Action wanted after dispute

The dispute at the Uong Bi city mining site has been dragging on for 10 months

Over the days of March 4-5 on the mining site of Indonesian coal mining company PT Vietmindo Energitama in Uong Bi city of the northeastern province of Quang Ninh, an incident broke out with the workers of Tan Viet Bac (TAVIBA), leaving one Indonesian staff of Vietmindo injured.

The incident was determined to be the peak of a dispute that has been going for 10 months between the two companies, related to a contract signed in 2015 for a period of five years.

Accordingly, TAVIBA was to drill, blast, load, and transport raw rock and coal at the mining site. However, in June last year, Vietmindo unilaterally terminated the contract with the reason that TAVIBA had been continuously failing to fulfil its tasks outlined in the contract. According to Vietmindo’s announcement on working results, in the first quarter of 2016, TAVIBA transported 52.9 per cent of the initial target of 1,016 million cubic metres or 94.1 per cent of the amended target (571,500 cubic metres), while in the second quarter of 2016 it finished 42 per cent (112.5 per cent of the amended target), in the third and fourth quarters the figures were 91.7 and 75.7 per cent of the amended targets, respectively.

Protesting the termination, TAVIBA blocked major roads of the mining site with vehicles, machines, and equipment over the last 10 months. The company also submitted increasing compensation demands, from VND60 billion ($2.6 million) to VND400 billion ($17.39 million).

“These demands are unreasonable. We will not issue compensation because we had legal grounds to terminate the contract,” Hendra Gumawan, group CEO of PT Vietmindo Energitama, told VIR.

Gumawan also said that according to Conclusion No.24/TB-UBND of the meeting between the two parties and Quang Ninh authorities on January 17, 2019, TAVIBA should have removed their vehicles and equipment from the site before February 10, 2019 and in exchange Vietmindo was to transfer VND20 billion ($869,000) to TAVIBA.

“The conclusion was given, Vietmindo transferred the money immediately, including VND14.5 billion (630,400) for the debt and VND5.4 billion ($234,800) to support TAVIBA to move the vehicles and the equipment,” Gumawan said.

However, until early March, there was no movement from TAVIBA. Therefore, over the days of March 4-5, Vietmindo tried to clear the equipment and vehicles, but met with opposition of more than 100 local people, resulting in the incident.

Gumawan also said that due to the barriers, Vietmindo could not operate the mine, leading to losses and forcing them to lay off 188 workers on February 28. Other 100 workers may also lose their jobs. “If there is no improvement, Vietmindo will permanently leave the project before the scheduled ending time in 2021.”

The representative of the ­company’s Trade Union Dao Thi Quynh Nhu told VIR that most of the 355 workers have been working for Vietmindo for more than 10 years, some even 20 years. “In 2018, ­workers’ average income was VND10.5 million ($410), but at the moment, they receive the minimum salary of VND3.71 million ($160). After subtracting insurance, they get only a little more than VND2 million (nearly $100),” Nhu said.

Meanwhile, at the meeting on March 1, Nguyen Van Bac, director of TAVIBA, said that the company compensated Vietmindo for the quarters when TAVIBA could not fulfil their contractual obligations. However, he said that Vietmindo’s unilateral termination has violated the contract and Vietmindo has to compensate TAVIBA for its investment in roads, blasters, and loan interest. “We have initiated legal proceedings at the Quang Ninh court,” he said.

Replying to TAVIBA’s representative, the CEO of Vietmindo said that the contract contained a provision that if any side’s economic rights were violated, they could submit the situation to the Singapore International Arbitration Centre (SIAC).

“We encourage TAVIBA to submit the situation to the SIAC. Like many other foreign investors in Vietnam, we think that the investment environment in the country is good, but if this incident continues we will have to stop our project. This is a ‘One scabby sheep is enough to spoil the whole flock’ situation’,” said Gumawan.

Tran Tuan Anh - Director, Minh Bach Law Firm Over the last 10 months, TAVIBA has seriously violated Vietnamese regulations by preventing Vietmindo’s production activities without drawing the appropriate measures by authorities like the Uong Bi People’s Committee and the Uong Bi public security forces, causing huge economic losses to Vietmindo. The Indonesian Embassy in Vietnam has attended repeated working sessions with the Quang Ninh People’s Committee but no solution has been found. This is also the reason why TAVIBA’s people have carried out dangerous activities affecting public security such as using guns and knives at Vietmindo’s mining site on March 4-5. Initially, this was a contractual dispute between the two sides. However, TAVIBA has turned the dispute into a matter of public disorder and violated Vietmindo’s legitimate rights. These acts have violated Vietnam’s criminal law and regulations. The violations of administrative and criminal law by TAVIBA’s people are clear, but it is difficult to understand why Quang Ninh authorities have not initiated criminal prosecution. Vietmindo and the legal team who composed the contract understood that trade dispute resolution mechanisms in Vietnam take time. So, both sides agreed that the SIAC handle any arising dispute. Thus, TAVIBA can send the situation to the SIAC if their economic rights were violated by the termination of the contract, but local authorities must take measure to handle TAVIBA’s administrative and criminal violations to create trust among foreign investors.