Churchill Mining advises that the International Centre for Settlement of Investment Disputes (ICSID) arbitral tribunal, comprising Professor Gabrielle Kaufmann-Kohler (president), Michael Hwang SC (arbitrator) and Professor Albert Jan van den Berg (arbitrator), has rejected the Republic of Indonesia’s challenges to the Tribunal’s jurisdiction.

The ruling enables Churchill to pursue claims for damages against the Indonesian government relating to the expropriation of the firm’s rights over the East Kutai coal mine.

Meantime, late last week Indonesia indicated that it is set to file a challenge against the ruling. “We will file an objection,” said Investment Coordinating Board (BKPM) chairman Mahendra Siregar in Jakarta. “The recent ruling is not in line with the existing law in Indonesia.”

Indonesia’s Justice Ministry and the Attorney General Office will work on the objection, he said without providing any timeframe to file the objection.

Churchill, and its Australian subsidiary Planet Mining, are seeking damages of not less than US$1.05 billion, excluding interest, to settle the long-running dispute. The company began arbitration against the Indonesian government in May 2012 at the ICSID in Washington.

The East Kutai Coal Project is a world-class thermal coal deposit in Kalimantan with a JORC-compliant resource of 2.730 billion tonnes.

Churchill’s chairman David Quinlivan says, “We are pleased that the Tribunal has rejected the Republic of Indonesia’s jurisdictional challenges and the Tribunal decisions now allow Churchill and Planet to pursue their claims for damages against the Republic of Indonesia under the respective Bilateral Investment Treaties Indonesia entered into with the United Kingdom and Australia.”

In summary, the jurisdictional challenges by the Republic of Indonesia claimed:

  • The Republic of Indonesia had not consented to ICSID arbitration of the dispute with Churchill and its wholly-owned subsidiary Planet Mining under the UK-Indonesia and Australia-Indonesia Bilateral Investment Treaties, and/or
  • Even if the Tribunal found that the Republic of Indonesia had consented to ICSID arbitration as a general matter, the tribunal would still lack jurisdiction because Churchill and Planet’s investments fell outside the scope of protected investments under the respective Bilateral Investment Treaties.

In its ruling, the Tribunal dismissed the Republic of Indonesia’s challenges and found that the Tribunal has jurisdiction over the claims Churchill and Planet have submitted.

In its announcement of May 10, 2013, Churchill provided a preliminary estimate of its and Planet’s damages as a result of the actions taken by the Republic of Indonesia of not less than US$1.054 billion, excluding interest. This estimate remains under review and Churchill and Planet will finalize their damages presentation in the course of the arbitration proceedings.

Churchill and its lawyers, Quinn Emanuel Urquhart & Sullivan, LLP will now seek directions from the Tribunal on the schedule for submissions and hearings on Churchill’s claims for damages.

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