Affan Muhammad Andalan

031411133043 / A-3

Nusa Tenggara Partnership B.V. and PT Newmont Nusa Tenggara v.

Republic of Indonesia (ICSID Case No.ARB/14/15)

Case Summary
This case was registered to ICSID at July 15, 2014. Nusa Tenggara Partnership B.V.
(Dutch),PT Newmont Nusa Tenggara (Dutch) as the Claimants claimed the dispute subjected
to the copper and gold mining project with the Republic of Indonesia as Respondent. Here are
the chronological order of the case based on ICSID decision:
1. On June 30, 2014, the International Centre for Settlement of Investment Disputes
("ICSID") received a request for arbitration from Nusa Tenggara Partnership B.V. and PT
Newmont Nusa Tenggara ("the Claimants") for the institution of arbitration proceedings
under the Convention on the Settlement of Investment Disputes Between States and Nationals
of Other States ("the ICSID Convention"), in respect of a dispute with the Republic of
Indonesia.
2. The Request was registered on July 15, 2014, pursuant to Article 36(3) of the ICSID
Convention and Rules 6(1)(a) and 7(a) of the ICSID Institution Rules.
3. On August 25, 2014, prior to the constitution of an Arbitral Tribunal, the ICSID Secretariat
received a letter from the Claimants, requesting the discontinuance of the proceeding
pursuant to Rule 44 of the ICSID Rules of Procedure for Arbitration Proceedings
("Arbitration Rules").
4. Rule 44 of the ICSID Arbitration Rules provides:
If a party requests the discontinuance of the proceeding, the Tribunal, or the SecretaryGeneral if the Tribunal has not yet been constituted, shall in an order fix a time limit within
which the other party may state whether it opposes the discontinuance. If no objection is
made in writing within the time limit, the other party shall be deemed to have acquiesced in
the discontinuance and the Tribunal, or if appropriate the Secretary-General, shall in an order
take note of the discontinuance of the proceeding. If objection is made, the proceeding shall
continue.
5. On August 25, 2014, the Secretary-General sent a letter to the parties, in accordance with
Rule 44 of the ICSID Arbitration Rules, ordering the Republic of Indonesia to state whether
or not it opposed the discontinuance of the proceeding by September 24, 2014.
6. On August 29, 2014, the ICSID Secretariat received a letter from the Republic of Indonesia
stating that it had no objections to the discontinuance of the proceeding.
Finally, considering the above and in accordance with Rule 44 of the ICSID Arbitration
Rules, the Secretary-General hereby take note of the discontinuance of the proceeding.

Affan Muhammad Andalan

031411133043 / A-3

Background of the Lawsuit

Law No. 4/2009 on Mineral and Coal, required mining companies to downstream production
in the country prior to export. Article 170 of the Mining Law stipulates that downstreaming
must be done no later than 5 years after the Mining Law is enacted, which would mean in
2014. The law allows exports of semi-finished mineral products, such as copper concentrate,
until 2017, but only with a progressive export tax ranging from 20% to 60 %. This
progressive tax rate was intended to force miners to develop mineral processing facilities in
Indonesia and forms part of a broader strategy by Indonesian governments to get a larger
share of its mineral resources According to Newmont, the new law had led them to halt work
at the Batu Hijau copper and gold mine on the island of Sumbawa (West Nusa Tanggara
Province), leading to 'hardship' and 'economic loss'. Newmont subsequently closed the mine,
sending home 3,200 workers.
After intensive lobbying and pressure from large mining companies, the Indonesian
government agreed to amend the regulations for Freeport and Newmont and postpone
obligations to build mineral refinery plants in Indonesia. Unlike Freeport, however, Newmont
adamantly refused to accept the conditions set by the Indonesian government and sued them
at ICSID.

Indonesia-Netherlands BIT
In March 2014, the Indonesian government announced that it will not renew its Bilateral
Investment Treaty with the Netherlands when it expires in July 2015. The country is facing a
rising number of investment cases, with transnational companies claiming very high amount
of money. Most BITs actually give foreign investors far-reaching protection through the socalled Investor-State Dispute Settlement mechanism (ISDS). This allows companies to sue
governments over actions and policies that impact on their business.
The Dutch BITs are known to be particularly expansive in the rights and protection given to
foreign investors. Meanwhile, the government of Indonesia plans to continue the export ban
and seeks to boost export of processed minerals instead of the raw materials. They also plans
to give more incentive to local miners.

Revocation of the Lawsuit

This revocation of lawsuit conducted by the Claimants came after the governmentof
Indonesia opened formal negotiations and entered into the Memorandum of Understanding
(MoU) with the company. The signing will be followed by the opening access of copper
concentrates exports and the export from Batu Hijau mine. Previously, the government of
Indonesia already prepared to sue Newmont to the UNCITRAL. However, since the
negotiation succeed to be agreed upon both parties, the proceeding at ICSID is discontinued.

Affan Muhammad Andalan

031411133043 / A-3

Conclusion
The negotiation process between the two parties has been actually far from transparent and
the deal could not be monitored by local civil society organisations. The eventual agreement,
though, clearly undermined the implementation of the new mining law, which was put in
place in the interest of Indonesias citizens. It has long been argued that the impact of
Bilateral Investment Treaties is not just shown in the cases brought to tribunals that rule
against states rights to regulate and protect citizens, but also in the many cases that do not
make it to ICSID because states backtrack on regulation for fear of lawsuits. Indonesias
decision to cancel its BIT with the Netherlands is a move in the right direction, but the
government also has its hands tied in its attempts to roll back unjust investment protection
agreements. In the future, the country need to consider more comprehensively regarding the
trade and investment policies. Therefore, the national interest will not be sacrificed easily and
played by the companies since the Constitution of Indonesia mandated that all natural
resources are used for the welfare of the nation.

References:
Van der Pas, Hilda & Damanik, Riza, Netherlands Indonesia Bilateral Investment Treaty
rolls back implementation of new Indonesian mining law The case of Newmont Mining vs
Indonesia,
https://www.tni.org/files/download/newmont-indonesia-case-4.pdf,
2014,
th
accessed on 20 September 2016.
Nusa Tenggara Partnership B.V. and PT Newmont Nusa Tenggara v. Republic of Indonesia
(ICSID
Case
No.ARB/14/15),
https://icsid.worldbank.org/apps/icsidweb/cases/Pages/casedetail.aspx?CaseNo=ARB/14/15,
accessed on 20th September 2016.
https://bisnis.tempo.co/read/news/2014/07/17/090593794/newmont-mau-cabut-gugatanarbitrase-ini-syaratnya, accessed on 20th September 2016.