A dispute between Lippo group and Astro Malaysia over a failed pay television joint venture appears likely to continue in an Indonesian courtroom despite a recent Singapore arbitration court ruling in favor of the Malaysian group.
The companies involved are PT Direct Vision, a joint venture between Astro All Asia Networks, a Malaysian holding company controlled by the tycoon Ananda Krishnan, and PT Ayunda Prima Mitra, which is affiliated with Lippo.
The deal was intended to be Indonesia’s largest cable TV venture before it was wrecked by the dispute. The Jakarta Globe is affiliated with Lippo.
Astro Nusantara, the satellite television provider launched by Direct Vision, began operating in 2006 with 48 channels. It ceased operations in October 2008 due to the dispute.
Astro contended that Ayunda owed Astro $245 million by the end of the three-year cooperation agreement. Ayunda responded by saying that Astro had used improper accounting procedures to escape paying Ayunda hundreds of millions of dollars.
Astro denied the allegation, saying the suit was intended to blame Astro for thousands of disappointed subscribers.
Eventually, the case wound up at the Singapore International Arbitration Center, which on May 7 released a preliminary ruling favoring Astro and rejecting Ayunda’s challenge to the tribunal’s jurisdiction, saying it had the power to hear and determine any dispute within the scope of the business deal between the two parties.
The Singapore court said it would also give further consideration to Astro’s filing of its legal action to facilitate recovery of some 905 million ringgit ($259 million) from Ayunda.
The court, with which Astro filed notice on Oct. 6, 2008, ordered Ayunda to immediately drop a pending lawsuit against Astro in the South Jakarta District Court and also forbade Ayunda from taking take any further legal action against Astro. However, the Jakarta court in a May 13 hearing rejected Astro’s request to stop the dispute, asserting that its jurisdiction took primacy. Another hearing on the case is expected on Wednesday.
Harianda Noerlan, corporate secretary of PT First Media, Ayunda’s parent company, told the Jakarta Globe that while Lippo was still discussing the possibility of appealing the arbitration ruling, the local court should have the authority to determine the dispute. “The company involved in the dispute is located in Jakarta,” Harianda said. “The arbitration court relied for its ruling on a subscription and shareholders agreement, which actually was due last year.”
Prawida Murti, Astro’s lawyer, said the arbitration ruling had settled the question of jurisdiction. “The local court should respect the arbitration ruling because our country signed the Convention of New York in 1958 that has stipulations about arbitration courts,” Prawida said.
The convention was followed by a presidential decree in 1998 and an arbitration law in 1999. “We are confident that we’re going to win because we have the arbitration ruling in our hands despite the preliminary ruling by the local court that it also has jurisdiction,” she said.