The Ad Hoc Committee described the Award on the Merits of the Tribunal thus:
"The Tribunal awarded damages to Amco in the amount of US$3,200,000 plus interest on the following grounds:
(a) Indonesia had failed to protect P.T. Amco’s right to manage the Kartika Plaza Hotel under a contract with P.T. Wisma, a private corporation organized under Indonesian law and controlled by INKOPAD, a body connected with the Indonesian Army. P.T. Wisma had resorted to illegal self-help in its dispute with P.T. Amco and had taken over the management of the hotel with the help of Army and Police personnel on March 31—April 1, 1980. Indonesia’s failure to protect P.T. Amco’s rights in this regard was violative of a host State’s duty under international law to protect foreign investors’ rights and interests.
(b) BKPM, Indonesia’s Capital Investment Coordination Board, had on July 9, 1980 revoked P.T. Amco’s licence to do business in Indonesia, without the prior warning required by BKPM Decree 01/1977. The failure of BKPM to give prior warning to P.T. Amco, and the grant of no more than one hour’s hearing to P.T. Amco’s representatives in the revocation proceedings, amounted in the view of the Tribunal to a violation of the fundamental principle of due process.
(c) In its revocation order, BKPM found that
(i) P.T. Aeropacific rather than P.T. Amco had carried out P.T. Amco’s obligation to manage the hotel under the investment licence; and
(ii) P.T. Amco had contributed only US$1,399,000 of foreign capital of which US$1,000,000 was in the form of Ioan and US$399,000 in the form of equity capital, instead of the US$3,000,000 of foreign equity capital plus US$1,000,000 of Ioan capital promised by, and required from, P.T. Amco in its application for the investment licence and in the Lease and Management contract (Award, para. 129).
The Tribunal held that the above two grounds did not justify BKPM’s revocation of P.T. Amco’s investment licence, considering that:
(i) Indonesia must have known and had tolerated management of the Kartika Plaza Hotel by P.T. Aeropacific, which management had in any case ceased two years before the revocation order;
(ii) P.T. Amco had invested US$2,472,490 in equity capital rather than a total of US$1,399,000, of which US$1,000,000 was in loan funds and US$399,000 in equity funds, as stated by BKPM.
(iii) The shortfall of 1/6 of the required investment was not material under the circumstances of the case.
(d) The Tribunal awarded P.T. Amco damages for the illegal deprivation of its rights to manage the Kartika Plaza Hotel from April 1, 1980 until the stipulated date of expiry of the contract in 1999. The decisions reached by the Indonesian courts before whom P.T. Wisma had on April 24,1980 commenced proceedings against P.T. Amco for rescission of the management contract on grounds of breach thereof by P.T. Amco, which decisions granted P.T. Wi$ma’s demand for rescission, were based on the fact that the management contract had become inoperative by reason of BKPM having revoked P.T. Amco’s license to do business in Indonesia. The Tribunal did not feel bound by the decision of the Indonesian courts and so awarded damages to P.T. Amco. The Tribunal, referring to the right to repatriate capital imported into Indonesia under Indonesia’s Foreign Investment Law, held Amco entitled to receive the damages awarded to it in United States dollars and outside Indonesia."
Decision, para. 3
"Indonesia seeks the annulment of the Award for the following reasons:
(a) That the Arbitral Tribunal manifestly exceeded its powers, seriously departed from a fundamental rule of procedure, and failed to state the reasons upon which it based the Award in deciding that claimant’s investment shortfall was not material and did not justify the revocation of P.T. Amco’s license, and that the amount of foreign equity capital invested by claimants was approximately US$2,5 million;
(b) That the Arbitral Tribunal seriously departed from a fundamental rule of procedure in deciding not to consider the merits of all the grounds justifying the revocation of P.T. Amco’s license;
(c) That the Arbitral Tribunal manifestly exceeded its powers, seriously departed from a fundamental rule of procedure, and failed to state the reasons upon which it based the Award in deciding that Indonesia violated due process in revoking the investment license and therefore must compensate claimants;
(d) That the Arbitral Tribunal failed to state the reasons upon which it based the Award in deciding that Indonesia incurred State responsibility for failure to afford adequate protection to a foreign investor;
(e) That the Arbitral Tribunal failed-to state the reasons upon which it based the Award in deciding that Indonesia shall compensate claimants in US dollars outside Indonesia, converted from rupiahs at the exchange rate prevailing as of April 1, 1980."
Decision, para. 4.
"the ad hoc Committee by unanimous decision annuls the Award as a whole for the reasons and with the qualifications set out above. The annulment does not extend to the Tribunal’s findings that the action of the Army and Policy personnel on March 31-April 1, 1980 was illegal. The annulment extends, however, to the findings on the duration of such illegality and on the amount of the indemnity due on this account..."
The Ad Hoc Committee rejected Indonesia’s contention that the Tribunal failed to evaluate the acts of the Army and Police personnel concerned under Indonesian law (para. 59).
The absence of reasons for not requiring Amco to exhaust local remedies was not a ground for annulment (para. 63).
The finding of the illegality of the acts of Army and Police personnel and persistence of that illegality even after the issuance of an interlocutory decree by the District Court was not to be annulled for manifest excess of power or for failure to state reasons (para. 66 and dispositif).
The Tribunal had not manifestly exceeded its powers by assuming jurisdiction over the matter of the legality of the acts of the Army and Police personnel (para. 68).
The portion of the Award by which the Tribunal had refused to regard the letters by the Bank of Indonesia as comparable to a required warning under BKPM Decree 01/1977 was not to be annulled for failure to apply the applicable law (para. 71).
The taking into consideration by the Tribunal of an administrative regulation issued by BKPM was not a failure to apply the applicable law (para. 72). '
The holding of the Tribunal that P.T. Amco was denied a fair and adequate hearing during the revocation procedures was not annulled by any failure to apply the applicable law amounting to a manifest excess of power or to state reasons (para. 79).
The affirmation of the Tribunal of the "illegality of the revocation procedure while, at the same time, conditioning the award of damages upon the existence of substantive reasons" for the revocation, was not an excess of powers by the Tribunal in applying and interpreting Indonesian Law (para. 83).
The Tribunal’s rulings on the assignment of management functions to Aeropacific was not to be annulled for excess of powers or failure to state reasons (para. 86).
Indonesia's claim for nullity based on unequal treatment of the parties in certain respects was rejected (paras. 88 and 123).
Indonesia’s claim for nullity based on unequal treatment of the parties in the allocation of burden of proof in the calculation of shortfall was rejected (para. 90).
The holding of the Tribunal concerning modalities of payment were not to be annulled for failure to interpret and apply Indonesian law (paras. 119 and 120).
The finding of the Tribunal that Amco had reached the investment sum of US$2,471,490 was a failure to apply the relevant provisions of Indonesian law and to state reasons and was annulled (paras. 95 and 98).
The Tribunal’s ruling on the non-materiality of the shortfall of P.T. Amco’s investment is annulled as a consequence of the annulment of the conclusions of the Tribunal on the calculation and the amount of P.T. Amco’s investment (para. 103).
The Tribunal's finding that BKPM was not justified in revoking Amco’s licence on account of the shortfall in investment, is annulled as a consequence of the annulments in paras. 95 and 98 (para. 105).
The granting of compensation by the Tribunal for procedural defects in the revocation order was annulled (para. 106).
The Ad Hoc Committee annulled the grant of damages to P.T. Amco in paras. 280—281 of the Award for the period beyond July 9, 1980 (para. 109).
The Tribunal’s findings on the amount of damages as a whole were annulled (para. 110).
The Tribunal’s rejection of Indonesia’s counterclaim for recovery of tax and import facilities granted to P.T. Amco was annulled (para. 116).
The Tribunal’s finding that all other submissions of the parties were rejected, is annulled (para. 117).
1. the illegality of acts of the army and police
2. exhaustion of municipal remedies in respect thereof
3. whether such acts of the army and police constitute a tort
4. unlawfulness of the revocation of the licence in respect of the procedures followed
5. the inadequacy of the hearing given to P.T. Amco
6. the inability of the ICSID Tribunal to set aside the revocation orders.
After a full fifty five pages of careful analysis and scholarly study Professor Reisman reaches the following conclusion:
"Under the ICSID Convention, an ad hoc Committee may annul all or part of an award. If it decides to annul only part of the award, those parts of the award which have not been annulled are res judicata as between the parties, in my opinion, these conclusions are mandated by the ordinary meaning, objects, and purposes of the text and the context of ICSID Article 52. They are consistent with the historical development, of which the ICSID experiment is a part, and also compelled by international policy considerations. They are consistent with more general practice. The alternative interpretation would lead to an absurdity. An interpretation which refused to give effect to the particular nullification competence of an ad hoc Committee would render those words in the Convention meaningless by making decisions of partial nullification, which the ad hoc Committee has been mandated to undertake, of no legal effect." (p. 56).
It is in the same sense that Judge Anzilotti’s celebrated dictum in the Chorzow Factory Case PCIJ, Series A, No. 13, p. 27 is to be understood, when he says "it is certain that it is almost always necessary to refer to the statement of reasons to understand clearly the operative part and above all to understand the causa petendi." But he affirms at both the beginning and end of the dictum that it is the operative part of a judgment which contains the Court’s binding decisions.
"... it is true everywhere that the rule of res judicata applies to the conclusion, but as regards the effect upon the premises wide differences exist between the Anglo-American law and the continental."
"Occasionally states have agreed to submit the question whether an arbitral award was void to a second ad hoc tribunal. In such a case, the second tribunal sits as a court of cassation rather than of appeal. It may only uphold or quash the award, in whole or in part; it cannot substitute findings of its own." (Italics added)
"[whereas] the appreciation of the facts of the case and the interpretation of the documents were within the competence of the Umpire and as his decisions, when based on such interpretation, are not subject to revision by this Tribunal, whose duty it is not to say if the case had been well or ill judged, but whether the award must be annulled."
5 AJIL (1911) at 231.
(In fact, the Tribunal in the Orinoco Case had been given express powers by the parties to substitute its own findings, and went on to do so).
(i) the Amco group did not satisfy their investment obligation and therefore the licence revocation was substantively justified and lawful;
(ii) the calculation of the Amco group’s actual investment;
(iii) the materiality of the investment shortfall;
(iv) the procedure relating to the licence revocation cannot per se support an award of damages;
(v) damages due for wrongful acts of the army and police terminate on July 9, 1980;
(vi) P.T. Amco’s right to manage the hotel ended on July 9, 1980.
"As the withdrawal of the investment licence cannot be considered unjustified, the resulting effect of such withdrawal cannot be considered unjustified either, i.e., P.T. Amco’s inability to exercise its right to manage the Kartike Plaza Hotel as of the day of issuance of the revocation order (July 9, 1980), whatever would have been the outcome of the litigation by P.T. Wisma against P.T. Amco before the Jakarta courts."
In its Observations of January 14, 1988 on the jurisdiction of this Tribunal, the Republic of Indonesia objected to the jurisdiction ratione personae of Amco Asia. This objection was stated to be based on new facts that did not become known to Indonesia until after the date of the Award, namely, that Amco Asia, a company registered in Delaware was dissolved under the laws of Delaware on December 27, 1984, approximately one month after the rendering of the Award. A different company, bearing the name Amco Asia Corporation, was then incorporated under the laws of the state of Delaware. It was said by Indonesia in its Observations of January 14, 1988 that this new company was created "for the sole purpose of creating the semblance of its status on a claimant."
(1) Except as the parties otherwise agree, a party may present an incidental or additional claim or counterclaim arising directly out of the subject-matter of the dispute, provided that such ancillary claim is within the scope of the consent of the parties and is otherwise within the jurisdiction of the Centre.
(2) An incidental or additional claim shall be presented not later than in the reply and a counterclaim no later than in the counter-memorial, unless the Tribunal, upon justification by the party presenting the ancillary claim and upon considering any objection of the other party, authorizes the presentation of the claim at a later stage of the proceeding.
"Except as the parties otherwise agree, the Tribunal shall, if requested by a party, determine any incidental or additional claims or counterclaims arising directly out of the subject matter of the dispute provided that they are within the scope of the consent of the parties and are otherwise within the jurisdiction of the Centre."