TEMPO.CO, Jakarta - The cooperation between Pertamina and Golden Spike Indonesia has not worked well. So far, it has only resulted in a few hundred barrels of oil per day, yet the Central Jakarta District court has ordered the state-owned oil and gas company Pertamina to pay Golden Spike trillions of rupiah in damages. So Pertamina's decision to take the case back to court as a cassation is appropriate.

Back on July 6, 1989, the two companies signed a revenue-sharing contract to process the oil at Raja Tempirai block. They immediately formed a joint operating body (JOB). At first, all went smoothly until 2007 when Golden Spike experienced difficulties in repaying its debts around the Raja block.

Because Golden Spike failed to carry out its responsibility to pay its share of the operating funds, in accordance with the agreement, the company JOB stopped giving out its share of the revenues. Golden Spike then proceeded to sue Pertamina Hulu Energi Raja Tempirai, a Pertamina subsidiary, at the Central Jakarta District Court. On July last year, the judges decided in favor of Golden Spike, ordering Pertamina to pay US$125 million, or Rp1.7 trillion, in damages to Golden Spike. The Jakarta High Court has reinforced the verdict at the court of appeals.

The verdict of the two courts is very suspicious. The agreement between the two companies clearly stressed that all disputes should be resolved through arbitration. Why did the state courts favor Golden Spike's lawsuit and ignored Law No. 30/1999 on arbitration and dispute settlement? Article 3 of this legislation clearly stressed that when the parties are bound by an arbitration agreement, the courts no longer have the authority to try the dispute. The stench of a conspiracy is unavoidable.

In court, Golden Spike was unable to prove its claim of being the sole risk operation taker, which was the basis of its case. Yet, they won the case. What Golden Spike should have done, before going off on its exploration activities, is that it should have reported its plans to the JOB, to seek the approval of the oil and gas special taskforce. This would have ensured that its status of the sole risk taker, is registered with JOB. But the judges, again and again, seem to ignore the contents of the agreement.

This is not the first time that Pertamina has lost its legal cases and must pay damages in trillions of rupiah to its erstwhile collaborators. Previously, it fought cases with Karaha Bodas, followed by Paiton I and PLTP Dieng-Patuha. The joint exploitation failed to produce anything, yet Pertamina dug deep into its pockets to pay out millions of dollars. The partner companies' way of shaking down Pertamina seems to be the same: Take it to court and then demand huge compensation for damages.

Perhaps these companies intended to steal right from the beginning. This is why Pertamina must be more careful in selecting its partners. Everytime there's an offer to collaborate, there must be a thorough due dilligence on the applying company. Learning from experience, Pertamina should frame its contracts by closing all gaps that allow questionable businessmen to get money for free.

In many cases, these mishaps happen because there has been a previous conspiracy between the crooked company and a Pertamina insider. It has succeeded in breaking up the crude oil mafia inside Petral through a forensic audit. While the situation is still conducive to reforms, it would be good for Pertamina to carry out a similar audit to root out the crooked collaborators. (*)