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Yoon & Yang LLC counsels PT KRAKATAU POSCO, an Indonesian subsidiary of POSCO, in successfully obtaining a final ruling from the Supreme Court of the Republic of Indonesia to set aside arbitral award

2019. 12. 27

In 2011, POSCO conducted an approximately USD 3 billion-worth joint venture project with PT KRAKATAU STEEL, an Indonesian state-owned steel company, to build an integrated steel mill with a 3,000,000-ton per year annual capacity in Indonesia.  However, PT KRAKATAU ENGINEERING, an Indonesian state-owned construction company and one of the contractors of the project, filed for arbitration with BANI Sovereign, an Indonesian arbitration institution, claiming for payment of the outstanding contract price, and the tribunal issued an arbitral award upholding PT KRAKATAU ENGINEERING’s request for payment.
 
Yoon & Yang LLC, after jointly researching Indonesian arbitration law, civil law, civil procedure law, and the precedents of the Supreme Court with an Indonesian law firm, counseled PT KRAKATAU POSCO to file a claim in Indonesian District Court to set aside the arbitral award on the basis that BANI Sovereign had no jurisdiction over the dispute.
 
Upon deciding to hear PT KRAKATAU POSCO’s claim, the Indonesian District Court set aside the arbitral award, and on October 24, 2019, the Indonesian Supreme Court dismissed PT KRAKATAU ENGINEERING’s appeal, upholding the ruling of the District Court.  
 
This was a typical case in which an Indonesian party to a dispute unilaterally chose a dispute resolution body in its favor regardless of the dispute resolution clause under the contract using its good connections with and influence on the judicial institutions in Indonesia, and the arbitration institution stubbornly issued an arbitral award despite objections to its jurisdiction.  In response to this frustrating and unjust situation where a Korean company that invested in Indonesia would be forced to pay a vast sum of money, Yoon & Yang LLC’s Indonesian team (Ji Hoon Cha & Min Young Han), which has extensive experience and well-established connections regarding dispute resolution in Indonesia, created a litigation team including a former Indonesian Minister of the Ministry of Law and Human Rights and a former Supreme Court Justice.  This would be a good precedent to foreign investors in Indonesia in that Yoon & Yang LLC managed to draft the right team to deal with such a delicate litigation case and successfully defended a foreign investor’s legitimate interests in an Indonesian court that is prone to rule in favor of its state-owned companies.

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