U.S. court upholds freeze on Pertamina accounts

U.S. court upholds freeze on Pertamina accounts

Agence France-Presse, Jakarta

A U.S. appeals court has upheld a freeze on nearly US$275 million in trust accounts of Indonesia's state-owned oil and gas firm, Pertamina, a statement received here Thursday said.

In a statement issued from New York, U.S.-controlled power firm Karaha Bodas Co. (KBC) said it had originally restrained more than $520 million in Pertamina trust accounts in an attempt to secure payment on a $261 million award made by an international arbitration panel.

"By maintaining the freeze, the court has provided KBC with a clear path to secure fair and final payment," Christopher Dugan, KBC's chief litigator, said in the statement.

By endorsing the freeze on assets, the court denied a motion by the Indonesian government to release 95 percent of the frozen funds, KBC said.

Appeals to determine the final disposition of the contested assets will be heard before the appeals court in August, said the Cayman Islands firm which is primarily owned by Florida Light and Power and Caithness Energy of New York.

Wednesday's ruling is the latest in a series of what KBC describes as legal victories in its efforts to secure payment for damages awarded by Swiss arbitrators in December 2000 over a suspended power project.

KBC said it had invested more than $100 million in developing a geothermal project suspended by Indonesia in 1998 at the height of the economic crisis.

Pertamina has said the Indonesian government, not the oil company, suspended the project and that the dispute between the two sides should be settled under Indonesian law.

In April Pertamina obtained a Jakarta district court injunction to prevent KBC from recovering its damage award, prompting a court in Houston, Texas, to declare Pertamina in contempt.