Indonesia's Ratification of the ASEAN Agreement on Transboundary Haze Pollution

On 16 September 2014, the Indonesian parliament ratified the ASEAN Agreement on Transboundary Haze Pollution ("Haze Treaty"), making it the last country to do so from among the ten ASEAN member signatories.

The ASEAN Agreement on Transboundary Haze Pollution

The Haze Treaty is a regional environmental treaty that obliges states party to prevent and mitigate haze pollution 'through concerted national efforts and intensified regional and international cooperation'. Executed in June 2002 in response to the growing haze issue in the region, the Haze Treaty prescribed a slew of measures designed to strengthen individual state commitment and enhance cooperation amongst parties in the fight against haze pollution. Primarily, these required each state party to:

1. take measures to prevent and control activities that may lead to transboundary haze pollution, including implementing education and awareness building campaigns alongside legislative and other regulatory measures;
2. take appropriate steps to monitor (i) areas prone to the occurrence of land and/or forest fires, (ii) environmental conditions conducive to such fires and (iii) any resulting haze pollution, and to designate a National Monitoring Centre for such purposes;
3. ensure that appropriate legislative, administrative and financial measures are taken to mobilise resources necessary to respond to and mitigate the impact of haze pollution;
4. facilitate the exchange of experience and relevant information among enforcement authorities of the signatory states, in particular to respond promptly to requests for relevant information sought by a state or states that are or may be affected by transboundary haze pollution; and
5. promote and support scientific and technical research programmes related to the causes and consequences of transboundary haze pollution.

The Haze Treaty also provided for the setting up of a central ASEAN Co-ordinating Centre for Transboundary Haze Pollution Control to coordinate and monitor information on pollution, and the establishment of a Transboundary Haze Pollution Fund to be applied toward effective implementation of the Haze Treaty.

Impact of the Haze Treaty to-date

The Haze Treaty was hailed as a landmark in ASEAN collaboration on transboundary environmental issues at the time of its signing. However, the intervening years have witnessed little or no discernible improvement in the haze situation. Reports indicate that haze pollution has in fact worsened to the extent that in June 2013, the three-hour Pollutant Standards Index (PSI) reading in certain parts of Indonesia, Malaysia and Singapore reached record-breaking and hazardous levels.

Two primary factors have been cited as reducing the effectiveness of the Haze Treaty. First, until its recent ratification, Indonesia, alleged by some to be the main contributor to haze pollution in the region, was the only ASEAN member state that had yet to fully commit itself to the Haze Treaty. The likely impact of Indonesia's ratification is discussed further below. Second, and significantly, the Haze Treaty contains no enforcement provisions and prescribes no specific sanctions against a country that has failed to comply with its obligations thereunder (which in any event allow significant discretion as to the measures which should be taken at the domestic level). Instead, Article 27 of the Haze Treaty simply states that any dispute relating to non-compliance with the Haze Treaty or any protocol thereto 'shall be settled amicably by consultation or negotiation'. Consistent with established ASEAN practice, this means that inter-State enforcement of the Haze Treaty remains a matter of diplomacy, with no route for direct legal redress (particularly as only two of the ten ASEAN member states have recognised the compulsory jurisdiction of the ICJ).

Indonesia's ratification – a great leap forwards?

Indonesia's ratification therefore represents a much anticipated development for the Haze Treaty. Does this represent a paradigm shift forward for regional cooperation?

One view is that Indonesia's ratification may not by itself change matters significantly. As set out above, the Haze Treaty merely provides a basic framework for regional cooperation with no hard sanctions in the event of non-compliance. What specific implementing measures Indonesia will take remains to be seen.

However, some steps have already been taken. In 2009, Law Number 23 of 2009 on Environmental Protection and Management was enacted in Indonesia imposing a maximum fine of Rp 10 billion (approximately US$800,000) and up to ten years in prison for individuals or corporations engaging in land burning activities. This has led to a number of successful prosecutions in the past two years. More recently, the Indonesian government has introduced the Indonesian Sustainable Palm Oil scheme, which bans the use of fire in plantation development, and will be mandatory for all palm oil companies in Indonesia by end-2014.

Indonesia's ratification of the Haze Treaty has other potential implications. It may assist other ASEAN member states to take action against corporations responsible for contributing to the haze pollution. At present, national enforcement efforts against large palm oil producers that participate in or allow for the clearing of land by slash-and-burn farming practices in Indonesia are stymied by the inability of neighbouring states to obtain necessary evidence on the ground. This has led countries such as Singapore to pass its Transboundary Haze Pollution Bill in August this year. The new legislation seeks to make Singaporean companies accountable for the acts of their subsidiaries in Indonesia, and relies on certain presumptions to establish a causal nexus between the company's activities in Indonesia and pollution in Singapore. Assuming Indonesia's ratification leads to greater exchange of technical information and data, such cooperation may empower member states to take more decisive action at a national level. Already, Indonesian lawmakers have gone on record to express their support for the Singapore Haze Bill, which should translate to more robust collaboration between Indonesia and the rest of ASEAN.

Developments in the region, and the clarity of its skies, will no doubt be keenly watched.

For further information, please contact Dominic Roughton, Partner, Andrew Cannon, Partner, Antony Crockett, Senior Associate, Emmanuel Chua, Associate, or your usual Herbert Smith Freehills contact.