Pertamina loses U.S. appeal against Karaha Bodas<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
State oil and gas company Pertamina has lost an appeal in a
\nU.S. court, clearing the way for Karaha Bodas Co. (KBC) to get
\nUS$290 million in damages for a canceled power project.<\/p>\n
In a judgment filed March 23, the U.S. Court of Appeals for
\nthe Fifth Circuit threw out Pertamina's bid to nullify the 2000
\narbitration award made to KBC, which is owned by
\nFPL, Caithness Energy LLC and other U.S. investors.<\/p>\n
In 2001, the Geneva Arbitration Court ordered Pertamina to pay
\n$261 million in compensation to KBC for canceling KBC's
\ngeothermal power project in Garut, West Java. The government
\nhalted the project in 1998 as part of belt-tightening measures to
\ncope with the economic crisis.<\/p>\n
KBC subsequently asked several district courts in the U.S.,
\nHong Kong and Singapore to confirm the arbitration ruling. It
\nraised its claim to $290 million after taking interest into
\naccount. All the district courts upheld the arbitration ruling.<\/p>\n
While confirming the arbitration ruling, the New York District
\nCourt also ordered U.S. banks to freeze funds worth $650 million
\nowned by Pertamina and the Indonesian government.<\/p>\n
Pertamina appealed the court decision. In addition, the firm
\nlaunched a lawsuit in the Central Jakarta District Court to
\nnullify the arbitration ruling.<\/p>\n
The Central Jakarta District Court ruled in favor of Pertamina
\nin 2002, saying that the arbitration award was not valid under
\nIndonesian law.<\/p>\n
However, Bloomberg reported on Thursday that the U.S. Court of
\nAppeals rejected the argument that the Indonesian court had the
\npower to nullify the award, saying that Pertamina had agreed to
\nbe bound by Swiss arbitration and had lost an appeal in the Swiss
\ncourts.<\/p>\n
\"We reject Pertamina's efforts to delay or avoid enforcement
\nof the award as evidencing a disregard for the international
\ncommercial arbitration procedure it agreed to follow,\" the U.S.
\nCourt of Appeals said.<\/p>\n
Pertamina's spokesman was not available on Thursday for
\ncomment.<\/p>\n
The verdict came several weeks after Pertamina won a U.S.
\ncourt ruling ordering U.S. banks to release $360 million of the
\n$650 funds frozen at the request of KBC on the grounds that the
\nfunds belonged to the Indonesian government rather than
\nPertamina.<\/p>\n
KBC is one of the 27 independent power producers (IPP) that
\nsigned power purchase agreements (PPA) with state electricity
\ncompany PT PLN prior to the economic crisis. As far as KBC is
\nconcerned, it signed a PPA with PLN and a contract with Pertamina
\nfor the exploration of geothermal resources. Pertamina then held
\nthe authority over geothermal resources, as well as oil and gas
\nresources.<\/p>\n
Most of the projects were suspended after the economic crisis,
\ncausing protracted disputes between the independent power
\nproducers and PLN. In order to put an end the disputes, last year
\nthe government revived all the projects, but KBC refused to
\nrevive its project, and instead opted for legal recourse.<\/p>\n
The Indonesian government has also asked the U.S. government
\nto help mediate an out-of-court settlement in the dispute between
\nPertamina and KBC, but to date with no results.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pertamina-loses-us-appeal-against-karaha-bodas-1447893297",
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"sponsor": "Okusi Associates",
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