If wars are won through small victories, Norway’s Parbulk II has won another battle in its long-running legal fight to get Indonesia’s Humpuss Intermoda Transportasi to pay up on a $27m arbitration award.
A panel of judges at the South Jakarta District Court has issued an interlocutory judgment rejecting Humpuss’ attempt to have the case thrown out via a legal mechanism called an absolute competency exemption.
Parbulk II, a fund set up by Pareto with investors including the Wilh Wilhelmsen and Blystad groups, has been fighting for 14 years to get Humpuss to pay up on a $27m award against Humpuss subsidiary Heritage Maritime from an ad hoc London Maritime Arbitrators Association tribunal.
The English High Court separately found in favour of Parbulk II pursuant to the guarantee signed by Humpuss, which provides for the High Court as the non-exclusive dispute resolution forum. The court ordered Humpuss to pay $28m plus interest to Parbulk II.
The Norwegian company took its fight, which has also played out in courts in Singapore and New York, to Indonesia in August after Humpuss refused to pay.
Despite Parbulk II director Christian Due’s fears that Humpuss and its subsidiaries were trying to gain home ground advantage, the move was deemed necessary, as Humpuss had no foreign assets and its vessels traded only in domestic waters.
Humpuss tried to have the case thrown out by arguing that the legitimate forum for the claim should have been the bankruptcy court that oversaw its restructuring proceedings in 2012 and it therefore should not be heard by the South Jakarta District Court in a separate proceeding.
The panel of judges disagreed, ruling that the court did indeed have jurisdiction over the case, as the crux of Parbulk II’s lawsuit is whether Humpuss defaulted on a guarantee it had signed, and had nothing to do with the restructuring.
The panel said Parbulk II’s breach of contract lawsuit was filed in order to implement the provisions of Indonesian laws that permit foreign civil court decisions to be enforced in Indonesia. Therefore they determined that the South Jakarta District Court had jurisdiction to adjudicate on the case.
The interim decision asserts the authority of the South Jakarta District Court to continue examining Parbulk II’s lawsuit.
Due, in a written statement to TradeWinds, said he appreciated the panel’s decision and hoped this ruling would serve as a positive precedent for the investment climate in Indonesia.
The dispute stems from a sale-and-leaseback deal involving a panamax bulk carrier lined up between Parbulk II and Humpuss in 2007.
Parbulk II agreed to buy the 70,000-dwt Mahakam (built 1996) from Humpuss for $67.5m. It bareboat-chartered the bulker back to the Indonesian company at $38,500 per day for five years.
However, the deal quickly turned sour when Humpuss stopped making the charter payments.
Parbulk II arrested the ship in Malaysia, claiming that Humpuss was in breach of the contract not only because it had failed to pay the charter hire but also because it did not maintain hull-and-machinery insurance, changed technical managers without consent and failed to keep the vessel in an acceptable condition.
Humpuss redelivered the Mahakam to Parbulk II shortly after its arrest. It was subsequently sold to Cyprus Sea Lines for $17.5m, less than one-third of what Parbulk II had paid for it two years earlier.
