Churchill V Indonesia

Background:
Churchill Mining Plc. was a British-Australian mining company that operated a coal mining project in
Indonesia through its subsidiary, PT Indonesia Coal Development (“ICD”). The project was located in
East Kutai, Indonesia. In 2010, Churchill Mining discovered that its mining licenses had been revoked
by the Indonesian government. Churchill Mining filed a claim under the International Centre for
Settlement of Investment Disputes (ICSID) against Indonesia in 2012.

Legal Basis for Churchill to sue Indonesia under ICSID rules:

Churchill Mining based its claim on the 1992 Bilateral Investment Treaty (BIT) between the United
Kingdom and Indonesia. The BIT provides for protection of foreign investments by nationals or
companies of one country in the territory of the other country. The BIT also provides for resolution
of investment disputes through arbitration under the ICSID rules.

Churchill's substantive legal claims against Indonesia:

Churchill claimed that Indonesia had breached its obligations under the BIT by revoking Churchill's
mining licenses without compensation. Churchill argued that it had invested substantial funds and
resources in the project, and that the revocation of its licenses had deprived it of the opportunity to
continue with the project.

Indonesia's objections to the jurisdiction of the ICSID tribunal:

Indonesia argued that the ICSID tribunal did not have jurisdiction to hear Churchill's claim. Indonesia
claimed that Churchill had not made a qualifying investment under the BIT, and that the dispute did
not concern an investment. Indonesia also argued that the dispute was not suitable for ICSID
arbitration as it involved domestic regulatory measures.

Churchill's responses to Indonesia's objections to the jurisdiction:

Churchill argued that its investment in the mining project met the criteria for investment under the
BIT, and that the revocation of its mining licenses constituted a breach of Indonesia's obligations
under the treaty. Churchill also argued that the dispute concerned an investment, and that the ICSID
tribunal had jurisdiction to hear the dispute.

Reasons for the tribunal's decision:

The ICSID tribunal held that Churchill's investment in the mining project met the criteria for
investment under the BIT. The tribunal also found that the revocation of Churchill's mining licenses
constituted a breach of Indonesia's obligations under the treaty. The tribunal held that the dispute
concerned an investment, and that it had jurisdiction to hear the dispute. The tribunal awarded
Churchill Mining $9.44 billion in damages, which was later reduced to $4.1 billion by the annulment
committee of ICSID.