U.S. court again rejects Pertamina?s appeal in dispute with Karaha
Thursday, May 29 2003 - 04:23 AM WIB
Koran Tempo reported on Thursday that the Houston court had recently rejected Pertamina?s latest maneuver to escape from paying the compensation to Karaha Bodas Company due to the lack of the legal bases.
Pertamina submitted three new evidences in March to the Houston in its latest attempt to escape from paying the compensation. The new evidences included the Central Jakarta?s court decision to annul the international arbitrary decision, the payment of insurance premium of US$70 million against political risks to Karaha Bodas Company and the result of Pertamina?s due diligence on the capacity of the geothermal power project developed by Karahas Bodas Company.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro confirmed the Houston?s decision on Wednesday, saying that Pertamina?s effort to use the Central Jakarta court?s decision to annul the arbitrary decision had been blocked by the Houston court.
"Using the Central Jakarta?s ruling as evidence was turned down because the Houston court considered it as out of the court decision," the minister said.
Meanwhile Pertamina?s legal consultant Simson Panjaitan said that the Houston court only rejected the Central Jakarta court?s ruling, one of the three new evidences brought forward by the state owned oil and gas company.
The American court?s decision on the other two evidences ? the insurance premium payment of US$70 million by Karaha Bodas Company and the result of Pertamina?s due diligence which indicated that the capacity of the geothermal power in the Karaha Bodas project was only 30 MW as against 200 MW stated by the developer in its legal suit at the international arbitrary ? had not been made.
Simson said that if the court accepted the evidences, the arbitrary decision requesting Pertamina to pay the US$ 261 million would be immediately dropped. "If the new evidences are all rejected, we will make another appeal and question the court?s decision," he said.
The Karaha Bodas project is one of dozens of mega projects which were suspended by the government after the financial crisis hit the country in late 1997. The government revoked the decision in 1998 after protests from Karaha Bodas Company?s shareholders including Caithness Energy, Florida Power, Japan Tomen Power and their local partner PT Sumarah Daya Sakti. But in early 1998, the government again issued a decree to resuspend the project.
Not happy with the decision, the developers then sued Pertamina on the behalf of the government through the International Arbitrary Agency, which then issued a ruling in favor of the Karaha Bodas developers. Pertamina were asked to pay a compensation of US$261 million but the state-owned oil and gas company refused to settle the payment.
The Central Jakarta Court -- which claimed it as the most rightful body to settle the legal dispute ? then issued a ruling to annul the arbitrary decision. Unfortunately, the ruling was rejected. The arbitrary ruling was instead endorsed by the U.S. court.
In another legal battle, a New York district court accepted the request of Karaha Bodas Company to freeze Pertamina?s funds and assets held by the Bank of America. Pertamina then made an appeal saying that the decision was legally wrong because 95 percent of the funds were owned by the Indonesian government.
The appeal was later accepted but Pertamina was still unable to withdraw the money due to the difference in the perception on the nominal value of the funds which were owned by the Indonesian government.
Karaha Bodas won an approval from the government in 1994 to develop the geothermal power project in Karaha, West Java under a joint operation scheme with Pertamina. At the same year, Karaha Bodas Company also won a contract to sell the electricity to be produced from the Karaha project to state owned electricity company PLN.(*)