Indonesia lost in Karaha Bodas case

The govrenment of Indonesia and state-owned oil company, PT Pertamina, lost a U.S. Supreme Court bid to avoid having to pay $265 million to utility Karaha Bodas Co. in a long-running dispute over a canceled power project, agency reported.

The justices, without comment, refused to second-guess a lower court ruling that orders payment from a frozen bank account owned by Indonesia to satisfy an arbitration award won by Karaha six years ago.

Karaha, whose owners include FPL Group Inc. and Caithness Energy LLC, is trying to recover $100 million it spent on an Indonesian geothermal power project that was canceled in 1998.

Pertamina had agreed with Karaha to jointly operate the power plant and to buy electricity generated by the plant.

A Swiss arbitration tribunal in December 2000 ordered Pertamina to pay Karaha $261 million to cover the $100 million plus lost profits and interest.

Karaha then turned to courts in the U.S. to try to force payment, eventually winning an asset freeze and a federal trial judge's order that the money be turned over. The New York-based 2nd U.S. Circuit Court of Appeals upheld the turnover order in March. (*)