SECTOR SPOTLIGHT:
Dispute Resolution in the Mining Industry
DISPUTE RESOLUTION — in the Mining Industry -----------------------------------------------------------------------Mohamed Idwan (‘Kiki’) Ganie is the Managing Partner of Lubis Ganie Surowidjojo (LGS). He graduated from the Faculty of Law of the University of Indonesia and holds a PhD in Shipping Law from the University of Hamburg. -----------------------------------------------------------------------WHAT GIVES YOU AN ADVANTAGE OVER LOCAL AND GLOBAL COMPETITORS IN YOUR AREAS OF EXPERTISE? LGS has obtained Lloyd’s Register Quality Assurance certifications of ISO 9001:2008 for Quality Management systems and ISO 14001:2004 for Environmental Management systems to ensure that all aspects of the firm’s operations and the quality of services are on par with the most well managed companies and organizations in the world. WHY IS THE MINING INDUSTRY EVER-FLUCTUATING AND EVOLVING? IN WHAT WAYS DOES THIS SECTOR PRESENT OPPORTUNITIES AND FINANCIAL CHALLENGES TO THOSE WORKING WITHIN THE INDUSTRY?
The natural resource sector in general, and the mining sector in particular, is a popular target of populist legislative policies. As such, and combined with the effects of varying world demand, companies in the sector often come under pressure as the surrounding conditions undergo at times dramatic change. HOW HAS AN INCREASINGLY REGULATED BUSINESS ENVIRONMENT AFFECTED THE TYPE AND VOLUME OF WORK YOU CONDUCT ON BEHALF OF YOUR CLIENTS? EIncreased regulatory scrutiny is emerging as an issue of increasing importance in Indonesia. A number of government agencies have been particularly active in this sense, especially those relating to environmental compliance and forestry, and increasingly so in relation to corruption issues. WHAT ARE THE KEY CHALLENGES WHEN RESOLVING MINING DISPUTES AND HOW CAN THEY BE AVOIDED? 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. 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
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often not recognized by the Indonesian legal system. WHY ARE SO MANY DISPUTES SIMPLY UNAVOIDABLE WITHIN THE MINING MARKET? Due to the differences of legal systems and legal realities, foreign clients need to have a close and intense working relationship with their Indonesian counsel 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”. -----------------------------------------------------------------------Nicholas Watts is a senior associate based in Singapore and leads Freehills’ dispute resolution practice in Southeast Asia (Region). -----------------------------------------------------------------------Our disputes team works closely with clients to develop strategic solutions to manage and resolve existing and potential disputes that may arise in the Region. WHAT GIVES YOU AN ADVANTAGE OVER LOCAL AND GLOBAL COMPETITORS IN YOUR AREAS OF EXPERTISE?
a. assessing the appropriate dispute resolution process and outcome for our clients having regard the potential issues arising in the relevant jurisdiction where the contract will be performed. For instance, we identify whether the local courts are appropriate to resolve the dispute or whether international arbitration should be used, particularly given the greater enforceability of international arbitration awards. b. defining the scope of any potential mining dispute that may arise. This is because disputes and legal proceedings in the mining industry may not be confined to the private parties but may also involve the relevant regulators and other interested parties (such as competing concession holders in the case of an overlapping concession). HOW HAS AN INCREASINGLY REGULATED BUSINESS ENVIRONMENT AFFECTED THE TYPE AND VOLUME OF WORK YOU CONDUCT ON BEHALF OF YOUR CLIENTS? The corollary of increased regulation has been increased work from clients which are concerned to ensure that their business practices comply with relevant regulations. An example is the recent UK anti-bribery legislation. Typically, this sort of work is advisory.
Being “on the ground” in the Region provides our team with a deep understanding of the potential risks associated with transactions and projects and we frequently advise clients on risk mitigation and/or dispute avoidance strategies either during the transaction phase or during execution of their contracts/projects. WHO DO YOU TYPICALLY ACT FOR? DESCRIBE A TYPICAL CLIENT? Typically, we act for “blue chip” international energy companies that have invested in an emerging market, such as Indonesia. However, given our breadth and depth of experience, we are frequently asked to assist government owned companies in those jurisdictions in exploring investment opportunities in other jurisdictions within the Region and beyond and to than assist those clients when disputes arise. WHY IS THE MINING INDUSTRY EVER-FLUCTUATING AND EVOLVING? IN WHAT WAYS DOES THIS SECTOR PRESENT OPPORTUNITIES AND FINANCIAL CHALLENGES TO THOSE WORKING WITHIN THE INDUSTRY? There are several key factors that keep the mining industry in a constant state of flux. These include economic factors surrounding commodity prices and demand.
Company: Lubis Ganie Surowidjojo Name: Dr. Mohamed Idwan (‘Kiki’) Ganie Email: ganie@lgslaw.co.id Web: www.lgsonline.com Address: Menara Imperium 30th Floor Jl. H. R. Rasuna Said Kav. 1 Kuningan Jakarta 12980, Indonesia Telephone: +62 21 831-5005, 831-5025
An example of where economic factors come into play is where the price of commodities drop and parties have entered into long term supply agreements. Typically, the selling party will seek to renegotiate the terms and price of supply even in circumstances where express terms providing for a price escalation are absent. HOW ARE YOU ABLE TO ASSIST IN RESOLVING CONFLICTS AND DISPUTES WITHIN THE MINING INDUSTRY? We assist clients before a dispute arises by identifying appropriate mechanisms in their contracts to ensure that the potential risk implications of a dispute are minimised. This involves working with our clients in:
Company: Freehills Name: Nicholas Watts Email: nicholas.watts@freehills.com Web: www.freehills.com Address: 10 Collyer Quay, #15-08 Ocean Financial Centre, Singapore 049315 Telephone: +65 62369970
ACQUISITION INTERNATIONAL