Australia-Indonesia

Far from a road to nowhere, Australia-Indonesia legal relations are firming up along with trade and cross-border transactions. Licensing, contracts and bilateral trade treaties all help in practical ways for those who know how to tap in smartly.

Australia and Indonesia are party to a number of bilateral treaties and multi-lateral conventions. Most regulate legal relations on the international plane between the neighbouring states, but some provide recourse to citizens or corporate entities of each state, or are incorporated into municipal law in either state.

Older treaties are inherited from treaties to which the Netherlands were the original contracting party. Other treaties mark important historical phases in decolonisation of Indonesia and Australia's stance in relation to that process. Morre recent treaties deal with mutual security co-operation.

Of particular interest to citizens and corporate litigants are the double-tax agreements and bilateral investment treaties which provide relief and recourse respectively to those engaged in business between the two countries.

Use of the Bilateral Investment Treaty

On 26 December 2012, Planet Mining, an Australian subsidiary of a UK company, commenced a claim against Indonesia pursuant to the Australia-Indonesia Bilateral Investment Treaty.

It is reported that Planet Mining holds a 5% interest in a local Indonesian company, PT Indonesia Coal Development (“ICD”), with the remaining 95% of ICD being held by Planet Mining’s parent company, Churchill Mining plc. Planet Mining's claim is consolidated with the claim that Churchill Mining has also commenced against Indonesia. Churchill Mining has written to the Indonesian President in relation to the dispute, and the letter has been made public. That letter sets out the alleged factual background to the dispute between Churchill Mining and Indonesia.

According to Churchill Mining’s letter, in 2007 and 2008 a number of Indonesian companies, which had various agreements in place with ICD, were granted mining and exploration licences in the East Kutai region by the East Kutai Regent. It is said that the concession areas have huge coal deposits of approximately 2.7 billion metric tons. Churchill Mining alleges that, subsequently, the East Kutai Regent granted licences for a portion of the same area to another company and revoked the licences granted to the companies with which ICD had an agreement. Churchill Mining contends that the revocation of the licences was wrongful.

Planet Mining has  now commencenced arbitration before ICSID.