TIDMCHL
RNS Number : 4921B
Churchill Mining plc
04 April 2017
4 April 2017
AIM: CHL
CHURCHILL MINING PLC
CHURCHILL FILES REQUEST FOR ANNULMENT OF ICSID AWARD
UPDATE ON SUSPENSION
Further to the announcement of 28 February 2017, the Directors
of Churchill Mining plc (AIM: CHL) and its subsidiary Planet Mining
Pty Ltd (collectively "the Company") advise that on 31 March 2017,
following a detailed analysis of the ICSID Award ("Award") of 6
December 2016 with its solicitors Clifford Chance LLP, the Company
lodged an application to annul the Award under Article 52 of the
ICSID Convention ("Annulment Application").
A copy of the Company's Annulment Application is available on
the Company's website at www.churchillmining.com
In the Annulment Application, the Company explains how the Award
is the product of a process that was tainted by a range of serious
departures from fundamental rules of procedure and fairness and
manifest excesses of power by the arbitrators. In particular:
1. Long after all of the evidence was filed and over a year
after the document authenticity hearing, the Tribunal requested new
submissions on a legal authority that neither side had relied upon
(this new legal authority was the case of Minnotte v Poland). The
Tribunal prevented the parties from introducing new factual
evidence with their submissions, even though Minnotte v Poland gave
rise to a distinct legal framework which clearly raised new issues
of fact, specifically whether the Company (i) lacked due care or
was negligent in investigating the factual circumstances
surrounding the making of its investment and (ii) deliberately
closed its eyes to indications of serious misconduct or crime or
unreasonably failed to perceive such indications. The Tribunal
eventually disposed of the case on the basis of this new legal
framework - a clear violation of the Company's right to be
heard.
2. The Tribunal re-admitted (without notice) the witness
evidence of the State's key witness, Mr Isran Noor (the Regent of
East Kutai) - despite having previously struck Mr Noor's testimony
from the record because he outright refused to attend the hearing
to face questions (even via video-link). The Tribunal then relied
on Mr Noor's evidence as part of the Award, including when applying
the new legal framework described above.
3. The Tribunal dismissed the Company's claims in respect of the
exploitation licences for the EKCP (in respect of which no
allegations of forgery were made by the State) without giving the
Company the right to be heard on (and without applying) Indonesian
law, which was critical to determining the validity of these
licences as stand-alone title instruments. The Tribunal did this
even though the Company emphasised the importance of this
Indonesian law issue at the hearing and requested notice if the
Tribunal intended to decide this issue. The Tribunal subsequently
expressly carved-out this issue from the scope of the parties'
post-hearing briefs, which the Company took as a clear and
unambiguous indication that it would be addressed in a subsequent
phase of the proceedings.
4. The Tribunal committed a range of other annullable errors,
including failing to state the reasons on which the Award was
based.
In its Annulment Application, the Company invoked three grounds
for annulment of the Award:
(i) that the Tribunal seriously departed from a fundamental rule
of procedure (ICSID Convention, Article 52(1)(d));
(ii) that the Tribunal manifestly exceeded its powers (ICSID
Convention, Article 52(1)(b)); and
(iii) that the Tribunal failed to state the reasons on which the
Award was based (ICSID Convention, Article 52(1)(e)).
As part of its Annulment Application, the Company requested a
stay of enforcement of the Award (ICSID Convention, Article 52(5))
and asked the ICSID Secretary-General to inform the State that the
enforcement of the Award has been provisionally stayed (ICSID
Arbitration Rules, Rule 54).
The filing of the Annulment Application has automatically
resulted in a provisional stay of the Award (including the costs
order). This remains in place until the ICSID ad hoc Committee has
decided on whether or not to continue the stay, having given each
party an opportunity to present its observations. The ad hoc
Committee takes into account the specific circumstances of each
case when considering whether it should grant a continued stay of
enforcement of the Award. This process may take three to four
months, but the overall duration will depend on how quickly an ad
hoc Committee is constituted to hear the Company's application, how
quickly Indonesia applies for the provisional stay to be lifted (we
assume it will do so promptly) and, finally, how long it takes the
ad hoc Committee to hear and determine the parties' submissions on
continuation of the stay. Please note that if the stay is
continued, the ad hoc Committee may at any time modify or terminate
the stay if requested to do so by either party (after hearing the
parties).
Update on suspension
The Company confirms that the suspension in trading in the
Company's shares on AIM remains in place and will be reviewed
following the ad hoc Committee's decision as to whether it should
grant a continued stay of enforcement of the Award.
Churchill Chairman David Quinlivan said:
"Our detailed assessment has revealed that the Award contains
many annullable errors. As we explain in the Annulment Application,
the Tribunal was not clear in the procedural orders it used to
manage the document authenticity phase.
The Tribunal surprised the parties by unilaterally changing the
scope of the document authenticity phase at the eleventh hour. At
the same time, the Tribunal denied the Company the opportunity to
present the evidence needed to address the new issues raised. We
protested the Tribunal's surprising change in scope but this
protest was ignored by the Tribunal.
In my view, one of the most unsound things about the Award is
the Tribunal's unsubstantiated condemnation of the Company for its
failure to conduct reasonable due diligence over a period that
spanned many years without ever articulating what it considered the
standard due diligence program of an investor in the Indonesian
mining sector was at the time. We also note that the State did not
put on any such evidence. Indeed, the few due diligence materials
that were incidentally on the record were filed by Churchill and
went directly against the Tribunal's conclusions on this critical
point: none of the documents showed that other mining investors
into Indonesia considered the forgery of signatures on official
State documents to be a known risk at the time, let alone that
forensic document examination was a standard due diligence item for
mining companies investing in Indonesia.
Having not identified what it considered a reasonable due
diligence process to be, we are even more confused by the
Tribunal's conclusion that Churchill should have done yet more due
diligence after the making of the investment. Due diligence is of
course an important process but it occurs prior to the making of an
investment not after.
We were also aggrieved by the Tribunal's failure in the Award to
apply any sanctions at all for the refusal by Indonesia to produce
certain documents, particularly documents relating to
investigations into events that were the focus of the document
authenticity phase of the proceedings. Despite long-term
investigations by various agencies, no charges have ever been laid
against anyone connected to the Company or the EKCP. The Company
fails to understand how the Tribunal could accept Indonesia's
allegations of forgery and fraud without having seen these
documents, especially when the Tribunal previously ordered that
they be produced by Indonesia. It is concerning that the Tribunal
seems to have been willing to accept at face value serious
allegations that the State's own agencies have never made, let
alone prosecuted.
But, from our perspective, probably the most unsound aspect of
the Award is that it shows that, despite having decided to
disregard Mr Noor's witness statement due to his outright and
contemptuous refusal to attend the hearing on document authenticity
at all, the Tribunal then re-admitted and relied upon Mr Noor's
witness statement as part of its finding that the exploitation
licences were signed by him in circumstances where he was deceived
by another senior member of the Regency staff. The Tribunal did not
give the Company any notice that it was considering doing this and,
if it had, the Company would obviously have objected in the
strongest terms. In the Company's view, this was a gross violation
of due process.
In the Annulment Application we note that, the day after the
issuance of the Award, Mr Noor hosted a press conference in which
he accepted congratulations for the Tribunal's decision. I struggle
to see how the same witness who refused to attend the hearing to
face cross-examination can take credit for the result, unless of
course the decision not to come to the hearing was calculated to
achieve that result. In my personal opinion, the behaviour of Isran
Noor in this case has been very poor and reflects badly on
Indonesia as an investment destination.
There are many other aspects of the Award that the Company
challenges in the Annulment Application, including the Tribunal's
failure to apply Indonesian law to determine the validity of the
exploitation licences signed by Mr Noor and the Tribunal's failure
to state the reasons on which it dismissed certain of the Company's
claims, including its intellectual property claims based on the
feasibility studies. Overall, the Company is extremely disappointed
with the way its case has been handled so far but looks forward to
the opportunity to present its grievances to the Annulment
Committee."
S
For further information, please contact:
Churchill Mining plc Northland Capital Partners
Limited
David Quinlivan Nominated adviser
Nicholas Smith Edward Hutton/William
Russell Hardwick Vandyk/Gerry Beaney
Broking
John Howes
+ 61 8 6380 9670 +44 (0)20 3861 6625
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCMMGGDNDZGNZG
(END) Dow Jones Newswires
April 04, 2017 03:15 ET (07:15 GMT)
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