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Indonesia: Court Finds Company Guilty of Starting Forest Fire

(Feb. 21, 2017) On February 7, 2017, the South Jakarta District Court issued a guilty decision against the company PT Waringin Agro Jaya (WAJ), which markets palm oil.  The company was found to have deliberately lit a fire to clear land in South Sumatra Province, leading to a forest fire.  WAJ was ordered to pay a fine of Rp466.5 billion (about US$35 million); approximately 37% of that fine is considered to be compensation for the over six square miles of land that were burned, and the remainder will cover rehabilitation costs.  (Hans Nicolas Jong, Government Wins in Forest Fire Case, JAKARTA POST (Feb. 9, 2017).)

The plaintiff in the case was Indonesia’s Ministry of the Environment and Forestry, which has won a number of court cases against businesses in recent years; however, in none of the cases has a company as yet paid a fine.  In the WAJ case, the Ministry had asked for a higher fine of Rp754 billion (about US$56.4 million).  (Id.)

The Ministry and Bambang Hero Saharjo of the Bogor Institute of Agriculture, who had been a forest-fire expert witness in the case, welcomed the decision.  Saharjo said that the judges were correct to hold WAJ liable and that the judges “showed support for the environment.”  (Id.)  On the other hand, according to the company’s attorney, M. Sidik Latuconsina, WAJ is planning to appeal the decision.  (Id.)

Background

The process of deforestation, often connected with forest and peatland fires, is considered a major environmental issue in Indonesia.  In 2015, uncontrolled fires resulted in widespread smog, considered to be a significant environmental disaster.  (Jong, supra.)  The fires and related haze caused economic losses equal to 1.9% of Indonesia’s national gross domestic product.  The damaging smog spread to Malaysia and Singapore.  (Haeril Halim & Hans Nicholas Jong, Indonesian Government Remains Vigilant on Forest Fires, JAKARTA POST (Jan. 24, 2017).)

The Ministry of the Environment and Forestry has encountered challenges in enforcing court verdicts against businesses.  According to Rasio Diho Sani, the director-general for law enforcement at the Ministry, enforcement is a lengthy process due in part to the need to wait for an official record of the judicial decision, which may take more than a year.  The Ministry has also pointed to the need for a standard enforcement mechanism and has asked the Supreme Court to issue a regulation on the matter.  Sani noted that a September 2015 final, binding decision against another palm oil company, found guilty of illegal burning in Aceh Province, has yet to be enforced.  (Jong, supra.)

In another environmental case, a company found to have caused damage on Belitung Island was ordered to pay damages more than three years ago but is negotiating the timetable for payment of the Rp31.5 billion (about US$2.36 million) fine.  Jasmin Ragil Utomo , the Ministry’s environmental dispute settlement director, said of that case that the company “asked to make payments over 15 years.  But we can’t allow that.”  (Id.)