American court decisions on Karaha Bodas case remain uncertain
Monday, June 2 2003 - 03:42 AM WIB
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta last week that the government was still unable to withdraw the funds that had been frozen by Bank of America due to the international arbitration decision.
The minister said that Pertamina had forwarded new evidences in the New Orleans appeal court (fifth circuit) in its efforts to annul the confirmation of the international arbitration decision which ordered Pertamina to pay a compensation of about US$261 million to Karaha Bodas.
?The appeal court has returned the case to the Houston court,? the minister said, adding that the Houston district court had been asked by the appeal court to reconsider the Central Jakarta court?s decision to annul the international arbitration ruling.
The Central Jakarta court?s decision was one of the three new evidences submitted by Pertamina in the appeal court. The other two evidences included a proof that Karaha Bodas had received an insurance payment, and the result of Pertamina?s audit indicating that the geothermal power reserves found in the geothermal project amounted only 30 megawatt (MW) as against 200 MW stated by the developer in the legal suit at the international arbitration.
Purnomo said that the appeal court had not yet issued a ruling related to the other two evidences.
Aside from the Houston court, Karaha Bodas has also asked for a confirmation of the arbitration decision at the New York district court. According to Purnomo, the New York district court was still debating over Indonesia?s request addressed to Bank of America to withdraw its funds.
The bank has frozen US$261 million in Pertamina?s accounts in line with the injunction issued by the New York court at the request of Karaha Bodas.
Purnomo said that the government had established an inter-governmental team to help settle the legal dispute with Karaha Bodas. A number of efforts have been made, including appeals to the International Monetary Funds (IMF) and the U.S. State Department.
The minister said the government appealed to the two institutions to issue a statement so that the case could be settled out of the court.
The Karaha Bodas project is one of dozens of mega projects which were suspended by the government after the financial crisis hit the country in late 1997. The government revoked the decision in 1998 after protests from Karaha Bodas?s shareholders including Caithness Energy, Florida Power, Japan Tomen Power and their local partner PT Sumarah Daya Sakti. But in early 1998, the government again issued a decree to resuspend the project.
Not happy with the decision, the developers then sued Pertamina at an international arbitration panel in Geneva, which then issued a ruling in favor of the Karaha Bodas developers. Pertamina were asked to pay a compensation of US$261 million but the state-owned oil and gas company refused to settle the payment.
The Central Jakarta Court -- which claimed to be the most rightful body to settle the legal dispute ? then issued a ruling to annul the arbitration decision. Unfortunately, the ruling was rejected by Karaha Bodas. Karaha Bodas used the arbitration ruling in its legal fight against Pertamina in the United States.
The New York district court accepted the request of Karaha Bodas to freeze Pertamina?s funds at the Bank of America. Pertamina then made an appeal saying that the decision was legally wrong because 95 percent of the funds were owned by the Indonesian government.
The appeal was later accepted but Pertamina is still unable to withdraw the money due to the difference in the perception on the number of funds owned by the Indonesian government. (*)