Manila (Platts)--26Nov2012/352 am EST/852 GMT

Indonesia's Constitutional Court ruling on November 22 intended to clarify who awards new mining concessions by putting them under the jurisdiction of regional authorities may actually complicate auctions, law firm Baker & McKenzie said Monday.

Although the ruling -- which relates to the country's 2009 mine law -- is designed to facilitate awards, Baker & McKenzie said additional layers of red tap means regional governments ability to make awards could be hampered. The constitution court decision is "a clear win for regional autonomy," the legal firm said but it may lead to "further delays in the ability to award new concessions."

Baker & McKenzie highlighted continuing difficulties in categorizing what constitutes a potential auctionable mine.

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Since the passage of the 2009 mining law, the Indonesian central government has been trying to finalize the mining area, known by its Indonesian acronym WP, the associated mining business area (WUP) and mining business area (WIUP).

According to the law firm, new mining concessions can only be granted in areas designated as WIUP.

"There will be further delays in finalizing the maps," because the "top down" approach has been replaced with a "bottom up" system, Baker & McKenzie said.

Baker & McKenzie said that the Constitutional court mandates the regional government to first determine what will constitute the WP and only after doing so will the matter be further "determined" by the central government after consultation with the Indonesian parliament.

With respect to WUP, the same process will be applied but only the parliament will be notified, the law firm said.

As far as WIUP is concerned, the regional government will determine the acreage and boundaries and only then will the central government confirm the area determination.

New mining concession can only be awarded once these processes are completed, the law firm said.

The drive behind the legal challenges mounted by the regional governments against the 2009 Mining Law is to free up their ability to get on with awarding new mining concessions, Baker & McKenzie said.

The Jakarta Post said Monday that the constitutional court decision was a response to the fourth challenge to the country's mining law this year. The recent decision stems from a case filed H. Isran Noor, the head of coal-rich East Kutai regency.

The newspaper said the mining law may face a fifth review in the coming months according to lawyers for Indonesia's second-largest Muslim organization, Muhammadiyah.

--Cecilia Quiambao, Cecilia_quiambao@platts.com --Edited by Martin O'Rourke, martin_orourke@platts.com

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