Court says arbitration to settle Chevron, Saripari dispute

The Central Jakarta District Court ruled on Tuesday that a drilling contract dispute between PT Saripari Pertiwi and PT Chevron Pacific Indonesia should be settled through arbitration, Kontan reported Wednesday.

Judge Suko Priyo said that the court does not have authority to rule on the contract dispute. Not satisfied with the ruling, Saripari said it would file for an appeal, insisting that the court should rule the contract dispute arguing there?s an element of crime in the case.

The dispute started when Saripari won a US$42.20 million oil drilling contract from Chevron on January 20, 2008. Saripari then teamed up with insurance firm Ramayana to issue performance bonds worth about 5 percent of the contract value, or $2.11 million.

But in May 2008, the value of the contract dropped to $37.09 million, and on August 16, 2012 Chevron terminated the contract on grounds that the Saripari workers staged a strike, thus causing the latter firm to fail to guarantee the contract. Chevron then asked Ramayana to redeem the performance bond. Saripari rejected the request, saying that even if it is to be liquidated, the value should be reduced in line with the lower value of the contract. (*)