Jakarta. Chief Legal Affairs Minister Yusril Ihza Mahendra said Thursday that the Navayo International dispute should be a wake-up call for the Indonesian government to pay attention to the dispute settlement chapter in a foreign business deal.

In 2016, the Defense Ministry inked a contract with the Liechtenstein-based Navayo International AG for a satellite project. Navayo later sued the ministry at an arbitration court in Singapore over the canceled project and unpaid bills worth $16 million. Indonesia lost the lawsuit, and Navayo's legal team demanded the government pay $24.1 million no later than Nov. 22, 2024. The award would grow by another $2,568 each day after that deadline until Indonesia pays it all off.

Yusril revealed that the contract with Navayo stated that the Defense Ministry had agreed to resolve disputes through a Singaporean arbitral tribunal. According to Yusril, the problem could have been avoided should the ministry insist on an Indonesian dispute settlement system. Amid efforts to counter Navayo, Yusril is planning to pen a letter addressed to all ministries and government bodies to be extra careful when drafting contracts with other countries and foreign private-owned businesses.

"If needed, it is best to consult first with us or the Attorney General's Office [AGO]. This way, our government will have a solid position and not lose when sued at an international court or arbitral tribunal,"  Yusril told reporters in Jakarta.

Yusril said the decision made by Singapore's arbitral tribunal was final and binding, thus preventing Jakarta's court to have a retrial.

"This should be a lesson for all Indonesian ministries that we should not agree on settling the disputes at an international arbitral tribunal when doing business with foreign parties. Where is your sense of nationalism if you agree on settling the disputes overseas despite using state money [in those contracts]," he said.

Navayo was not the only company that the defense ministry had worked with for the satellite project. The ministry made a similar contract with the European aerospace giant Airbus. Yusril told the press that the contract with Airbus also specifies that any disagreements should be resolved through the Singaporean arbitral court.

"A contract must be written in Indonesian if made in our country. ... When a dispute arises, it must be resolved through deliberation or consensus. If both sides can't reach an agreement, they can take it to the national arbitration agency or an Indonesian court," the seasoned lawyer said.

The case has hit another snag after Navayo demanded the French court last year to seize five residences of Indonesian diplomats in Paris due to the unpaid awards. The French court had greenlit Navayo's request. Yusril revealed that Indonesia would try to resolve the asset fiasco using diplomatic means such as by communicating with the French government. Indonesia argues that such confiscation of diplomatic assets violates international law.

Yusril claimed that Indonesia initially intended to pay the compensation. However, audits showed that Navayo had only done work worth Rp 1.9 billion ($115,164), just a small fraction of the $16 million bill.

"Unfortunately, we had not discovered this fact when the arbitral court took place in Singapore. ... The court's decision is final, but the signs of corruption had prompted the government to postpone the payment despite the growing interests," Yusril said.

"The AGO had summoned Navayo several times, but they never showed up. If there is enough reason, it is better to declare Navayo as a suspect. We might even ask Interpol to find Navayo to be brought to Indonesia to put them on trial for corruption."

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