Malaysia’s IOI Corporation Berhad (IOI) announced on 9 May that it had recently filed a challenge in the Zurich District Court of Switzerland against its suspension by the Roundtable on Sustainable Palm Oil (RSPO).

The suspension was announced on 1 April following a year-long investigation into allegations that the company had failed to protect forests and peat areas.

Major food companies Nestlé, Mars, Unilever and Kellogg have subsequently dropped IOI as a supplier.

“The decision to challenge the RSPO Board’s suspension decision is a difficult and painful one for us to take,” said IOI CEO Dato’ Lee Yeow Chor in a statement. “On the one hand, we have great commitment and attachment to RSPO. On the other hand, we feel that we have been unfairly affected by the extent and scope of the suspension decision.”

He said the decision to challenge the suspension followed an appeal to the RSPO complaints panel, which had not been considered.

“Our appeal was principally made on two aspects of the suspension decision: one is that the decision – based on findings of breaches in the principles and criteria for sustainable palm oil production in IOI plantations – should not cover the downstream processing units which are certified under a different set of rules; another is that the decision should not affect existing certified palm oil purchase and sales contracts which have already been entered into prior to the suspension decision.”

Dato’ Lee Yeow Chor said the suspension of the company’s RSPO certifications, which affected its current RSPO oil contract commitments, had caused significant disruptions to certain parts of the European and American food manufacturing sector.

He said the court would set a date for a conciliatory hearing where both parties would be present, and formal legal action would only be sanctioned if both parties failed to reach agreement in the conciliatory proceeding.

He said IOI still remained committed to implementing the action plan required to lift its RSPO suspension.

“Since the suspension decision, we have had several discussions with the complainant, conducted a four-day field verification visit with Global Environmental Centre (GEC), a specialist firm in peat and HCV matters, and have started to implement the improvement measures suggested by GEC.”

The company had also “taken corrective actions to review and enhance our sustainability practices”, he said.

However, NGOs have condemned IOI.

“We raised the alarm over the serious environmental and human rights impacts of IOI’s operations in Malaysia six years ago and only now has the RSPO finally taken action,” said Friends of the Earth senior food campaigner Clare Oxborrow.

IOI grows and processes palm oil, with some 152,000ha of oil palm plantations in Malaysia and 83,000ha in Indonesia. It it also the largest oleochemical manufacturer in Asia, and has a speciality fats business operated under Loders Croklaan.