2013-08-23 02:32:03 -
An IDR 200 billion investment agreement made by Global Emerging Markets (“GEM”) with publicly listed electronics company PT. Agis Tbk. in 2010 is now under dispute in a local Jakarta court, despite the fact that the agreement calls for dispute resolution under the Rules of the ICC International Court of Arbitration.
Under the signed Investment Agreement, GEM committed to subscribe for new shares in PT. Agis Tbk. up to an aggregate subscription value of IDR 200 billion. The 3-year firm commitment agreed by the parties was under a structure whereby PT. Agis Tbk. had sole control over the amount (based on a median market price) and timing of any investment, through its issuance of a series of draw down notices. On
September 29, 2010 Pt.
Agis Tbk. announced to the market that it had successfully executed its first Draw Down pursuant to the Investment Agreement. In addition, as part of the investment agreement, PT. Agis Tbk. was legally bound to issue 1 billion warrants to GEM, which would have meant an additional IDR 125 billion in funding for PT. Agis Tbk., if and when the warrants were exercised. It is the failure of PT. Agis Tbk. to issue these warrants, which is one of PT. Agis Tbk.’ obligations under the mutually signed investment agreement, which is currently under dispute.
Warren P Baker III, Managing Director at GEM, said: “GEM is still keen to invest in and work with PT. Agis Tbk. moving forward; however, this relationship is under threat given the arbitrary nature of the dispute that has been brought against GEM in an Indonesian district court. The Investment Agreement clearly spells out that any disputes would obligatorily be settled by arbitration under the Rules of the ICC International Court of Arbitration. PT. Agis Tbk. is now trying to circumvent the ICC arbitration process by moving to a civil action in Jakarta under the Indonesian Civil Code. Furthermore, if PT. Agis Tbk.’ actions go unchecked, it may discourage other foreign investors in the Indonesian market, showing that Indonesian companies can ignore their signed agreements and embroil investors in time-consuming proceedings on the basis of false claims.”
International commentary has been critical of disputes such as these for hampering Indonesia’s ability to capitalize on its investment-grade credit rating in the private sector. Critics say access to new capital for local businesses is limited when foreign investors sense that, if commercial disagreements arise, they may be subject to protracted litigation in the domestic courts, even though they and their Indonesian counterparties have agreed to resolve all disputes in a neutral forum of their choice.
Foreign Direct Investment in Indonesia has seen significant growth in recent years, hitting record levels in the first half of this year. In the second quarter of 2013 alone, investment into Indonesia totaled US$6.5 billion, representing a nearly 20% increase over the same period in the previous year. In order to achieve this growth, Indonesia has signed 65 Bilateral Investment Treaties. These treaties are intended to provide foreign parties with comfort that their investments will be adequately protected.
Mr. Baker continued: “This is an important time for foreign investment in Indonesia, as the world is watching to see if the country and its government continue to be supportive of these international partnerships. While disagreements are bound to arise, this dispute should be easily resolved under the terms of the original agreement, which clearly calls for disputes to be referred to arbitration under the auspices of the ICC International Court of Arbitration. It would be a shame if this incident were to have a negative impact on the ability of other local companies to attract and secure foreign investment.”
Notes to editors
The current dispute (No.: 534/PDT.G/2012/PN.JKT. PST), is being heard by a panel of Judges - Amin Sutikno, S.H., M.H., Annas Mustaqim, S.H., M.Hum., Robert Siahan, S.H., M.H. . The Registrar is Zuherna, S.H..
Representing the plaintiff is AFS Lawyer Partnership. White & Case in Singapore and Hanafiah Ponggawa & Partners in Indonesia are representing GEM Global Yield Fund Limited and GEMIA Inc. The trial is scheduled to proceed from 21 August 2013.
For more information please contact: Warren P. Baker, III – firstname.lastname@example.org
About GEM Group
Global Emerging Markets Limited, www.gemny.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
, was founded in 1991. GEM is a $3.4b investment group having completed 330 transactions in 65 countries. The firm is an alternative investment group that manages a diverse set of investment vehicles across the world. GEM's funds include: CITIC/GEM Fund; VC Bank/GEM Mena Fund; Kinderhook; GEM Global Yield Fund; GEM India and the GEM Brazil Private Equity Fund.
" title="http://cts.businesswire.com/ct/CT?id=bwnews&sty=20130822006260r1&sid=16929&distro=ftp\"/>" target="_blank" rel="nofollow">cts.businesswire.com/ct/CT?id=bwnews&sty=20130822006260r1&am ..
GEM GroupWarren P. Baker, III, +1 212-582-3400 email@example.com