Hong Kong high court favors KBC in Karaha power project dispute
Tuesday, August 6 2002 - 04:27 AM WIB
KBC, a Cayman Islands-registered firm controlled by U.S. investors, said in a press release the high court decision affirmed KBC?s right to pursue payment in Hong Kong and preserves a direct legal means to do so.
Pertamina this year sought declaration from the Hong Kong High Court to reject the Hong Kong Court?s verdict which allowed KBC to garnish monies and assets held by Pertamina in Hong Kong as payment for an arbitral award granted to KBC in 2000. Pertamina wanted the high court to state that service of the Hong Kong Court?s orders in Indonesia was defective and therefore the entire proceedings were unlawful.
The Hong Kong Court in May 2002 affirmed the award given by a Switzerland-based arbitration panel, granting KBC permission to enforce it in Hong Kong. The court also issued interim Charging Orders to give KBC a beneficial inerest in Pertamina-held shares in three Hong Kong companies ? Tugu Insurance Co. Ltd., Pertamina Energy Trading Ltd. and Korea Indonesia Petroleum Ltd ? and interim Garnishees Orders.
Pertamina was given 28 days within which to appeal the court?s original confirmation of the arbitral award. A final decision on the disposition of the frozen assets is expected in September.
KBC had filed lawsuits asking courts in the U.S., Singapore and Hong Kong ?where Pertamina has assets ? to reaffirm the arbitration ruling and order Pertamina to pay compensation.
Switzerland-based panel of arbitrators in 2000 ordered Pertamina to pay KBC a total of US$261.1 million in compensation for the suspension by the Indonesian government of its geothermal power project in Karaha Bodas village in West Java. The project suspension occurred in 1998 after Indonesia was hit by severe economic crisis.
Pertamina argued that the suspension of the project was force majeure and that the $261.1 million award had been based on unreasonable calculations. (leo)