Pt Thiess Contractors Indonesia v (1) Pt Kaltim Prima Coal (2) Standard Chartered Bank, Singapore Branch

JurisdictionEngland & Wales
JudgeMR JUSTICE BLAIR,Mr Justice Blair
Judgment Date14 July 2011
Neutral Citation[2011] EWHC 1842 (Comm)
CourtQueen's Bench Division (Commercial Court)
Docket NumberCase No: 2011 FOLIO 68
Date14 July 2011
Between:
Pt Thiess Contractors Indonesia
Claimant
and
(1) Pt Kaltim Prima Coal
Defendants
(2) Standard Chartered Bank, Singapore Branch

[2011] EWHC 1842 (Comm)

Before:

Mr Justice Blair

Case No: 2011 FOLIO 68

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr David Mildon QC and Mr Jern-Fei Ng (instructed by Stewarts Law LLP) for the

Claimant Mr Andrew Baker QC and Mr Sadhanshu Swaroop (instructed by Holman Fenwick Willan LLP) for the First Defendant

Hearing dates: 10 th June 2011, and 30 June 2011

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

MR JUSTICE BLAIR Mr Justice Blair
1

This action has been brought by the claimant, PT Thiess Contractors Indonesia ("Thiess") against the first defendant, PT Kaltim Prima Coal ("KPC"), and the second defendant Standard Chartered Bank ("the bank") for various declarations/orders to which it claims to be entitled under the terms of a Cash Distribution Agreement dated 27 June 2007. The action commenced on 20 January 2011. In short, KPC applies for a stay of the action on the grounds that an arbitration is presently under way between the parties. Thiess opposes the application, giving rise to the issue that I have to decide. (In form, the application is for a declaration that the court should not exercise any jurisdiction which it may have and/or for an order that the proceedings be stayed, and KPC makes it clear that it does not by the application submit to the jurisdiction of the court or take any step in the proceedings to answer the substantive claim.) The bank has no substantive position in the proceedings, and arrangements have been entered into by which it agrees to abide by the outcome, and otherwise drop out.

2

The facts are as follows. KPC operates a coal mine at Sangatta in East Kalimantan, Indonesia under a "Coal Contract of Works" granted by the Government of Indonesia. Thiess was engaged by KPC as its main sub-contractor to perform mining services at the mine pursuant to an "Operating Agreement – Mining Services" dated 10 October 2003 (the "OAMS"). The OAMS, which is governed by the laws of the state of Queensland, Australia, is a "life of mine" contract under which Thiess is remunerated primarily at a rate per tonne of coal produced. The background for present purposes is that the OAMS provides a mechanism for the review of pricing arrangements every five years. The parties have been unable to agree new pricing arrangements, and the present application is part of their overall dispute. In the absence of agreement, in broad terms the contract provides (to quote KPC's written submissions) for there to be a mediation, followed by an "expert determination", followed by arbitration.

3

The other agreement which is relevant so far as this application is concerned is the Cash Distribution Agreement (the "CDA") dated 27 June 2007. (I was told by Mr David Mildon QC, counsel for Thiess, that this replaced earlier arrangements, but these are not in evidence, though there is some reference to them in the Particulars of Claim.) Unlike the OAMS, the CDA is governed by English law. It creates legal relationships between KPC and another Indonesian coal company, and "principal contractors" including Thiess, as well as marketing agents (such as Glencore) and two account banks, of which one is Standard Chartered's Singapore branch. It is concerned, amongst other things, with the distribution of the cash proceeds of sale of coal produced not just under the OAMS but also under other contracts. Thiess is not actually a party to the CDA, but says that the parties operated on the basis that it is entitled to enforce the terms which are for its benefit (see the Claim Form in these proceedings). Mr Andrew Baker QC, counsel for KPC, drew attention to the fact that Thiess was not a party, but I did not understand him to say that this was in itself determinative of the application.

4

An important issue in argument was the role (or otherwise) of the CDA as providing security in the case of dispute between the parties. As Mr Baker QC put it, the stated purpose of the CDA was to "implement certain account administration and cash management arrangements" in relation to the revenue of, inter alia, KPC. The CDA does not in terms state that it is an agreement giving security to anyone, and it is, he says, primarily directed at the banks.

5

In answer, the submission made by Thiess is that for present purposes the provision of security is indeed the function of the CDA. To quote its written submissions, the material provisions of the CDA are those concerned with securing the position of the service providers (including, amongst others, Thiess) and the coal companies (including KPC) where a dispute is pending as to how much should be paid under the relevant operating agreement (including the OAMS). In oral submissions to the arbitrators on 8 June 2011, Mr Mildon QC put it as follows. There is a distinction between on the one hand the OAMS, which is the agreement by which the final resolution of whether money is due from KPC to Thiess will be determined, and the CDA, which goes to security, and where cash flows from the sale of coal through the banks back to the parties pending the determination of the underlying dispute. He made, essentially, the same submission on the hearing of this application.

The dispute resolution provisions

6

I shall now describe the dispute resolution provisions of the two contracts so far as necessary. Clause 18 of the OAMS provides for various steps, of which the last is arbitration (the stage that has now been reached). The place of the arbitration is Singapore. Clause 18.3 provides as follows:

"18.3 Formal Settlement of Issues

Either Party may at any time that there exists an Issue under this Agreement give an issue notice to the other initiating the formal Issue resolution process set out as follows:

(d) (Arbitration) Arbitration of the Issue not resolved by Mediation in accordance with Clause 18.2(c) shall be finally settled by international arbitration. Unless otherwise agreed by both Parties:

(i) the dispute shall be referred to arbitration and finally settled in accordance with, and subject to, the UNCITRAL Arbitration Rules;"

The key definition in this regard is as to what is included within the term "Issue". Clause 1.1 of the OAMS provides that, "'Issue' means any difference or dispute between the parties arising under or in connection with this Agreement".

7

As regards the CDA, clause 31 provides for the non-exclusive jurisdiction of the

English courts as follows:

"GOVERNING LAW AND JURISDICTION

31.1 This Agreement is governed by and shall be construed in accordance with English law.

31.2 For the benefit of each of the other parties [this includes Thiess], each of the Transaction Parties which are parties to this Agreement [this includes KPC], the Principal Contractors, the Principal Marketing Agents and the Account Banks agrees that the English courts have non-exclusive jurisdiction to settle any disputes in connection with this Agreement and accordingly submits to the jurisdiction of the English courts".

8

There is then provision made for service on agents in England. The clause continues:

"31.4 Each party hereto:

(i) waives objection to the English courts on grounds of inconvenient forum or otherwise as regards proceedings in connection herewith; and

(ii) agrees that a judgment or order of a court in connection herewith is conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction."

The disputes

9

KPC has analysed the overall dispute between the parties into a number of distinct compartments. This analysis is not common ground, because Thiess approaches the issues differently, and characterises the disputes differently. The distinction which it draws is a more straightforward one between the underlying dispute as to the amounts payable under the OAMS, which is within the exclusive jurisdiction of the arbitral tribunal, and the provision of security pending arbitration, which it says is the subject of a separate code (i.e. the CDA) with its own jurisdiction provisions in case of dispute. Having identified that disagreement, I set out KPC's analysis in this regard, which I have found helpful in explaining the current position in the arbitration.

10

KPC describes the review of the pricing arrangements as "Dispute 1". The factual background is that on 1 October 2010, Mr Michael Lawrence (who had been appointed by the Institute of Arbitrators & Mediators Australia) made an "expert determination" of the pricing arrangements for the five year period from 1 July 2009. KPC was not satisfied with this "determination" (I should say I have put this phrase in inverted commas in accordance with KPC's submissions). Accordingly, on 28 October 2010 KPC referred to arbitration "the dispute over the pricing arrangements for the five year period commencing 1 July 2009" (see OAMS clause 3A.2(b)(viii)). The Tribunal consists of Mr David R Haigh QC, Professor Michael Pryles and Mr David Williams QC.

11

KPC says that there are two related disputes as to the effect of the "expert determination". The first (which it describes as "Dispute 2(a)") is whether the "expert determination" is "final and binding". Secondly, if, the "expert determination" is not "final and binding" then there is a dispute (which it describes as "Dispute 2(b)") as to its effect pending the outcome of the arbitration. As I understand it from KPC's submissions, the issue is whether current rates continue to be applied, or the disputed rates in the "expert determination" are applied, until the issue can be decided by the Tribunal. It is apparent that...

To continue reading

Request your trial
15 cases
  • Clearlake Shipping Pte Ltd v Xiang Da Marine Pte Ltd
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 22 Agosto 2019
    ...Ltd v MLC (Bermuda) Ltd [1999] 1 Lloyd's Rep 767, at 777 ( per Rix J); PT Theiss Contractors Indonesia v PT Kaltim Prima Coal [2011] EWHC 1842 (Comm) at [41] ( per Blair J); and Trust Risk Group SpA v AmTrust Europe Ltd [2015] EWCA Civ 437, [2017] 1 CLC 456 at [48] ( per Beatson 29 I agr......
  • Arch Reinsurance Ltd v Akay Holdings Sdn Bhd
    • Malaysia
    • Federal Court (Malaysia)
    • Invalid date
  • China Export & Credit Insurance Corporation v Emerald Energy Resources Ltd
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 22 Junio 2018
    ...approach was adopted and applied by Blair J in PT Thiess Contractors Indonesia v PT Kaltim Prima Coal and Standard Chartered Bank [2011] EWHC 1842 (Comm). Here, the first Defendant (“KPC”) operated a coal mine in Indonesia and engaged the Claimant (“Theiss”) to perform mining services at th......
  • Silica Investors Ltd v Tomolugen Holdings Ltd
    • Singapore
    • High Court (Singapore)
    • 29 Mayo 2014
    ...Premium Nafta Products Ltd v Fili Shipping Co Ltd [2007] 2 CLC 533 (refd) PTThiess Contractors Indonesia v PTKaltim Prima Coal [2011] EWHC 1842 (Comm) (refd) Raukura Moana Fisheries Ltd v The Ship ‘Irina Zharkikh’[2001] 2 NZLR 801 (refd) Recyclers of Australia Pty Ltd v Hettinga Equipment I......
  • Request a trial to view additional results
1 books & journal articles
  • Arbitration
    • Singapore
    • Singapore Academy of Law Annual Review No. 2014, December 2014
    • 1 Diciembre 2014
    ...at [26]. The court also noted that Transocean was followed by the English case of PT Thiess Contractors Indonesia v PT Kaltim Prima Coal[2011] EWHC 1842 which approved of the approach of ascertaining the objective intention of the parties (Oei Hong Leong at [27]) and other similar approache......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT