Anti-Suit Injunction

• Author: International Law Group
• Pages: 222-223

Page 222

In 1994, Karaha Bodas Company, LLC (KBC), a Cayman Islands company entered into a joint venture with Pertamina, an oil and gas company owned and controlled by the Republic of Indonesia, to explore and develop certain geothermal energy resources in Indonesia (the "Project"). The parties agreed to settle any disputes by binding arbitration in Geneva, Switzerland. In 1998, after the Indonesian government had suspended the Project, KBC initiated arbitration proceedings in Switzerland and was awarded over $261 million.

In 2001, at KBC's request, the United States District Court for the Southern District of Texas confirmed the Award in the amount of $261 million plus interest. In March 2002, Pertamina fi led an action in an Indonesian trial court, while the Texas District Court's judgment was on appeal in the U.S. Court of Appeals for the Fifth Circuit.

KBC obtained a temporary restraining order from the Texas District Court prohibiting Pertamina from pursuing its case in Indonesia. Pertamina obtained an injunction from the Indonesian court prohibiting KBC from enforcing the Award and annulling the Award, despite the Texas District Court's temporary restraining order. The Texas District Court issued a preliminary injunction prohibiting the enforcement of the Indonesian injunction.

The United States Court of Appeals for the Fifth Circuit vacated the preliminary anti-suit injunction issued by the Texas District Court. In March 2004 the Indonesian Supreme Court vacated the Indonesian trial court's injunction and order nullifying the award, ruling that only the Swiss court had power to annul the Award. The Fifth Circuit affirmed the confi rmation of the Award.

KBC sought enforcement of the Texas District Court's judgment in the Southern District of New York, where Pertamina maintained bank accounts that held hundreds of millions of dollars in assets. The parties engaged in litigation as to whether the money in the accounts belonged to Pertamina or the Indonesian government. The U.S. Court of Appeals for the Second Circuit determined that the money in the account was owned by both Pertamina and the Indonesian government. The District Court then ordered Pertamina to turn over the amount of the award from those funds that they owned.

Pertamina then filed an action in the Cayman Islands claiming fraud and seeking repayment of all funds received by KBC and seeking an injunction prohibiting KBC from disposing of any of the funds. KBC moved in...