BACKGROUND
On 18 March 2019, in the case of Churchill Mining Plc And Planet Mining Pty Ltd v Republic Of Indonesia, the ICSID Annulment Committee (“Committee”) has dismissed Churchill Mining PLC and Planet Mining PTY LTD’s[1] (“Applicants”) application to annul the award rendered on 6 December 2016.
The dispute arose due to the revocation of Churchill Mining PLC’s exploration licenses for a mining project in East Kutai, Kalimantan. Churchill Mining PLC then filed a claim against Indonesia for alleged breaches of Indonesia’s Bilateral Investment Treaties (“BIT”) between the United Kingdom and Australia which was registered on 26 December 2012. The Applicant claimed that “the State failed to provide “clear and convincing evidence” that the disputed documents were forged and fabricated by Ridlatama [the Applicant’s business partner], or of the existence of a massive, systematic and sophisticated scheme to defraud the Respondent. It further claimed that the signatures on the 34 documents were authorized and hence the documents were validly issued.” [Emphasis added]
However, the ICSID Arbitral Tribunal dismissed the claims “concluding that the general survey licenses, the exploration licenses and the ancillary documents were neither authentic nor authorized”; and ordered Churchill Mining PLC to pay more than USD 9 million in costs and arbitration fees.
ANNULMENT APPLICATION
In response, Churchill Mining PLC submitted an annulment application relying on the grounds provided under Article 52 of the ICSID Convention on 31 March 2017. The grounds were:
- Article 52(1)(d) of the ICSID Convention: Serious departure from a fundamental rule of procedure;
- Article 52(1)(b) of the ICSID Convention: Manifest excess of powers; and
- Article 52(1)(e) of the ICSID Convention: Failure to state reasons
The hearings took place on 16 July 2018 and 17 July 2018 in Singapore before the Committee consisting of Judge Dominique Hascher, Professor Dr. Karl-Heinz Böckstiegel and Ms. Jean Kaliciki. The salient points of the annulment decision on the above relied grounds are set forth next.
COMMITTEE DECISION
First, the Arbitral Tribunal did not violate the fundamental rules of procedure since the Applicant was presented the opportunity to present its case and respond to the Respondent’s arguments. A finding of such violation requires a high threshold that showcases clear denial of a reasonably full opportunity to be heard without the need to demonstrate that the outcome of the case would have been different otherwise. The Committee further opined that the principle of “full opportunity” requires “tribunals to provide each party with an adequate opportunity to be heard but not necessarily with an unlimited opportunity to present its case. In this perspective, the right to be heard is commonly considered as not absolute, but rather subject to possible limitations, provided that they are reasonable and proportional to the aim to be achieved.”
Contrary to the Applicant’s assertions, the Committee found that the Applicant had submitted the relevant documents and arguments in supporting its claim on due diligence. The fact that the Arbitral Tribunal did not exercise its authority to order the parties to present more evidence indicates that the submitted evidences were already sufficient. Other than that, the Arbitral Tribunal consistently explained throughout the proceeding that the assessment on the legal consequences of an illegal investment would be based on the good faith principle and the prohibition on the abuse of process that would be a matter of admissibility.
The Committee held that the disregard of documents pertaining to the corruption investigation on the East Kutai Regency showcased the Arbitral Tribunal’s respect towards the confidential nature of the process. In any case, the East Kutai Regent’s witness statement would not have been the only or main evidence that led to the Arbitral Tribunal’s conclusion in finding the illegality of the Applicant’s investment.
The Arbitral Tribunal had considered the specific facts of the case in placing the burden of proof on the Applicant to prove the existence of fraud and deception and does not reflect a sudden departure from the usual practice. In the same vein, the Arbitral Tribunal also