On July 8, 2014, a tribunal composed of Professor Gabrielle Kaufmann-Kohler (President), Michael Hwang S.C., and Professor Albert Jan van den Berg (the “Tribunal”), issued a Procedural Order No. 9 denying Churchill Mining PLC and Planet Mining Pty Ltd (“Claimants”) their application for provisional measures. Relying on Article 47 of the ICSID Convention and Rule 39 of the ICSID Arbitration Rules, Claimants asked the Tribunal to “recommend,” among other things, that the Republic of Indonesia (“Indonesia” or “Respondent”) (i) “refrain from threatening or commencing any criminal investigation or prosecution against the Claimants, their witnesses in these proceedings, and any person associated with the Claimants’ operations in Indonesia, including their wholly owned subsidiary (…);” and (ii) “stay or suspend any current criminal investigation or prosecution against Claimants’ current and former employees, affiliates or business partners pending the outcome of th[e] arbitration.” The Claimants also requested more general measures seeking to prevent Indonesia from threatening “the exclusivity” of the ICSID proceedings and generally aggravating the dispute.
At a time where the investor-state dispute resolution system is criticized for permitting too lax an access to treaty-based remedies through arbitration, the Churchill Mining Tribunal showed restraint and caution in addressing Claimants’ request to enjoin a host state from initiating or continuing criminal proceedings against Claimants’ witnesses and potential witnesses. The Tribunal did recognize Claimants’ theoretical right to protection against existing or threatened criminal proceedings that would be likely to impair Claimants’ rights in the arbitration. However, the Tribunal set a high bar for the evidence that Claimants would have had to adduce to establish the likelihood that their rights are indeed put at risk by Indonesia’s actions.
This is the second procedural order on provisional measures that the Tribunal issued in this dispute. On March 4, 2013, the Tribunal issued a Procedural Order No. 3 rejecting the Republic of Indonesia’s request for the Tribunal to recommend that Churchill Mining refrain from making “false, unfounded and misleading statements to the media regarding the case,” and from “approaching and/or persuading and/or inducing any [Indonesian officials] to enter into any ‘amicable’ settlement outside of the arbitration proceedings.”
In the treaty-based arbitrations they commenced against the Republic of Indonesia in 2012, Churchill Mining PLC and Planet Mining Pty Ltd. dispute the alleged revocation of four mining licenses. Churchill Mining PLC, an English entity, and Planet Mining Pty Ltd., an Australian company, allege to have obtained such licenses through their partnership with a local group of companies, the Ridlamata companies. On March 18, 2013, the Tribunal issued a Procedural Order No. 4 consolidating the proceedings initiated by Churchill Mining and Planet Mining, reserving the possibility to issue separate decisions for each claim. Procedural Order No. 9 on Provisional Measures came after the Tribunal upheld its jurisdiction in two Partial Awards, both dated February 24, 2014.
In the arbitration, the Republic of Indonesia disputes the validity of the mining licenses at issue. In particular, Respondent raised allegations of forgery, and argued, among other things, that some of the licenses Claimants rely upon were forged by Claimants and Claimants’ Indonesian partner, the Ridlamata companies. Claimants, on the other hand, allege that Indonesia put pressure on its witnesses by threatening them with criminal prosecution, and by initiating criminal actions against their Indonesian partners.
Procedural Order No. 9
While it reminded the parties of their general duty “not to take any action that may aggravate the dispute or affect the integrity of the arbitration,” the Tribunal considered that, “in the present circumstances,” the provisional measures requested by Claimants were not warranted. A key reason for the Tribunal’s decision to reject Claimants’ application is that “[a]s matters presently stand … the impairment of Claimants’ procedural rights is speculative and hypothetical.” Indeed, while the Republic of Indonesia indicated that it was considering the criminal prosecution of certain employees of Claimants, some of which could be witnesses in the arbitration proceedings, no formal criminal action has been commenced yet.
The Tribunal cited to Article 39 of the ICSID Arbitration Rules, which provide that a request for provisional measures must specify “the rights to be preserved, the measures the recommendation of which is requested, and the circumstances that require such measures.” The Tribunal referred to the interpretation of the requirements in Article 39 as adopted by “[v]arious ICSID tribunals.” Specifically, the tribunal considered that “the provisional measures must: (i) serve to protect certain rights of the applicant, (ii) meet the requirement of urgency; and (iii) the requirement of necessity, which implies the existence of a risk of irreparable or substantial harm.” To reach a conclusion on that basis, the Tribunal conducted a fact-specific inquiry of whether Claimants established “with sufficient likelihood” that the requirements are met. The Tribunal noted that it may change its assessment and conclusions if the circumstances of the case were to change.
Respondents challenged the existence of the rights that Claimants were seeking to protect. The Tribunal, however, considered that those rights were not “hypothetical:” Claimants were entitled to ensure that their right to provide evidence in the arbitration was not “impaired by the criminal investigations brought against actual or potential witnesses.” But, the Tribunal agreed with Respondent’s position that the criminal proceedings initiated against Claimants’ Indonesian partner, the Ridlamata companies, “do not threaten the exclusivity of the ICSID proceedings because the Ridlamata companies are not parties to the arbitration proceedings. The Tribunal further found that, a mere threat to institute criminal proceedings against “the Claimants, their witnesses or potential witnesses,” was insufficient to impinge on the exclusivity of the ICSID arbitration.
As to Claimants’ right to the preservation of the status quo and the non-aggravation of the dispute, the Tribunal agreed with “previous decisions” and found that such a right was “self-standing and vested in any party to ICSID proceedings.” Claimants were alleging that Indonesia’s threats of criminal proceedings constituted “continued harassment and intimidation” targeted at “Claimants themselves, Claimants’ witnesses, and persons currently or previously associated with Claimants’ investment in Indonesia.” But while the Tribunal agreed that “the threat or the initiation of criminal charges is not conducive to lowering the level of antagonism between the Parties,” it did not find that the circumstances were such that the status quo was altered by Indonesia’s actions, or that such actions had aggravated the dispute.
First, the Tribunal noted that no formal investigation had been initiated and no criminal charges were lodged against Claimants or their current witnesses. As to the criminal investigations already opened, the Tribunal found that because they were targeted at the Ridlatama companies, which were not parties to the arbitration, they could not have altered the status quo of the arbitration. Thus, the Tribunal found, the Claimants’ rights in the arbitration are not affected.
Second, the tribunal considered that Claimants were unable to establish evidence of “pressure or intimidation against Claimants and their witnesses.”
Third, the Tribunal did not find that Indonesia’s statements at the hearing and in their written submissions that one of Claimants’ witnesses “may have to respond to the Indonesian authorities” was sufficient to demonstrate that “Indonesia is indeed contemplating the possibility of initiating criminal proceedings against” that witness. Neither did the Tribunal find that the witness’s obligation to answer questions at the police station regarding criminal investigation into the Ridlatama companies, or Indonesia’s past use of criminal proceedings to interfere with arbitrations, constituted sufficiently “concrete elements” to warrant the order of the provisional measures requested.
Lastly, Claimants’ reference to a risk of criminal proceedings targeted at any person “currently or previously associated with Claimants’ investment in Indonesia” was equally insufficient to convince the Tribunal that the provisional measures requested were warranted. The Tribunal specifically distinguished the Churchill Mining situation from the circumstances in Quiborax v. Bolivia where, the Tribunal noted, actual criminal investigations had been initiated against a co-claimant. In the case of Churchill Mining, the Tribunal held, the procedural integrity of the arbitration was not impaired.
Having found that “Claimants’ right to the exclusivity of the ICSID proceedings, their right to the preservation of the status quo and non-aggravation of the dispute, and their right to the procedural integrity of [the] proceedings” were not affected, the Tribunal considered that neither the urgency, nor the necessity requirements were fulfilled.
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