Samarinda, East Kalimantan. A court of arbitration has ordered the Samarinda administration to pay Rp 125 billion ($13.2 million) to the contractor building the city’s new airport.
Rudyanto, a lawyer for the company, Nuansa Cipta Realtindo, said on Friday that the Indonesian National Arbitration Board (BANI) had found in favor of the contractor, but not for the full amount of Rp 250 billion it was seeking.
“The decision from the BANI came on August 3 and declared us the winner against the Samarinda administration,” he said. “We hope the administration complies with the decision.”
Zulfakar, the city secretary, confirmed the decision and said talks were being coordinated internally to determine how to carry out the obligation. “It’s true that we lost and have been ordered to pay Rp 125 billion to NCR,” he said.
The dispute leading to arbitration stemmed from Samarinda Mayor Syaharie Jaang’s decision in April 2011 to annul the contract with NCR that was first signed in 2006 to build the city’s new airport, named BSB.
The decision was made after the East Kalimantan administration moved in January 2011 to take over the BSB project from the Samarinda administration.
With the transfer of authority, the contract between NCR and the city was no longer valid, thus leading to its annulment, despite the fact that construction on the airport was already in progress.
After the contract was killed, the provincial administration ordered an audit of the work carried out so far and found several irregularities, including the fact that NCR had been appointed directly without going through a tender, and that it had begun construction in 2005, before the contract was signed.
In response, NCR filed suit with the BANI in November last year for nonpayment of Rp 30 billion of its Rp 70 billion contract, and for losses incurred as a result of the nonpayment.
It also claimed it had completed 31 percent of the project, but auditors put the figure at 23 percent.
Zulfakar said that the arbitration board had gone with the higher figure for completion when deciding on the amount to award the contractor.
The City Council called the decision unfair and urged the Samarinda administration to appeal it.
“This is very unfair and we urge the city to challenge the arbitration board’s ruling,” said Siswadi, the council speaker.
He said a lot of the findings presented during the hearings by the city had not been taken into account in the board’s decision, which he said contributed to the favorable outcome for NCR.
Siswadi added that the City Council was considering seeking the advice of former justice minister and prominent lawyer Yusril Ihza Mahendra on the case.