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Jp Morgan Chase Bank, N.A v. Pt Indah Kiat Pulp and Paper Corporation

November 16, 2011

JP MORGAN CHASE BANK, N.A., PLAINTIFF,
v.
PT INDAH KIAT PULP AND PAPER CORPORATION TBK, A CORPORATION DULY ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF INDONESIA; PT PABRIK KERTAS TJIWI KIMIA TBK, A CORPORATION DULY ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF INDONESIA; AND ASIA PULP AND PAPER COMPANY, LTD., A CORPORATION DULY ORGANIZED UNDER THE LAWS OF SINGAPORE, DEFENDANTS.



The opinion of the court was delivered by: Geraldine Soat Brown, United States Magistrate Judge

Judge James F. Holderman Magistrate Judge Geraldine Soat Brown

MEMORANDUM OPINION AND ORDER

This matter comes before the court on the motion by defendants Asia Pulp and Paper Company, Ltd. ("Asia Pulp"), PT Indah Kiat Pulp and Paper Corporation Tbk ("PT Indah"), and PT Pabrik Kertas Tjiwi Kimia Tbk ("PT Pabrik") (collectively, "defendants") to stay enforcement of citations to discover assets that plaintiff JP Morgan Chase Bank, NA ("JP Morgan") directed to them. [Dkt 330]*fn1 Defendants assert that an injunction entered by an Indonesian court temporarily prohibits them from complying with the citations. (Id.) After weighing the relevant considerations, the court concludes that it need not and should not stay its own proceedings. Therefore, the motion to stay is denied, and defendants are ordered to comply with the citations.

Background

This case is currently in the post-judgment collection phase. Summary judgment was previously granted against all defendants, and the District Judge entered judgment on September 13, 2010, awarding damages to JP Morgan in an amount of $32,156,331.55 against PT Indah, $21,340,006.22 against PT Pabrik, as well as the total $53,496,337.77 against Asia Pulp as a guarantor. (Orders, Oct. 14, 2009, Apr. 21, 2010, Sept. 13, 2010) [Dkt 257, 265, 296]; (Judm.)[Dkt 297.]*fn2

On October 19, 2010, JP Morgan issued citations to discover assets to all defendants. (Defs.' Mot., Ex. C.)*fn3 The citations require defendants to produce all financial records regarding their assets, including but not limited to the following: bank account records for the past 12 months, accounts receivable records, payroll records, income tax returns, transfers of assets to third parties, and financial statements. (Id.) The citations further require corporate representatives of the defendants to appear for citation examinations. (Id.) Defendants seek to stay enforcement of the citations pursuant to a "Provisional Injunction" entered by an Indonesian court, which, they assert, prevents them from responding to the citations in this case until that injunction is lifted. (Defs.' Mot. at 2-3.) The District Judge referred defendants' motion to this court. [Dkt 361.]*fn4

The Provisional Injunction was entered by the District Court of Siak Sri Indrapura on June 12, 2008 in case number 02/Pdt.G/2008/PN-SIAK (the "Indonesian case"). (Defs.' Mot., Ex. A-1, Prov. Inj. at 1, 59-60.)*fn5 That case, filed on April 4, 2008 by PT Indah Lestari ("Lestari"), alleges breach of a "Coal Sale and Purchase Agreement" by a number of companies (the "Indonesian Defendants"). Two of the Indonesian Defendants (Asia Pulp and PT Indah) are also defendants in this case. (Id. at 1-3, 5-6.) PT Pabrik is not a named defendant in the Indonesian case. (See id. at 1-3.) Lestari sought a total of $5,131,525 in "Material Damage" in the Indonesian case, including $2,130,000 against PT Indah specifically, as well as $10,000,000 in "Immaterial Damage." (Id. at 7-8.) Lestari further sought to hold Asia Pulp jointly and severally liable as a guarantor for all payments owed Lestari by the Indonesian Defendants. (Id. at 9.)

While the Indonesian case was pending, Lestari petitioned the Indonesian court to bar the Indonesian Defendants from providing information about their assets to third parties. On June 12, 2008, the Indonesian court granted the motion and entered the Provisional Injunction, finding Lestari's request was reasonable in order to "protect interests of the Plaintiff, so that after the assets of the Defendants can be located, the Plaintiff may proceed with its petition for placing of security attachment over those assets, and . . . so as to avoid any transfer of the assets to third party[.]" (Prov. Inj. at 50-53, 55, 59.). The Provisional Injunction required the Indonesian Defendants to "provide statements and information on the assets of the Defendants and those owned by all subsidiaries of the Defendants to the Plaintiff [Lestari.]" (Id. at 59, ¶ 2.) The Indonesian Defendants were further ordered to abstain from providing statements and information on the assets of the Defendants and those owned by all subsidiaries of the Defendants to any party temporarily during the examination process of this case, except in respect of those required by the prevailing laws and regulations of the Republic Indonesia and or as permitted/ordered/requested by the authorized agencies in the Republic of Indonesia[.] (Id. at 59, ¶ 3 (emphasis added).) Lestari also requested that monetary sanctions of $100,000 a day be imposed on the Indonesian Defendants if they failed to comply with the Provisional Injunction, but the court did not order any such sanction. (See id. at 11, 58-60.)

A little over a year after issuing the Provisional Injunction, the Indonesian court rendered a "Verdict of the Civil Case" on September 29, 2009, finding in favor of Lestari in a total amount of $5,131,525, ordering PT Indah to pay $2,130,000 of that amount, and ordering Asia Pulp, as guarantor, to "pay all indemnities" in the event the other Indonesian Defendants failed to do so. (Pl.'s Resp., Ex. 2-24, Verdict at 91-93.) [Dkt 369.]*fn6 The Verdict appears to refer to the Provisional Injunction in two places. First, in the section entitled "Regarding Legal Considerations," the Verdict states, "Panel of Judges has pronounced a Provisional decision dated June 12 (the twelfth), 2008 (year two thousand and eight), Panel of Judges shall uphold the said Provisional Decision in the Final Verdict accordingly." Second, in the section entitled "To Judge," the court states: "Upholding the Provisional Decision in its entirety[.]" (Verdict at 63, 91.) The court expressly declined to order a $100,000 a day penalty for noncompliance with the Verdict. (Id. at 83-84.) Defendants represent that the case is now on appeal before the High Court of Pekanbaru, but no decision has yet been rendered. (Defs.' Reply at 3, 6.) [Dkt 370.] No documents relating to the appeal were attached to defendants' motion.

Defendants further represent that they have repeatedly applied to the Indonesian District Court and the High Court of Pekanbaru for permission to provide information about their assets to United States creditors. (Defs.' Mot. at 3; Defs.' Reply at 6.) Defendants did not provide documentation to support that assertion, but, at the request of the court, JP Morgan attached the materials it had received from defendants about the Indonesian case, along with English language translations. (Pl.'s Resp., Group Ex. 2.) Those materials include copies of letters from Indonesian counsel for PT Indah and other Indonesian Defendants to the Chief Judge of Siak Sri Indrapura District Court dated October 8, 2008 and May 20, 2009, requesting permission to provide statements and information about their assets and those of their subsidiaries to creditors in the United States. (Pl.'s Resp., Exs. 2-19, 2-22.) There is no indication whether that request was addressed by the Indonesian District Court. There are also letters dated April 29 and October 21, 2010, from counsel for PT Indah and other Indonesian Defendants requesting permission from the Pekanbaru High Court to provide information about their assets to creditors in the United States while the appeal of the Indonesian case was pending. (Pl.'s Resp., Exs. 2-25, 2-26.) On November 8, 2010, that court said:

Whereas there is [sic] no laws whatsoever that may be used by the Panel of Judges to deviate or avoid the provisional judgment of the Siak District Court of which, at present, is under examination process. Hence, we advise [sic] to wait until the case in question is settled by the Panel of Judges in the near future.

(Pl.'s Resp., Ex. 2-29 at 2.) Defendants view that as a denial. There has been no update from defendants on the status of the Indonesian case.

Defendants submitted "a legal opinion on the issues of Indonesian law" in the form of a declaration from Otto Hasibuan, an Indonesian attorney retained by Asia Pulp. (Defs.' Mot., Ex. B, Decl. Otto Hasibuan ¶¶ 1, 2.)*fn7 Mr. Hasibuan is a licensed attorney in Indonesia and has been practicing law there for over twenty years. (Id. ¶ 1.) Mr. Hasibuan opines that, as of the date of his declaration (December 20, 2010), the Provisional Injunction remained in "full force and effect" and will remain in effect until the conclusion of the appeals process. (Id. ¶¶ 8, 9.) He states it is not unusual in the Indonesian court system for appeals to last longer than six months, and not unusual for such injunctions to remain in place for more than two years. (Id. ¶¶ 9, 13.) The purpose, he states, is to allow the plaintiff in the Indonesian case, Lestari, to identify assets over which it could obtain a security attachment to satisfy a judgment and to avoid transfer of such assets to others. (Id. ¶¶ 6, 12.) The injunction is only temporary; after the assets are identified and attached, such a provision injunction will be vacated. (Id. ¶ 13.) To date, however, Lestari has not attached any assets of the Indonesian Defendants. (Id.)

Mr. Hasibuan does not include citations or excerpts from any sources of Indonesian law in support of his opinions. He opines that the Provisional Injunction prohibits defendants from providing any of the information JP Morgan seeks in its citations to discover assets, and that defendants would be exposed to "substantial monetary fines" if they do disclose any such documents, information, or testimony. (Id. ¶¶ 17, 18.) He did not, however, cite any support for that conclusion, nor does his opinion discuss or refer to the fact that the Indonesian court expressly rejected Lestari's request that the Provisional Injunction specify monetary sanctions for its violation. Likewise, Mr. Hasibuan opines that the Provisional Injunction prohibits not only defendants but also their subsidiaries from providing information about their assets. (Id. ¶ 11.) Again, Mr. Hasibuan does not ...


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