Churchill Mining loses arbitration against Indonesia

JOHANNESBURG (miningweekly.com) – The International Centre for Settlement of Investment Disputes (ICSID) Tribunal on Wednesday granted Indonesia's application to dismiss Aim-listed Churchill Mining’s claims for damages arising out of the revocation of the mining licences that made up the East Kutai coal project (EKCP) in east Kalimantan.

Churchill was seeking the full relief owed to it under the provisions of the UK–Indonesia bilateral investment treaty and under international law.

In 2012, Churchill moved to file a claim of international arbitration against the country for breaches of Indonesia’s obligations under that bilateral investment treaty.

Churchill’s Australian subsidiary Planet Mining, through its 5% shareholding in PT Indonesia Coal Development also held an interest in the East Kutai coal project, and also filed for arbitration at ICSID against the Republic of Indonesia pursuant to the Australia–Indonesia bilateral investment treaty.

The arbitrations were consolidated into a single proceeding and were dealt with and heard together.

The companies claimed $1.14-billion plus pre-award interest of $16-million for a total of $1.31-billion.

However, the tribunal found that 34 disputed documents were held to be not authentic and said the forger of the disputed documents was most likely a person or persons acting for or on behalf of Churchill's Indonesian partner, the Ridlatama group, in collusion with a person inside the East Kutai Regency.

However, the tribunal stated that there was no finding that Churchill or its officers were involved in any forgery and that Churchill's due diligence investigations conducted at the time of acquiring the East Kutai coal licences were insufficient.

Churchill was ordered to pay $9.44-million in costs and arbitration tribunal fees.

"We are extremely disappointed by the tribunal's decision and the fact that [it] drew no adverse inferences against Indonesia following the refusal by East Kutai regent Isran Noor to attend the August 2015 hearing so that he could be cross-examined and the refusals by Indonesia to provide documents that the tribunal itself considered prima facie relevant,” Churchill chairperson David Quinlivan said.

“While we are still reviewing the reasons, the tribunal appears to have accepted that Noor was deceived into signing the exploitation licences despite his nonappearance and his witness statement having been struck from the record. Indonesia has always conceded that the EKCP exploitation licences were validly issued and signed and it is difficult to understand how the tribunal found otherwise on the evidence available," the company added.

The ICSID process allows Churchill to request annulment of the award by an application in writing addressed to the secretary-general on grounds including that the tribunal was not properly constituted; that the tribunal had manifestly exceeded its powers; that there had been a serious departure from a fundamental rule of procedure; or that the award failed to state the reasons on which it was based.

Churchill believes there are grounds to annul this award and is working with its lawyers Clifford Chance to determine which of the above grounds may be available. As part of that application, Churchill would seek a stay of the costs orders that have been made.