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Compensation from forest fire cases: Urgency to reform law enforcement

Indonesia recently experienced the height of ruthless forest fires, particularly in West Kalimantan, Central Kalimantan, South Kalimantan, Riau, Jambi and South Sumatra

I Ketut Dharma Putra Yoga (The Jakarta Post)
Jakarta
Thu, October 24, 2019

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Compensation from forest fire cases: Urgency to reform law enforcement

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span>Indonesia recently experienced the height of ruthless forest fires, particularly in West Kalimantan, Central Kalimantan, South Kalimantan, Riau, Jambi and South Sumatra.

According to the National Disaster Mitigation Agency (BNPB), Indonesia has experienced 1,226 forest fires in the last 10 years. Many companies have been penalized by the court but the number of forest fires have only increased, suggesting hardly any deterrence effect on the companies.

Additionally, the government failed to heavily implement the “zero tolerance” principle. In fact, the government seems reluctant to prevent forest fires by imposing strict punishment on the perpetrators.

In 2015, a civil claim was filed by the community against the government in connection with the forest fires.

The community, represented by the smoke emergency advocacy team, Central Kalimantan, sued President Joko “Jokowi” Widodo, and other government institutions. The lawyers claimed the government had committed unlawful acts because the haze had caused people to suffer from disease and disrupted their daily activities. Therefore, the lawsuit said the government had failed to fulfill people’s rights to a clean and healthy environment in accordance with the 1945 Constitution , the Human Rights Law and the Environmental Law.

The civil claim was granted by the Palangkaraya District Court, Palangkaraya High Court and Supreme Court. The court decision ordered the government to issue the implementing regulation on prevention and countermeasures regarding forest fires and establish a hospital providing free services for all affected victims.

However, ironically in 2019, the government filed a judicial review with the Constitutional Court to annul the lower courts’ rulings, instead of voluntarily complying with the decision.

The rejection of the government to implement the court decision shows its lack of awareness of its failure in preventing forest fires. This is worrying because the gesture of the government will also directly or indirectly trigger the companies declared guilty of forest fires to also ignore the court orders to provide compensation for the damages.

Similarly, the companies are also reluctant to voluntarily comply with the court decision to pay compensation for the forest fires. The government also filed civil claims to demand the compensation from companies that were proven to have caused the forest fires.

In December 2018, the Environment and Forestry Ministry won its case against PT National Sago Prima, a corporation found guilty of burning 3,000 hectares in Riau, in 2015. Shortly after, the Supreme Court decided that the company must pay compensation of around Rp 1 trillion (US$71.27 million).

However, this victory could not be immediately executed. Moreover, the ministry has won some similar cases but the compensation has yet to be paid by the polluters.

Forcing the companies to pay hundreds of millions of dollars for the victims and for land recovery has not been effective.

Alternatively, the court may execute all company assets as substitution once they are not able to pay the compensation. However, the companies’ assets are not immediately frozen by the court.

Even if, assuming the court executes the companies’ assets, the economic values of the assets will likely not equal the compensation demanded by the government, given that the companies who committed the forest fires are also mostly small companies. Therefore, the weakness of law would instead encourage the companies to keep burning the forests because the punishment does not significantly affect their business.

As forest fires continuously occur, the government needs to reform its law enforcement. Today, if a company commits forest fires, the liability to pay a fine or compensation is only limited to the company’s ability to pay; without involving the liability of the directors and shareholders to pay compensation. It is because Indonesian law recognizes the principle of separation of wealth between the company and its directors’ wealth or shareholders.

However, the punishment needs to be changed to deter the perpetrators and to maximize the fines paid by the companies.

Thus, there should be an expansion liability, involving directors and shareholders, as a new legal breakthrough related to forest fires. To pay the compensation, the law should not only target the companies but also needs to involve the directors of the companies and their shareholders.

Therefore, the government can claim that the directors and shareholders are collectively responsible for paying compensation. This liability expansion should be shouldered collectively by the company, directors and shareholders.

Therefore, assistance from the Law and Human Rights Ministry is needed to reveal the information about the company — its directors and shareholders. This will be also useful to identify the relations between companies committing the forest fires for further investigation by the police.

Nevertheless, the company can always state it is unable to pay the compensation even if the court has confiscated the wealth or property of directors and/or shareholders, because such wealth will not always hold equal value to the compensation.

The government should be transparent with the list of companies that have caused forest fires, its directors and shareholders. Such transparency will put pressure on the companies, both morally and legally, and the public should always follow developments in the cases to see whether the listed companies pay the compensation.

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Lawyer practicing in shipping, international trade, insurance and reinsurance, including investment, financing and the environment

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