JAKARTA (Yosefardi) – 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.”