Jakarta court annuls arbitration decision over Karaha Bodas power project dispute
Tuesday, August 27 2002 - 08:20 AM WIB
Pertamina in 2001 field a suit in the Central Jakarta district court asking it to annul the Swiss arbitration?s decision. The arbitration court had awarded $261 million to KBC, but Pertamina rejected that decision.
KBC?s lawyer Rambun Tjajo said on Tuesday they could not accept the Jakarta district court?s decision arguing that it had no authority to annul the Swiss arbitration ruling.
Rambun said Pertamina and KBC had agreed that their disputes be settled by the Swiss panel of arbitrators.
However, Pertamina?s legal officer Simson Panjaitan said an Indonesian court could nullify the Swiss arbitration ruling because it was guaranteed by the New York Convention.
The dispute centers on Karaha, which is principally backed by U.S. companies FPL Energy and Caithness Energy, entering into contracts with Pertamina and another local company in 1994 to develop the Karaha Bodas geothermal project in West Java.
The Indonesian government, however, cancelled the project as part of the retrenchment program to cope with the impact of the crisis hit Indonesia in late 1997. KBC, which claimed to have invested some $100 million in the geothermal project, sued Pertamina through international arbitrators.
A Switzerland-based arbitration panel in 2000 ordered Pertamina to pay KBC US$261 million in compensation for its costs and loss of future profits due to the suspension by the Indonesian government of the Karaha Bodas power project.
The U.S. Court of Appeals ruled in June 2002 to uphold a decision in the U.S. courts to allow KBC to freeze Pertamina assets worth $275 million.
Pertamina had refused to follow the decision of the Swiss arbitration panel arguing that the $261 million compensation was not based on reasonable calculations. Moreover, the suspension of the Karaha Bodas project was force majeur, Pertamina said. (godang)