By Amanillah and Arzia Tivany Wargadiredja
PALEMBENG, Indonesia/JAKARTA (Reuters) - Indonesia's efforts to penalize the companies allegedly responsible for its annual forest fires suffered a setback on Wednesday after a judge rejected a $565 million lawsuit against a pulp and paper firm.
Indonesia brought a civil case in a South Sumatra court against PT Bumi Mekar Hijau (BMH), a supplier to Asia Pulp and Paper, one of the world's biggest pulp and paper companies.
The $565 million in damages would have been the largest financial award ever levied against a company accused of forest burning activities in Indonesia with the intent of sending a strong message to those responsible for the annual haze.
"The lawsuit against PT Bumi Mekar Hijau is rejected because the evidence is not proven," said presiding judge Parlas Nababan. He did not comment any further and then ended the court proceedings.
Indonesia and the wider Southeast Asian region suffered for months this year from haze caused by smouldering forest and peatland fires. The fires were largely located on the islands of Sumatra and Borneo and climate officials described them as a crime against humanity as pollution levels soared.
The government alleged that BMH failed to prevent the recurrence of fires in 2014 and 2015 on about 20,000 hectares of land in the Ogan Komering Ilir region of Sumatra, Eka Widodo Soegiri, a spokesman at the Environment and Forestry Ministry told Reuters.
An appeal to the court's verdict will be made within two weeks, said Rasio Ridho Sani, director general for law enforcement at the Forestry Ministry, after the hearing.
"The decision is against the people's will," said Sani. "We had presented the facts from the field that there was indeed forest burning in the mentioned location. The fact on the field also show that the company doesn't have adequate equipment to prevent and control the forest fire in the mentioned location."
The government's evidence was far-fetched, BMH's lawyer Maurice, who like many Indonesians uses one name, told reporters after the ruling, citing the extent of the hotspots and the sampling process that the government used.
Environmental groups cautioned that Wednesday's ruling will likely frustrate other pending lawsuits.
"This will be a bad precedent related to other similar lawsuit against the forest fires perpetrators in the future," said Hadi Jatmiko, director at Friends of the Earth Indonesia, which was involved in monitoring BMH.
Indonesia is still pursuing the companies seen as responsible even as the forest fires have eased because of monsoon rains. The government has sanctioned 23 companies because of the fires, with three having land-use or environmental permits revoked, 16 having permits suspended and four issued "government force sanctions."
The government says it will also review laws that allow smallholder farmers to burn, ban peatland development and take back all burned land within a company's concession area.
Green and palm industry groups have warned that the forest fires, which cost Indonesia about $16 billion in 2015, will flare up next year unless the government issues new regulations on forest clearing.
(Additional reporting by Bernadette Christina Munthe; Reporting by Arzia Tivany Wargadiredja in Jakarta and Amanillah in Palembang; Writing by Michael Taylor; Editing by Christian Schmollinger)