mARCH 2012 26 Global Arbitration INDONESIAN www.lawyer-monthly.com

ARBITRATION: UNDERSTANDING IS THE KEy!

As part of Lawyer Monthly’s special focus on arbitration, this month we speak to Mohamed Idwan Ganie, the Managing Partner of Indonesian law firm, Lubis Ganie Surowidjojo (LGS). Here, he discusses with us the common issues surrounding arbitration in his jurisdiction, and the current trends within this practice area. He also talks to us about his opinions on the Volkswagen-Suzuki dispute.

Q

Is there a typical method of dealing with dispute resolution for all businesses or do you have to employ a specific tactic for foreign companies compared to local companies?

Foreign plaintiffs often have a perception that they lose cases in Indonesia due to inappropriate conduct by the courts, while, in fact, the reasons are usually more closely linked to a lack of understanding of the Indonesian legal system and insufficient documentary preparation. Over the last 4-5 years corruption has been almost entirely eradicated from the Indonesian court system, so the parties can now be assured that disputes will be determined on the respective merits. Consequently, any consideration in the past to declare Indonesia a “non convenient” forum based on such concerns, should therefore no longer apply in our experience. As such, it is increasingly important for foreign plaintiffs to understand the Indonesian dispute resolution process rather than attempting to import western legal concepts that are often not recognized by the Indonesian legal system.

Q

The recent breakdown in relations between carmakers Suzuki and Volkswagen has recently pushed Suzuki to demand that Vw submit to arbitration as it attempts to force the company to sell a 20% stake it owns in the Japanese group. what are your opinions on this case?

The Volkswagen-Suzuki dispute illustrates a number of things that can go wrong with a

trans-border partnership – starting with an apparent disagreement on the exact nature of the relationship between the parties, which has been evident almost since the day of signing, to the misjudgment of the business culture, and concluding with the current disagreement on the default and buyout provisions of the agreement. All of which have culminated in a non-productive partnership wrought with arguments, and what is likely to be a multi-year dispute as the fractious alliance is sought to be unraveled.

Q

How do you assist clients involved in arbitration? Is there any general advice you could offer clients to prevent the situation from escalating?

Due to the differences of legal systems and legal realities, foreign clients need to have a close and intense working relationship with their Indonesian attorneys to better understand any legal impact and options available under Indonesian law (which might not be similar to the impact and options in their own jurisdictions in the same situation), so that results and options can be realistically analysed and also commercially “translated” at each stage of the proceedings.

The client needs to look for a firm with solid

experience in the dispute resolution sector. They also need to make a realistic analysis of the legal position and how Indonesian courts would decide the relevant legal issues, which can be best provided by an experienced litigation firm that is also experienced in commercial transactions.

Finally, the client needs to ensure that they

will be involved, and obtain reports, on all stages and developments of the proceedings in order to issue instructions as and when

needed. The traditional approach adopted by Indonesian litigation firms was, and more often than not still is, that once the lawyer has been instructed, reports are very rare and the lawyer will act as he deems necessary based on his own discretion, and might as a result commit clients to legal liabilities without further, or confirming, instructions. LM

CONTACT:

Dr. Mohamed Idwan (‘Kiki’) Ganie Managing Partner Lubis Ganie Surowidjojo

Address:

Menara Imperium, 30th Fl. Jl. H.R. Rasuna Said Kav. 1 Jakarta 12980, Indonesia

Tel: +62 21 831-5005, 831-5025 Fax: +62 21 831-5015, 831-5018 Email: ganie@lgslaw.co.id Website: www.lgsonline.com