Comment on the Karaha Bodas arbitration (breach of a long-term power purchase agreement)
Article from: OGEL 3 (2003), in International Oil, Gas & Energy Dispute Management
Summary
In the Karaha Bodas v Indonesia Award ,* the tribunal awarded substantial damages to a US independent power investor in Indonesia after the Indonesian state electricity company PLN refused, in the context of the 1998 Indonesian economic crisis, to let the project go forward and also refused to comply with its subsequent take-or-pay obligation. The Karaha Bodas award has been severely criticized for misunderstanding valuation methods and for awarding in effect twice damages ('double- counting'), first by awarding the value of the investment made and then awarding the discounted ...