Justice Minister Yasonna Laoly answers reporters' questions in Jakarta on Monday. (JG Photo/Nur Yasmin)

Churchill Mining Loses Final Legal Battle Against Indonesia, Must Pay $9.4m

BY :NUR YASMIN

MARCH 26, 2019

Jakarta. An international tribunal has dismissed claims by Churchill Mining against the Indonesian government for damages arising from the revocation of the London-listed firm's mining licenses in East Kalimantan, a top government official said in Jakarta on Monday.

The British miner and its Australian subsidiary, Planet Mining, had plans to explore a 35,000-hectare coal mining concession in the Busang area in East Kalimantan after their acquisition in 2008 of a 75 percent stake from local company Ridlatama.

However, two years later, then-East Kalimantan district head Isran Noor revoked Churchill's license based on accusations of illegal logging. The license was subsequently awarded to another Indonesian company, the Nusantara Group, which is majority owned by presidential candidate Prabowo Subianto.

Churchill sued the district head for the revocation of its mining licenses that made up the East Kutai Coal Project, claiming that the action breached the United Kingdom-Indonesia and Australia-Indonesia investment treaties.

In its legal demand, the British miner accused both the Indonesian government and the regional government of having conducted "indirect expropriation" and breached the "fair and equitable treatment principle."

Churchill filed a legal suit to the International Center for Settlement of Investment Disputes (ICSID) in 2013, claiming $1.3 billion, requital for its investment in the project.

The company estimated that the mine held coal reserves of about 2.8 billion tons – among the world's largest.

In December 2016, the tribunal committee consisting of Gabrielle Kaufmann-Kohler, Michael Hwang and Albert van den Berg, dismissed all the claimants' requests based on a proven lack of proper due diligence on their side. The ICSID awarded compensation of $9.4 million to the government of Indonesia, but in March 2017, the plaintiffs lodged an appeal, requesting an annulment of the award. 

The case was heard by a committee consisting of Dominique Hascher, Karl-Heinz Bockstiegel and Jean Kalicki, who on March 18, decided in favor of the Indonesian government and dismissed the appeal based on a finding that the British company had obtained its licenses in a fraudulent manner. 

The decision was final, thus ending a six-year dispute. The tribunal will soon process the legal costs of $9.4 million awarded to the Indonesian government.

"The signatures on the documents [provided by Churchill], about 34 documents, from exploration to exploitation documents, might have been made with the use of autopen technology, based on observations by our experts," Justice Minister Yasonna Laoly told reporters in Jakarta.

"This has been a long battle… This is Indonesia's first huge win in this kind of lawsuit, and [we] got a significant award out of it," he added.

The minister said the tribunal's decision proves that the Indonesian government has sovereignty in managing its mining sector and that it treats foreign investors in a just and fair manner. 

"Our triumph conveys a special message to foreign investors who don't have good intentions. Sometimes they don't carry out their due diligence properly," Yasonna said.

However, he said the fight was not yet over, as the government must actively ensure the enforcement of the penalty against Churchill and Planet.

"We must check their assets in Britain and Australia and then we will enforce the court's decision. We have to talk to their lawyers and we will find a way to enforce it; we have to cooperate with other countries too, no matter how long will it takes, we are pursuing it," said Cahyo Rahadian Muzhar, director general of legal administration in the Ministry of Justice and Human Rights.

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