Indonesia’s highest court has declined to enforce Singapore arbitral awards against a local company on the grounds that doing so would “interfere with the judicial process in Indonesia,” according to the Malaysian company seeking enforcement.
Astro Malaysia, a Kuala Lumpur-based conglomerate led by billionaire Ananda Krishnan, has been involved in a dispute since 2008 with the Lippo Group, an Indonesian conglomerate controlled by the Riady family, over a failed satellite television joint venture in Indonesia. In a series of decisions in 2010, a three-member panel of the Singapore International Arbitration Centre awarded Astro around $300 million.
The awards have been upheld in Singapore, Malaysia, Hong Kong, and the U.K., but the Central Jakarta District Court declined to enforce them in a September 2012 decision. Astro announced Tuesday it had been informed that the Supreme Court of Indonesia was denying its appeal of the district court’s decision.
According to Astro, the court said the SIAC awards were “contrary to public order” and that they “contradict the fundamental principles of the legal system and people at large in Indonesia, the laws in Indonesia and have violated the state and legal sovereignty of Indonesia.”
Indonesia is a signatory to the New York Convention governing the cross-border enforcement of arbitral awards.
In a statement, Astro lawyer Chou Sean Yu of Singapore’s WongPartnership said: “The Supreme Court of Indonesia’s recent decision is disappointing as it would appear to run counter to the principles of the New York Convention. It may give rise to the perception that Indonesia is not arbitration-friendly and foreign arbitral awards are difficult to enforce in Indonesia, which in turn would affect the investment climate in Indonesia.”
Singapore has long promoted itself as a regional hub for international arbitration, so a lack of recognition of SIAC awards in Indonesia, Southeast Asia’s largest economy, could be setback to those efforts.
Though the Supreme Court is Indonesia’s highest, there is a provision for the court to re-hear cases. It’s not clear if Astro will pursue this option. Lippo is also currently challenging the awards’ enforcement in the Singapore Court of Appeal, where a decision is pending.