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Jakarta court rejects civic lawsuit against Freeport

Jakarta Globe - September 13, 2012

Rangga Prakoso – Judges at the South Jakarta municipal court on Thursday rejected a civil suit filed by the Indonesian Human Rights Committee For Social Justice (IHCS) against a subsidiary of mining giant Freeport McMoRan in Papua.

"We accept the defense of the defendant, and declare the lawsuit filed by the plaintiff unacceptable," said Suko Harsono, who headed the panel of judges hearing the case.

The court said that IHCS, a non-governmental organization, had no legal right to file the lawsuit against Freeport Indonesia because the complaint targeted the working contract between Freeport Indonesia and the government instead of human rights issues.

"Because the lawsuit has nothing to do with human rights, the panel of judges is of the opinion that the plaintiff has no legal standing to file the lawsuit," Suko said.

IHCS filed the suit against Freeport Indonesia at a Jakarta court in July, and also named President Susilo Bambang Yudhoyono and the Energy and Mineral Resources Ministry as respondents.

The suit alleged that the government and Freeport were in breach of a 2003 regulation which set higher royalty rates on total gross sales of minerals mined. Freeport's contract was established before 2003, and the Indonesian legal system does not recognize the principle of retroactivity.

Freeport, whose home office is in Louisiana, currently pays 1.5 percent on copper and 1.5 percent on gold. The IHCS argued that the royalties should be raised to bring Freeport in line with the law, and that the company should pay back money owed at the rate set by the 2003 law, or 3.75 percent for gold and 4 percent for copper.

IHCS said Freeport owes the state about Rp 2.2 trillion ($246 million) in unpaid royalties from 2003 to 2010. Suko said that if the government felt it has suffered losses from the contract, the agency with the authority to declare such a loss would be the Financial Audit Board (BPK); the House of Representatives has the authority to nullify the contract, the court said.

Lawmakers, environmentalists and Papuan politicians argue that Freeport's contract is "unfair" considering that Grasberg is the world's largest gold mine, has one of the largest deposits of copper in the world and has allegedly caused environmental damage.