|Table of Abbreviations|
|BP/RT Mem.||BP/Rio Tinto Respondents' Memorial on Jurisdiction dated 31 August 2007|
|BP/RT PHB||BP/Rio Tinto Respondents' Post-Hearing Brief dated 10 April 2008|
|BP/RT Reply||BP/Rio Tinto Respondents' Rebuttal Submission dated 20 December 2007|
|BP/RT Respondents||Rio Tinto plc, BP p.l.c., Pacific Resource Investments Limited and BP International Limited|
|CCOW||Coal Contract of Work = the KPC Contract|
|C. CM.||Claimant's Counter-Memorial on Jurisdiction dated 22 November 2007|
|CJDC||Central Jakarta District Court|
|Claimant||The Government of the Province of East Kalimantan, or GPEK|
|C. Reply||Claimant's Submission on Indonesian Law dated 17 January 2008|
|C. Rejoinder||Claimant's Summary of 10 April 2008|
|Exh. BP/RT||BP/RT Respondents' Exhibits|
|Exh. C-||Claimant's Exhibits|
|Exh. KPC||KPC Respondents' Exhibits|
|Exh. RA C.||Claimant's Exhibits filed with the Request for arbitration|
|GPEK||The Government of the Province of East Kalimantan, or the Claimant|
|GOI||The Government of Indonesia = Government|
|Government||The Government of Indonesia = GOI|
|ICSID||International Centre for Settlement of Investment Disputes|
|ICSID Arbitration Rules||ICSID Rules of Procedure for Arbitration Proceedings|
|ICSID Convention||Convention on the Settlement of Investment Disputes between States and Nationals of other States|
|ICSID Institution Rules||ICSID Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings|
|KPC Contract||Agreement dated 8 April 1982 between PT KPC and Peruskan Negara Tambang Batubura and its successors in title, as amended.|
|KPC Mem.||KPC Respondents' Objections to Jurisdiction dated 31 August 2007|
|KPC PHM||KPC Respondents' Post-Hearing Memorial dated 10 April 2008|
|KPC Reply||KPC Respondents' Rebuttal to Claimant's Counter-Memorial dated 20 December 2007|
|KPC Respondents||PT Kaltim Prima Coal, Sangatta Holdings Limited and Kalimantan Coal Limited|
|LA. BP/RT||BP/RT Respondents' Legal Authorities|
|LA. C.||Claimant's Legal Authorities|
|LA. KPC||KPC Respondents' Legal Authorities|
|PKP2B [KPC]||The KPC Contract|
|PTBA||PT Tambang Batubura Bukit Asam (Persero)|
|PT KPC||PT Kaltim Prima Coal|
|RA or Request||Claimant's Request for Arbitration dated 5 April 2006|
|Tr.||Transcript of the Hearing on Jurisdiction of 27-28 February 2008|
• PT Kaltim Prima Coal ("PT KPC"), a corporation incorporated under the laws of Indonesia, with its offices at Menara Kadin Indonesia, 28th floor, Jalan H.R. Rasuna Said, Block X-5, Kav. 02-03, Jakarta 12940, Indonesia. PT KPC was originally a joint venture company between CRA Limited, an Australian corporation (Conzinc RioTinto of Australia Ltd, now Rio Tinto Limited) and BP p.l.c., a corporation incorporated under the laws of England and Wales, which owned PT KPC with a 50:50 shareholding. The current shareholding structure of PT KPC is disputed by the Parties (see infra ¶63).
• Sangatta Holdings Limited ("Sangatta"), a corporation incorporated under the laws of the Cayman Islands, having its offices at Maples and Calder, George Town, Grand Cayman, Cayman Islands.
Sangatta was a wholly owned subsidiary of Pacific Resource Investments Limited (a company incorporated under the laws of the Cayman Islands and a subsidiary of Rio Tinto Limited) until 15 July 2003. From that date, Sangatta has been owned by PT Bumi Resources Tbk, a public company traded on the Indonesian stock exchange.
• Kalimantan Coal Limited, a corporation incorporated under the laws of the Republic of Mauritius, having its offices at 608, St James Court, St Denis Street, Port Luis, Mauritius. Kalimantan Coal Limited was wholly-owned by BP International Ltd until 15 July 2003, and then by PT Bumi Resources Tbk.
• Rio Tinto plc, a corporation incorporated under the laws of England and Wales, having its registered office at 6 St James's Square, London, England SW1Y 4LD.
Rio Tinto plc, formerly known as the RTZ Corporation p.l.c., was "unified" in 1995 with CRA Limited "into a single economic entity through a dual listed company structure," listed respectively in England and in Australia (BP/RT Mem., ¶ 10).
• BP p.l.c., a corporation incorporated under the laws of England and Wales, having its registered office at 1 St James's Square, London, England SW1Y 4PD.
• Pacific Resource Investments Limited, a corporation established under the laws of the Cayman Islands, having its registered office at Maples & Calder, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. It is domiciled at 55 Collins Street, Melbourne 3001, Australia (BP/RT Mem., ¶ 17).
Pacific Resource Investments Limited is a member of the Rio Tinto group of companies (BP/RT Mem., ¶ 18). More particularly, it is a wholly owned subsidiary of Rio Tinto Limited.
• BP International Limited, a company established under the laws of England and Wales, having its registered office at Chertsey Road, Sunbury-on-Thames, Middlesex, England, TW16 7 BP (BP/RT Mem., ¶ 19).
BPI is a wholly owned subsidiary of BP p.l.c. (BP/RT Mem., ¶ 20).
(collectively the "Respondents").
Participation and Promotion of National Interest
Subject to the provisions hereunder, Contractor [PT KPC] shall ensure that its shares are offered either for sale or issue to the Government or Indonesian nationals or Indonesian Companies controlled by Indonesians (hereinafter called 'the Indonesian Participant') in each year following the end of fourth full calendar year after commencement of the Operating Period. (Exh. KPC 6 = Exh. BP/RT 5)
23.1 Except for tax matters, which are subject to the jurisdiction of the Majelis Pertimbangan Pajak (The Consultative Board for Taxes), any dispute between the Parties hereto arising before or after termination concerning anything related to this Agreement and the application thereof, including contentions that a Party is in default in the performance of its obligations, shall, unless settled by mutual agreement, or by mutually satisfactory conciliation, be referred for settlement by arbitration to the International Centre for Settlement of Investment Disputes pursuant to the Convention thereon which entered into force on October 14, 1966. The provisions of Article 23.2.3 hereof shall apply mutatis mutandis to any such arbitration.
23.2 If the services of the Centre are unavailable to the Parties, then such unsettled dispute shall be referred for settlement to a Board of Arbitration of three members, consisting of two arbitrators and an umpire. Batubara and [PT KPC] shall each appoint one arbitrator and the arbitrators so appointed shall appoint an umpire. If the arbitrators appointed by the Parties shall be unable to agree upon the umpire within thirty (30) days after appointment of the second arbitrator, the umpire shall, upon request of either Party hereto, be designated by the President of the International Court of Justice. If for any reason an arbitrator or umpire shall fail or be unable to act, his successor shall be appointed in the same manner as the arbitrator or umpire whom he succeeds. The umpire shall not be closely connected with, or have been in the public service of, or be a national of Indonesia, Australia or the United Kingdom and he shall be a person of recognised standing in the international jurisprudence.
23.1.1 If within two (2) months after institution of a Board of Arbitration proceeding hereunder by either Party, the other Party shall fail to appoint an arbitrator by written notice to the instituting Party, such instituting Party shall have the right to apply to the President of the International Court of Justice for the appointment of a sole arbitrator having the same qualifications as those required in the case of an umpire. In such event, the sole arbitrator shall constitute the Board of Arbitration hereunder with respect to such proceeding.
23.2.2 Unless the Parties otherwise agree, the place of arbitration shall be Geneva, Switzerland. The Board of Arbitration shall determine its own rules of procedure and the place of arbitration, and, in the case of a Board of Arbitration constituted pursuant to Article 23.2 or 23.2.1, the decision of the Board shall be made by majority vote of the members or by the sole arbitrator as the case may be. The decision of the Board of Arbitration shall be final and binding on the Parties hereto, and the Parties shall comply in good faith with the decision and award of the Board. [...]
23.3 The provisions of this Article shall continue in force notwithstanding the termination of this Agreement. (Exh. KPC 6 = Exh. BP/RT 5)
With reference to the outcome of the meeting between the Department of Energy and Mineral Resources and the Directors of PT KPC on 3 April 2001, an agreement has been reached to resolve the PT KPC share divestment issue in the best possible manner based on the spirit of good faith to fulfill [sic] the requirements of Article 26 of the Coal Mining Cooperation Agreement number J2/ Ji-DU/16/82 dated 8 April 1982.
With regard to this, and considering that the government through the Finance Minister's letter number S-380/MK.017/2000 dated 26 July 2000 has stated that there is as yet no need for the government to purchase PT KPC shares, we hope that the Board of Directors of PT KPC will promptly offer and implement the share divestment in the first quarter of 2001 in the amount of 51% (fifty one percent) in accordance with the terms of Article 26 of the Coal Agreement based on the principle of 'business to business' by taking into account the aspirations of the local government of East Kalimantan and the people of East Kalimantan in the context of the implementation and spirit of regional autonomy.
In accordance with Article 26 PKP2B No. J2/Ji.DU/16/82, the Contractor must guarantee that the shares are offered to or issued to the Government of Indonesia or its citizens or corporations owned by or controlled by Indonesians.
The central government thorough [sic] the Minister of Finance pursuant to letter No. S-380/MK/017/2000 dated 26 July 2000 has declared that they are not yet interested in purchasing the PT Kaltim Prima Coal (KPC) shares.
Since the definition of Government as specified in the contract includes the Provincial and Regency Administrations, we draw to the attention of PT KPC, that it should, in offering the shares, take into account the aspirations of the local government and people of East Kalimantan, by adhering to the principle of 'business-to-business.'
Regarding the price of the shares offered, we wish that you remain at the price basis as agreed upon for the 30% share offer, namely US$ 175 million in accordance with the minutes of meeting of 26 October 2000, hence the price for the 51% share offer should be US$ 297 million. As you have been informed, the agreement specified in the Minutes of Meeting constitutes a step in the context of resolving the matter of the percentage of the shares that should be divested by PT Kaltim Prima Coal.
As you are aware, with reference to the letter No. 1412/80/MEM.S/2001 dated 4 April 2001, the Minister of Energy and Mineral Resources has requested KPC's Director to immediately offer and implement 51% share divestment on the first quarter of 2001 in accordance with Article 26 of Coal Agreement based on 'business to business' principle and taking into consideration the aspiration of the Local Government and people of the East Kalimantan in relation with implementation and spirit of regional autonomy.
With regard to the mentioned above, we kindly ask your assistance to comply to those who are interested in buying the KPC's share to submit their official offer, along with the complete data concerning their financial sources, work program and amount of share to be bought.
For your information, PT Batu Bara Borneo Batuah which has had support and recommendation from Bupati Kutai Timur and DPRD Kabupaten Kutai Timur has shown its interest to buy 51% of KPC's share through the letter No. 007/B.4/I/2002 dated 28 January 2002.
Furthermore, with reference to the Agreement with KPC, 31 March 2002 is the final date to determine the price of 2001 share offer. It is expected that the agreed price to be offered should have been reached by 31 March 2002 and immediately offered to the interested parties.
1. That 51% of shares of PT KPC be offered to the Government of the Republic of Indonesia on 31 July 2002 at a price of US$ 419,220,000.
2. Furthermore the said 51% of PT KPC's shares be allocated to the Provincial Government/Kabupaten Government of Kutim in the amount of 31% and the balance of 20% to the Government of the Republic of Indonesia.
3. Due Diligence will be conducted on all prospective buyers of shares of PT KPC especially with respect to capacity and resources of their funding.
4. The Government will give protection (indemnity) to PT KPC and related parties against any civil claims in Indonesian District Courts in relation to divestment process of PT KPC.
5. Furthermore such protection (indemnity) will be passed on to all purchasers of the divested shares of PT KPC on a joint and several basis.
(a) The 2001 Offer was made by KPC to GOI on the Offer Date and will be confirmed by KPC sending a letter in the form of the Offer Terms ('Offer Letter') promptly after the date hereof.
(b) Without limiting the obligations of GOI under this Agreement and within 30 days from the Offer Date, GOI shall be entitled, to assign and transfer its rights to and interest in and in respect of the 2001 Offer arising under the Offer Letter in part only to the entities described below (each, an 'Assignee') in respect of such number of Offer Shares as is described below, subject to the requirements of the Offer Terms:
(i) to GOI or a State-Owned Enterprise involved in mining, in each case as agreed in writing between GOI and KPC - a number of Offer Shares being a Material Shareholding; and
(ii) to the Provincial Government of Kaltim, the Regency Government of Kutim, or companies owned by the Provincial Government of Kaltim or the Regency Government of Kutim respectively - a number of Offer Shares to be determined in each case by GOI but which, in aggregate, shall be a Material Shareholding,
provided always that:
A) the aggregate percentage which GOI assigns and transfers its rights and interest to under this Clause 3.1 (b) shall not exceed the total percentage of the Offer Shares;
B) the assignment and transfer of the rights to and interest in the 2001 Offer by GOI under this Clause 3.1 (b) may be exercised in respect of any Offer Shares once only;
C) the Government's right to assign and transfer the rights to and interest in the 2001 Offer in accordance with this Clause 3.1 is strictly personal to GOI;
D) no single person or entity may give an Acceptance in respect of the whole of the Offer Shares; and
E) the 2001 Offer shall not be capable of acceptance by any person other than an Assignee.
[...] (Exh. BP/RT 222)
14.1 Any dispute under this Agreement between the Parties, or any Party and third party beneficiaries of rights under this Agreement conferred by Clause 2.3 [ recte 23], arising before or after termination concerning anything related to this Agreement and the application thereof, including contentions that a Party is in default, shall be resolved in accordance with the procedures contained in Article 23 of the Coal Agreement [the KPC Contract] which are hereby adopted mutatis mutandis.
14.2 In the event of any dispute between the Parties (or any Party and third party beneficiaries of rights under this Agreement conferred by Clause 2.3) being referred for settlement in accordance with the provisions of this Clause 14, the operation of and processes under this Agreement (and, if necessary the Offer Terms) shall be suspended until such time as the dispute has been finally settled by agreement between the Parties (or any Party and third party beneficiaries of rights under this Agreement conferred by Clause 2.3) or resolved in accordance with the terms of this Agreement. (Art. 14, Exh. BP/RT 222)
The first paragraph of Clause 3.1 (b) of the Framework Agreement (as has been amended by the First Amendment) shall be hereby amended to read as follows:
Without limiting the obligations of GOI under this Agreement and not later than 1700 Jakarta time on 28 October 2002, GOI shall be entitled, to assign and transfer its rights to and interest in and in respect of the 2001 Offer arising under the Offer Letter in part only to the entities described below (each, an 'Assignee') in respect of such number of Offer Shares as is described below, subject to the requirements of the Offer Terms.' (Exh. BP/RT 236 = Exh. KPC 109)
1. The divestment due diligence process will be undertaken by both parties (purchaser and seller) in accordance with the Coal Agreement [the KPC Agreement] and applicable regulations and will be undertaken as soon as possible and will be facilitated by the Government and PT. KPC.
2. If the time up to 31 March 2003 is not enough, it is suggested that the due diligence process be extended for 3 months from 31 March 2003.
3. For implementation of the above matters, it is suggested that the related parties (Governor, Head of the Kalimantan Province Regional Peoples Representative Assembly, the Bupati, the Head of the East Kutai Regional Peoples Representative Assembly and the East Kalimantan Peoples Alliance for Justice and Welfare, the shareholder of PT. KPC namely BP and Rio Tinto, the Minister for Mining, the Minister for State Owned Enterprises, the Minister of Home Affairs) have a meeting in Jakarta as soon as possible, to be facilitated by the Coordinating Minister for Economic Affairs. (Exh. BP/RT 271)
As result of Respondents' default in the performance of its (their) obligations under KPC CONTRACT and also violation of Law on Foreign Investment and Decisions of the Government of the Republic of Indonesia, Claimant has to incur damages inter alia in the form of loss of revenue/income from dividend which has been or will be distributed by PT KALTIM PRIMA COAL, which should have been received by Claimant, if Respondents perform or complete the performance of PT KALTIM PRIMA COAL's and RIO TINTO's and BP's (being "Foreign Investors" under KPC CONTRACT) obligation to divest 51% shares in PT KALTIM PRIMA COAL and to comply with the provisions of Article 26 of KPC CONTRACT in conjunction with the above mentioned Decisions of the Government of the Republic of Indonesia, as follow:
(1) on the basis of data from Directorate of Coal, Directorate General of Geology and Mineral Resources, tabulated below [...]
[Total of USD 144.18 million].
(2) on the basis of projection of PT KALTIM PRIMA COAL's profit after tax for year 2001 until year 2010, which was prepared by Salomon Smith Barney, appraiser of PT KALTIM PRJMA COAL at the time it submitted the price of PT KALTIM PRIMA COAL shares to the Government of the Republic of Indonesia, as tabulated below [...]
[Total USD 627.95 million]
If Respondents perform or complete the performance of PT KALTIM PRIMA COAL's and RIO TINTO's and BP's (being "Foreign Investors" under KPC CONTRACT) obligation to divest 51% shares in PT KALTIM PRIMA COAL and to comply with the provisions of Article 26 of KPC CONTRACT in accordance with the above mentioned Decisions of the Government of the Republic of Indonesia, on which basis 31% shares in PT KALTIM PRIMA COAL has been allocated to Claimant, therefore the damages of Claimant shall at minimum be (US$ 144,180,000 + US$ 627,950,000) X 31/51 = US$ 469,333,921.56 (four hundred sixty nine million three hundred thirty three thousand nine hundred twenty one United States Dollars and fifty six cents). Claimant seek full compensation for such damages:
- in the amount of US$ 469,333,921.56 (four hundred sixty nine million three hundred thirty three thousand nine hundred twenty one United States Dollars and fifty six cents);
- interest on such sums from May 2003 (taking into account 3-month period for due diligence and acceptance as of the Decision of the Government of the Republic of Indonesia dated 31 October 2002 [the Minutes of Limited Coordination Meeting between Ministers [or Limited InterMinisters Coordination Meeting] dated 31 October 2002 mentioned above], and another 3-month period for completion as of the acceptance, both as regulated in Article 26 of KPC CONTRACT) until the date of payment; and
- costs of attorneys, consultants, the arbitration panel, and such other losses and expenses as are legally allowable, together with such further and additional relief as the Arbitration Tribunal may deem appropriate. (RA, ¶ 17)
(i) On behalf of the Claimant:
Mr. P.D.D. Dermawan, DNC Advocates at work
Mrs. Kirana Diah Sastrawijaya, DNC Advocates at work, assistant
Ms. Khairunusa Dhyani, DNC Advocates at work, secretary
(ii) Claimant's observers Mr. Laden Mering, Chief of Daya Tribes Mr. Abraham Ingan, Chief of Indigenous Youth of Kalimantan Prof. Sarosa Hamung Pranoto, former Rector of Mulawarman University
Mr. Muhamad Amir, former Chairperson of Indonesian Youth National Committee, East Kalimantan chapter
Mr. Hamdani Bachtam, Secretary of Indigenous Youth of Kalimantan
Mr. Isran Noor, Deputy and acting Regent of East Kutai
Mr. Budi Surjono, staff of Deputy Regent of East Kutai
Mrs. Eka Komariah Kuncoro, Senator of East Kalimantan
Mr. Ridwan Suedi, Regent of Pasir
Mr. Thariq Mahmud, member of the public
Mr. Adrianto Supoyo, member of the public
Mr. Alvin Arifin, member of the public
Mr. Muhammad Rustam, representative from the non-indigenous group of people of East Kutai
Mr. Mohammad Jono, representative from the non-indigenous group of people of East Kutai
Mr. Ardiansah Sulaiman, Deputy Speaker of the Regional House of People's Representatives of East Kutai
Mr. Marden Assa, member of the Regional House of People's Representatives of East Kutai and representative from Daya people of East Kutai Mr. Yuwanto Soemadji, Head of Division of Mining of the Regency of Berau Mr. Ismail Thomas, Regent of West Kutai
Mr. Aji Pangeran Poeger, Prince of the Sultanate of Kutai Mr. Arifin Praboe, Crown Prince of the Sultanate of Kutai Mr. Nur Andriyani, Senator of East Kalimantan
Mrs. Marwah Batubara, Senator of DKI Jakarta Mrs. Rina Laden
Ms. Marthine Pauline Berendine, National University of Singapore
(iii) On behalf of the KPC Respondents:
Mr. Michael P. Lennon, Jr., Baker Botts (UK) LLP Ms. Ania Farren, Baker Botts (UK) LLP Mrs. Jane Dowling, Baker Botts (UK) LLP
Mr. Carlo Verona, Baker Botts (UK) LLP Ms. Ibu Yanti Sinaga, PT Bumi Resources Tbk Mr. Muhammad Sulthon, PT Bumi Resources Tbk Ms. Yossintana Caroline, PT Bumi Resources Tbk Mr. Aji Wijaya, Sunarto Yudo & Co Mr. Eresendi Winaharta, Sunarto Yudo & Co
(iv) On behalf of the BP/Rio Tinto Respondents:
Mr. Matthew Weiniger, Herbert Smith LLP Ms. May Tai, Herbert Smith LLP Mr. Iain Maxwell, Herbert Smith LLP Mr. Gary Hodgson, BP p.l.c.
Mr. Stewart Jones, BP p.l.c.
Mr. Trudy Steedman, Rio Tinto
Mr. David Dawborn, Hiswara Bunjamin & Tandjung
Mr. Mulya Lubis, Lubis Santosa & Maulana
Mr. Alexander Lay, Lubis Santosa & Maulana
Mr. Mike Jolley, Rio Tinto
Mr. Pradakso Hadiwidjojo, BP Indonesia
(v) Other observers
Mr. Ruston Situmorang, Ministry of Energy and Natural Resources of the Government of the Republic of Indonesia
(i) the letter sent by Drs Yurnalis Ngayoh on 24 June 2008 regarding the revocation of this arbitration could not be confirmed as it did not conform to the applicable regulations;
(ii) "the Government of the Province of East Kalimantan still continues and is applicant party, together with the Government of the Regency of East Kutai, in ICSID arbitration case No. ARB/07/03, until there is definitive decision from the elected Governor of East Kalimantan;"
(iii) all administrative matters "relating to the joint claim interests in the said ICSID arbitration case" would be handled through the Government of the Regency of East Kutai.
KPC Respondents respectfully reiterate their request that the Arbitral Tribunal enter a decision:
(i) That all of the GPEK's claims in these proceedings are outside the jurisdiction of ICSID and of this Tribunal;
(ii) Ordering the GPEK to pay all of KPC Respondent's costs associated with these proceedings, including the arbitrators' fees and administrative costs fixed by ICSID, and the legal costs (including attorneys' fees) incurred by KPC Respondents, in an amount to be quantified; and
(iii) Ordering any other relief that the Tribunal sees fit.
(KPC PHM, ¶ 89)
(i) The Claimant is not a Contracting State or a designated subdivision of a Contracting State;
(ii) The Claimant is not a party to any ICSID consent agreement;
(iii) The Republic of Indonesia has never given its approval for the Claimant to consent to ICSID arbitration;
(iv) The BP/Rio Tinto Respondents have not consented in writing to submit the dispute with the Claimant to ICSID arbitration; and
(v) The Claimant lacks standing to bring the present proceedings.
(1) declare that it has no jurisdiction over the Claimant's claims filed by its Request for Arbitration dated 5 April 2006;
(2) order that the Claimant shall pay the BP/Rio Tinto Respondents' legal and other costs of these proceedings; and
(3) order any other remedy the Tribunal deems appropriate.
(BP/RT PHB, ¶ 108)
First, relying on Amco v. Indonesia, the Claimant submits that the interpretation of an agreement which refers to ICSID arbitration must not be too formalistic. It further argues that the principle in favorem jurisdictionis applies to arbitration under the ICSID Convention (C. CM., A5 ¶ 56). An arbitration agreement should be construed in good faith and "by taking into account the consequences of the commitments theparties may be considered as having reasonably and legitimately envisaged" (quoting CSOB v. Slovak Republic) (C. CM., A ¶ 90).
The Government has the authority to give consent that a dispute regarding investment between the Republic of Indonesia and Nationals of other States is settled in accordance with the [ ] Convention and to represent the Republic of Indonesia in such dispute with right of substitution. (Exh. C-64)
• Article 26 of the KPC Contract;
• The agreement on Shares Offering between PT KPC and the GOI as announced in PT KPC's press release of 15 July 2002 (Exh. C-6);
• The decision of the GOI recorded in the Minutes of Limited Cabinet Meeting of 30 July 2002 (Exh. C-7) to allocate 31% of KPC's shares to inter alia the GPEK;
• The offer for sale of 51% PT KPC's shares made on 31 July 2002;
• The decision of the GOI as evidenced in the Minutes of Limited Coordination Meeting of 31 October 2002 (Exh. C-9) to allocate 31% of the shares to the two local companies, i.e., the Perusdas referred to in paragraph43.
Furthermore, in connection with the standard for interpretation of the jurisdictional requirements under the ICSID Convention, the Claimant argues that "the purpose of the Convention is to apply the principle in favorem jurisdictions, meaning that the parties' original intent to submit the dispute to ICSID arbitration shall be respected" (C. CM., ¶ 56). The KPC Respondents reply that no doctrine of "in favorem jurisdictionis" exists and that its application could lead to ignoring the jurisdictional requirements of Article 25 (KPC Reply, ¶ 10).
Amco Indonesia Corporation and others v. Republic of Indonesia (ICSID Case No. ARB/81/1), Decision on Jurisdiction of 25 September 1983, 1 ICSID Reports 389 (1993), p. 394; for other decisions, see e.g. Duke Energy Electroquil Partners & Electroquil S.A. v. Republic of Ecuador (ICSID Case No. ARB/04/19), Award of 18 August 2008, ¶¶ 129 et seq
PLAINTIFFS [the GPEK and the Provincial Company Melati Bhakti Satya] are part of the united Government of the Republic of Indonesia and is [sic] the subordinate of the Central Government.16
[I]t is evident from Article 25 (1) that ICSID has no jurisdiction in matters brought by or against an entity other than a contracting state unless the entity has been designated to ICSID by the contracting state as a constituent subdivision or agency of the contracting state.
Article 23.1 of PKP2B [...]" (Exh. BP/RT 316, p.125). In other words, while the first condition of the test is met, the second one is not.
1. The request to join the Regency of East Kutai to these proceedings is denied;
2. The Tribunal lacks jurisdiction over the present dispute;
3. The costs, fees and expenses of the Tribunal and the Centre shall be borne equally by the Claimant, on the one hand, and the Respondents, on the other hand;
4. Each Party shall bear its own legal fees and other costs incurred by it in connection with this arbitration.
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