Pertamina loses U.S. appeal against Karaha: Report

State-owned oil and gas company Pertamina, lost an appeal in a U.S. court, clearing the way for Florida-based Florida Power Limited Group Inc. and other claimants to recoup $261 million they are owed over a canceled power project, Bloomberg reported Thursday.

In a judgment filed March 23, the U.S. Court of Appeals for the Fifth Circuit threw out Pertamina's bid to nullify the 2000 arbitration award made to Karaha Bodas Co., which is owned by FPL, Caithness Energy LLC and other U.S. investors.

In August 2002, a U.S. District Court froze $285 million of Pertamina's funds in the U.S. Pertamina had been challenging the U.S. courts' recognition of the Swiss arbitration and had won an August 2002 ruling from an Indonesian court that the award was not valid under Indonesian law.

?We reject Pertamina's efforts to delay or avoid enforcement of the award as evidencing a disregard for the international commercial arbitration procedure it agreed to follow,? the U.S. Court of Appeal said.

Karaha, a Cayman Islands company, is seeking to recover its investment in an Indonesian power project plus money awarded by arbitrators for lost profits. The Indonesian government halted the venture in 1998, when the country's currency collapsed and it was forced to seek a bailout from international donors.

The U.S. court rejected the argument that the Indonesian court had the power to nullify the award. Pertamina had agreed to be bound by Swiss arbitration and had lost an appeal in the Swiss courts, the U.S. court said.

Pertamina's argument ?was inconsistent with the arbitration agreements Pertamina signed and with its earlier positions,? the court said.

Courts in Hong Kong and Singapore affirmed the Swiss arbitration tribunal's decision in June 2002, Karaha had said at the time. Pertamina earlier said its money in the U.S. couldn't be frozen under the U.S. Foreign Sovereign Immunity Act.

Pertamina, however, told Petromindo.Com early this week that a New York court had partly granted appeal from the Government of Indonesia to release some of the US$650 million of fund owned by the GOI that was frozen in Bank of New York and Bank of America. The court, according to Pertamina lawyer Simson Panjaitan had ordered to freeze only $290 million, the amount of the award compensation payable to Karaha. He said the ruling was not immediately effective pending appeal result by Karaha. (*)