Jakarta court orders BP to pay $2 million compensation to supplier
Thursday, March 11 2004 - 12:02 PM WIB
The amount was much lower than the $70.3 million demanded by Mestaco in compensation for the abrupt termination of its contract with BP, Pradakso Hadiwidjojo, BP Indonesia's senior manager for communications and external affairs, said in a statement made available to Petromindo.com.
Pradakso did not disclose the amount of BP's funds frozen by the bank, and even the name of the bank.
"The court decision was not fully based on the arguments and evidences submitted by the two conflicting parties, and did not go in line with normal legal practices in Indonesia," Pradakso said.
Moreover, Pradakso said, the court not necessarily ordered the freezing of BP's bank account considering that it was a multinational company with large investments in Indonesia, thus making it impossible for the firm to evade any legal obligations.
"The freezing of BP's bank account could have serious negative impacts on our operation in Indonesia", Pradakso said.
Mestaco, which had supplied BP with a chemical called Halon-1301 used for extinguishing fire, sued BP in the South Jakarta court after the termination of their contract.
Meanwhile, BP complained that the Halon-1301 supplied by Mestaco had been contaminated with another chemical called Dichloromethane, which easily catches fire. This prompted BP to terminate its cooperation with Mestaco.
BP said that Mestaco's wrong practice was detected in mid-2001, and was corroborated by the forensic department of Indonesia's National Police Headquarters and a private laboratory in Singapore.
Mestaco however refused the laboratories' conclusions and reported the case to South Jakarta court, demanding BP to give it $70.3 million in compensation for the abrupt termination of its contract.
The company, which was assisted by lawyers from Soemadipradja & Taher law firm, said that it would appeal the court ruling. (Hotma)