05 July 2019
SIAC Jakarta Conference 2019
By Julia Nugroho, Senior Associate, Dewi Negara Fachri & Partners (in association with Hogan Lovells)

The SIAC Jakarta Conference 2019 was titled "Damages in International Arbitration: Contemporary Principles and Practices" and it attracted over 200 participants, including in-house counsel and professionals.

Mr. Kevin Nash (Deputy Registrar & Centre Director, SIAC) opened the session noting the release of the SIAC Rules 2016 which sought to make arbitration faster and more efficient. SIAC has arguably handled more Emergency Arbitration applications than any other jurisdiction in the world, and was the first commercial arbitration institution to release the early dismissal procedure for claims and defences. SIAC also has a robust provision for joinder and consolidation provisions.

Mr. Cavinder Bull, SC (Vice President of SIAC Court of Arbitration) followed with the opening address noting the stellar performance of SIAC in 2018. In 2017, Singapore was ranked the 3rd most preferred seat of arbitration in the world, and SIAC was the 3rd most preferred arbitration institution in the world. Parties need to have an effective way to resolve cross border transactions, and arbitration has proven to be the best solution to resolve those disputes. Arbitration gives us, among others, a flexible procedure, speedy resolution, low cost, suitability for complex dispute, confidentiality, and international enforceability.

Panel Session I: Contemporary Damages Principles in International Arbitration

The first panel discussed the contemporary damages principles. Dr. Mohamed Idwan (‘Kiki’) Gani (Managing Partner of Lubis Ganie Surowidjojo) moderated a panel of distinguished speakers comprising Mr. Andi Kadir (Partner of HHP Law Firm), Mr. Ignatius Andy S.H. (Partner, Ignatius Andy Law Offices), Mr. Simon Barrie Sasmoyo (Senior Associate of Assegaf Hamzah & Partners), and Mr. Simon Dunbar (Partner of King & Spalding).

Mr. Andy discussed the damages that can be recovered for a breach of contract claim which under Indonesian Civil Code (ICC) is comprised of compensation of cost, loss, and interest. An interesting point raised by Mr. Andi Kadir was the good faith concept in Indonesia and whether it is the “unruly horse” of the ICC. Good faith principle has been used to relax the application of the ICC, to make certain deviation on the calculation of damages. In relation to this, Indonesian courts do not provide a clear reasoning and do not provide a clear threshold when the parties and the court can invoke the notion of good faith. If there is a violation of justice, the court has the authority to apply the notion of good faith to rectify or remedy the situation, and it is in line with the principle of justice. This may create legal uncertainty. Similar concerns may also be noted from the open-ended notion of the public policy concept.

Mr. Sasmoyo continued the session by sharing his experience and practical tips. Based on his experience, he has seen the Tribunal grant liquidated damages because it is a more reasonable calculation by the parties as opposed to a penalty, which is punitive in nature. Therefore, stipulating exorbitant figures (e.g., twice or triple the contract amount) in the penalty clause would not be wise.

Mr. Dunbar discussed examples of typical damages clauses in a contract. Limitation of liability, no consequential loss, and liquidated damages provisions are generally treated as boilerplate provisions but have significant impact on the economics of the transaction. He emphasised the importance of clarity on what you want to exclude in the contract.

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Left to Right: Ignatius Andy S.H., Simon Dunbar,
Dr Mohamed Idwan (‘Kiki’) Ganie, Andi Kadir and Simon Barrie Sasmoyo

Members of the audience

Panel Session II: Quantifying Damages in Post-M&A Disputes

The second panel focused on quantifying damages in post M&A disputes, and was moderated by Mr. Cavinder Bull, SC. The speakers were Mr. Oommen Mathew (Managing Partner of DWF LLP), Mr. Iain Potter (MDD Forensic Accountants), Mr. Ajinderpal Singh (Senior Partner of Denton Rodyks & Davidson LLP), and Mr. Kabir Singh (Partner of Clifford Chance).

Mr. Mathew gave an overview on proof of damages including the preservation of evidence and providing the evidence in arbitration. Post-M&A disputes often arise out of breach of warranty provisions, fraudulent misrepresentation, and valuation or tax disputes. As such, the examination of the relevant documentary evidence would be crucial. Mr. Kabir Singh advised that being aware of the local limitation period is very important in the transaction. Mr. Ajinderpal Singh also shared practical insights on clauses relating to warranties by the seller, fraudulent misrepresentation, seller's limitation of liability, and notice period.

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Left to Right: Oommen Mathew, Iain Potter,
Cavinder Bull, SC, Ajinderpal Singh and Kabir Singh

Left to Right: Rob Palmer, Tony Budidjaja,
Chong Yee Leong and James Taylor

Panel Session III: Assessment of Damages in Construction Disputes

The last session of the conference was moderated by Mr. Chong Yee Leong (Member of SIAC Board of Directors). The panel members were Mr. Tony Budidjaja (Managing Partner of Budidjaja International Lawyers), Mr. Rob Palmer (Office Managing Partner of Ashurst LLP), and Mr. James Taylor (Senior Managing Director of FTI Consulting).

Mr. Taylor explained that typical causes of construction disputes generally include, among others, variation order, suspension of work, defective works, and payment delay. Mr. Palmer then explained the concept of concurrent delay in a construction project. In the Indonesian context, it can be contractually agreed by the parties to "share the risk". Finally, Mr. Budidjdja commented that the use of experts on the subject matter is needed because construction disputes are generally highly technical in nature and may require intensive fact-investigation. He also emphasised that the quality of the expert report will determine the speed of the arbitration proceedings.

The interesting and very informative conference concluded with brief closing remarks from Mr Chong.
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