Legal Approaches to The Settlement of Environmental Dispute

LEGAL APPROACHES TO THE SETTLEMENT OF ENVIRONMENTAL DISPUTE

1. Environmental Dispute Overview

   Environmental disputes involve conflicts between two or more parties arising from activities that have the potential to and/or have impacted the environment. Referring to the definition in Law No. 32 of 2009 on Environmental Protection and Management (“Environmental Law”), environmental disputes encompass elements of conflict, disputing parties, the existence of conducted activities, and these activities having the potential to and/or having impacted the environment.^[1]

   According to the Indonesian Dictionary (Kamus Besar Bahasa Indonesia), conflict or ‘perselisihan’ is defined as a dispute, where from a legal perspective, a dispute refers to a conflict or disagreement between two parties concerning their individual rights and obligations or civil obligations. In the context of the environment, the disputing parties are any legal entities engaged in an activity that has an impact on the environment.

   The activities referred to in environmental disputes are activities that have the potential to and/or have already impacted the environment. This can be interpreted as activities that have caused changes in the environment resulting in pollution and/or environmental damage. In the settlement of PSLH, the government has implemented the guidelines to settle outside or inside court with stages that will be explained further in this article.

2. Pre-Settlement of Environmental Disputes

   1. Complaints on Alleged Environmental Disputes

      The emergence of environmental disputes and the subsequent settlement of environmental disputes begin with complaints. A complaint comprises the conveyance of information verbally or in writing to the relevant environmental authority pertaining allegations of pollution and/or environmental damage.

      Up to this date of article, the procedures for filing complaints and handling complaints regarding alleged pollution and/or environmental damage are governed by the Regional Regulation (Province, Regency, or City), Governor Regulation, Regent Regulation, and Mayor Regulation in each respective region where the complaint is filed.

      Furthermore, not every complaint can proceed to the settlement of environmental disputes (penyelesaian sengketa lingkungan hidup or “PSLH”). PSLH is the only available settlement forum—out-of-court resolution procedure to file complaints against activities and/or actions that have (i) potentially caused pollution and/or environmental damage, (ii) potentially caused harm to the community and/or the environment, and (iii) resulted in environmental disputes.

      In the event that an activity and/or actions meets the criteria of a complaint that can be settled through PLSH, a litigating right to file a lawsuit will arise from such complaints, as provided by Environmental Law.

3. Litigating Rights in Environmental Disputes

   Environmental Law grants the government and local governments, the public, and environmental organizations the right to file claims for compensation or specific actions against activities and/or actions as a result of pollution and/or environmental damage which leads to environmental loss.

   Environmental Law imposes limitations on parties who are eligible to file lawsuits in environmental disputes. The litigating rights for the aforementioned parties are outlined as follows:

   1. Government and Regional Government

      Government and regional government institutions in charge of environmental affairs shall be authorized to file litigation for compensation and certain measures against activities and/or actions causing environmental pollution and/or damage which result in environmental loss.

   2. Public

      The public has the right to file a group representative’s claim or “Class Action” for their own interests and/or for the benefit of the public if they suffer losses due to pollution and/or environmental damage. This type of lawsuit may be filed if there are similar facts or events, legal grounds, and types of demands between the group representatives and group members.

   3. Environmental Organizations

      Environmental organizations shall reserve the right to file a lawsuit to preserve environmental function. The lawsuit shall be limited to certain measures, and real expenses or expenditures as the result of environmental loss without claim for compensation.

   Claims by the public or community can only be pursued through the form of Class Action lawsuits. Other claims pursued which are not Class Action can only be pursued through general civil claims – lawsuits for unlawful act - if the claim is filed by a community that is not represented by a group representative. Lawsuits for unlawful acts cannot be pursued if the defendant is engaged in businesses or activities using hazardous and toxic materials (B3) waste. This is because there is a differentiation between lawsuits for unlawful acts and strict liability, which lies in the burden of proof regarding fault or wrongful conduct.

   The lawsuit of unlawful act in the environmental concept is different with the common lawsuit of unlawful act where the plaintiff is not required to prove the substance of mistake as a basis of compensation. The amount of compensation which may be imposed with environmental pointers or destroyers may be stipulated up to a certain limit. Up to a certain limit means there is an obligation according to the stipulation of laws and regulations to provide insurance for the said business and/or activity of the environmental funds have been made available.

• Stages of Environmental Dispute Settlement

  The PSLH is regulated under the authority of the Ministry of Environment and Forestry (“MoEF”) as outlined in the Ministry of Environment Regulation No. 4 of 2013 on Environmental Dispute Settlement Guidelines (“MoEF Reg. 4/2013”). The stages of the PSLH are (i) verification of environmental dispute; (ii) clarification; (iii) determination of the choice of environmental dispute settlement; and (iv) implementation of environmental dispute settlement.

   

  1. Verification Stage

     After receiving complaints, the head of the Regional Government will submit a request of PSLH to the Minister, Governor, or Regent/Mayor according to their respective authorities in order to conduct verification of the environmental dispute.

     The purpose of this verification is to determine the validity of the environmental dispute, the form and amount of losses due to environmental pollution and/or damage, and certain actions that must be taken by the responsible entity of the business and/or activity.

     The verification activities are documented in an environmental dispute verification report supplemented with minutes of verification, which encompasses records from the environmental dispute verification agenda, minutes of sampling, and minutes of submission of samples to the laboratory (“Verification Report”).

  2. Clarification Stage and Determination of Dispute Settlement Options

     After receiving the Verification Report, the Ministry, Governors, and/or Regents/Mayors shall be authorized to engage in a process of clarification with the parties involved in the environmental dispute. This clarification process aims to discuss the validity the content of the Verification Report.

     The clarification process will lead to either an accord or rejection of the Verification Report. This step is crucial for it will ensure all parties are on the same page regarding the information and findings presented in the Verification Report.

     Based on the results of this clarification process, the Minister, Governor, or Regent/Mayor will provide options for PSLH to the involved parties. These options encompass two approaches: (i) through a court, and (ii) out of court or alternative dispute resolution. If the parties opt to resolve the environmental dispute through the court, the PSLH will be conducted at the relevant district court where the Minister, Governor, or Regent/Mayor taking the role as the facilitator.

     If the parties opt to resolve the environmental dispute out of court or an alternative dispute resolution, the involved parties may determine whether the PSLH will be resolved through: (i) negotiation, (ii) mediation, or (iii) arbitration. The selection of these options shall align with the legal regulations that oversee their respective processes.

  3. Settlement of Dispute Resolution

     1. Alternative Dispute Resolution

        Alternative dispute resolution is negotiation and mediation out of court with the objective to conclude an amicable resolution as formed in an agreement. The agreement resulting from a negotiation and mediation then could be registered with the relevant district court to obtain a settlement deed (akta perdamaian). The registration of such agreement is not mandatory for the involved parties. The parties can still execute the agreement even if it is not registered with the relevant district court.

        Conversely, if the parties fail to come to an agreement through the negotiations or mediation, the injured party has the option to initiate a lawsuit at the relevant district court. This legal course allows further resolution through the judicial system if the alternative dispute resolution does not lead to a satisfactory outcome.

        Aside from an alternative dispute resolution, the parties could opt to carry out the environmental dispute settlement through arbitration by engaging an arbitrator's services in accordance with the applicable arbitration laws and regulations.

     2. Court Proceedings

        Should the parties opt to resolve the dispute through court proceedings, the dispute will be settled at the relevant district court in accordance with the civil procedure. As stipulated in the civil law proceedings, it is mandatory to consider the statutes of limitations (daluwarsa) when filing a tort lawsuit. The calculation of statutes of limitations commences from when the pollution and/or environmental damage occurred.

        The statutes of limitations do not apply to pollution and/or environmental damage caused by businesses and/or activity using hazardous and toxic materials (B3) waste and/or causing serious threat to the environment shall be absolutely responsible for the incurred losses without the need to prove the said mistake (known as strict liability). This liability extends not only to the statute of limitations but encompasses overarching responsibility.

• Form and Calculation of Loss

  PSLH is aimed to determine the accuracy of the environmental dispute, the form and amount of losses due to environmental pollution and/or damage, and certain actions that must be taken by the responsible entity of the business and/or activity.

  In the stages of PSLH, the Minister, Governor, Regent/Mayor, and/or the head of the Regional Government are required to determine environmental losses and calculate the environmental losses that occur as regulated in the Ministry of Environment Regulation No. 7 of 2014 on Environmental Loss Due to Environmental Pollution and/or Damage (“MoEF Reg. 7/2014”).

  On this basis, MoEF has established guidelines for determining losses and calculating the amount of environmental losses which encompass:

  1. Losses due to exceeding environmental quality standards as a result of failure to fulfil all or part of the obligations for water waste treatment, emissions, and/or hazardous and toxic waste management;
  2. Losses for reimbursement of the costs of conducting PSLH, including field verification expenses, laboratory analysis, expert fees, and supervision of environmental damage payment implementation;
  3. Losses for replacement of costs for pollution and/or environmental damage mitigation, environmental restoration, and/or ecosystem loss;
  4. Ecosystem losses; and
  5. Community losses due to pollution and/or environmental damage.

• To calculate environmental losses, the party involved must be an expert in the field of pollution and/or environmental damage, as well as an expert in the field of environmental economic valuation. These experts, as defined, must meet the qualifications specified by the applicable laws and regulations.

  The calculation of environmental losses must adhere to the Guidelines for Calculating Environmental Losses issued by the MoEF. These guidelines can also serve as a reference for calculating the losses by the responsible entity of the business and/or activity.

  During the verification and clarification processes, the responsible entity of the business and/or activity can also present their own experts. Subsequently, the verification results, along with the loss calculation outcomes assessed by the experts from the responsible entity of the business and/or activity, can be utilized as arguments during the clarification stage.

  It is important to note that the results of the environmental loss calculations by experts are necessary to be considered as an initial assessment, while the outcomes may undergo changes throughout the PSLH process. Changes might be influenced by both technical and non-technical factors, such as:

  Technical Factors	Non-Technical Factors
  The duration or length of environmental pollution and/or damage occurrence.	Inflation.
  The pollutant volume exceeding environmental quality standards.
  The pollutant parameters exceeding environmental quality standards.	Government Policies.
  The land area and distribution of environmental pollution and/or damage.
  The status of the affected land

  The final compensation amount of environmental losses will be determined based on the agreement through negotiation, mediation, or arbitration, and/or through a final and binding court decision.

  The payment of the aforementioned environmental losses constitutes non-tax state revenue that must be remitted to the state treasury.

• Environmental Crimes

  The PSLH settlement outside the court shall not apply to environmental crimes as governed in Environmental Law. The legal proceedings of environmental crimes will be conducted according to the Indonesia penal code and criminal procedural law to ensure a proper investigation, prosecution, and adjudication of environmental crimes.

We hope that our article provided you a glimpse into the settlement of environmental disputes in Indonesia.

If you require further information on this matter, please do not hesitate to contact us. Thank you.

Nurjadin Sumono Mulyadi & Partners

Please note that the information contained in this article should be only used as a general explanation with respect to the subject hereof and may not contain legal advice or legal opinion for your specific cases. The information herein should not be used or relied upon regarding any particular facts or circumstances without seeking legal advice from us. We will not be liable nor be responsible for any consequences, damages or other similar forms which may be suffered by any party who had used or relied upon this article.

Bilrendhy Hutapea Senior Associate bilrendhy.hutapea@nurjadinet.com		Trifena Martina Mastra Associate trifena.mastra@nurjadinet.com
Putri Kalingga Hermawan Associate putri.h@nurjadinet.com

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[1] Article 1 Number 25 Law No. 32 of 2009 on Environmental Protection and Management.