KUALA LUMPUR: A legal representative of Astro Malaysia Holdings Bhd contended that the Supreme Court of Indonesia’s decision to dismiss the company’s appeal to make claims over a failed venture appears to run counter to the principles of the New York Convention.
“[The Supreme Court’s decision] 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,” said counsel Chou Sean Yu, who is attached to Singapore-based WongPartnership, which is Astro’s legal representative.
His comments came on the heels of the Indonesian Supreme Court’s dismissal of the appeal by Measat Broadcast Network Systems Sdn Bhd, a wholly owned unit of Astro, to enforce the awards ruled by the Singapore International Arbitration Centre (SIAC) against three units of the Lippo group.
The SIAC had in 2010 ruled in favour of the claimants against PT First Media Tbk, PT Direct Vision and PT Ayunda Prima Mitra in Indonesia. SIAC granted Measat and the other claimants an award amounting to some RM970 million plus interest.
However, the Central Jakarta District Court rejected Measat’s application last September, leading Measat to file an appeal in October 2012 in the Supreme Court, which later dismissed the appeal.
What irks Astro is that the decision by the Indonesian courts were inconsistent with the judgments that have been entered into the terms of the awards in four other relevant jurisdictions, namely Singapore, Malaysia, Hong Kong and the United Kingdom.
With the recent ruling by Indonesia’s Supreme Court, the awards remain unpaid by the Lippo units despite the arbitration award being registered in four jurisdictions – Singapore, Malaysia, Hong Kong and the United Kingdom.
In an email to The Edge Financial Daily, Chou said many corporations intending to invest in Indonesia have chosen arbitration, including under SIAC, as a legal recourse should disputes arise.
He said the New York Convention was intended to facilitate recognition and enforcement of arbitral awards made in the territory of other signatory states, and Indonesia was signatory to the New York Convention.
Although Astro has not said what its next course of action is, sources said it could consider filing for a civil review in the Supreme Court of Indonesia.
The troubles faced by tycoon Tan Sri T Ananda Krishan’s Astro in Indonesia is a reminder of the challenges that companies with existing operations or eyeing new investments face there.
It is worth noting that apart from the pay-TV venture, Ananda had made investments in the telecommunications industry in Indonesia via Maxis Communication Bhd (MCB).
Currently, Ananda has an effective stake of 29.25% in Maxis Bhd, worth RM14.8 billion, through Usaha Tegas that owns 45% of MCB which, in turn, owns 65% of the listed Maxis Bhd. MCB owns 14.9% of Indonesian-based PT Axis Telekom.
In early 2005, Astro entered into a partnership to set up a pay TV business in Indonesia through a Lippo subsidiary, Direct Vision, which at the time owned a multimedia licence awarded by the Indonesian government.
However, when the partnership ran into heavy resistance and did not last beyond 2008, the two parties decided to arbitrate the dispute in Singapore.
Nonetheless, the pay TV venture paved way for Ananda’s other corporate pacts in Indonesia, including the purchase by Ananda’s flagship telco company MCB of a controlling 51% interest in Lippo’s telco company Natrindo, now known as Axis.
In April 2007, Maxis moved to raise its exposure in Indonesia’s telco market after it bought out Lippo’s remaining 44% interest in Natrindo, now PT Axis Telekom, for US$124 million (RM405.5 million).
Two months after concluding the buyout of Natrindo, Ananda entered into an alliance with Saudi Telecom, Saudi Arabia’s largest telecommunications company. He sold a 25% stake in Maxis and 51% interest in Natrindo for a whopping US$3.05 billion.
This article first appeared in The Edge Financial Daily, on September 11, 2013.