Karaha wins at HK, S'pore courts

Karaha wins at HK, S'pore courts

Moch. N. Kurniawan, The Jakarta Post, Jakarta

Independent power firm Karaha Bodas Co. LLC. (KBC) said on
Wednesday it had won important rulings from two Asian courts
affirming a US$261 million award against state-owned oil and gas
company Pertamina, as reported by AFP.

However, Pertamina finance director Ainun Naim said the ruling
was not yet final as the courts had yet to hear Pertamina's
statement.

"It's a one-sided version. It's not an absolute verdict," he
told the Jakarta Post.

Ainun pointed out that the New York court had once ordered
that Pertamina's account in a U.S. bank be frozen to meet
Karaha's demand. But the court later changed its decision,
ordering the release of the fund after hearing Pertamina's
defense statement stating that the bank accounts belonged not to
the state firm but to the Indonesian government.

Orders handed down by courts in Hong Kong on May 23 and
Singapore on May 29 had "opened new legal avenues" to make
Pertamina hand over the money resulting from a canceled joint
venture, according to AFP.

The $261 million award for damages and lost profits was set by
a Swiss tribunal 18 months ago "for proven and uncontested
expenditures, lost profits and the costs and expenses of
arbitration."

Christopher Dugan, a lawyer for KBC, said the Hong Kong and
Singapore rulings took the company a step closer to securing
payment.

"The issues at stake in this matter have been heard, decided
and affirmed in KBC's favor on repeated occasions, but it is
particularly important to have also obtained positive affirmation
of this in Asia."

"Pertamina has gone to extraordinary lengths to avoid paying
its debts," Dugan said.

Pertamina is contesting the Hong Kong decision in court on
Thursday.

Karaha Bodas has reportedly sought confirmation of the
arbitration award in Hong Kong, Singapore and Canada as Pertamina
assets are located in those countries.

According to Ainun, Pertamina has a subsidiary Pertamina
Energy Trading Limited (Petral) in Singapore and an insurance
company Tugu Insurance Company in Hong Kong.

Karaha Bodas has previously won a confirmation from Houston
Court in the U.S.

Pertamina, on the other hand, won a Jakarta injunction that
ordered Karaha Bodas to halt its campaign to seize Pertamina
assets worldwide.

KBC said it had invested more than $100 million developing
geothermal resources in Indonesia under a 1994 contract with
Pertamina and Indonesia's state-owned electricity company PLN.

But the projects were suspended by the government in 1997 amid
the economic crisis.

Under the terms of the contract, disputes were to be settled
by an international arbitration tribunal in Switzerland which
ruled for Karaha Bodas in December 2000.

Pertamina insisted that the arbitration award was flawed,
claiming that the suspension of the Karaha Bodas project was a
matter of force majeure. It was suspended by the Indonesian
government to cope with the economic crisis and the suspension
was approved by the International Monetary Fund (IMF).

Pertamina has been asking the IMF to explain to the U.S. court
the reason behind the suspension of the project in order to
convince the judges that the suspension was a case of force
majeure.

But, the IMF has refused to do so, saying the suspension was
the Indonesian government's decision and it was not responsible
for that.

Disappointed by the IMF's refusal, Pertamina's president
Baihaki Hakim accused the IMF of unfairly trying to wash its
hands of the case.

Karaha Bodas, a Cayman Islands firm, is primarily owned by
U.S. companies Florida Light and Power and New York-based
Caithness Energy.