Politics, Law and Security

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

An international tribunal has dismissed claims by Churchill Mining against the Indonesian government for damages arising from the 2013 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 whose group had vacated their license after not finding sufficient coal. Churchill believes the success of their exploration activities prompted Nusantara to find a way back in, partially through document falsification.

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. 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. 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.” This decision was an appeal of a 2016 ICSID decision and now ends the six-year dispute. The tribunal will soon process the legal costs of $9.4 million awarded to the Indonesian government. 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.
(Editor’s note: The case– even though it is celebrated by the Indonesian government– will likely negatively potential foreign investors in the mining sector. )

Current Polls

President Jokowi maintains a lead of 19 points over his rival Prabowo in all but one recent poll. However, the active part of the Presidential campaign– rallies, meetings etc.– Officially began March 23 so sentiment could change. This year’s April 17 election also includes a vote for Parliament. It will be the first simultaneous ballot. Indonesians are becoming more independent– some might say apathetic– in their attitudes towards political parties. Most voters identify with a party only because of the Presidential candidate, not its platform or ideology. Polls also indicate that several established parties (PPP, PAN, Hanura) may not win enough votes to seat a representative in Parliament. PDI-P, the party of President Jokowi and its chairwoman Megawati, could be the main beneficiary and could come out of the election with a larger proportion of seats (33%). A recent voter survey by the firm Charta Politik ranked the following issues in order of prime importance: (1) cost of living, basic necessities, (2) lack of jobs, (3) cost of education and health care. Corruption ranked sixth.