[Korea] Ministry of Justice | Indonesia

[Jay]

To: Faizah Rahayu < KangNa > CC: ChoMinae@moj.kr.gov, LimJinyoung@moj.kr.gov, ParkTaesung@mofa.kr.gov, KimMinseo@Cheongwadae.gov, KimSanggon@mtie.kr.gov, YooMyunghee@mot.kr.gov, LeeSeonjeon@hhi.org

From: BaekJaeeung@moj.kr.gov

Subject: [Int'l Trade] [Urgent] Customs and Trade Authority Dispute Mechanism

Security: Private and encrypted Protected by the NIS and MoFA DPB

Dear Director Rahayu & Whom it may concern,

[Please note this email is being recorded by the Republic of Korea Ministry of Justice and its contents may be used in legal proceedings]
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Thank you for the courtesy email pertaining to the matters of the Customs and Trade Authority and the Republic of Korea's trade relations. For matters of this level, the Ministry of Foreign Affairs which has primary jurisdiction over foreign affairs and dispute resolution mechanism, and the Ministry of Trade, Industry, and Energy to which this dispute pertains have agreed forward the Ministry of Justice shall be the primary agency responsible in addressing this matter. On such note, the relevant agencies will be continually informed. At this time, it is my understanding that you are the relevant agency as expressed in your email to the Ministry of Trade, Industry, and Energy of Korea.

As per your customs agency website, you officially list the following vessels flying the ROK Flag, HMM Bae Jaehoon & HMM Pyongyang owned & operated by the Hyundai Heavy Merchant a Korean Country as unregistered. Additionally you have listed Hantan, Imjin, Soyang, Hongcheon, and Geum which fly the German Flag but also carry Korean cargo and respectively is destined for Korea. The following seven vessels to our understanding are cargo ships and are not warships or official government ships. The seven ships to our understanding and per the terms of trade between Germany and Korea, Italy and Korea, and Australia and Korea are operated by civilian carriers unless specified otherwise. The ROK Ministry of Justice shall be representing Hyundai Heavy Merchants interests during these discussions and shall by extension of cargo bound for Korea take interest in that of the German Governments until a time otherwise they take matters in their own hands.

The Republic of Korea and Republic of Indonesia as parties to the United Nations Convention on the Law and the Sea (UNCLOS) and such shall invoke the relevant articles pertaining to the treaty and agreement over the current proposed tax on trade vessels. The Republic of Korea opposes the proposed tax on trade vessels as violation of Article 26 of the UNCLOS treaty. As stipulated, under clause one traffic in transit shall not be subject to any customs duties, taxes or other charges except charges levied for specific services rendered in connection with such traffic. With regards to the Indonesian Maritime Law, no specific indications over specific services to be rendered have been indicated. With Article 26 pertaining to customs duties, taxes and other charges. We further oppose the proposed measures as a violation of Article 18 of the UNCLOS treaty. Which defines passage as navigation through the territorial sea without entering the internal waters of the coastal State or for the purpose of entering or leaving the internal waters, with the condition that the passage be continuous and expeditious. We also wish to notify Indonesia is in violation of Section III of the UNCLOS Treaty.

Section III which pertains to innocent passage which all ships are entitled to within the territorial waters on the specific conditions outlined by the Treaty. Noting that passage shall be continuous and expeditious. This in so far as recognizing that passage which may includes stopping and anchoring in so far as the same are incidental to ordinary navigation or are rendered necessary by force majeure or distress or for the purpose of rendering assistance to persons, ships or aircraft in danger or distress. Such Passage remains innocent so long as it is not prejudicial to the peace, good order or security of the coastal State.

All such considered, the Republic of Korea views the current actions taken by Indonesian Authorities as running contrary to the UNCLOS treaty pertaining to matters of Transit and Innocent Passage. As both being parties, we hope that Indonesia will continue to respect international law pertaining to international trade and transit. The following trade vessels as far as the current parties and corporations are aware do not have any regular layovers inside Indonesian Ports, utilize Indonesian services outside of which is customary to the maintenance of traffic and regulation of transit, or refuel and replenish within the territorial boundaries of Indonesia. Additionally, the Strait of Malacca is not exclusive to Indonesia and is within the respective zones of Malaysia and Singapore. We thus request that Indonesia repeal their duties levied on trade vessels. With request with urgency clarifications be made by the Department of Trade and Maritime Passage over this.

I look forward to your cooperation in addressing this dispute and hope to address it on a bilateral level. However, the Republic of Korea is ready to pursue this legal course of action is left unresolved in the international legal courts which have jurisdiction over disputes pertaining to international treaties. Nonetheless, I hope you are able to respond in a timely manner and that an amicable resolution can be reached.

Signed,
Baek Jae-eun
Minister of Justice
Republic of Korea

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Republic of Korea
Ministry of Justice
All information is protected from release by the Diplomatic Communications Security Act 1997
Authorized viewing is limited to those directly emailed, cc'd, and bcc'd​

 

[KangNa]

Customs and Trade Authority
Republic of Indonesia​

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Recipient:	Baek Jae-eun, Minister of Justice Jay
Sender:	Faizah Rahayu, Director of the Trade and Customs Authority
Subject:	[Int'l Trade] [Urgent] Customs and Trade Authority Dispute Mechanism

Dear Minister Baek,

We appreciate you reaching out to us. Your claim of our policies breaching international law, specifically the United Nations Convention on the Law and Sea, is something that we are taking very seriously.

As a key principle of our nation, the adherence to international law and the functioning of international politics along a global rules-based order is something we continue to upheld, advocate and protect. The drafting, ratification and implementation of Indonesian maritime law and powers of enforcement granted to the Customs and Trade Authority has been in close coordination with Indonesia's Ministry of Justice to ensure all laws and activities adhere to international laws and conventions.

You have presented three legal challenges regarding our policies and activities: a claim to breaching Section 3 and Article 26 of the United Nations Convention on the Law and Sea and the intent to implement our national policies in international jurisdictions.

Firstly, whilst Article 26 states that "No charge may be levied upon foreign ships by reason only of their passage through the territorial sea", this is not necessarily the situation here. The tariff implemented is not specifically targeting the ships passage, but rather for a charge for a service and compensation, which under Article 26, is permitted. The service we charge is security protection against piracy. Piracy in Indonesian waters, notably the Strait of Malacca, South China Sea and Sulawesi Sea, has made the region the most dangerous in the world for civilian vessels. The Indonesian Armed Forces have worked tirelessly to protect vessels and it is my understanding that our Defence Ministry made a significant purchase to your nation to further expanding our nation's anti-piracy capabilities. Despite these efforts, the scale of the region and cost has proven difficult to manage. Meanwhile, it has been acknowledged that almost all of our efforts have been to protect foreign vessels that have no relation to our state, yet the cost of protection comes out of the pockets of our citizens, citizens whom are already earn an income below the global average. Consequently, as permitted under Article 26 and Article 21 of the United Nations Convention on the Law and Sea, we have decided to charge for the service of protection.

Furthermore, the tariff also covers compensation. The traffic generated by foreign civilian vessels has proven to have had a detrimental and irreversible impact on the marine environment of Indonesia. Civilian vessels, especially cargo ships, release significant quantities of pollutants into our nation's waters, pollutants that have jeopardised the health of our marine environment. Past governments have previously forgone seeking compensation from the operators of merchant vessels, however, as there is greater understanding on the impacts of merchant vessels on the marine environment, we can no longer wave the cost of damages. Thus, we must seek compensation to finance the conservation of living resources and reduce the impacts of pollution to preserve marine health. This is permitted under Article 21 of the United Nations Convention on the Law and Sea. Additionally, due to the economic and social effects resulting from the harmful environmental impacts of foreign vessels in Indonesia's territorial waters, per Article 19, the passage of vessels through Indonesian waters is not completely innocent. Consequently, we are permitted to take adequate measures under Article 25.

You also brought up the accusation of us enforcing a law in foreign territory. This is not the case. It is true that the Strait of Malacca is shared with our neighbouring states Singapore and Malaysia, however, the defined territorial boundaries and the geography of the Strait of Malacca, Singapore Strait and Riau Archipelago requires that vessels must pass through Indonesian territory in order to pass between the South China Sea and the Indian Ocean.

I can assure you that despite your claims, this newly implemented policy abides by all international laws. We are willing to cooperate with the Republic of Korea to address your concerns in a civil manner via diplomatic channels. Though it is your right to escalate this to the International Courts of the Global Assembly, we believe that such escalatory decision is irrelevant to the situation and will only succeed in generating an unnecessary rift.

Sincerely,

Faizah Rahayu

Director of the Trade and Customs Authority
Republic of Indonesia

 

[Jay]

To: Faizah Rahayu < KangNa > CC: ChoMinae@moj.kr.gov, LimJinyoung@moj.kr.gov, ParkTaesung@mofa.kr.gov, KimMinseo@Cheongwadae.gov, KimSanggon@mtie.kr.gov, YooMyunghee@mot.kr.gov, LeeSeonjeon@hhi.org

From: BaekJaeeung@moj.kr.gov

Subject: [Int'l Trade] [Urgent] Customs and Trade Authority Dispute Mechanism

Security: Private and encrypted Protected by the NIS and MoFA DPB

Dear Director Rahayu & Whom it may concern,

[Please note this email is being recorded by the Republic of Korea Ministry of Justice and its contents may be used in legal proceedings]
​

Thank you for the response pertaining to the matters of the Customs and Trade Authority Law and the Republic of Korea's trade vessels. We appreciate your governments willingness to discuss this and address the dispute amicably on a bilateral measure. As well as appreciation on your clarifications pertaining to the services rendered. On the first issue, the ROK recognizes the need for mechanisms to protect the environment in and around Indonesia as well as the security risks poised by piracy and other non-state actors. We appreciate Indonesia's proactive steps in addressing such matters. I also wish to clarify that the issue of application over others maritime zones is pertaining to Singapore and Malaysia only. That being areas under the traffic separation scheme and the 1973 agreement between Indonesia and Singapore over the Singapore Strait. To which, transit is not necessarily required through Indonesian Exclusive Economic Zone or Territorial Waters.

On that note, as outlined in Article 26, those levies must be on specific services rendered to each ship. The tariff would be rendered onto ships not for a specific services rendered to them, but would be an act outside services to ships. On the first item, pertaining to security, the matter is covered under articles 146 and 100 on the responsibilities of all states to protect human life and combating piracy respectively. To which, All States shall cooperate to the fullest possible extent in the repression of piracy on the high seas or in any other place outside the jurisdiction of any State. While we recognize that under Article 26 Indonesia may charge and levy fees for services, those services based on our interpretation are direct services e.g. docking, stop-over, towing, or other physical actions taken on behest of the ship. As clarified in Article 37, the transit through territorial waters within a strait would not apply to the normal provisions of transit through territorial waters. As such we believe that the notion of piracy-prevention which is an obligation as per the treaty under Article 100, and environmental costs would not apply to Article 26 in its entirety.

On the second item, the UNCLOS and environmental compensation, ships operating within your waters must continue to maintain International standards and not hamper or otherwise harm the environment. While Korea supports environmentalist policies and efforts to safeguard the environment, we do to believe that this is a direct service provided to ships and vessels. Specifically we reject the interpretation to the impact of discharge of pollutants mainly not intentioned to cause harm but a byproduct of the fuel used is a violation of Article 19. As per Article 19, the listed measure does not fall within a violation and thus negation of innocent passage. The permitted actions are therefore not justifiable on this basis. On that issue, we believe that Indonesia may not impose tariffs and levy charges onto ships in transit through straits as they do not constitute a breach of innocent passage, are not a levied service directly offered to a transit vessel. The UNCLOS Treaty outlines that Indonesia may close or restrict specific portions of its maritime borders under the guise of being non-discriminatory and protecting the coastal state. To which we would believe more appropriate for Indonesia to restrict detain parts of the sea lanes which may cause damage to the maritime environment.

Noting such disputes, the Republic of Korea believes it would be more partial to deploy a warship to assist the Indonesian Government and share the burden of the operational cost in providing additional security to the region. As a major artery of Asian economic development, the Straits and adjacent trade vectors are crucial to longterm growth and development. To which, all of Asia should share the responsibility of assisting through financial or material means. On this, we ask that service charges pertaining to piracy be waived on the conditions that Korea participate in a multinational anti-piracy operation under Indonesian authority. Such would be a mutual obligation of all states under Article 100 of UNCLOS. primary responsibility for enforcement normally falls on the coastal State. Additionally, we would like to assist with environmental cleanups not necessarily the direct cause of Korean-flagged vessels. Furthermore, should it be made to our attention of crareleness and excess discharge of pollutants by a ship flying the Korean Flag, we will impose fines on such vessel in doing so. Lastly, we would be willing to offer a financial grant annually to assist your government on covering the costs of environmental protection and restoration.

I look forward to your response and likewise concur that an International Legal Case would be in neither of our interests. In doing so it would drag the process and likely not revolve the root-causes of this dispute. However, this should not be taken as a waiver to our right to proceed with legal proceedings at the ICJ. As such I hope that as you have responded with, a diplomatic solution may be achieved. I would also like to hear your counter-proposals on the subject of supporting anti-piracy operations and environmental clean ups as well as financial assistance to environmental protection and conservation.

Signed,
Baek Jae-eun
Minister of Justice
Republic of Korea

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Republic of Korea
Ministry of Justice
All information is protected from release by the Diplomatic Communications Security Act 1997
Authorized viewing is limited to those directly emailed, cc'd, and bcc'd​

 

[KangNa]

Customs and Trade Authority
Republic of Indonesia​

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Recipient:	Baek Jae-eun, Minister of Justice Jay
Sender:	Faizah Rahayu, Director of the Trade and Customs Authority
Subject:	[Int'l Trade] [Urgent] Customs and Trade Authority Dispute Mechanism

Dear Minister Baek,


After careful consideration, we have taken the decision to suspend the implantation of the tariff on civilian vessels until further notice whilst we re-evaluate the policy.

Before we progress, I wish to clarify your understanding of Indonesia's Exclusive Economic Zone and territorial waters in relation with the agreements you mentioned. The 1973 agreement on Indonesia–Singapore border, the treaty has only partially delimited the current maritime boundary within the Strait of Singapore to replace the de facto border status that was adopted by the former colonies of British Malaya and the Dutch East Indies. Thus, much of the boundaries within the Strait remains either undefined, disputed or both.
Despite your statement that commercial traffic passing through the Indonesian waters in the area is not necessary, our territorial waters at either end of the Singapore Straits and the standardisation of sea lanes and traffic, which is reinforced by the traffic separation scheme you mentioned, entails that all maritime traffic has to pass through Indonesian waters at some point during the journey in order to travel between the South China Sea and the Indian Ocean.

On you're proposals regarding bilateral cooperation, as a Customs Authority, we are unauthorised to comment on, enter discussions and ratify treaties with foreign states and organisations. Thus, I can only suggest that you approach our state's Foreign Ministry with such proposals. I hope you can understand.


Sincerely,

Faizah Rahayu

Director of the Trade and Customs Authority
Republic of Indonesia

 

[Jay]

To: Faizah Rahayu < KangNa > CC: ChoMinae@moj.kr.gov, LimJinyoung@moj.kr.gov, ParkTaesung@mofa.kr.gov, KimMinseo@Cheongwadae.gov, KimSanggon@mtie.kr.gov, YooMyunghee@mot.kr.gov, LeeSeonjeon@hhi.org

From: BaekJaeeun@moj.kr.gov

Subject: [Int'l Trade] [Urgent] Customs and Trade Authority Dispute Mechanism

Security: Private and encrypted Protected by the NIS and MoFA DPB

Dear Director Rahayu & Whom it may concern,

[Please note this email is being recorded by the Republic of Korea Ministry of Justice and its contents may be used in legal proceedings]
​

Thank you for the update regarding the suspension on the implementation of the tariff proposal. We look forward to your re-evaluation and hope you will continue to inform us of relevant information as time progresses. We believe such a matter is of significant importance and will continue to monitor the issue. My office is happy to be consulted on the Korean Government's interests and hope that your government will reach out prior to making future announcements so that we may be able to prepare a formal response.

As per clarification on the Exclusive Economic Zone, our current understanding is that a vessel could travel through Malaysia and Thailand's EEZ's without crossing Indonesia's maritime boundaries. The Singapore Strait arrangement also allows a vessel to transit through Singapore's maritime boundaries and the delimitation although disputed is still an avenue of arbitration. This nonetheless is a component of a specific sea-way in which your application of domestic law would not be appropriate. Considering the wider impact on neighboring countries such as Singapore, and Malaysia.

Considering the matters of this discussion have been temporary suspended, and contingent on that suspension, I believe that we may hand the proposed cooperation arrangements to the relevant ministries and agencies. Thank you for your cooperation and engagement and I look forward to your final review and hopeful abolishment of the tariff proposal.

Signed,
Baek Jae-eun
Minister of Justice
Republic of Korea

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Republic of Korea
Ministry of Justice
All information is protected from release by the Diplomatic Communications Security Act 1997
Authorized viewing is limited to those directly emailed, cc'd, and bcc'd​