COAL BUSINESS DISPUTE SETTLEMENT, merupakan salah satu materi pembahasan dalam acara kegiatan Kurusus Intensif Hukum Pertambangan yang di selengarakan oleh EMLI Training.
Materi tersebut di sampaikan oleh Bapak Dendi Adisuryo, S.H. Beliau yang memiliki background sebagai commercial lawyer, memiliki pengalaman praktis dalam proyek energi dan pertambangan dan sektor perbankan/keuangan. Beliau juga memiliki pengalaman luas dalam penugasan terkait penanaman modal asing dan restrukturisasi perusahaan.
2. ADCOLAW – experience and expertise
Mining, Energy and Major Projects are core areas of focus for
ADCO Attorneys at Law.
Work for over 40 major clients since our establishment on 2008
and on projects with a cumulative value of over US$500 million
Named as one of Asian Leading Lawyers for Natural Resources
since 2011
3. AGENDA
• Typical disputes in coal sale transaction
• Handling cross border disputes
• Arbitration vs court litigation – comparison
4. Typical Disputes in Coal Sale
• Quality
• Quantity
• Delay in coal delivery
• Price Escalation
• Pre- shipment financing “coal buy”
5. Typical Disputes in Coal Sale
Quality
Common clause -> parties agree to set:
• certain specification parameters as price benchmarking (CV, TM, Sulphur,
size) (“Agreed Spec”)
• minimum spec parameter as rejection (“Rejected Spec”)
• price adjustment formula for coal spec below the Agreed Spec but above the
rejected spec
Disputes:
• L/C discrepancy
• Rejection in CIF / CNF deal, where COA sampling is taken in discharging port
• COA credibility -> using umpire sample as final reference
• Negotiation of price due to coal spec below rejection limit
6. Typical Disputes in Coal Sale
Quantity
Common clauses:
• Agreed quantity / period
• Quantity measurement will be based on draught survey in
loading port
• Tolerable deviance of DS
Disputes:
• Less quantity of coal supply – deadweight loss
• Credibility of draught survey
7. Typical Disputes in Coal Sale
Delay in coal delivery
Common clauses:
• Agreed laytime
• Demurage because laytime is exceeded to be borne the seller
• Despatch -> seller’s entitlement
Disputes:
• Delay in delivery due to “force majeure” – in coal industry there
are many events that might be categorized as force majeure ->
flood, hauling road blockade etc
• Credibility of draught survey
8. Typical Disputes in Coal Sale
Price Escalation
Common clauses:
• Fixed vs floating
• Formula of price or reference to certan price index (eg. ICI)
• Rise and fall formula -> fuel price, exchange rate, labor etc
Disputes:
• Economy slowdown
• Striking price increase of fuel
• Increase of cost of fund (due to industry risk) affecting the COGS
9. Typical Disputes in Coal Sale
Pre-shipment financing “coal buy”
Common clauses:
• Buyer will pay in advance after signing of contract (usually 50%)
• The advance will be used for OPEX and (sometimes) CAPEX
• 40% payment will be made after cargo is loaded onto barge /
vessel
• 10% payment againts documents (eg. COA, DS, Inv etc)
Disputes:
• Misuse of the advance payment -> civil / criminal
• No coal after advance payment due to technical reasons, force
majeure, fraud etc
10. What to Address in Handling Cross
Border Disputes
• Choice of forum -> must be clear whether the parties agree to
settle through arbitration or court? Which arbitration, what
rule etc..?
Discussion.
“The Parties agree to resolve all dispute arising out of or
related to this agreement to Chinesse Arbitration.”
Note: there are 3 arbitration bodies China, namely: (1) The Hong
Kong International Arbitration Centre (“ HKIAC ”), (2) The China International
Economic and Trade Arbitration Commission (CIETAC), and (3) China Maritime
Arbitration Commission (CMAC). Which one will apply??
11. What to Address in Handling Cross
Border Disputes
Language barrier
• English is widely used in Indonesia, but many Indonesians – even law
professor being the expert withness - face difficulties when have to use
English in arbitration
• How to handle?
• Always use interpreter, even if our withness refuses to do so (some because
of prestige / prideness)
12. What to Address in Handling Cross
Border Disputes
Enforcement of Foreign Arbitration Award in Indonesia
• Must be registered in the Disctrict Court of Central Jakarta
• As other country, the Indonesian laws does not recognise a mechanism to
cancel / appeal the award of foreign arbitration
• But the loosing party may challenge the enforcement of the award based on
limited reasons: (1) falsified document(s) is used during the arbitration
proceeding, (2) hidden of material information, and (3) disruption to public
order
• We do not have the statistics, but from cursory observation, not less than
75% foreign arbitration awards are challanged based on the above reasons
13. Arbitration vs court litigation –
comparison
Items Court Litigation Arbitration
Speed X √
Costs √ X
Transparency X √
Confidentiality X √
Enforcement √ X
Commercial approach of
disputes settlement
X √
The award is Final and
Binding
X √
