Balikpapan. The East Kutai district in East Kalimantan says a $2 billion lawsuit a British coal miner has brought against it should instead be aimed at the company’s Indonesian partner.
The case, which has been ongoing in Indonesian courts since 2010, revolves around East Kutai’s decision to revoke four coal mining permits in Busang subdistrict that were previously obtained by the Ridlatama Group, an Indonesian company. Britain’s Churchill Mining bought a 75 percent stake in Ridlatama in 2008.
“If [Churchill] is suing Indonesia and the East Kutai government, [the lawsuit] is surely misdirected,” East Kutai mining agency chief Wijaya Rahman said during the weekend.
Wijaya insisted that Churchill should sue Ridlatama, not East Kutai, for losses incurred by the permits’ annulment. He added that Churchill never notified the local government about Ridlatama’s acquisition or its transfer of assets.
District head Isran Noor did not technically revoke the permits, Wijaya claimed, but rather claimed they had been improperly obtained in the first place because the would-be mining sites overlapped with forest conservation areas.
He said a 2008 Supreme Audit Agency (BPK) report found irregularities in five mining permits issued between 2006 and 2008, four of which were owned by Ridlatama. A Forestry Ministry recommendation on the matter cited the BPK audit.
Churchill applied for arbitration to the International Center for Settlement of Investment Disputes in Washington on May 22, and the court accepted it last week.
Wijaya said the district was ready to face the lawsuit because it had a strong case against Churchill.
President Susilo Bambang Yudhyono said the central government would assist East Kutai in preparing its case.
“We must defend our honor, truth and justice. This is a matter of principle,” the president said. “I do not want such a multinational corporation to oppress a developing country like Indonesia.”
Yudhoyono said the case would serve as a lesson for local administrations across the country.