Lippo loses arbitration hearing against Astro All Asia Networks Plc
25 May 2009
Indonesia - The Singapore International Arbitration Center (SIAC) has favored Astro All Asia Networks Plc in its preliminary ruling against PT Ayunda Prima Mitra (APM), a subsidiary of Indonesian property and media group Lippo.
In its statement to the Malaysian Stock Exchange, Astro said it received the arbitration tribunal’s award ruling in favour of Astro, rejecting APM’s challenge as regards the tribunal’s jurisdiction, and affirming that it had jurisdiction to hear and determine any dispute within the scope of the business deal between Astro and any concerned units or subsidiaries of the Lippo group of companies.
The arbitral tribunal advised APM, Lippo’s subsidiary, to immediately discontinue its lawsuit at the South Jakarta district court against Astro and its affiliates.
The tribunal, which presided over a preliminary hearing between April 20 and 24, also made a judgement prohibiting APM from bringing any further legal proceedings against Astro and its affiliates.
Based on this ruling, the SIAC will now give further consideration to Astro’s filing of its legal action to facilitate recovery of some 905 million ringgit (US$245 million) from the Lippo Group and its affiliates following a contract dispute over its pay-television service business in Indonesia. This involves a substantial sum in dispute between the two conglomerates, and the outcome may entail a substantial payout.
Astro filed the notice of arbitration with the SIAC on 6 October 2008.
The clash between the two conglomerates started when Astro ended its support and services to the Lippo Group’s subsidiary PT Direct Vision (DV), which is 49 percent owned by APM, in October after allegations that Lippo had failed to pay the $245 million bill in question.
Astro, which has no stake in DV, said the bill included interest on all outstanding payments due since March 2005. DV managed the now-defunct Astro pay-television service in Indonesia.
On the other hand, according to APM, Lippo had offered to obtain a license permit, and Astro pledged to provide investment and to support DV’s operations.
In 2004, Astro was invited by Lippo to become a strategic partner in DV. The two companies entered into an agreement on 11 March 2005 for the establishment of a joint venture to operate a cable TV business in Indonesia through DV. But this deal subsequently fell apart.
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