Dyah Ayu P Farisa Mutia Helena ShalihaIlham Khouri Julius Robinhood SJohny Sabar Sihombing Churchill Mining VS Indonesian Republic

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?PROBLEM STATEMENTS

THEORY ANALYSIS

Rights and obligations of arbitratorIt 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 concernedTied 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 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

International Institution

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 Indonesia) Resolving Disputes of Investment Law in IndonesiaBased on Clause 32 on Investment Law, ways of resolving disputes between government and domestic investors are as follow: Deliberation and Consensus TribunalArbitrationAlternative Dispute Resolution (ADR) Negotiation Mediation ConciliationInternational Arbitration

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 IndonesiaDecision 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 Indonesia)

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

Case Analysis (Churchill VS Indonesia)

ConclusionForeign 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

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