Churchill Mining VS Indonesian

Republic
Dyah Ayu P
Farisa Mutia
Helena Shaliha
Ilham Khouri
Julius Robinhood S
Johny Sabar Sihombing

PROBLEM STATEMENTS
Based on the topic back ground, we would like to analyses the
following problem;
How investment dispute settlement provisions and legislation in
the field of investment in Indonesia?
How is the settlement of investment disputes through international
arbitration in case of revocation of mining rights between Churchill
Mining Plc with the Regional Government of East Kutai Regency?
How will the results of the institute ICSID?
What are the effects obtained for the Republic of Indonesia?

THEORY ANALYSIS

Rights and obligations of

arbitrator
It should be independent and show impartiality, open or

closed (although he is chosen by one of the parties to the

dispute does not mean he represents or should defend those
who choose it).
explain all the facts and neutral to the parties concerned
Tied to implement procedures reasonably (equitable)
appreciate and respect the principles of impartiality treatment
and respect the rights of the parties to be heard.
Solving and give the verdict in the shortest possible time and
the corresponding time period specified.
Maintaining the confidentiality of the parties as well as
published decision.
During the investigation perpetrator is entitled to obtain the
cooperation of the honest and open sides.
perpetrator can not be prosecuted because the arbitration
process or the content of the decision, unless convicted of a
criminal offense.

Arbitration Institution
International
Institution
ICSID (International Center for the Settlement of Investment Dispute)

An institution that settle dispute between foreign investor and

country receiving investment (host state).
Established under the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States (the ICSID
or the Washington Convention) with over one hundred and forty
member States.
It was opened for signature on March 18, 1965 and entered into
force on October 14, 1966.
Difference with other institutions:
- Formulated by World Bank
- Independent institution (non-block)
- National Tribunals role is to strengthen ICSID results
- Balancing the interest of each related parties

Foreign Direct Investment PMA (Penanaman

Modal Asing)

Investment activity conducted in the territory of the Republic

Indonesia by foreign investors (either by using foreign capital or
by joint venture with a domestic investor).

An investment through establishing, purchase or acquisition.

Stated on Law No. 25 year 2007.

Benefit:
- Long term
- Technology transfer
- Management skills transfer
- Opening new vacancy

Case Analysis (Churchill VS

Resolving Disputes of Investment Law in Indonesia
Indonesia)

Based on Clause 32 on Investment Law, ways of resolving

disputes between
government and domestic investors are as follow:
Deliberation and Consensus
Tribunal
Arbitration
Alternative Dispute Resolution (ADR)
a. Negotiation
b. Mediation
c. Conciliation

International Arbitration

Case Analysis (Churchill VS

Indonesia)

Points of Churchills Claim

Badan Pemeriksa Keuangan (BPK) found five fake Izin Kuasa
Pertambangan (IUP) in 2006-2008. the fake IUP can be seen by
inverted numbering code on IUP.
Bupati Kutai Timur revoke IUP of Ridlatama Group by
recommendation of Central Government.
Bupati admit that he issued IUP for Ridlatama Group but not for
Churchill Mining. He thought that by selling its share to Churchill,
Ridlatama Group is disputes to Penanaman Modal Asing (PMA) PMA
is prohibiting foreign owenership of Izin Usaha Pertambangan (IUP)
Moreover, Churchill Mining Plc dont have the mining permit in
production forest in Indonesia from The Ministry of Forestry Republic
of Indonesia (confirmed to UU No. 41 tahun 1999, article 27 and 28).
Churchill found it was unfair. Churchill found different fact proposed
by Bupati Kutai Timur and BPK. They thought that the decision was
violate asas praduga tak bersalah upheld by Republic of
Indonesia Law.

Case Analysis (Churchill VS

Indonesia)
Points of Churchills Claim..

Churchill having invested $ 40 million in the project felt

disadvantaged because permission to conduct mining activities
revoked.
Churchill sued Indonesia to the International Centre for Settlement
of Investment Dispute (ICSID), which Indonesia must indemnify
the Churchill obtained a $ 2 billion or equivalent to Rp 19 trillion.
Reason for lawsuit Churchill Indonesian Government to
International Arbitration (ICSID) is because Churchill was getting
unequal treatment between local and foreign investors that led
Churchill suffered a loss of $ 2 billion.

Case Analysis (Churchill VS

Indonesia)

ICSIDs decision regarding Churchils claim to Republic Indonesia

Decision regarding Churchill claim are as follow:
No decision been made regarding Churchill claim to republic Indonesia.
The winner of this dispute can force the loser to enforce the decision
made by ICSID. Based on article 53 ICSID, declare that the
arbitrations decision is binding all parties involved in related cases.
If there is a country refuse to recognize and to enforce the arbitration
decision based on conventions rule, this country is considered as
doing violation to article 53 (1) ICSID Convention.
In February 2014, ICSID allow Churchill and Planet Mining to proceed
claims for their losses incurred by the Republic of Indonesia under the
Bilateral Investment Treaty between Indonesia and the UK - Australia.
Churchill suggested the initial estimate of around $ 1,054 billion
(including interest) for damages against the company and its
subsidiaries as a result of the actions of the Republic of Indonesia.

Case Analysis (Churchill VS

Impact of Churchills claim to Republic
Indonesia)

Indonesia
There are three impacts observed from Churchills
claim to Republic Indonesia:
Influence investment climate in Indonesia
Possibility of losing a chance to get investor
Possibility of losing money or resources to meet the
claim penalty raised by Churchill.

Conclusion

Foreign investment have to obey the Indonesian regulation

Churcill Mining havent got yet the result for their claim in
amount US $ 1 Billion after they completed all the legal
action in Indonesia.
In the dispute between Churchill and Indonesia about their
investment the legal aspect is mention in Chapter XV
article 32 Constitution No. 25 2007

Suggestion

Indonesian Government should reform regulation

about foreign investment especially for natural
resources exploitation permit.
Indonesian Government should reform district
autonomy law implementation.