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LONDON (Alliance News) - Churchill Mining PLC Wednesday said the Republic of Indonesia has failed to make its latest advanced payment to the organisation handling the ongoing arbitration between the country and the London-listed firm.
The International Centre for the Settlement of Investment Disputes, which is handling the ongoing case, is taking funds from both Churchill and the government to fund its own ongoing costs whilst the dispute is being handled.
However, the International Centre requested a fifth payment from both parties back in February, and although Churchill has paid its USD200,000 share, Indonesia has failed to make its own payment totalling the same amount.
"It is strange that Indonesia has failed to pay its share of an advance payment requested by the tribunal to cover the costs of deciding Indonesia's own application. But this is not the first time that Indonesia has been issued a default notice in this arbitration," said David Quinlivan, chairman of Churchill.
"What makes this time different is that Indonesia has not cured its default and has not offered any explanation or excuse for its failure to pay. In fact, Indonesia has not said or done anything in the arbitration since the fifth advance payment was requested two months ago," he added.
Churchill and the government are arguing over the country's decision to revoke the company's licences covering its sole asset, the East Kutai coal project. Churchill considers the measures taken by the Indonesian government as "unlawful" and is pursuing its claim against the country in an attempt to secure USD1.31 billion, plus interest, in damages.
The Indonesian government claims that the licences covering the project were never owned by Churchill or its partner, saying the documents related to the licences were forged and that the areas of land covered by the licences were, at all times, owned by companies belonging to the Nusantara Group, an Indonesian firm that is involved in numerous infrastructure projects in the country.
However, the failure by the Indonesian government to pay its share of costs has thrown the case into doubt.
"We are taking Indonesia's silence and failure to pay its share of the fifth advance payment as a sign that Indonesia may no longer wish to participate in the arbitration. It is too early to tell if this is the case, and our lawyers have written to clarify the situation. We will know by next Wednesday," said Quinlivan.
"However, if Indonesia does pull out, that will not stop the arbitration. Churchill remains committed to the resolution of its dispute with Indonesia through the [International Centre] process and will do whatever has to be done to ensure that the arbitration progresses to its natural conclusion," he added.
Churchill and Indonesia were due to have paid their respective USD200,000 fees to the International Centre by March 28.
However, in what may be a surprise to shareholders, Churchill paid Indonesia's USD200,000 share in full to allow the case to continue, which may demonstrate Churchill's confidence of winning the case.
Churchill said it will review the amount of costs it wants to reclaim from the government of Indonesia following the move.
"There is no question that Indonesia can afford to pay its share of the costs of these proceedings. Indonesia has failed to provide any explanation at all for its default, despite being given a number of written notices and an additional one month grace period in which payment could be made. From these facts, Churchill can only conclude that Indonesia's non payment was the result of a positive decision not to pay," said the company.
Churchill has also requested all future costs, including Churchill's share, be covered by Indonesia, highlighting the costs are paying for a case brought by Indonesia and not the company.
Churchill said it will apply for the tribunal to make a fixed schedule on the matter if Indonesia does not confirm it wants to continue participating in the case by April 20, which is next Wednesday.
Churchill shares were trading up 12% to 14.75 pence per share on Wednesday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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