regulations. In Hertanti’s view, such protections should instead be formulated in the public interest.
“It’s typically asserted that such mechanisms are common business practice, however they have been intentionally manipulated with the practice of business law in mind in order to primarily protect the interests of investors. This has resulted in the government losing its authority to formulate policies that are primarily of benefit to the general public,” asserted Ms. Hertanti at a discussion event held in Jakarta on 4 November 2015.
According to Ms. Hertanti’s observations, such practices date all the way back to the colonial era. Hertanti also asserted that the investor-protection imperative has subverted various international agreements and laws.
Ms. Hertanti claimed in her address that investment-protection agreements had begun to come to prominence after the end of the Second World War and that these investment-protection agreements served the imperial interests of the former occupying nations and their companies. This can be seen in the fact that these agreements placed a heavy emphasis upon the compensation which had to be paid by newly independent states in the case of their assets being nationalized.
Such investment-protection agreements began to be formulated after the war, as newly independent, formerly occupied countries started to take control of assets which had been left behind by their former occupants. Many countries also began to implement nationalization programs. In this climate, countries who wished to invest their capital funds beyond the boundaries of their own states felt the need for some sort of guaranteed protection. Investors thus began to demand the equal and fair treatment of both domestic and foreign investors, and so the modern investment-protection agreement was born.
A number of other typical clauses commonly found in investment-protection agreements are also worthy of note. One such type of clause concerns a state’s obligation to cover the losses suffered by corporations as a result of war, armed conflicts, revolutionary movements, national emergencies, civil disturbances, or insurgencies, usually in form of compensation or restitution. Clauses stating that both state and corporation are to be considered equal in the event of a dispute resolution are also common.
Abdulkadir Jailani, Director of Economic, Social, and Cultural Agreements at the Ministry of Foreign Affairs, was also present at the event and expressed his broad agreement with Ms. Hertanti, while also admitting that foreign investors were often concerned about becoming the victims of politicization.
However, Mr. Jailani also expressed his regret that many state representatives were quick to sign investment-protection agreements without actually understanding their contents in enough detail. The result of this, Mr. Jailani stated, was that clauses worthy of criticism were only discovered at a later date.
“This is not limited to Indonesia, as decision makers across many developing countries do not understand the agreements that they are signatories to in enough detail. International agreements cannot be simply terminated at a moment’s notice. Indeed any annulment of an international agreement must refer to a clause incorporated into the agreement itself,” asserted Mr. Jailani.
Mr. Jailani further revealed that the classification of vested interests had gradually shifted from developed versus developing countries, to states versus corporations. This new investor paradigm, according to Mr. Jailani, is no longer a problem exclusive to developing countries, as even developed countries are having to deal with this new duality.
“Even Germany has had to grapple with this new reality. Moreover, Australia, Russia, and France are also highly concerned about corporations facing off against sovereign states,” Mr. Jailani concluded.
(sp)
Marcell Sihombing, Kartini L. Makmur
Indonesia has had to endure more than its fair share of investment disputes over the years and a substantial number of claims have come before various international-arbitration institutions, including The International Centre for the Settlement of Investment Disputes (ICSID). Most of these arbitration claims are filed by foreign corporations who allege that the government has damaged their interests through the introduction of new regulations or policies.
In the case of PT Newmont Nusa Tenggara, for example, the company filed a claim against the Indonesian government on 2014 owing to the fact that the Mining Law set out an obligation for mining companies to build smelters in the country. Prior to this case, Churchill Mining filed a claim against the Indonesian government after alleging that it had issued double licenses which covered identical mining concessions.
Commenting on the issue, Rachmi Hertanti from Indonesia for Global Justice (IGJ) leveled criticisms at the country’s investment-agreement and dispute-resolution mechanisms. Hertanti firmly believes that these mechanisms offer investors too much protection in the context of Indonesian laws and regulations. In Hertanti’s view, such protections should instead be formulated in the public interest.
“It’s typically asserted that such mechanisms are common business practice, however they have been intentionally manipulated with the practice of business law in mind in order to primarily protect the interests of investors. This has resulted in the government losing its authority to formulate policies that are primarily of benefit to the general public,” asserted Ms. Hertanti at a discussion event held in Jakarta on 4 November 2015.
According to Ms. Hertanti’s observations, such practices date all the way back to the colonial era. Hertanti also asserted that the investor-protection imperative has subverted various international agreements and laws.
Ms. Hertanti claimed in her address that investment-protection agreements had begun to come to prominence after the end of the Second World War and that these investment-protection agreements served the imperial interests of the former occupying nations and their companies. This can be seen in the fact that these agreements placed a heavy emphasis upon the compensation which had to be paid by newly independent states in the case of their assets being nationalized.
Such investment-protection agreements began to be formulated after the war, as newly independent, formerly occupied countries started to take control of assets which had been left behind by their former occupants. Many countries also began to implement nationalization programs. In this climate, countries who wished to invest their capital funds beyond the boundaries of their own states felt the need for some sort of guaranteed protection. Investors thus began to demand the equal and fair treatment of both domestic and foreign investors, and so the modern investment-protection agreement was born.
A number of other typical clauses commonly found in investment-protection agreements are also worthy of note. One such type of clause concerns a state’s obligation to cover the losses suffered by corporations as a result of war, armed conflicts, revolutionary movements, national emergencies, civil disturbances, or insurgencies, usually in form of compensation or restitution. Clauses stating that both state and corporation are to be considered equal in the event of a dispute resolution are also common.
Abdulkadir Jailani, Director of Economic, Social, and Cultural Agreements at the Ministry of Foreign Affairs, was also present at the event and expressed his broad agreement with Ms. Hertanti, while also admitting that foreign investors were often concerned about becoming the victims of politicization.
However, Mr. Jailani also expressed his regret that many state representatives were quick to sign investment-protection agreements without actually understanding their contents in enough detail. The result of this, Mr. Jailani stated, was that clauses worthy of criticism were only discovered at a later date.
“This is not limited to Indonesia, as decision makers across many developing countries do not understand the agreements that they are signatories to in enough detail. International agreements cannot be simply terminated at a moment’s notice. Indeed any annulment of an international agreement must refer to a clause incorporated into the agreement itself,” asserted Mr. Jailani.
Mr. Jailani further revealed that the classification of vested interests had gradually shifted from developed versus developing countries, to states versus corporations. This new investor paradigm, according to Mr. Jailani, is no longer a problem exclusive to developing countries, as even developed countries are having to deal with this new duality.
“Even Germany has had to grapple with this new reality. Moreover, Australia, Russia, and France are also highly concerned about corporations facing off against sovereign states,” Mr. Jailani concluded.
(sp)
Indonesian Version
Marcell Sihombing, Kartini L. Makmur
Indonesia has had to endure more than its fair share of investment disputes over the years and a substantial number of claims have come before various international-arbitration institutions, including The International Centre for the Settlement of Investment Disputes (ICSID). Most of these arbitration claims are filed by foreign corporations who allege that the government has damaged their interests through the introduction of new regulations or policies.
In the case of PT Newmont Nusa Tenggara, for example, the company filed a claim against the Indonesian government on 2014 owing to the fact that the Mining Law set out an obligation for mining companies to build smelters in the country. Prior to this case, Churchill Mining filed a claim against the Indonesian government after alleging that it had issued double licenses which covered identical mining concessions.
Commenting on the issue, Rachmi Hertanti from Indonesia for Global Justice (IGJ) leveled criticisms at the country’s investment-agreement and dispute-resolution mechanisms. Hertanti firmly believes that these mechanisms offer investors too much protection in the context of Indonesian laws and regulations. In Hertanti’s view, such protections should instead be formulated in the public interest.
“It’s typically asserted that such mechanisms are common business practice, however they have been intentionally manipulated with the practice of business law in mind in order to primarily protect the interests of investors. This has resulted in the government losing its authority to formulate policies that are primarily of benefit to the general public,” asserted Ms. Hertanti at a discussion event held in Jakarta on 4 November 2015.
According to Ms. Hertanti’s observations, such practices date all the way back to the colonial era. Hertanti also asserted that the investor-protection imperative has subverted various international agreements and laws.
Ms. Hertanti claimed in her address that investment-protection agreements had begun to come to prominence after the end of the Second World War and that these investment-protection agreements served the imperial interests of the former occupying nations and their companies. This can be seen in the fact that these agreements placed a heavy emphasis upon the compensation which had to be paid by newly independent states in the case of their assets being nationalized.
Such investment-protection agreements began to be formulated after the war, as newly independent, formerly occupied countries started to take control of assets which had been left behind by their former occupants. Many countries also began to implement nationalization programs. In this climate, countries who wished to invest their capital funds beyond the boundaries of their own states felt the need for some sort of guaranteed protection. Investors thus began to demand the equal and fair treatment of both domestic and foreign investors, and so the modern investment-protection agreement was born.
A number of other typical clauses commonly found in investment-protection agreements are also worthy of note. One such type of clause concerns a state’s obligation to cover the losses suffered by corporations as a result of war, armed conflicts, revolutionary movements, national emergencies, civil disturbances, or insurgencies, usually in form of compensation or restitution. Clauses stating that both state and corporation are to be considered equal in the event of a dispute resolution are also common.
Abdulkadir Jailani, Director of Economic, Social, and Cultural Agreements at the Ministry of Foreign Affairs, was also present at the event and expressed his broad agreement with Ms. Hertanti, while also admitting that foreign investors were often concerned about becoming the victims of politicization.
However, Mr. Jailani also expressed his regret that many state representatives were quick to sign investment-protection agreements without actually understanding their contents in enough detail. The result of this, Mr. Jailani stated, was that clauses worthy of criticism were only discovered at a later date.
“This is not limited to Indonesia, as decision makers across many developing countries do not understand the agreements that they are signatories to in enough detail. International agreements cannot be simply terminated at a moment’s notice. Indeed any annulment of an international agreement must refer to a clause incorporated into the agreement itself,” asserted Mr. Jailani.
Mr. Jailani further revealed that the classification of vested interests had gradually shifted from developed versus developing countries, to states versus corporations. This new investor paradigm, according to Mr. Jailani, is no longer a problem exclusive to developing countries, as even developed countries are having to deal with this new duality.
“Even Germany has had to grapple with this new reality. Moreover, Australia, Russia, and France are also highly concerned about corporations facing off against sovereign states,” Mr. Jailani concluded.
(sp)
Marcell Sihombing, Kartini L. Makmur
Indonesia has had to endure more than its fair share of investment disputes over the years and a substantial number of claims have come before various international-arbitration institutions, including The International Centre for the Settlement of Investment Disputes (ICSID). Most of these arbitration claims are filed by foreign corporations who allege that the government has damaged their interests through the introduction of new regulations or policies.
In the case of PT Newmont Nusa Tenggara, for example, the company filed a claim against the Indonesian government on 2014 owing to the fact that the Mining Law set out an obligation for mining companies to build smelters in the country. Prior to this case, Churchill Mining filed a claim against the Indonesian government after alleging that it had issued double licenses which covered identical mining concessions.
Commenting on the issue, Rachmi Hertanti from Indonesia for Global Justice (IGJ) leveled criticisms at the country’s investment-agreement and dispute-resolution mechanisms. Hertanti firmly believes that these mechanisms offer investors too much protection in the context of Indonesian laws and regulations. In Hertanti’s view, such protections should instead be formulated in the public interest.
“It’s typically asserted that such mechanisms are common business practice, however they have been intentionally manipulated with the practice of business law in mind in order to primarily protect the interests of investors. This has resulted in the government losing its authority to formulate policies that are primarily of benefit to the general public,” asserted Ms. Hertanti at a discussion event held in Jakarta on 4 November 2015.
According to Ms. Hertanti’s observations, such practices date all the way back to the colonial era. Hertanti also asserted that the investor-protection imperative has subverted various international agreements and laws.
Ms. Hertanti claimed in her address that investment-protection agreements had begun to come to prominence after the end of the Second World War and that these investment-protection agreements served the imperial interests of the former occupying nations and their companies. This can be seen in the fact that these agreements placed a heavy emphasis upon the compensation which had to be paid by newly independent states in the case of their assets being nationalized.
Such investment-protection agreements began to be formulated after the war, as newly independent, formerly occupied countries started to take control of assets which had been left behind by their former occupants. Many countries also began to implement nationalization programs. In this climate, countries who wished to invest their capital funds beyond the boundaries of their own states felt the need for some sort of guaranteed protection. Investors thus began to demand the equal and fair treatment of both domestic and foreign investors, and so the modern investment-protection agreement was born.
A number of other typical clauses commonly found in investment-protection agreements are also worthy of note. One such type of clause concerns a state’s obligation to cover the losses suffered by corporations as a result of war, armed conflicts, revolutionary movements, national emergencies, civil disturbances, or insurgencies, usually in form of compensation or restitution. Clauses stating that both state and corporation are to be considered equal in the event of a dispute resolution are also common.
Abdulkadir Jailani, Director of Economic, Social, and Cultural Agreements at the Ministry of Foreign Affairs, was also present at the event and expressed his broad agreement with Ms. Hertanti, while also admitting that foreign investors were often concerned about becoming the victims of politicization.
However, Mr. Jailani also expressed his regret that many state representatives were quick to sign investment-protection agreements without actually understanding their contents in enough detail. The result of this, Mr. Jailani stated, was that clauses worthy of criticism were only discovered at a later date.
“This is not limited to Indonesia, as decision makers across many developing countries do not understand the agreements that they are signatories to in enough detail. International agreements cannot be simply terminated at a moment’s notice. Indeed any annulment of an international agreement must refer to a clause incorporated into the agreement itself,” asserted Mr. Jailani.
Mr. Jailani further revealed that the classification of vested interests had gradually shifted from developed versus developing countries, to states versus corporations. This new investor paradigm, according to Mr. Jailani, is no longer a problem exclusive to developing countries, as even developed countries are having to deal with this new duality.
“Even Germany has had to grapple with this new reality. Moreover, Australia, Russia, and France are also highly concerned about corporations facing off against sovereign states,” Mr. Jailani concluded.
(sp)