Dr. Ahmad Redi.,S.H.,M.H.
Abstract
Article
169 letter b of Act Number 4 of 2009 on Mineral and Coal Mining regulates that
the stipulation mentioned in work contract (KK) and coal mining undertaking
work agreement (PKP2B) shall be adjusted 1 (one) year at the latest since this
Act is promulgated except concerning state revenue. Instruction for adjustment
of KK/PKP2B article is not automatically can be implemented in view of there is
opinion differences between the Government and mining company as the party to
implement KK/PKP2B. Mining company is of the opinion that KK/PKP2B has pacta
sunt servanda principle that must be recognized by the parties that has to be
respected. Therefore, if either party does not want to carry out contract
adjustment, then KK/PKP2B adjustment cannot be forced. This very differences in
opinion that becomes the basis for intention to renegotiate KK/PKP2B between
the Government and mining company which becomes the party in the contract,
consequently effort is needed to find solution on the implementation of
instruction of the contract/agreement in Article 169 letter b of Act No. 4 of
2009 on Mineral and Coal Mining with the intention of the coal mining. This
article will discuss in critical-analytical manner on legal aspect of
renegotiation with the validity of pacta sunt servanda in KK/PKP2B in
Indonesia.
1. INTRODUCTION
Article 33 Clause (3) of the 1945
Constitution of the Republic of Indonesia (hereinfurther is referred to as “UUD
NRI 1945”) mentions that “land, water, and natural wealth contained in it shall
be controlled by the state for the greatest prosperity of the people”.
The meaning of “controlled by the
state” in Elucidation of Article 33 of UUD NRI 1945 as also mentioned in
Article 33 clause (2) UUD NRI 1945 that says “branches of production and
control the life of people in general shall be controlled by the state and
utilized for maximum prosperity of the people” has been interpreted by
Constitution Court that “branches of production” as mentioned in Article 33
clause (2) of UUD NRI 1945, namely”
“branches of
production that must be controlled by the state are those who are considered to
be important for the state and/or influence people’s life, namely: (i) branch
of production that is important for the state and influence people’s life, (ii)
important for the state but does not influence people’s life, or (iii) is not
important for the state but influence people’s life. The three of them must be
controlled by the state and utilized for maximum people’s prosperity.[1]
As stipulation that regulates
national economy and social welfare[2],
Article 33 of UUD NRI 1945 becomes important basis in the life of Indonesia
economy with basis of collective effort based on family principle, including
management and use of mining that prioritizes benefits for national interest
and for Indonesian people’s prosperity.
Stuart G. Gross, describes that:
“Article 33 (3) of the 1945 Constitution states that “[t]he land, the
waters and the natural riches contained therein shall be controlled by the
State and exploited to the greatest benefit of the people.” As two commentators
in the mining industry observed, “this formulation goes beyond traditional
affirmation,” articulating, rather, a fundamental, inviolable precept of
Indonesian constitutional law. Thus, Contracts of Work (CoWs) resemble traditional
concession contracts only in some ways, such as the manner in which revenue is
transferred back to the State in the form of taxation and royalties, and the
level of control holders of CoWs have over operations. However, in other
important ways foreign mining companies act not as concessionaires but as
contractors for the Republic of Indonesia (RI), which retains title to
unextracted minerals, and for whom the mining companies work”.[3]
Based on the above opinion, Article
33 of UUD NRI 1945 can be understood as a fundamental credo and exceeds a
traditional affirmation. Mining work contract in Indonesia is not a mining
concession owned by the company. The company only has a role as license holder
given by Government of Indonesia. Through work contract the Government gets
benefits from tax, royalty, and control/supervision of mining production
operation.[4]
The principle contained in Article
33 of UUD NRI 1945 above becomes philosophical and sociological base of making
Act Number 4 of 2009 on Mineral and Coal Mining (hereinfurther is referred to
as “Act No. 4 of 2009”) which replaces Act Number 11 of 1967 on Mining Basic
Stipulations” (hereinfurther is abbreviated into “Act No. 11 of 1967”) which in
practice was not able to accommodate mining activity development in national as
well as international scope which continuously develops.
The development of such mining
activity practice, among others concerning distribution of authority between
Central Government and local government in its connection with regional
autonomy, arrangement on mining area, reclamation obligation and post-mining
activity[5],
area of mining business permit, and share divestation of foreign mining
business permit, so that in this lacking mining law reform is needed from
regulation regime of Act No. 11 of 1967 to Act No. 4 of 2009.[6]
As a form of mining law reform
mentioned above, Act No. 4 of 2009 contains basic reflections as the
followings:[7]
- Mineral and
coal as non-renewable resources is controlled by the state and its
development and efficient use is carried out by the Government and local
government together with business actor;
- The
Government further provides opportunity to business entity of Indonesian
legal entity, cooperative, individual, as well as local community to do
mineral and coal undertaking based on permit, which is in line with
regional autonomy, given by the Government and/or local government
according to each authority;
- In the
frame of organizing decentralization and regional autonomy, mineral and
coal mining management is implemented based on externality,
accountability, and efficiency principles involving the Government and
local government;
- Mining
business should result in greatest economic and social benefits for
Indonesian people’s welfare;
- Mining
business should be able to accelerate regional development and boost
society/small and middle scale business activity and growth of mining
support industry; and
- In the
frame of creating sustainable development, mining business activity must
be implemented through upholding environmental, transparent and people’s
participation principles.
Linkage of principle and substance of
Act No. 4 of 2009 in its practical surface also consider national as well as
international development namely mining business which has entered globalization
era and marked with the presence of free competition based on mining
information technology, investment attractiveness and environmental issues, and
also democratization which has become business circle’s demand.[8]
However, such legal reform cannot automatically
be implemented in practice considering there are legal problem in mineral and
coal mining companies which have been operational before the issuance of Act
No. 4 of 2009. Mining business activity conducted by mining company before the
issuance of Act No. 4 of 2009 is in accordance with Work Contract (KK) and
Mineral and Coal Mining Undertaking Work Agreement (PKP2B) between the
Government of the Republic of Indonesia and mineral and coal mining companies.
Business actors are of the opinion that sanctity
of contract aspect and principle of pacta
sunt servanda are elements that have to be considered by the Government
before forcing to implement articles in Act No. 4 of 2009 to mineral and coal
mining companies.[9]
Article 169 letter b of Act No. 4 of
2009 mentions that at the time this Act is effective:
- Work
Contract and coal mining undertaking work agreement that have existed
before the enactment of this Act shall be valid until the end of
contract/agreement period.
- Stipulations
mentioned in article of work contract and coal mining undertaking work
agreement as mentioned in letter a at the latest of 1 (one) year since the
enactment of this Act shall be adjusted except on state revenue.
- Exception
for state revenue mentioned in letter b is an effort of state revenue
improvement.
Referring to
provisions in Article 169 letter b, all articles in KK and PKP2B must be
adjusted with provisions in Act No. 4 of 2009. The provisions, for example on
adjustment of royalty, production contribution, mining area, divestment
obligation, obligation for purification and management, reclamation and
post-mining obligation, domestic market obligation, and others mentioned in Act
No. 4 of 2009.
As formulation of Government policy
to settle the problem for application of articles in Act No. 4 of 2009
(debottlenecking) to mineral and coal mining companies in operation before the
issuance of Act No. 4 of 2009, the Government announces KK/PKP2B renegotiation
policy with a hope such KK/PKP2B evaluation can provide benefits to all
parties.
The Government is of the opinion
that the presence of mineral and coal undertakings should provide the greatest
benefits for national interest. KK and PKP2B made in the past tend to inflict
loss the state and nation, so that in line with the issuance of Act No. 4 of
2009 and sociologically there is high expectation of the Government to obtain
high benefits from mineral and coal undertakings, therefore KK/PKP2B must be
re-negotiated.
This article will describe
critical-analytically on legal aspect of adjustment (renegotiation) of KK and
PKP2B which constitutes the instruction of Article 169 letter b of Act No. 4 of
2009 with validity of sanctity of contract and pacta sunt servanda in KK and PKP2B which becomes the basis in
civil law, especially in contract law. This critical-analytical description is
important to find out legal foundation of implementation of contract
renegotiation and fundamental reason of KK and PKP2B renegotiation for the
Government of Indonesia.
Based on the above description,
formulation of problems in this article are: (1) how is the legal aspect of
implementation of KK and PKP2B renegotiation with validity of sanctity of contract and pacta sunt servanda principles in KK and
PKP2B? and (2) what benefits does the Government of Indonesia want to achieve
from the implementation of KK and PKP2B renegotiation?
To answer the questions above, this
article is structured as the followings: Section 1 Introduction, Section 2 will
discuss on juridical review on pacta sunt servanda principle and KK/PKP2B
renegotiation from Indonesia national law perspective and international law.
After that Section 3 will discuss on the benefits of KK/PKP2B renegotiation
which becomes persuasive reason for the Government of Indonesia in implementation
of KK/PKP2B renegotiation in achieving greatest benefits of mineral and coal
mining for national interest. Section 4 will mention conclusions.
2. PACTA SUNT
SERVANDA PRINCIPLE VS KK/PKP2B RENEGOTIATION
KK/PKP2B renegotiation in practice
can be carried out in case there are certain circumstances which enable the
implementation of KK/PKP2B renegotiation. This opinion is mentioned by M.
Sornarajah that:
An obligations is created to renegotiate contract where the contractual
equilibrium which existed at the time of the contract has been altered by a
fundamenteal change of circumstance. This is a departure from the hoary
doctrine of pacta sunt servanda upon which developed states have placed so much
store in building up a theory of internationalization of foreign investment
contract. But, renegotiation is more sensible as a technique for avoiding
disputes and for ensuring that the relationship remains viable in the context
of changed circumstances. There is growing body of opinion which believes that
a renegotiation clause should be read into foreign investment contract of long
duration. the innclusion of the duty to renegotiate contracts in the light of
changed circumstances is consistent whit this opinion. Again, one can see that
the genesis of much of the ideas that underlay the Draft Code is in the
writings that supported it. To that extent, there was a definite effort being
made to bring about norms opposed to those that had been hitherto articulated
in the area.”[10]
From the statement above, a fundamental
circumstance which needs obligation equilibrium of the parties enables to
implement contract negotiation. Although basically there is pacta sunt servanda principle in the
contract, but renegotiation constitutes a logical aspect as a technique to
prevent dispute and to make sure that relationship remains viable in the
context that has changed.
Contract renegotiation is common
practice in the context of change of circumstance, mainly in the contract which
its validity is very long (long term contract), that a change of circumstance
and condition contextually enable the parties who sign the contract to review
the aspects they have agreed upon. In the context of mineral and coal mining,
KK and PKP2B renegotiation constitutes a form of implementation of Article 169
of Act No. 4 of 2009, which regulates that at the time Act No. 4 of 2009 begins
to be effective:
- Work
Contract and coal mining undertaking work agreement that have existed
before the enactment of this Act shall be valid until the end of
contract/agreement period.
- Stipulations
mentioned in article of work contract and coal mining undertaking work
agreement as mentioned in letter a at the latest of 1 (one) year since the
enactment of this Act shall be adjusted except on state revenue.
- Exception
for state revenue mentioned in letter b is an effort of state revenue
improvement.
As mentioned in letter b above, that
within a period of 1 (one) year since the enactment of Act No. 4 of 2009 all
articles in KK and PKP2B must adjust with Act No. 4 of 2009. This Act is
enacted on 12 January 2009 so that all KK and PKP2B holders should have
adjusted with this Act. However, in reality such adjustment is not easy
considering that KK and PKP2B have certain characteristics. The 2 (two) big
companies, namely PT Freeport Indonesia and PT Newmont Nusa Tenggara ask the
Government of Indonesia to respect clauses in mining KK. Forcing the validity
of Act No. 4 of 2009 constitutes of regulation overlapping in Indonesia, that
it harms investor.[11]
KK and PKP2B constitute written
agreement between the Government of Indonesia and contractor in mineral and
coal mining area. Both have strong power and binding the parties. The
characteristics of agreement as regulated in Article 1338 clause (1) of the
Indonesian Civil Code that all agreements that are legally made shall be valid
as an act for those who make it.
KK and PKP2B as written agreements
theoretically and judicially have 3 (three) principles which each of them are
inter-related, namely the principle of consensus, the principle of binding
force of contract and principle of freedom of contract.[12]
Principle of consensus is related with the birth of contract; principle of
freedom of contract is related with freedom of the parties to determine with
whom to have contract, content of contract, form of contract, and choice of
law; while principle of binding force of contract is related with binding
validity of content of contract to both parties that enter into the contract.[13]
Freedom of contract can only reach
fairness if both parties have equal bargaining power. If bargaining power is
not balanced then a contract can tend to become unconscionable.[14]
Furthermore, Syahdeni mentions that:
“Unbalanced Bargaining Power occurs when
the strong party can force his will to the weak party, so that the weak party
just follows terms of contract handed to him. Other requirement is such power
is exercised to force his will so that it gives advantage to him. As a result,
the contract becomes illogical and in violation with fair rules”.[15]
Balance of power is very important to
reach a fair contract, that there is no party that forces his will to get
advantage to his side only while inflicting loss to other party. This occurs
mainly when the party in the contract is a state in its private law position which
is represented by the Government. However, it is not automatically the state is
in strong position in entering into a contract. Even the state can be in a weak
position and suffer a loss, for example when a state undergoes economic
difficulty or the benefit of contract being implemented is not according to
what should be received by the state. Other weak position, for example, when an
official who makes a contract performs discrepancy for his own interest and
inflicting loss for the interest of the state and nation.
In the problems of contract, the
international community has an organization namely International Institute for
the Unification of Private Law (UNIDROIT) which constitutes an independent
international organization domiciled in Rome, Italy which its goal is to assess
the need and methods in the frame of modernization and harmonization of
international private law among the states as well as state association in the
world.[16]
Indonesia on 2 September 2008 has legalized and ratified UNIDROIT Statute with
President’s Regulation Number 59 of 2008 on Ratification of Statute of the
International Institute for the Unification of Private Law.
The role of this international
organization is to publish various international agreement and convention which
can become the guidance in making international contract. In this case UNCITRAL
in 1980. Has issued United Nations
Conventions on Contracts for the International Sale of Goods (CISG) and
UNIDROIT has issued Principles of International Commercial Contracts (UPICCs)
in 1994 which later has been revised in 2004. International agreement in
contract area, similar to national law, is the primary legal source. This
source is not less important compared to other primary legal sources, namely
national law and contract document that regulates the parties.[17]
In UPICCs there is a guidance on
business contract and also on possibility of renegotiation on certain contract
which undergoes certain circumstances. Such circumstances, for example in
Article 6.2.2. on hardship.
Article 6.2.2. There is hardship where the occurrence of
events fundamentally alters the equilibrium of the contract either because the
cost of a party’s performance has increased or because the value of the
performance a party receives has diminished, and
(a)
the events occur or
become known to the disadvantaged party after the conclusion of the contract;
(b)
the events could
not reasonably have been taken into account by the disadvantaged party at the
time of the conclusion of the contract;
(c)
the events are
beyond the control of the disadvantaged party; and
In Article 6.2.2
difficult situation (hardship) occurs if there is a situation which
fundamentally alters the equilibrium of contract. This is due to cost of
contract implementation increases very high or value of contract implementation
for the party receiving it decreases very highly, while
1)
such
occurrence is known by the disadvantaged party after the contract is made;
2)
such
occurrence cannot be anticipated by the disadvantaged party before the contract
is concluded;
3)
such
occurrence takes place beyond the control of the disadvantaged party;
4)
risk
of the occurrence is not anticipated by the disadvantaged party.
In addition, the
legal consequence of hardship situation is regulated in Article 6.2.3:[19]
(1)
In case of hardship
the disadvantaged party is entitled to request renegotiations. The request
shall be made without undue delay and shall indicate the grounds on which it is
based.
(2)
The request for
renegotiation does not in itself entitle the disadvantaged party to withhold
performance.
(3)
Upon failure to reach agreement within a reasonable time
either party may resort to the court.
(4)
If the court finds
hardship it may, if reasonable,
(a)
terminate the
contract at a date and on terms to be fixed, or
(b)
adapt the contract
with a view to restoring its equilibrium.
Legal consequence if there is hardship
is regulated in Article 6.2.3 which determined that:
1)
the
disadvantaged party has the right to ask for contract renegotiation to the
other party that must be submitted by showing its reasons;
2)
renegotiation
request does not automatically provide the right to the disadvantaged party to
cease contract implementation;
3)
if
the parties fail to reach agreement within the reasonable time, each party can
file a claim to court;
4)
if
the court proves there is hardship, then it can decide to
a.
end
the contract on a firm date and period;
b.
change
the contract to return to equilibrium.
The issues of contract in international
law must strengthen regulating position of national law, in Indonesia for
example contract is regulated in Indonesia Civil Code and other legislative
regulations. Regulation in national law regime and international law needs to
be harmonized. In this case, legal harmonization constitutes a demand as well
as needs that must be fulfilled by both parties in implementation of trade or
international business transaction. Harmonization effort according to Hannu
Honka can be conducted in some ways, namely:[20]
1)
national
legislative regulations in contract area;
2)
use
of standard contract;
3)
application
of international customary laws (international customs);
4)
international
legal principles;
5)
arbitrage
tribunal decisions; and
6)
harmonization
according to legal guide/guidelines and legal doctrine.
Furthermore as mentioned earlier, in
Indonesia context there are problems of contract and renegotiation of contract
occur in mineral and coal mining business activity after the enactment of Act
No. 4 of 2009. Article 169 letter a of the Act provides instruction all KK or
PKP2B holders within a period of one year since the enactment of the Act must
adjust the articles in KK or PKP2B according to the provisions in Act No. 4 of
2009.[21]
The provision in Article 169 letter a if
interpreted as is in black and white or with the use of grammatical
interpretation, on 12 January 2010 (one year after its enactment) all articles
in KK or PKP2B must adjust to Act No. 4 of 2009, so that renegotiation is not
needed if such Article can be implemented by KK or PKP2B holder, but Government
policy which still wants to use renegotiation on KK or PKP2B becomes a middle
way to such Article implementation stalemate.
The effort of KK or PKP2B renegotiation
has 2 (two) aspects if viewed from the renegotiation policy, namely: (a) the
Government is not consistent with black and white arrangement of such Article,
actually what is written as norms must be implemented according to the
instruction of Act; and (b) sanctity of
contract principle is still recognized, that although the Act instructs
adjustment of KK and PKP2B to the Act but articles in the contract bind the
parties and become the law for the parties that made them.[22]
Seriousness of the Government of
Indonesia to renegotiate KK and PKP2B is real with the establishment of Evaluation
Team as contained in Presidential Decision Number 3 of 2012 on Evaluation Team
to Adjust Work Contract And Mineral And Coal Mining Undertaking Work Agreement
which is stipulated on 10 January 2012. Consideration of establishing this
Evaluation Team is:[23]
a.
based
on the provisions mentioned in article of existing work contract and coal
mining undertakings work agreement, need to be adjusted with Act No. 4 of 2009,
to provide optimum benefit for national interest of Indonesia;
b.
that
for adjustment as mentioned in letter a, it is necessary to perform integrated
and coordinated evaluation .
The Evaluation Team has membership[24]
of Coordinating Minister of Economy ( Chairperson and also member), Minister of
Energy and Mineral Resource (daily chairperson and member) and Ministers of
Finance, Internal Affairs, Law and Human Rights, Industry, Trade, Forestry,
State Owned Enterprise, Cabinet Secretary, General Attorney of the Republic of
Indonesia, Head of Finance and Development Supervision Agency, Head of National
Land Agency, and Head of Investment Coordinating Body as members.
The duty of Evaluation Team includes:[25]
a.
to
perform evaluation against provisions mentioned in articles of work contract
and coal mining undertaking agreement, which needs adjustment to Act No. 4 of
2009 on Mineral and Coal Mining;
b.
to
stipulate the necessary steps for settlement of work area determination and
state revenue, as position of the Indonesia Government in conducting
renegotiation of work contract and coal mining undertaking agreement;
c.
to
stipulate the necessary steps for implementation of obligation of holders of
work contract and coal mining undertaking agreement, to mineral and coal
processing and/or purification.
Renegotiation between RI Government and
holders of KK and PKP2B includes:[26]
a.
mining
work area;
b.
contract
extension;
c.
state
revenue/royalty;
d.
obligation
of management and purification;
e.
obligation
of divestment; and
f.
obligation
of domestic mining goods and services use.
Until March 2012 there are 9 (nine) KKs
and 60 (sixty) PKP2Bs which their renegotiation points have been approved,
which have been conducted since August 2010 against 37 (thirty seven) companies
holding KK, and 74 (seventy four) companies holding PKP2B[27]
Some
companies that have approved among others are Selo Argokencono Sakti, Tanjung Alam Jaya, Sumber Kurnia Buana, Bangun
Benua Persada Kalimantan, and K Caraka Mulia. While those who
have approved KK among others are Tambang Mas Sable,
Kasingan Bumi Kencanam and
Iriana Mutiara Idenburg.[28]
KK
and PKP2B renegotiation can be viewed from aspects of legal certainty
(judicial), benefits or use (sociological), and justice (philosophical):[29]
a.
Aspect of justice (philosophical)
If
viewed from philosophical aspect of Act No. 4 of 2009 creation which is
contained in consideration of the Act, namely that mineral and coal contained
in Indonesia mining legal territory constitute non-renewable natural wealth as
the blessings of God Almighty that has significant role in fulfilling the needs
of many people, therefore its management must be controlled by the State to
provide real added value for national economy in the effort to achieve
prosperity and welfare of the people in a just manner.[30]
Besides in
Article 2 it is regulated that mineral and/or coal mining is managed based on principles
of benefit, justice and balance; taking side to nation’s interest;
participative, transparency, and accountability; sustainability and
environmental orientation.
Justice
principle in mineral and coal mining undertaking becomes the basis in mineral
and coal mining undertaking, all mining commodities must be able to provide
welfare for the greatest people’s prosperity.
In its
implementation, mining undertaking that has been conducted by holders of KK or
PKP2B have not yet been able to provide justice for Indonesian people. As said
by Minister of Energy and Mineral Resources Jero Wacik, that content of
existing contract and agreement is expected to be more fulfilling justice and
national interest.[31]
This justice
aspect that the Government wishes to materialize in contract renegotiation, the
Government wants that benefits from the mining must be in accordance with each
own portion which is now considered as not yet balanced. However, KK or PKP2B
renegotiation also has to consider the interest of contractor which in business
perspective wants to get big profit in the fund being invested. The wishes of
both parties must be accommodated, so that the content of KK and PKP2B must
reflect justice to both parties that it will reach win-win solution.
In line with
such justice conception, John Rawls in his book “Justice as Fairness” explains
the theory of social justice as “the difference principle and the principle of
fair equality of opportunity”.[32]
Furthermore
John Rawls confirms that upholding justice program with people dimension must
deal with two justice principles, namely, first, providing equal right and
opportunity based on basic freedom which is the widest, equal freedom for
everybody. Secondly, it is able to re-regulate social-economic gap that occurs
so that it can provide reciprocal benefits for everybody, whether they are the
privileged as well as non-privileged groups.[33]
In
the concept of Rawls known as original
position principle, namely the same and equal situation among each person
in the society, there is no party who has higher position than the others and
in this condition people can make agreement with other party in balance. As
written by Rawls “one is the idea of original position; the other is the idea
of citizens as free and equal persons”.[34]
Therefore,
among business actors, government, and society there are original position, so
that equality of each party must be
considered as balanced and have the same position in receiving benefits or
yield from controlling and undertaking of mineral and coal mining. Therefore,
the Government that has position as one of the parties (position as private
entity) which on the other hand as regulator (position as public entity) must
be able to provide balance of benefits (justice) between business actor and society,
so that justice can be manifested for both interest.
b.
Aspect of benefit
Aspect of utility or benefit to
the yield of mining constitutes the most important right for providing a permit
or contract being agreed by the Government of Indonesia and contractor. Without
the presence of benefit or utility, an investment in mining area is useless
because it will inflict loss to the state.[35]
Such benefit
aspect, if connected with Jeremy Bentham’s utilitarianism theory, it correlates
with law/act formation namely that it constitutes a sign and volition which
must be stated by ruler in a certain form, so that everybody can act according
to the act that has been expressed. As Bentham mentions:
“According to this
definition, a law can be considered in eight different respect. (1) In respect
to its source: that is in respect to the person or persons of whose will it is
the expression. (2) In respect to the quality of its subjects: by which I mean
the person and things to which it may apply. (3) In respect to its object: by
which I mean the act, as characterized by the circumstances, to which it may
apply. (4) In respect to its extend, the generality or the amplitude of its
applications: that is in respect to the determinateness of the persons whose
conduct it may seek to regulate. (5) In respect to its aspect: that is in
respect to the various manners in which the will whereof it is the expression may apply itself to the act
and circumstances which are its object. (6) In respect to it force: that is, in
respect to the motives it relies on for enabling it to produce the effect it
aims at, and the laws or other means which it relies on for bringing those
motives into play: such laws may be styled its corroborative appendages. (7) In
respect to its expression: that is in respect to the nature of the signs by
which the will whereof it is the expression may be made known. (8) In respect
to it remedial appendages, where it has any: by which I mean certain other laws
which may occasionally come to be subjoined to the principal law in question:
and of which the design it to obviate the mischief that stands connected with
any individual act of the number of those which are made efficacy of the
subsidiary appendages to which it stands indebted for its force”. [36]
Through law definition, there are
8 (eight) considerations as described above, which basically Bentham does not
only give attention on law formation which constitutes a sign of will
expression and instruction of sovereign ruler, but Bentham as follower of will
theory in law also believes that law implementation will be very influential in
determining quality of the law being established.[37]
For such purpose the will must be created coming from various societal elements
without exception, so that it can create what is called as unity of will[38]
which further by theory of will followers is referred to as “the unity of
enforcement entails the unity of will”.[39]
The process of legal formation is
based on a motive which originates from an absolute principle, namely the
principles of utility which is meant as:
“... that priciple which approves or disapproves of
every action whatsoever, according to the tendency which it apears to have to
augment or diminish the happiness of the party whose interest is in question.”[40]
It is necessary
to understand if utilitarianism very emphasizes on importance of consequence of
action in evaluating it is good or bad. Quality of action morally is measured
based on consequence of an action. The action which provides the greatest
benefits, means the most promoting prosperity, welfare and happiness of people,
than such action is good.[41]
On the contrary, if an action brings more harms than benefits, such action must
be considered as bad, consequence of action here indeed determines all of its
moral quality.[42]
This very statement makes the idea that utilitarianism adopts the concept of
consequencionalism, which means every action is morally seen from the
result/consequence as the impact of such action.
The
benefit aspect of the mining, for example in state revenue of 2012 amounting to
Rp14.453 (fourteen coma four hundred and fifty three) trillions which comes
from royalty and fixed contribution,[43] excluding tax revenue and
other indirect benefits such as workforce being employed, technology transfer, community development,
and corporate social responsibility.
Nevertheless, such benefits still considered not to give maximum benefits to
the state, for example on a wish the royalty given by contractor to the state
should be improved.[44] Contribution of mining
company to Indonesian economy is still low, among others indicated with low
royalty payment.
This
becomes sociological reason to have renegotiation of KK and PKP2B between the
government and holders of IUP and IUPK of mineral and coal mining.
c.
Aspect of legal certainty
Binding
characteristic of legislative regulations to norm adressat constitutes a legal principle. Written law which contains
norms simply functions to create order in society’s life should become rules of
the game for everybody which becomes jurisdiction of validity of legislative
regulation.
Related to the legal certainty
aspect, then implementation of KK/PKP2B renegotiation needs rule of law. Rule
of law consists of 4 (four) elements, namely “fidelity to sufficiently clear
and instructive rules; rules
of ‘principled predictability” or ‘fair certainty’; rules from valid, or
legitimate, sources of govermental authority; rules from authority exsternal to
the individual (or govermental body) exercising legal power”.[45] So that
implementation of KK/PKP2B implementation can be conducted by negotiating
parties which eventually create mutual concord of the parties based on rule of
law principle.
As regulated in every legislative
regulations that it is considered to be valid on the day of enactment, and
provision on that everybody should know therefore legislator positions it in
state gazette or addendum of state gazette.
Therefore,
all norms in a legislative regulation must be valid for legal adreast and
exception on certain thing is regulated in transitional provision as transition
between regulation or condition before it is enacted.
Similarly
on provision in Act No. 4 of 2009, all provisions in the Act must be valid on
the day it is enacted, namely 12 January 2009. And concerning certain aspects,
they are regulated in transition provisions which in the Act are connected with
arrangement of KK and PKP2B given one year’s time to adjust with provisions in
articles in the Act.
As
adherent of positive law, the parties affected by such arrangement should comply with what are
written and automatically implemented.
Act
No. 4 of 2009 as the instrument that regulates activity in mining area should
become reference and rule of the game on all activities of mineral and coal
mining undertakings in Indonesia. The making of such Act constitutes a
democratic process in Indonesia which is made by people (represented by DPR –
House of People’s Representative) together with president as executive of state
policy, constitutes manifestation of the will of Indonesian people.
Therefore,
if it is interpreted according to normative and positivistic method, actually
renegotiation of KK and PKP2B is not needed because all KK and PKP2B holders
are obliged to submit to all provisions in Act No. 4 of 2009 including
provisions of Article 169 letter a.
The
three aspects (justice, benefit, and legal certainty) in its implementation
will occur spanungsverhaltnis, a resistance/tension
against each other based on the presence of differences of interest among the
three aspects.[46]
For example, on KK and PKP2B, there is conflict between arrangement in Act
Number 4 of 2009 and contractors’ interest that is guided by KK and PKP2B while
if it is implemented only based on KK and PKP2B then aspects of justice and
benefit for the people cannot be implemented fully.
The
spirit for renegotiation must be implemented with maximum justice orientation
for national interest, which means the Government and contractor performs the
agreement for common interest. Contract remains to get profit, while the
Government will not suffer loss or must also gain profit.
3. BENEFITS OF KK/PKP2B RENEGOTIATION
3.1 Benefit of State Revenue
Besides tax revenue, non-tax revenue
is no less important. Non-tax revenue from mineral and coal mining sector is
very high compared to that of non-tax revenue from other sector. In 2009
non-tax state revenue is Rp15.3 (fifteen point three) trillions, in 2010 Rp18.6
(eighteen point six) trillions, and increases in 2011 into Rp24.7 (twenty four
point seven) trillions.[47]
Arrangement
on non-tax state revenue is regulated in Act Number 20 of 1997 on Non-Tax State
Revenue (hereinfurther is referred to as “Act on PNBP”) which in Article 2
types of PNBP are grouped as the followings:[48]
a.
Revenue
from Government’s fund management;
b.
Revenue
from utilization of natural resources
c.
Revenue
from proceeds of State asset management being separated;
d.
Revenue
from service activity conducted by the Government;
e.
Revenue
based on court verdict and from imposition of administrative fine;
f.
Revenue
in the form of grant which constitutes the Government’s right;
g.
Other
revenue regulated in separate Acts.
Of
the seven types of PNBP, revenue from utilization of natural resources becomes
the main aspect in mineral and coal mining sector. Type and tariff of PNBP
mineral and coal mining as a whole are regulated in Government Regulation
Number 9 of 2012 on Non-Tax State Revenue which is Effective in Energy and
Mineral Resources Ministry (hereinfurther is referred to as PP PNBP KESDM).
3.2 Benefit of Share Ownership of Indonesia Participant
With the existence
of share ownership of Indonesia participant, especially the Government, it will
impact on economic, social benefits and other benefits. The benefits gained in
general from share ownership by Indonesia participant among others are the
application of mining best practices, better governance and supervision,
improvement of transparency and accountability, environmental protection, and
creation of better investment supervision. These benefits will be explained as
follows.
3.2.1
Maintaining National Interest Based on Best Mining Practice Principles
In
Act No. 4 of 2009, arrangement on best mining practice principles is regulated
into obligation of IUP and IUP holders as regulated in Article 95 that IUP and
IUPK holders are obliged to:
a.
Apply
good mining technical norms;
b.
Manage
finance according to Indonesia accounting system;
c.
Increase
added value of mineral and/or coal resources;
d.
Implement
development and empowerment of local community; and
e.
Comply
with tolerance of environmental carrying capacity.
In
application of good mining technical norms, holders of IUP and IUPK are obliged
to implement:[49]
a.
Stipulation
of mining work health and safety;
b.
Mining
operation safety;
c.
Management
and monitoring mining environment, including reclamation and post-mining
activities;
d.
Efforts
of mineral and coal resource conservation;
e.
Management
of mining residue of a mining business activity in solid, liquid, or gas forms
until meeting environmental quality standard before releasing them to
environmental media.
As mentioned in letter c above,
management and monitoring mining environment, including reclamation and
post-mining activities constitute a significant aspect in mineral and coal
mining undertaking activity. The importance of good mining practice principle
through management and monitoring mining environment is in line with
arrangement in Act No. 32 of 2009 as systematic and integrated effort conducted
to preserve environmental function and to prevent pollution and/or
environmental damage.[50]
Based
on guide from Federal
Department of the Environment and Heritage it
is stated that:
Best practice can simply be explained
as "the best way of doing things". Best practice environmental
management in mining demands a continuing, integrated process through all
phases of a resource project from the initial exploration to construction,
operation and closure. For it to be successful it requires careful planning and
commitment from all levels and groups within a mining company. It is based on a
comprehensive and integrated approach to recognising, and avoiding or
minimising, environmental impacts. In order to be fully effective, this
approach must be based on a sound set of generic and mining specific principles.[51]
a.
ecological sustainable development;
b.
intra- and inter-generational equity;
c.
accountability and compliance with international human
rights and environmental standars and principles;
e.
well informed and trained staff;
f.
effective communications and openness;
g.
flexibility; and
h.
continual improvement.
Implementation of norm or good
mining principle will benefit for national interest. Through application of
good technical norm then aspects of work health and safety, mining operation
safety; management and protection of environment; conservation of natural
resources; and management of mining residue will be well monitored by the
government directly from the company if the government becomes a part of
shareholders that has supervision function of good mining company governance.
With the application of good mining
norms, the national interest will be well maintained that negative mining
impact will be minimized even eliminated and can provide greatest benefits for
the people.
3.2.2
To Develop
Better Governance and Supervision For Implementation of Mining Undertakings in
Indonesia.
Good
corporate governance is very important in running the company to obtain high
benefits from such company operations so that the company can grow and be
beneficial in the long run, at the same time winning global business
competition.
Forum for
Corporate Governance in Indonesia (FCGI) memberikan
definisi corporate governance:
a set of rules
that define the relationship between shareholders, managers, creditors, the
government, employees and other internal and external stakeholders in respect
to their rights and responsibilities, or the system by which companies are
directed and controlled . (taken from Cadbury Committee of United Kingdom). The
objective of corporate governance is to create added value to the stakeholders. [54]
Furthermore,
good corporate governance is defined as:
A process and structure used by company organs
(shareholders/capital owner, commissioner/board of commissioners and board of
directors) to improve business achievement and company’s accountability in
order to materialize shareholders’ values in the long run by maintaining to
give attention to other stakeholders’ interest, based on legislative
regulations and ethical values. [55]
Application
of good corporate governance principles can provide high benefits with
materialization of:
a.
Good business ethics consistently
which impacts on sound, efficient and transparent business climate;
b.
Attitude and behavior which shows
business community’s compliance in implementation of provisions of legislative
regulations;
c.
Elimination of corrupt, nepotism and
collusive attitude and behavior;
d.
Quality improvement of sustainable
management, institution, and administration of company.
With
the presence of Government and/or local government’s participation in foreign
company in mineral and coal mining area, then the Government and/or local
government can confirm that good corporate governance principle is applied in
every business aspect and in all company lines.
Good
corporate governance principles namely transparency, accountability,
responsibility, independency and reasonableness and equality is needed to
achieve business sustainability of the company through giving attention to the
interest of stakeholders.[56]
Through
participation of the Government and/or local government in share ownership in
foreign mineral and coal mining company, then better corporate governance
principle for implementation of mining undertakings in Indonesia can be
achieved so that creating business climate and cooperation mechanism of mining
management in Indonesia which is conducive and just, and also providing high
benefits for the state.
Besides
developing good corporate governance, with the participation of Government
and/or local government there will be better supervision or control from the
Government and/or local government for implementation of mining undertakings in
Indonesia so that creating business climate and cooperation mechanism in
Indonesia which is conducive, just and also provides high benefits for the
state can be materialized.
Such
supervision is important considering until now the existing form of supervision
is only limited on Government or local government supervision as permit
provider or as contracting party in KK or PKP2B. while if viewed from
interpretation of Article 33 clause (3) of the 1945 Constitution, the
Constitution Court has ever issued Verdict Number 001-021-022/PUU-I/2003, which mentions:[57]
Supervision is important
considering that the form of supervisory oversight was
limited to government or local government as licensor
or as a contracting
party in KK
or PKP2B. Whereas
when seen from the interpretation
of Article 33 paragraph
(3) of the 1945 Constitution, the Constitution
Court has issued Decision Number
001-021-022/PUU-I/2003. In this ruling, the Constitution
Court stated:[58]
“People
collectively are constructed by 1945 Constitution submit a mandate to the state
to create policy (beleid) and handling
action (bestuursdaad), regulation (regelendaad), management (beheersdaad) and supervision (toezichthoudensdaad) for the goal of
greatest people’s prosperity. Function of handling (bestuursdaad) by the state
is conducted by the Government with its authority to issue and revoke permit
(vergunning), license (licentie), and concession (concessive). Function of
regulation by the state (regelendaad) is conducted through legislation
authority by DPR together with the Government, and regulation by the Government
(executive). Function
of management (beheersdaad) is conducted through mechanism
of share-holding and/or through direct involvement in management of State Owned
Enterprise or State Owned Legal Entity as institutional instrument through
which the state c.q. the Government use its control effectively on the wealth
resources for greatest people’s prosperity. Similarly on supervision function
by the state (toezichthoundensdaad)
is conducted by the state c.q. the Government in the frame of supervising and
controlling so that implementation of state’s control on important branches of
production and/or which dominate people’s lives are really conducted for the
greatest prosperity of all people.”
In interpretation of Article 33
clause (3) of the 1945 Constitution of the Republic of Indonesia, supervision
function constitutes one of the functions inherent in natural resources
holding.[59]
Supervision function by the
Government and/or local government will be very strong if the Government and/or
local government become a part of the company, namely as one of the
shareholders that have the rights as shareholder as regulated in legislative
regulations in limited liability company. The said supervision is not also
limited on supervision as regulated in Government Regulation No. 55 of 2010, in
the form of supervision to organization of mining business management[60]
and supervision to mining business activity implementation.[61]
Therefore,
through better supervision for implementation of mining undertakings in
Indonesia, it can create business climate and cooperation mechanism of mining
management in Indonesia which is conducive, just and also provides high
benefits for the state.
3.2.3
Improving
Transparency and Accountability of Mineral and Coal Mining Company
As
implementation of good corporate governance above, if there is participation of
Government and/or local government in the mineral and coal mining company as
shareholder, transparency and accountability in managing the company will be
created.
The
Government and/or local government as shareholders have the rights as regulated
in Act No. 40 of 2007, among others are:[62]
a.
Right
to attend and to vote in GMS;
d.
Right
to obtain information which is related with Company from Board of Directors
and/or Board of Commissioners in GMS forum, as long as it is related with
meeting agenda and not in violation with the interest of the Company;[65]
e.
On
written request by shareholder, Board of Directors grants permission to
shareholder to examine list of shareholders, special list, minutes of GMS and
annual report, and to obtain copy of minutes of GMS and copy of annual report.[66]
Through
such rights, the Government and/or local government have special rights as
shareholders. The right to vote in GMS; right to see list of shareholders and
special list provided at Company domicile and other rights can create
transparency and accountability in company management. This is completely
different if the Government and/or local government become the party outside
the company or party who has no shares in the company.
Therefore,
participation of Government and/or local government in share ownership in
foreign mineral and coal mining company is beneficial for materialization of
transparency and accountability of foreign mineral and coal mining company in
Indonesia.
3.2.4
Increasing Compliance
of Foreign Mineral and Coal Mining Company in Indonesia with Provisions of Acts
in Environmental Protection and Management
The existence of mining business
activity will directly or indirectly impact on environment. Environmental
damage in small or big magnitude because of mineral and coal mining business
activity is inevitable. For example, the existence of mining activity in
Indonesia forest region becomes the biggest cause of forest destruction of 70%
(seventy per cent) as a result of mining exploration.[67]
Wahana Lingkungan Hidup (WALHI) for
example, photographed environmental impact of PT FI existence in Papua which
causes the death of the Rivers Aijkwa, Aghawagon and Otomona due to piling up of mining stone waste and tailings
which if calculated in total can reach 840,000 (eight hundred forty thousand)
tons.[68] On
the other hand, Act No. 32 of 2009 and Act No. 4 of 2009 have regulated on
environmental aspect which needs to be observed in implementation of mining
business activity. Act No. 32 of 2009 regulates business activity which is
obliged to obtain environmental permit in the frame of protecting and managing
the environment, importance of assessment of strategic environment (KLHS) by
the Government and local government, spatial use according to spatial
arrangement, obligation of environmental solution and recovery, treatment of
hazardous and toxic material and waste, and other obligations in accordance
with Act No. 32 of 2009.
Moreover,
in Act No. 4 of 2009 it is regulated that mining company has to carry out
feasibility study[69] including
environmental study. Principle of mineral and coal mining management must be
sustainable and with environmental orientation[70]
and to secure sustainable benefits of mineral and coal mining and with
environmental orientation.[71] Obligations
of mining company are also regulated in Act No. 4 of 2009. Important
obligations among others are obligation of reclamation[72] and
post-mining activity.[73]
Furthermore
as regulated in Article 3 clause (1) of PP No. 78 of 2010 Implementation of
reclamation by IUP Exploration holder and IUPK Exploration holder is obliged to
fulfill the principle of environmental mining protection and management.
Principle of protection and management of mining environment, at least
includes:[74]
a.
Protection
to quality of surface water, land water, sea water, and land and air based on
quality standards or criteria of environmental damage standard in accordance
with legislative regulations;
b.
Protection
and recovery of bio-diversity; security of stability to stone cover pile,
tailing pond, ex mining area, and other artificial structure;
c.
Use
of area ex mining in accordance with its allocation;
d.
Observance
with local social and cultural values; and
e.
Protection
to land water quantity according to legislative regulations.
Obligations
in such provisions of legislative regulations must be carried out by all mining
companies in Indonesia. Government and/or local government involvement in the
company as shareholder even when the Government and/or local government can
place its representative as one of the commissioners in the mining company,
then it will push foreign mineral and coal mining company in Indonesia to more
comply with provisions of Acts in environmental management area.
The
important meaning of Government and/or local government participation in the
company as shareholder is so significant for compliance of foreign mineral and
coal mining company with provisions of Acts in environmental management area.
3.2.5
Become
Supervision Pattern of Investment Activity in Extractive Industry which Manages
Natural Resources, Including to Push KK and PKP2B Renegotiation
As
industry that its raw material is directly taken from nature (extractive),
mineral and coal mining must be
supervised in such a way in its management because mineral and coal constitute
non-renewable natural wealth that its management must be really maintained
sustainably according to principle of sustainable development. Similarly with
the intention of the Government to carry out KK and PKP2B renegotiation with
mining companies. One of the aspects put into material for KK and PKP2B
renegotiation is concerning share divestment, region area, royalty, domestic
added value increase, and others. Share ownership by Indonesian participant is
very important so that share divestment obligation as mandated in Article 112
of Act No. 4 of 2009 and Article 97 of PP No. 23 of 2010 as has been changed
with PP No. 24 of 2012 can be implemented.
With
the opportunity to purchase divested shares instructed in KK as occurred in PT
NTT share divestment, participation of Government and/or local government in
the said share ownership will reinforce the instructions of legislative
regulations in mineral and coal mining area on obligation of share divestment
to companies that not yet wish or do not wish to carry out share divestment
because KK or PKP2B does not regulate on obligation of share divestment in
certain quantity as PT FI.
3.3
Obligation
to Use Domestic Mining Goods and Services
Other important aspect of KK and PKP2B renegotiation
in foreign mineral and coal mining companies is potential use of domestic
goods, services and technology.
This is in line with the provision of Article 39
clause (2) letter t which regulates the obligation on production operation IUP
holder to use domestic goods, services and technology. Moreover, the form of
implementation of use of domestic goods, services and technology is also
supervised by Minister of ESDM (Energy and Mineral Resources), governor, and/or
regent/mayor according to their authority as regulated in Article 141 clause
(1) letter I which regulates that supervision by Minister of ESDM, governor,
and/or regent/mayor according to their authority, among others, in the form of
use of domestic goods, services, technology, and engineering and design
capability.
With
the existence of KK and PKP2B renegotiation then implementation of use of domestic goods, services, technology, and
engineering and design capability can be more
optimum.
4
CONCLUSION
Based on the
discussion above, it can be concluded that renegotiation of KK and PKP2B
constitutes the mandate of Article 169 letter b of Act No. 4 of 2009. People’s
mandate manifested in the process of making such Act by DPR as materialization
of people’s will, therefore, the renegotiation constitutes the mandate of
Indonesian nation against implementation of mineral and coal mining
undertakings in Indonesia. However, there is a separate legal regime which
becomes norms in implementation of KK and PKP2B namely principles of pacta sunt servanda which its existence
emphasizes on binding of the parties to the content of agreement determined by
the parties themselves, in this case the Government of the Republic of Indonesia
and mining company who sign the agreement. Without pacta sunt servanda it will be difficult to develop trust / good
faith in making agreement between the parties.
In Article 1338
of Indonesia Civil Code it is stated that agreement is the law of the parties
who make them. KK and PKP2B also constitute an agreement which its content is
binding for the parties who make them.
Therefore,
renegotiation of KK and PKP2B must be developed with equal understanding
between the Government and mining company. There should be the same intention
to evaluate the content of agreement that has been approved by both parties.
Without the intention to evaluate and be adjusted with Act No. 4 of 2009 then
renegotiation of KK and PKP2B cannot be implemented. Because this can lead to
legal dispute between the Government and mineral and coal mining company.
On the other
hand, the existence of mineral and coal mining undertakings must be viewed from
mutual benefits of the parties. It means the Government as controller of
natural wealth also has to get high benefits from mining undertaking activity
and also the company can benefit from their mining operation activity. Without
the intention to provide such benefits, then the loss suffered by either party
shall constitute violation to justice principle.
[1] Verdict of Case Number 001-021-022/PUU-I/2003 on Request for Examination of
Act Number 20 of 2002 on Electricity against the 1945 Constitution of the
Republic of Indonesia, p. 335.
[2] Stipulation on “National Economy
and People Welfare” is regulated in CHAPTER XIV OF the UUD NRI 1945, fourth
amendment”.
[3]
Stuart G. Gross, Inordinate Chill: Bits, Non-Nafta Mits, and Host-State
Regulatory Freedom--An Indonesian Case Study, Michigan Journal of
International Law, University of Michigan Law School, Spring 2003, pp.6-7.
[5] Post-mining activity is a
planned, systematic, and continual plan after the end of part or all mining
undertaking activity to recover natural environment function and social
function according to local conditions in all mining areas (see Article 1 point
27 of Act No. 14 of 2009).
[6] In consideration letter c of Act
No. 4 of 2004 it is mentioned: “that considering national as well as
international development, Law Number 11 of 1967 on Basic Stipulations of
Mining have no longer suitable revisions of legislative regulations in mineral and coal mining sector are needed
that can manage and undertake mineral and coal potential which are independent,
reliable, transparent, competitive, efficient, and environmentally oriented, in
order to secure sustainable national development”.
[7] General Provisions of Act No. 4
of 2009.
[8] Academic draft of Mineral and
Coal Draft Bill prepared by the Government on 12 June 2005, p. 2.
[9] Two biggest mining companies in
Indonesia, PT Freeport Indonesia and PT Newmont Nusa Tenggara have not yet been
willing to renegotiate the contract offered by the Government. Quoted from http://www.hukumonline.com/berita/baca/lt4e81e8fa315af/freeport-dan-newmont-enggan-renegosiasi-kontrak)
[10] M.
Sornarajah, The International Law on
Foreign Invesment, second edition, (Cambridge: Cambridge University Press,
2004), p.
278.
[11] Financial Business Newspaper
online, downloaded from www.bisniskeuangan.kompas.com/read/
2012/02/29/.../Freeport.dan. Newmont.Minta.Kontrak.Karya.Dihromati
on 29 February 2012.
[12] Ridwan
Khairandy, Good Intention in
Freedom of Contract, (Jakarta : PPS
Fakultas Hukum Universitas Indonesia, 2004), p. 27.
[13] Ibid.
[14] Sutan
Remy Syahdeini, Freedom of Contract and Balanced
Protection for Both Parties in Bank Credit Agreement in Indonesia (Book 1),
(Jakarta: Institut Bankir Indonesia, 1993), p. 185.
[15] Sutan Remy Syahdeni, ibid.
[16] UNIDROIT, an overview, downloaded from http://www.unidroit.org/dynasite.cfm? dsmid= 84219,
1 May 2012.
[17] Huala Adolf, Basic International Contract Law, (Bandung:
Refika Aditama, 2nd
Print, 2008I, p.
29.
[18] Article 6.2.2
UNIDROIT Principles Ofinternational Commercial Contracts 2004, http://www.unidroit.org/english/principles/contracts/principles2004/blackletter2004.
pdf
[21] Article 169 letter a Act No. 4
of 2009.
[22] This is regulated in Article
1338 clause (1) of Indonesia Civil Code that all agreements that are legally
made shall valid as act for the parties who made them.
[23] Item of Consideration of Kepres
No. 3 of 2012.
[24] First Dictum of Keperes No. 3 of
2012.
[25] Second Dictum of Kepres No. 3 of
2012.
[26] Quoted from explanation of
Thamrin Sihite, General Director of Mineral and Coal, Ministry of Energy and
Mineral Resources, downloaded from www.bisniskeuangan.kompas.com/read/2012/02/29/.../ Freeport.dan.Newmont.Minta.Kontrak.Karya.Dihromati on 29 February 2012.
[27] Downloaded from www.bisniskeuangan.kompas.com/read/2011/10/04/.../Pemerintah.
Optimis. Renegeoisasi.Kontrak.Berhasil. on 4 October 2012.
[28] Downloaded from www.bisniskeuangan.kompas.com/read/2012/02/29/.../Freeport.dan.
Newmont.Minta.Kontrak.Karya.Dihromati, on
29 February 2012.
[30] Item of Consideration letter a
of Act No. 4 of 2009.
[32] John Rawls, Justice and Fairness: A Restatement, edited by Erin Kelly, (Massachusetts:
Harvard University Press, 203), p. 14.
[33] John Rawls, A Theory of Justice, London: Oxford University press, 1973, which has been translated into
Indonesian language by Uzair Fauzan and Heru Prasetyo, Teori Keadilan,
Yogyakarta: Pustaka Pelajar, 2006.
[34] John Rawls, Op.cit, p. 14.
[35] Reference
[38] J.W.
Harris, Law and Legal Science: An Inquiry into the Concept Legal Rule and
Legal System, (Oxford: Clerendon Press, 1982), p. 29.
[41] K. Bertens, loc.cit.
[44] Downloaded from http://www.republika.co.id/berita/nasional/umum/12/03/13/m0suib-jero-wacik-tak-ada-perusahaan-tambang-yang-menolak-renegosiasi, op.cit.
[45] Ronald
A Coss, The Rule of Law in America,
in
Rohit Sacdev, Comparing The Legal Foundations of Foreign Direct Investment
in India and China: Law and Rule of Law in The India Foreign Direct Investment
Context, Columbia Journal of Law & the Arts, Vol. 25 (2001), p. 28.
[46] Satjipto Rahardjo, op.cit, p. 19.
[47] Directorate General of Mineral
and Coal, Ministry of Energy and Mineral Resources, Acceleration of Industrialization in the Frame of Supporting
Acceleration and Economic Development, Material of General Director of
Mineral and Coal in Work Meeting with Ministry of Industry, Grand Sahid Hotel
Jakarta, Jakarta 1 February 2012, p.43
[48] Article 2 of Act No. 20 of 1997.
[49] Article 96 of Act No. 4 of 2009.
[50] Article 1 Number 2 of Act No. 32
of 2009.
[51]
Federal Department of the Environment and Heritage Autralia, Overview of Best Practice Environmental
Management in Mining, downloaded
from http://www.ret.gov.au/resources/Documents/
LPSDP/BPEMOverview.pdf, p.18.
[53] Precautionary or
Preventive Principle constitutes a principle with a
goal to anticipate and perform early prevention to an uncertain impact because
of a certain activity conducted by human being. (See Sri Wartini, Implementation of Precautionary Principle in
Sanitary and Phythosanitary Agreement,
Case Study: Decision of Appellate Body WTO in Case of Hormone Beef
between European Union and United States of America, Law Journal No. 2 Vol.
14 April 2007: 296-313, p. 297.
Precautionary principle can be
found in various international conventions. One of the precautionary principle
definitions is contained in Article 15 of Rio Declaration, as the following: In order to protect the environment, the precautionary
approach shall be widely applied byStates according to their capabilities.
Where there are threats of serious or irreversible damage, lack of full
scientific certainty shall not be used as a reason for postponing
cost-effective measures to prevent environmental degradation. “.
(See Article 15 of
Rio Declaration of Environment and Development 1992).
[54]
Forum for Corporate Govermance in Indonesia, What is Corporate Governance, downloaded
from http://www.fcgi.or.id/corporate-governance/about-good-corporate-governance.html on 15 August 2012.
[56] National Committee of Governance
Policy, General Guide of Good Corporate Governance Indonesia 2006, downloaded
from http://www.ecgi.org/codes/documents/indonesia_cg_2006_id.pdf,
on 15 August 2012.
[57] Constitution Court, Case Verdict
Number 001-021-022/PUU-I/2003 on Request for Judicial Review of Act
Number 20 of 2002 on Electricity against
the 1945 Constitution of the Republic of Indonesia.
[58] Constitution Court, Case Verdict
Number 001-021-022/PUU-I/2003
on Request for Judicial Review of Act Number 20 of 2002 on Electricity against the 1945
Constitution of the Republic of Indonesia.
[59] In Article 33 clause (3) of the
Constitution it is mentioned that ““land, water, and natural wealth contained
in it shall be controlled by the state for the greatest prosperity of the
people”. Constitutional Court interprets the phrase “controlled by the state”
as in the Court Verdict Number 001-021-022/PUU-I/2003 p. 334.
[60] Supervision to mining business
management organization is conducted by the Government to local government.
In Article 14 of Government
Regulation Number 55 of 2010,
supervision to mining business management organization includes supervision: a.
stipulation of WPR; b. stipulation and granting WIUP of non metal mineral and
stones; c. granting metal and coal mineral WIUP; d. issuance of IPR; e.
issuance of IUP; and f. organization for guiding and supervision of activity conducted
by IPR and IUP holders.
[61] Supervision on implementation of
mining business activity is conducted by permit issuer (Minister of Energy and
Mineral Resources, governor, or regent/mayor) to IUP. IPR, or IUPK holders.
In Article 16 of PP No. 55 of
2010 it is regulated that supervision on mining business activity implementation
is conducted to: a. mining technique; b. marketing; c. finance; d. mineral and
coal data management; e. conservation of mineral and coal resources; f. mining
work health and safety; g. mining operation safety; h. environmental
management, reclamation and post-mining; i. use of domestic goods, technology
services, and engineering and design capability; j. mining technical work force
development; k. local community development and empowerment; l. mastery,
development and application of mining technology; m. other activities in mining
business activity area, which related to public interest; n. implementation of
activity in accordance with IUP, IPR, or IUPK; and o. quantity, type, and
quality of mining business production.
[62] Article 52 clause (1) of Act No.
40 of 2007.
[67]
Republika, 70 per
cent of Forest Destruction is Due To Mining, written on 8 August 2012 http://www.republika.co.id/berita/nasional/lingkungan/12/08/07/
m8e1ez-70-persen-kerusakan-hutan-akibat-tambang, downloaded on 15
August 2012.
[68]Walhi, Report of PT.
Freeport-Rio Tinto Operation Impact, Re-publication of WALHI Research 2006, downloaded from http://www.walhi.or.id/id/component/content/article/48-publikasi/1613-laporan-dampak-operasi-pt-freeport-rio-tinto-publikasi-ulang-riset-walhi-2006.html
on 15 August 2012.
[69] Feasibility
study is a phase of mining business activity to obtain detailed information of
all aspects related to determine economic feasibility and mining business
technique, including analysis on environmental impact and planning of
post-mining. (See Article 1 number 15 of Act No. 4 of 2009).
[70] Article 2 letter d of Act No. 4
of 2009.
[72] Reclamation
is activity which is conducted along the phase of mining business to arrange, recover
and improve environmental quality and ecosystem in order to re-function
according to its allocation. (Article 1 number 26 of Act No. 4 of 2009).
[73] Post
mining activity, which further is referred to as post-mining, is a planned,
systematic and sustainable activity after end of part of or all mining business
activity to recover natural environment function and social function according
to local conditions in all mining areas. (Article 1 number 27 of Act No. 4 of
2009).
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