Court Opinion

ID: 34429
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:16:12+00
Date Added: 2024-06-11T14:57:05.142805
License: Public Domain

United States Court of Appeals
                                                                        Fifth Circuit
                                                                     F I L E D
                IN THE UNITED STATES COURT OF APPEALS
                                                                     March 23, 2004
                         FOR THE FIFTH CIRCUIT
                          ____________________                   Charles R. Fulbruge III
                                                                         Clerk
                        Nos. 02-20042 & 03-20602
                          ____________________

                       Karaha Bodas Co., L.L.C.,

                                                        Plaintiff-Appellee,

                                      V.

   Perusahaan Pertambangan Minyak Dan Gas Bumi Negara; Et Al,

                                                                 Defendants,

         Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,

                                                    Defendant-Appellant.

             Appeal from the United States District Court
         for the Southern District of Texas, Houston Division

Before KING, Chief Circuit       Judge,    DAVIS,   Circuit       Judge,     and
ROSENTHAL,* District Judge.

ROSENTHAL, District Judge:

     Thirty years ago, the United States Supreme Court recognized

that “[a] contractual provision specifying in advance the forum in

which disputes shall be litigated and the law to be applied

is . . . an almost indispensable precondition to achievement of the

orderliness    and   predictability    essential   to    any   international

     *
        District Judge of the Southern District of Texas, sitting by
designation.
business transaction. . . . Such a provision obviates the danger

that a dispute under the agreement might be submitted to a forum

hostile to the interests of one of the parties or unfamiliar with

the   problem    area   involved.”1       When,     as    here,   parties   to

international    commercial   contracts     agree    to    arbitrate   future

disputes in a neutral forum, orderliness and predictability also

depend on the procedures for reviewing and enforcing arbitral

awards that may result.     This appeal arises from an arbitral award

(the “Award”) made in Geneva, Switzerland, involving contracts

negotiated and allegedly breached in Indonesia.            The Award imposed

liability and damages against Perusahaan Pertambangan Minyak Dan

Gas Bumi Negara (“Pertamina”), which is owned by the government of

Indonesia, in favor of Karaha Bodas Company, L.L.C. (“KBC”), a

Cayman Islands company.        KBC filed this suit in the federal

district court in Texas to enforce the Award under the United

National Convention on the Recognition and Enforcement of Foreign

Arbitral Awards (the “New York Convention”), and filed enforcement

actions in Hong Kong and Canada as well.2         While those enforcement

proceedings were pending, Pertamina appealed the Award in the Swiss

courts, seeking annulment.     When that effort failed, and after the

Texas district court granted summary judgment enforcing the Award,

      1
          Scherk v. Alberto-Culver Co., 417 U.S. 506, 516 (1974).
      2
        United Nations Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38
(entered into force with respect to the United States, Dec. 29, 1970),
codified at 9 U.S.C. § 201 et seq.

                                      2
Pertamina obtained an order from an Indonesian court annulling the

Award.3

     Pertamina   appealed   to   this   court.    During   the   appeal,

Pertamina filed in the district court a motion to set aside the

judgment under Federal Rule of Civil Procedure 60(b)(2), based on

newly-discovered evidence Pertamina contended should have been

disclosed during the arbitration, and under Rule 60(b)(5), based on

the Indonesian court’s decision annulling the arbitration Award.

This court remanded to the district court for consideration of

Pertamina’s Rule 60(b) motion.4         On remand, the district court

denied Pertamina’s Rule 60(b) motion.        This appeal consolidates

Pertamina’s challenges to the grant of summary judgment and to the

denial of the Rule 60(b) motion.

     Pertamina urges this court to reverse the district court’s

decision enforcing the Award on several grounds under the New York

Convention.   We conclude that the record forecloses Pertamina’s

arguments that procedural violations and other errors during the

arbitration preclude enforcement.       We reject Pertamina’s argument

     3
        A different panel of this court heard a separate appeal from the
district court’s injunction against Pertamina’s prosecution of the
action in Indonesia, but did not decide the effect of the Indonesian
court’s annulment order on the enforcement proceeding. Karaha Bodas
Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335
F.3d 357, 373-74 (5th Cir. 2003). One of the issues before this panel
is whether the Indonesian court’s order is a defense to the enforcement
of the Award.
     4
        Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara, 2003 WL 21027134, at *4-6 (5th Cir. March 5, 2003).

                                   3
that the Indonesian court’s order annulling the Award bars its

enforcement    under    the    New     York     Convention;          this      argument    is

inconsistent with the arbitration agreements Pertamina signed and

with its earlier position that Switzerland, the neutral forum the

parties selected, had exclusive jurisdiction over an annulment

proceeding.        We reject Pertamina’s efforts to delay or avoid

enforcement    of    the    Award      as   evidencing         a    disregard     for     the

international       commercial      arbitration         procedures        it    agreed     to

follow.5      In   short,    we   affirm        the    district       court’s     judgment

enforcing the Award, for the reasons set out in detail below.

                                  I.    Background

A.   Procedural and Factual History

     KBC explores and develops geothermal energy sources and builds

electric generating stations using geothermal sources.                           Pertamina

is an oil, gas, and geothermal energy company owned by the Republic

of Indonesia.6        In November 1994, KBC signed two contracts to

produce electricity from geothermal sources in Indonesia.                            Under

the Joint Operation Contract (“JOC”), KBC had the right to develop

geothermal    energy       sources     in   the       Karaha       area   of    Indonesia;

Pertamina was to manage the project and receive the electricity

     5
        We note that the length of this opinion reflects the number of
arguments Pertamina raises to evade its obligations under the Award more
than the strength of those arguments.
      6
        PLN, an electric utility owned by the government of Indonesia,
was a party to the arbitration but was dismissed from the district court
action.

                                            4
generated.       Under the Energy Sales Contract (“ESC”), PLN agreed to

purchase from Pertamina the energy generated by KBC’s facilities.

Both       contracts   contained      almost      identical         broad    arbitration

clauses, requiring the parties to arbitrate any disputes in Geneva,

Switzerland under the Arbitration Rules of the United Nations

Commission on International Trade Law (“UNCITRAL”).7

       7
             Article   13.2(a)   of   the   arbitration       provision      of   the   JOC
provided:

               If the Dispute cannot be settled within thirty
               (30) working days by mutual discussions as
               contemplated by Article 13.1 hereof, the Dispute
               shall finally be settled by an arbitral tribunal
               (the “Tribunal”) under the UNCITRAL arbitration
               rules . . . .       Each Party will appoint an
               arbitrator within thirty (30) days after the date
               of a request to initiate arbitration, who will
               then jointly appoint a third arbitrator within
               thirty (30) days of the date of the appointment of
               the second arbitrator, to act as Chairman of the
               Tribunal. Arbitrators not appointed within the
               time limits set forth in the preceding sentence
               shall be appointed by the Secretary General of the
               International Center for Settlement of Investment
               Disputes. Both Parties undertake to implement the
               arbitration award. The site of the arbitration
               shall be Geneva, Switzerland. The language of the
               arbitration shall be English.         The Parties
               expressly agree to waive [certain Indonesian
               procedural laws]. . . .

JOC, Art. 13.2(a),(d).           Section        8.2(a)   of   the    ESC’s   arbitration
provision similarly read:

               If the Dispute cannot be settled within forty-five
               calendar (45) days by mutual discussions as
               contemplated by Section 8.1 hereof, the Dispute
               shall finally be settled by an arbitral tribunal
               (the “Tribunal”) under the UNCITRAL arbitration
               rules . . . .    PLN on one hand, and [KBC] and
               PERTAMINA on the other hand, will each appoint one
               arbitrator, in each case within thirty (30) days
               after the date of a request to initiate
               arbitration, who will then jointly appoint a third
               arbitrator within thirty (30) days of the date of

                                            5
     On     September   20,     1997,       the    government      of   Indonesia

temporarily    suspended      the   project       because   of   the    country’s

financial    crisis.    The     government        of   Indonesia    indefinitely

suspended the project on January 10, 1998.              On February 10, 1998,

KBC notified Pertamina and PLN that the government’s indefinite

suspension constituted an event of “force majeure” under the

            the appointment of the second arbitrator, to act
            as Chairman of the Tribunal.      Arbitrators not
            appointed within the time limits set forth in the
            preceding sentence shall be appointed by the
            Secretary General of the International Center for
            Settlement of Investment Disputes, upon the
            request of any Party. All Parties undertake to
            implement the arbitration award. The site of the
            arbitration shall be Geneva, Switzerland.      The
            language of the arbitration shall be English. The
            Parties expressly agree to waive the applicability
            of [certain Indonesian procedural laws]. . . .

     Both contracts contained the following additional arbitration
language:

            The award rendered in any arbitration commenced
            hereunder shall be final and binding upon the
            Parties and judgment thereon may be entered in any
            court having jurisdiction for its enforcement.
            The Parties hereby renounce their right to appeal
            from the decision of the arbitral panel and agree
            that in accordance with Section 641 of the
            Indonesian Code of Civil Procedure [neither] Party
            shall appeal to any court from the decision of the
            arbitral panel and accordingly the Parties hereby
            waive the applicability of [certain Indonesian
            laws].    In addition, the Parties agree that
            [neither] Party shall have any right to commence
            or maintain any suit or legal proceeding
            concerning a [dispute hereunder until the] dispute
            has been determined in accordance with the
            arbitration procedure provided for herein and then
            only to enforce or facilitate the execution of the
            award rendered in such arbitration.

JOC, Art. 13.2(d); ESC, § 8.2(d).

                                        6
contracts.    KBC initiated arbitration proceedings on April 30,

1998.   In its notice of arbitration, KBC appointed Professor Piero

Bernardini, vice-chair of the International Chamber of Commerce’s

(“ICC”) International Court of Arbitration and member of the London

Court of International Arbitration, to serve as an arbitrator.

Pertamina,    however,   did   not   designate   an   arbitrator    in   the

contractually allotted thirty days.        The JOC and ESC both provided

that if a party failed to appoint an arbitrator within thirty days,

the Secretary-General of the International Center for Settlement of

Investment Disputes (“ICSID”) was to make the appointment.           After

notifying Pertamina, PLN, and the government of Indonesia, the

ICSID appointed Dr. Ahmed El-Kosheri, another vice-chair of the

ICC, as the second arbitrator.       As specified in the JOC and ESC,

the two appointed arbitrators then selected the chairman of the

arbitration panel, Yves Derains, the former Secretary-General of

the ICC.

     Pertamina   raised   threshold      challenges   to   the   Tribunal’s

consolidation of the claims KBC raised under the JOC and the ESC

into one arbitration proceeding and to the selection of the panel.

In October 1999, the Tribunal issued a Preliminary Award, rejecting

Pertamina’s threshold challenges and ruling that the government of

Indonesia was not a party to the contracts or to the arbitration

proceeding.

     KBC filed its Revised Statement of Claim in November 1999.

Pertamina received a number of extensions before it filed its reply

                                     7
to the Revised Statement of Claim in April 2000.                            KBC filed a

rebuttal to that reply in May 2000.                  In response to KBC’s rebuttal,

Pertamina sought additional discovery and a continuance of the

proceedings, claiming that KBC had raised assertions and added

elements       to   its   case-in-chief         not    contained      in    the   Revised

Statement of Claim.

      From the outset, the parties vigorously disputed whether KBC

could    have       obtained    financing       to    build   the     project     if   the

government of Indonesia had not issued the suspension decree.

Pertamina contended that KBC could not have built the project – and

therefore suffered no damages from the government decree suspending

the     work    –    because      the   precarious        situation        in   Indonesia

effectively made the necessary financing unavailable.                           Pertamina

asserted that KBC’s rebuttal introduced a new theory as to how

project financing could have been obtained.                         KBC changed from

focusing on the availability of third-party financing and argued in

the rebuttal that one of its direct investors, FPL Energy (“FPL”),

would have provided project financing if no other source was

available.      Shortly before the scheduled hearing, Pertamina sought

discovery of documents relating to FPL’s asserted willingness to

finance the project.           In May 2000, the Tribunal denied Pertamina’s

request to obtain this discovery before the hearing and denied the

request for a continuance.               The Tribunal stated that it would

decide at the conclusion of the hearing “whether any adjustment to

the   proceeding”         would    be   required       because   of    the      discovery

                                            8
requested.     The hearing on the merits proceeded as scheduled in

June 2000.

     The Tribunal received a large record.                   Both sides submitted

extensive witness statements, expert reports, exhibits, and briefs.

During   the      hearing,    Pertamina       and    PLN    cross-examined     KBC’s

witnesses,     including      two   witnesses       who    testified   about   KBC’s

ability to finance the project, Robert McGrath, Treasurer of FPL

Group,   Inc.,      and    Leslie    Gelber,        former     Vice-President     of

Development at FPL Energy.          Both witnesses submitted declarations

stating that “FPL Energy was prepared in 1998 to provide bridge

financing or direct capital to continue the Project through the

phases of the Project that were scheduled to be completed during

Indonesia’s period of instability.”                 At the hearing, counsel for

Pertamina specifically questioned McGrath about the availability of

project financing from FPL.           During that questioning, a Tribunal

member asked McGrath whether the investment in the project was

protected    by    a   form    of   political       risk    insurance.     McGrath

responded, “I am not sure of that.                     I know there were some

discussions at the time, but I don’t recollect as to whether it was

or wasn’t.”       Counsel for Pertamina asked no follow-up questions.

At the end of the hearing, counsel for Pertamina declined to pursue

the previously requested discovery and stated that the record had

been “fully” made.

     In the Final Award, the Tribunal found that under the JOC and

the ESC, Pertamina and PLN had accepted the risk of loss arising

                                          9
from a “Government Related Event.”        The Tribunal interpreted the

contracts as “putting the consequences of a Governmental decision

which prevents the performance of the contract at Pertamina’s . . .

sole risk.”    The Tribunal awarded KBC $111.1 million, the amount

KBC had expended on the project, and $150 million in lost profits.

The Tribunal explained in detail why it rejected the lost profits

amount KBC sought – $512.5 million – and how it arrived at the

amount awarded.

     In February 2001, Pertamina appealed the Award to the Supreme

Court of Switzerland. While that appeal was pending, KBC initiated

this suit in the federal district court to enforce the Award.

B.   The District Court Decisions

     Pertamina challenged enforcement of the Award in the federal

district court on four grounds under Article V of the New York

Convention:   (1) the procedure for selecting the arbitrators was

not in accordance with the agreement of the parties; (2) the

Tribunal improperly consolidated the claims into one arbitration;

(3) Pertamina was “unable to present its case” to the Tribunal; and

(4) enforcement of the damages Award would violate the public

policy of the United States.            As to the first two grounds,

Pertamina contended that the decision to consolidate the claims

under the two contracts was procedurally improper and that KBC’s

unilateral    appointment    of   an    arbitrator   violated   the   ESC

arbitration provision.      As to the third ground, Pertamina argued

                                   10
that    the   Tribunal   improperly    reversed   its   finding    in     the

Preliminary Award that Pertamina did not breach the contracts by

holding Pertamina liable for nonperformance in the Final Award;

that the Tribunal’s denial of Pertamina’s request for discovery of

FPL’s records prevented Pertamina from fully presenting its case;

and that the Tribunal’s denial of a continuance after KBC filed its

rebuttal to the reply to the Revised Statement of Claim prevented

Pertamina from fully preparing to meet KBC’s contentions.               As to

the fourth ground, Pertamina argued that the Award violated the

international abuse of rights doctrine and punished Pertamina for

obeying the Indonesian government’s decree.       Under Federal Rule of

Civil Procedure 56(f), Pertamina requested a delay in the district

court in responding to KBC’s summary judgment motion to seek

discovery of the same FPL records it had unsuccessfully sought in

the arbitration.

       Pertamina continued its appeal seeking annulment of the Award

to the Supreme Court of Switzerland while the enforcement action

was pending in the district court in Texas.         The Texas district

court slowed the proceedings in deference to Pertamina’s request

that the Swiss court first be allowed to decide whether to annul

the Award.      In April 2001, the Swiss Supreme Court dismissed

Pertamina’s claim because of untimely payment of costs.           Pertamina

moved for reconsideration; the Swiss court denied that motion in

August 2001.

                                      11
     In December 2001, the district court enforced the Award,

rejecting each of Pertamina’s grounds for refusal.                The district

court   carefully     reviewed   the   record   in   examining     Pertamina’s

claimed inability to challenge in the arbitration proceeding KBC’s

argument that it could have obtained project financing from its

investor, FPL.      The district court denied Pertamina’s Rule 56(f)

request for additional discovery on this issue.             Pertamina filed

its notice of appeal from the district court’s summary judgment

enforcing the Award in January 2002.

     Having failed in its effort to annul the Award in the Swiss

courts, Pertamina filed suit in Indonesia seeking annulment.                 In

August 2002, an Indonesian court annulled the Award. KBC continued

with enforcement suits in Hong Kong and Canada.            In October 2002,

while this appeal was pending, Pertamina discovered in the Canadian

proceeding that FPL and one other KBC investor, Caithness, had held

a political risk insurance policy covering the KBC project through

Lloyd’s of London.      Pertamina also learned that Lloyd’s had paid

$75 million under that insurance policy to FPL and Caithness for

the losses resulting from the Indonesian government’s suspension of

the project.

     In December 2002, Pertamina filed a motion in the district

court to vacate the judgment on three grounds: (1) newly-discovered

evidence   of   the   political   risk      insurance   policy,    under   Rule

60(b)(2); (2) the Indonesian court’s annulment of the underlying

arbitral Award, under Rule 60(b)(5); and (3) satisfaction of

                                       12
judgment to the extent of the $75 million insurance payment.

Pertamina also filed a motion in this court to supplement the

record and briefing.      In both motions, Pertamina argued that the

existence of political risk insurance coverage in favor of FPL

undermined KBC’s claims that the contracts allocated political

risks to Pertamina and that FPL would have financed the project in

order to avoid losing its earlier investment.                   Additionally,

Pertamina    argued    that    the   payment   of   the   insurance    proceeds

undermined the Tribunal’s determination of damages.                   Pertamina

urged that KBC’s failure to disclose the insurance during the

arbitration provided a basis for refusing to enforce the Award and

made the district court’s summary judgment improper.

     This    court    denied    Pertamina’s    motion     to   supplement   the

appellate record under Federal Rule of Appellate Procedure 10(e)

and remanded to the district court for consideration of Pertamina’s

Rule 60(b) motion.        On remand, the district court denied the

motion, finding that Pertamina failed to show that KBC had misled

the tribunal or that KBC’s failure to produce the political risk

insurance policy violated the          rules governing the arbitration.

     The    district   court    also   rejected     Pertamina’s    claim    that

Indonesia had primary jurisdiction to decide to annul the Award and

declined to give effect to the Indonesian court’s annulment order

as a defense to enforcement.          The district court imposed judicial

estoppel to preclude Pertamina from asserting that Indonesian

procedural law had governed the arbitration and that Indonesian

                                       13
courts had primary jurisdiction to review the Award.         Finally, the

district court rejected Pertamina’s argument that the amount of the

Award should be offset by the $75 million insurance payment.8

     This appeal followed.       Pertamina argues that the Tribunal

improperly consolidated the claims into one arbitration proceeding;

the selection of the arbitrators violated the JOC and ESC; the

Tribunal denied Pertamina a fair opportunity to present its case

because the Tribunal reversed part of its Preliminary Award without

notice, denied Pertamina’s request to postpone the arbitration, and

denied Pertamina’s discovery requests; the Award is contrary to

public policy because it violated the international law abuse of

rights doctrine and because the district court’s decision holds

Pertamina   liable   for   complying    with   Indonesian   law;   and   the

     8
        The day after the district court issued its final order denying
Pertamina’s Rule 60(b) motion, KBC submitted a letter to the court
“clarifying” that while FPL was not the insured under the political risk
insurance policy, FPL owned one of the named insureds that benefitted
under the policy.     The district court issued a supplemental order
acknowledging KBC’s letter and noting that the fact that FPL was not a
named insured under the insurance policy “was only one of many factors
that the Court considered in denying Pertamina’s Rule 60(b) Motion.
Thus, the fact that an entity owned by FPL, but not FPL itself,
benefit[t]ed under the policy does not change any legal conclusion” in
the court’s decision. On the same day that the district court issued
its supplemental order, and ten days after the court’s denial of
Pertamina’s Rule 60(b) motion, KBC filed a Motion to Amend Findings of
Fact under Federal Rule of Civil Procedure 52(b).          In a second
supplemental order, the district court recognized KBC’s motion as a
Motion to Amend or Alter Judgment under Federal Rule of Civil Procedure
59(e) and granted the motion. The court assumed, without deciding, that
FPL benefitted from the risk insurance policy, but held that it did not
affect the basis of the court’s decision. Pertamina argues that the
district court did not have jurisdiction to issue either of these two
supplemental orders. This court agrees that the issue addressed in the
supplemental orders does not affect the outcome of this case.

                                   14
Indonesian court’s annulment of the arbitral Award is a defense to

enforcement        under   the   New    York   Convention.    Each   ground   is

addressed below.

                                  II.    Analysis

     A district court’s decision confirming an arbitration award is

reviewed under the same standard as any other district court

decision.9    This court reviews a district court’s grant of summary

judgment de novo.10

A.   The New York Convention

     The     New    York   Convention     provides   a   carefully   structured

framework for the review and enforcement of international arbitral

awards.    Only a court in a country with primary jurisdiction over

an arbitral award may annul that award.11 Courts in other countries

have secondary jurisdiction; a court in a country with secondary

jurisdiction is limited to deciding whether the award may be

enforced in that country.12 The Convention "mandates very different

regimes for the review of arbitral awards (1) in the [countries] in

which, or under the law of which, the award was made, and (2) in

     9
        First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947-948
(1999); Hughes Training, Inc. v. Cook, 254 F.3d 588, 592 (5th Cir.
2001).
     10
          Eason v. Thaler, 73 F.3d 1322, 1324 (5th Cir. 1996).
     11
         Karaha Bodas Co., 335 F.3d at 364; see Yusuf Ahmed Alghanim &
Sons, W.L.L. v. Toys “R” Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997).
     12
          Karaha Bodas Co., 335 F.3d at 364.

                                          15
other [countries] where recognition and enforcement are sought."13

Under     the    Convention,    "the   country   in   which,   or    under   the

[arbitration] law of which, [an] award was made" is said to have

primary jurisdiction over the arbitration award.14                   All other

signatory states are secondary jurisdictions, in which parties can

only contest whether that state should enforce the arbitral award.15

It is clear that the district court had secondary jurisdiction and

considered only whether to enforce the Award in the United States.

     Article V enumerates specific grounds on which a court with

secondary jurisdiction may refuse enforcement.16 In contrast to the

     13
           Alghanim, 126 F.3d at 23 (quoted in Karaha Bodas Co., 335 F.3d
at 364).
     14
           Karaha Bodas Co., 335 F.3d at 364.
     15
           Id.
     16
           Article V, Section 201 of the New York Convention provides:

                1. Recognition and enforcement of the award may be
                refused, at the request of the party against whom
                it is invoked, only if that party furnishes to the
                competent authority where the recognition and
                enforcement is sought, proof that:

                (a) The parties to the agreement referred to in
                article II were, under the law applicable to them,
                under some incapacity, or the said agreement is
                not valid under the law to which the parties have
                subjected it or, failing any indication thereon,
                under the law of the country where the award was
                made; or
                (b) The party against whom the award is invoked
                was not given proper notice of the appointment of
                the arbitrator or of the arbitration proceedings
                or was otherwise unable to present his case; or

                (c) The award deals with a difference not
                contemplated by or not falling within the terms of

                                       16
limited authority of secondary-jurisdiction courts to review an

arbitral award, courts of primary jurisdiction, usually the courts

of the country of the arbitral situs, have much broader discretion

to set aside an award.       While courts of a primary jurisdiction

country may apply their own domestic law in evaluating a request

to annul or set aside an arbitral award, courts in countries of

          the submission to arbitration, or it contains
          decisions on matters beyond the scope of the
          submission to arbitration, provided that, if the
          decisions on matters submitted to arbitration can
          be separated from those not so submitted, that
          part of the award which contains decisions on
          matters submitted to arbitration may be recognized
          and enforced; or

          (d) The composition of the arbitral authority or
          the arbitral procedure was not in accordance with
          the agreement of the parties, or, failing such
          agreement, was not in accordance with the law of
          the country where the arbitration took place; or

          (e) The award has not yet become binding on the
          parties, or has been set aside or suspended by a
          competent authority of the country in which, or
          under the law of which, that award was made.
          2. Recognition and enforcement of an arbitral
          award may also be refused if the competent
          authority in the country where recognition and
          enforcement is sought finds that:

          (a) The subject matter of the difference is not
          capable of settlement by arbitration under the law
          of that country; or
          (b) The recognition or enforcement of the award
          would be contrary to the public policy of that country.

9 U.S.C. § 201, Art. V(1)-(2). See generally Alghanim, 126 F.3d at 23;
Susan Choi, Judicial Enforcement of Arbitration Awards Under the ICSID
and New York Conventions, 28 N.Y.U. J. Int’l L. & Pol. 175 (1996).

                                    17
secondary jurisdiction may refuse enforcement only on the grounds

specified in Article V.17

     The New York Convention and the implementing legislation,

Chapter 2 of the Federal Arbitration Act (“FAA”), provide that a

secondary jurisdiction court must enforce an arbitration award

unless it finds one of the grounds for refusal or deferral of

recognition or enforcement specified in the Convention.18 The court

may not refuse to enforce an arbitral award solely on the ground

that the arbitrator may have made a mistake of law or fact.19

“Absent extraordinary circumstances, a confirming court is not to

reconsider an arbitrator’s findings.”20 The party defending against

enforcement of the arbitral award bears the burden of proof.21

Defenses to enforcement under the New York Convention are construed

narrowly,     “to   encourage   the   recognition   and   enforcement   of

     17
           Alghanim, 126 F.3d at 23 (cited in Karaha Bodas Co., 335 F.3d
at 368).
     18
           9 U.S.C. § 207.
     19
        Europcar Italia, S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310,
315 (2d Cir. 1998); Nat’l Wrecking Co. v. Int’l Bhd. of Teamsters, 990
F.2d 957, 960 (7th Cir. 1993).
     20
           Europcar Italia, 156 F.3d at 315.
     21
         Imperial Ethiopian Gov’t v. Baruch-Foster Corp., 535 F.2d 334,
336 (5th Cir. 1976); see Czarina, L.L.C. v. W.F. Poe Syndicate, 2004 WL
205611, at *6 n.3 (11th Cir. Feb. 4, 2004).

                                      18
commercial      arbitration      agreements      in     international

contracts . . . .”22

B.   The Choice-of-Law Issues

     In the JOC and ESC, the parties stipulated that “the site of

the arbitration shall be Geneva.”       The Tribunal concluded that

under the arbitration agreements, Swiss procedural law applied as

the law of the arbitral forum.23 From 1998 to April 2002, Pertamina

consistently and repeatedly took the position before the Tribunal,

the Swiss courts, and the United States district court, that Swiss

procedural law applied to the arbitration.24     In April 2002, after

     22
        Imperial Ethiopian Gov’t, 535 F.2d at 335; Parsons & Whittemore
Overseas Co., Inc. v. Societe Generale de L’Industrie du Papier, 508
F.2d 969, 974, 976 (2d Cir. 1974).
     23
         The Tribunal specifically cited Swiss procedural law in its
Preliminary Award. The Tribunal first cited Swiss law regarding the
intentions of parties to a contract to help guide its determination
whether the government of Indonesia was a party to the JOC and ESC. The
Tribunal cited the Swiss concept of “connexity” in concluding that KBC
could consolidate its claims under the contracts into a single
arbitration proceeding. Finally, the Tribunal referred to Swiss common
law suggesting that arbitrators are not agents in determining that the
selection of Tribunal arbitrators was appropriate under the agreements.
The Final Award stated that it was “[m]ade in Geneva.”
     24
         See, e.g., Prelim. Award, § B(1) (“The Respondents support this
conclusion by making reference to Swiss law as the JOC and the ESC
provide for UNCITRAL Arbitration in Geneva between the parties which are
neither Swiss nor Swiss resident.        As a result, and under both
contracts, the arbitration proceedings are governed by Chapter 12 of the
Swiss Private International Law Statutes. Under Swiss law, [Respondent
contends] the Arbitral Tribunal is lacking jurisdiction because KBC
failed to comply with the contractual prerequisites to arbitration.”);
id. at § C(1) (“The Respondents also state that, under the arbitration
agreements and Swiss law, the arbitrators have no power to consolidate
. . . .”); id. at § C(3) (citing a Swiss federal tribunal case in
support of its decision that a consolidated arbitration was
appropriate); id. at § D(1) (Respondents contend that “[s]uch solution
is not acceptable under the applicable Swiss law”).
     The district court found that Pertamina “specifically, repeatedly

                                  19
the Swiss court had rejected Pertamina’s annulment proceeding and

the district court had held the Award enforceable in the United

States, Pertamina moved in the district court for a stay of the

Award pending the outcome of the annulment proceeding Pertamina had

filed in Indonesia.     For the first time, Pertamina raised in the

district court the argument that Indonesian, not Swiss, procedural

law had applied to the arbitration.       Pertamina took this position

in the district court as part of its argument that Indonesia had

primary jurisdiction over the Award and therefore had the authority

to set it aside rather than merely decline to enforce it.

     Article V(1)(e) of the Convention provides that a court of

secondary jurisdiction may refuse to enforce an arbitral award if

it “has been set aside or suspended by a competent authority of the

country in which, or under the law of which, that award was made.”25

Courts have held that the language, “‘the competent authority of

the country . . . under the law of which, that award was made’

refers exclusively to procedural and not substantive law, and more

and unequivocally” argued that Swiss arbitration law applied in the
arbitration. Pertamina opened its motion to stay the district court
proceedings pending appeal to the Swiss judiciary by stating:      “The
arbitration award . . . was conducted subject to the arbitration laws
of Switzerland, and the Swiss court is empowered to vacate an award
rendered in Switzerland. . . . KBC is asking this Court to act
prematurely to confirm an award that might be overturned in the country
whose law governed the arbitration.”      Pertamina added that “it is
fundamental that the courts of the originating nation are in the best
position to pass on issues under their own law. . . . Here, Pertamina’s
appeal encompasses questions of Swiss law.”     Pertamina made similar
arguments under Swiss procedural law in its responses to KBC’s motion
for summary judgment.
     25
          9 U.S.C. § 201, Art. V(1)(e).

                                   20
precisely, to the regimen or scheme of arbitral procedural law

under which the arbitration was conducted, and not the substantive

law . . . applied in the case.”26         In this appeal, Pertamina and the

Republic of Indonesia (the “Republic”), as amicus, argue that the

Tribunal and       the    district    court   erred    in    finding      that   Swiss

procedural law, rather than Indonesian procedural law, applied.

Pertamina    and    the     Republic    argue       that    in    the    arbitration

agreements, the parties chose Indonesian procedural, as well as

substantive, law to govern the arbitration.                      Pertamina and the

Republic assert that, as a result:              (1) the arbitration must be

examined for compliance with Indonesian procedural law; and (2) the

Indonesian court had primary jurisdiction to annul the Award,

providing a defense to enforcement in the United States.                           KBC

responds    that    the    Tribunal    properly      interpreted        the   parties’

contracts in deciding that Swiss procedural law applied and the

district    court    properly    applied      the     New   York    Convention      in

affirming that decision.        This court agrees with KBC.

     Under the New York Convention, the rulings of the Tribunal

interpreting the parties’ contract are entitled to deference.27

     26
          Int’l Standard Elec. Corp. v. Bridas Sociedad Anonima
Petrolera, Indus. y Comercial, 745 F. Supp. 172, 178 (S.D.N.Y. 1990);
see Alghanim, 126 F.3d at 21; M & C Corp. v. Erwin Behr GmbH & Co., KG,
87 F.3d 844, 848 (6th Cir. 1996).
     27
         Europcar Italia, 156 F.3d at 315; Nat’l Wrecking Co., 990 F.2d
at 960; see James Ford Inc. v. Ford Dealer Computer Serv. Inc., 56 Fed.
Appx. 324, 325 (9th Cir. 2003) (giving broad deference to an
arbitrator’s choice-of-law decision).

                                        21
Unless the Tribunal manifestly disregarded the parties’ agreement

or the law, there is no basis to set aside the determination that

Swiss procedural law applied.28 The parties’ arbitration agreements

specified that the site of the arbitration was Geneva, Switzerland

and that the arbitration would proceed under the UNCITRAL rules.

Those rules specify that the “arbitral tribunal shall apply the law

designated by the parties as applicable to the substance of the

dispute.”29     It is undisputed that the parties specified that

Indonesian substantive law would apply.30           It is also undisputed

that the      contracts   specified   the   site   of   the   arbitration    as

Switzerland.     The contracts did not otherwise expressly identify

the procedural law that would apply to the arbitration.                     The

parties did refer to certain Indonesian Civil Procedure Rules in

the contracts.31      Pertamina and the Republic argue that these

     28
          Europcar Italia, 156 F.3d at 315; Nat’l Wrecking Co., 990 F.2d
at 960.
     29
         UNCITRAL Arbitration Rules, G.A. Res. 31/98, U.N. GAOR Comm’n
Int’l       Trade      L.,      at     Art.      33(1)       (1976),
http://www.uncitral.org/english/texts/arbitration/arb-rules.htm.
     30
          Article 20 of the JOC and Section 12.1 of the ESC each
provided: “This Contract shall be governed by the laws and regulations
of [the] Republic of Indonesia.”
     31
         Pertamina and the Republic rely on the following contractual
provisions for their position:

            The parties expressly agree to waive the
            applicability of (a) Article 650.2 of the
            Indonesian Code of Civil Procedure so that the
            appointment of the arbitrators shall not terminate
            as of the sixth (6th) Month after the date(s) of
            their appointments and (b) the second sentence of
            Article 620.1 of the Indonesian Code of Civil

                                      22
references evidence an intent that while Switzerland would be the

place of the arbitration, Indonesian procedural law would apply as

the lex arbitri.

     Under the New York Convention, an agreement specifying the

place of the arbitration creates a presumption that the procedural

law of that place applies to the arbitration.32        Authorities on

          Procedure so that the arbitration need not be
          completed within the specific time.

JOC at Art. 13.2(a); ESC at § 8.2(a).

          In accordance with Section 631 of the Indonesian
          Code of Civil Procedure, the Parties agree that
          the Tribunal need not be bound by strict rules of
          law where they consider the application thereof to
          particular matters to be inconsistent with the
          spirit of this Contract and the underlying intent
          of the Parties, and as to such matters their
          conclusion shall reflect their judgment of the
          correct interpretation of all relevant terms
          hereof and the correct and just enforcement of
          this Contract in accordance with such terms.

JOC at Art. 13.2(b); ESC at § 8.2(b).

          The parties hereby renounce their right to appeal
          from the decision of the arbitral panel and agree
          that in accordance with Section 641 of the
          Indonesian Code of Civil Procedure neither Party
          shall appeal to any court . . . and accordingly
          the Parties hereby waive the applicability of
          Articles 15 and 108 of the Law No. 1 of 1950 and
          any other provision of Indonesian law and
          regulations that would otherwise give the right to
          appeal the decisions of the arbitral panel.

JOC at Art. 13.2(d); ESC at § 8.2(d).
     32
         Albert Jan van den Berg, “The Application of the New York
Convention by the Courts,” ICCA Congress Series No. 9 25, 26 (Kluwer
1999); Sir Michael J. Mustill & Stewart C. Boyd, The Law and Practice
of Commercial Arbitration in England 64 (Butterworths 2d ed. 1989);
Alain Hirsch, The Place of the Arbitration and the Lex Arbitri, 34 Arb.
J. 43, 46 (1979); Alan Scott Rau, The New York Convention in American
Courts, 7 Am. Rev. Int’l Arb. 213, 224 (1996). In their reports filed

                                  23
international arbitration describe an agreement providing that one

country will be the site of the arbitration but the proceedings

will be held under the arbitration law of another country by terms

such as    “exceptional”;    “almost       unknown”;33   a   “purely   academic

invention”;34 “almost never used in practice”;35 a possibility “more

theoretical     than   real”;   and    a     “once-in-a-blue-moon      set   of

circumstances.”36      Commentators note that such an agreement would

be complex, inconvenient, and inconsistent with the selection of a

neutral forum as the arbitral forum.37

in the district court, recognized authorities on international
arbitration retained by both Pertamina and KBC, including Albert Jan van
den Berg, Sudargo Guatama, Alan Scott Rau, and Eric A. Schwartz, agreed
that under the Convention, arbitration clauses designating the site of
the arbitration presumptively designate that site as the source of the
applicable procedural law.
     33
          Mustill and Boyd, Commercial Arbitration at 64.
     34
          Van den Berg, The Application of the New York Convention at 26.
     35
          Id.
     36
         Martin Hunter, Case and Comment:         International Arbitration,
[1988] Lloyd’s Mar. & Comm. L. Q. 23, 26.
     37
         See, e.g., Gary B. Born, International Commercial Arbitration:
Commentary and Materials 761 (2d ed. 2001). Few reported cases involve
arbitration clauses that separate the law of the forum state and the lex
arbitri. In two such English cases, Naviera Amazonica Peruana S.A. v.
Compania Internacional de Seguros del Peru, [1988] 1 Lloyd’s L. Rep. 116
(C.A. 1987), and Union of India v. McDonnell Douglas Corp., [1993] 2
Lloyd’s Rep. 48 (Q.B. 1992), the courts applied the presumption that the
procedural law of the place specified as the forum for the arbitration
would govern. Naviera Amazonica Peruana, [1988] 1 Lloyd’s L. Rep. at
119; Union of India, [1993] 2 Lloyd’s Rep. at 50. The Hong Kong court
also relied upon this presumption in determining that Swiss procedural
law governed the arbitration proceeding at issue in this case. Hong
Kong decision at 7-8.

                                      24
     In    the   JOC   and    ESC,     the      parties    expressly     agreed      that

Switzerland would be the site for the arbitration.                     This agreement

presumptively     selected         Swiss   procedural      law    to    apply   to    the

arbitration.     There is no express agreement in the JOC or ESC that

Indonesia would be the country “under the law of which” the

arbitration was to be conducted and the Award was to be made.38 The

Tribunal   recognized        the    parties’      selection      of    Switzerland     by

issuing the Award as “[m]ade in Geneva.”                  In selecting Switzerland

as the site of the arbitration, the parties were not choosing a

physical place for the arbitration to occur, but rather the place

where the award would be “made.”                   Under Article 16(1) of the

UNCITRAL rules, the “place” designated for an arbitration is the

legal rather than physical location of the forum.39 The arbitration

proceeding in this case physically occurred in Paris, but the Award

was “made in” Geneva, the place of the arbitration in the legal

sense and the presumptive source of the applicable procedural law.40

     The references in the contracts to certain Indonesian civil

procedure rules do not rebut the strong presumption that Swiss

     38
          9 U.S.C. § 201, Art. V(1)(e).
     39
         See Jacomijn J. van Hof, Commentary on the UNCITRAL Arbitral
Rules: The Application by the Iran-U.S. Claims Tribunal 109-10 (Kluwer
1991); see also UNCITRAL Arbitration Rules at Art. 16(1). Rules 16(2)
and (3) expressly permit proceedings to be conducted at a location
different from the designated “place” of the arbitration.     UNCITRAL
Arbitration Rules at Art. 16 (2)-(3). Rule 16(4) provides that “[t]he
award shall be made at the place of arbitration.” Id. at Art. 16(4).
     40
          Van Hof, Commentary on the UNCITRAL Arbitral Rules at 109-110.

                                           25
procedural law applied to the arbitration.41     These references fall

far short of an express designation of Indonesian procedural law

necessary to rebut the strong presumption that designating the

place of the arbitration also designates the law under which the

award is made.

     Pertamina and the Republic have belatedly asserted that the

district court should have conducted a choice-of-law analysis to

determine the law that would apply to the interpretation of the

parties’ contracts, rather than analyze the contracts under the New

York Convention. Pertamina and the Republic assert that the result

of such an analysis would have been to identify Indonesian law as

the decisional law under which to interpret the contracts.        This

argument is inconsistent with the position Pertamina – and its

experts   on   interpreting    international   commercial   arbitration

agreements – took earlier in this case, that the district court

should review the Tribunal’s interpretation of the contracts under

the New York Convention.      A court conducts the multifactor choice-

of-law analysis Pertamina now advocates in the absence of an

     41
         Robert N. Hornick, one of the authorities on international
arbitration and Indonesian law who submitted an affidavit and report in
the district court, provided an explanation for the references to the
Indonesian laws in the arbitration clauses unrelated to any intent to
designate Indonesia as the country under the law of which the Award
would be made. Hornick explained that each article of Indonesian law
cited in the contracts imposes a requirement inconsistent with the
contemplated arbitration. (Hornick Decl. ¶¶ 28-32). These articles
could have been invoked to oppose later enforcement of the Award in
Indonesia unless waived. By waiving in advance provisions that could
later be invoked to block enforcement of the Award in an Indonesian
court, the parties facilitated future enforcement efforts in Indonesia.
(Id.).

                                    26
effective    choice     of   law    by     the   parties    to    an   arbitration

agreement.42    In the JOC and ESC, the parties presumptively chose

Swiss procedural law as the lex arbitri when they designated

Switzerland as the site of the arbitration, and that presumption is

unrebutted.43

     As the district court, another panel of this court, and the

Hong Kong Court of First Instance have all recognized, Pertamina’s

previous    arguments    that      Swiss    arbitral   law       applied   strongly

evidence the parties’ contractual intent.44                Pertamina represented

to the Tribunal that Swiss procedural law applied.45                   As but one

example, Pertamina cited Swiss procedural law in arguing that the

     42
          REST. (2D) CONFL. §§ 187, 188, & 218 (1971).
     43
         Certain sections and comments of the Restatement also support
a determination that Swiss law applied to the arbitration agreement.
See, e.g. id. at § 188 (incorporating R EST. (2D) CONFL. § 6, which
requires consideration of the relevant policies of the forum); id. at
§ 218 cmt. b (suggesting that the arbitration forum may have the most
significant relationship to the arbitration and that a contractual
provision requiring arbitration to occur in a certain forum may evidence
an intention by the parties that the local law of this forum should
govern).
     44
          Karaha Bodas Co., 335 F.3d at 371; Hong Kong decision at 12.
     45
        See, e.g., Prelim. Award, § B(1) (“The Respondents support this
conclusion by making reference to Swiss law as the JOC and the ESC
provide for UNCITRAL Arbitration in Geneva between the parties which are
neither Swiss nor Swiss resident.       As a result, and under both
contracts, the arbitration proceedings are governed by Chapter 12 of the
Swiss Private International Law Statutes. Under Swiss law, [Respondent
contends] the Arbitral Tribunal is lacking jurisdiction because KBC
failed to comply with the contractual prerequisites to arbitration.”);
id. at § C(1) (“The Respondents also state that, under the arbitration
agreements and Swiss law, the arbitrators have no power to consolidate
. . . .”); id. at § C(3) (citing a Swiss federal tribunal case in
support of its decision that a consolidated arbitration was
appropriate); id. at § D(1) (Respondents contend that “[s]uch solution
is not acceptable under the applicable Swiss law”).

                                         27
Tribunal could not consolidate the claims under the JOC and ESC

into one proceeding.   Pertamina at no point argued to the Tribunal

that Indonesian procedural law applied. Pertamina initially sought

to set aside the Award in a Swiss court.46        Pertamina asked the

Texas district court to stay its enforcement proceeding until

Pertamina’s appeal in Switzerland was resolved.        In making this

argument, Pertamina stated that “[t]he arbitration . . . was

conducted according to the laws of Switzerland, and the Swiss court

is empowered to vacate an award rendered in Switzerland . . . .

KBC is asking this Court to act prematurely to confirm an award

that might be overturned in the country whose law governed the

arbitration.”47

     The Tribunal’s decision that Swiss arbitral law applied does

not make the Award unenforceable.48 The combination of the parties’

selection of Switzerland as the site of the arbitration; the

     46
         In the district court, Pertamina presented an affidavit and
report from an expert on international commercial arbitration that
weakly attempted to explain the appeal to the Swiss court as a mistake.
The theory that Pertamina’s lawyers erred and applied to the wrong court
for annulment – and then moved for reconsideration when that court
dismissed the appeal – is utterly without support in the record.
     47
         See Major League Baseball Players Ass’n v. Garvey, 532 U.S.
504, 509 (2001) (citations omitted) (“[I]f an ‘arbitrator is even
arguably construing or applying [a] contract and acting within the scope
of his authority,’ the fact that ‘a court is convinced he committed
serious error does not suffice to overturn his decision.’”).
     48
         Europcar Italia, 156 F.3d at 315; Nat’l Wrecking Co., 990 F.2d
at 960; see Garvey, 532 U.S. at 509 (“Courts are not authorized to
review [an] arbitrator’s decision on the merits despite allegations that
the decision rests on factual errors or misinterprets the parties’
agreement.”).

                                  28
failure clearly or expressly to choose Indonesian arbitral law in

their agreements, as required to select arbitral law other than

that of the place of the arbitration; and the clear evidence

provided by the parties’ own conduct that they intended Swiss law

to apply to the arbitration, amply supports the district court’s

determination that the Tribunal properly applied Swiss procedural

law.

       The district court also found that under the doctrine of

judicial estoppel, Pertamina’s prior conduct precluded it from

arguing against the application of Swiss procedural law.                       The

doctrine prevents a party from asserting a position in a legal

proceeding that is contrary to a position previously taken in the

same    or    earlier   proceedings.49        “The    policies    underlying   the

doctrine include preventing internal inconsistency, precluding

litigants from ‘playing fast and loose’ with the courts, and

prohibiting parties from deliberately changing positions according

to the exigencies of the moment.”50                  Fifth Circuit courts have

identified two limitations on judicial estoppel:                 (1) the position

of the party to be estopped must be clearly inconsistent with its

       49
         Hall v. GE Plastic Pac. PTE Ltd., 327 F.3d 391, 396 (5th Cir.
2003); see In re Coastal Plains, Inc., 179 F.3d 197, 205 (5th Cir. 1999)
(quoting Brandon v. Interfirst Corp., 858 F.2d 266, 268 (5th Cir. 1988))
(describing judicial estoppel as “a common law doctrine by which a party
who has assumed one position in his pleadings may be estopped from
assuming an inconsistent position”); see also Ahrens v. Perot Sys.
Corp., 205 F.3d 831, 833 (5th Cir. 2000); Ergo Sci., Inc. v. Martin, 73
F.3d 595, 598-600 (5th Cir. 1996).
       50
             United States v. McCaskey, 9 F.3d 368, 378 (5th Cir. 1993).

                                         29
prior position; and (2) the court must have accepted that prior

position.51 Judicial acceptance requires that the court adopted the

position previously urged by a party, whether as a preliminary

matter or as part of a final disposition.52

      The district court did not abuse its discretion in imposing

judicial estoppel to preclude Pertamina from arguing against the

application      of    Swiss    procedural        law.     Pertamina     repeatedly

represented to the Tribunal and to the district court that Swiss

procedural law controlled the arbitration.53               Both the Tribunal and

the   district      court     relied   on    these     representations    in   their

decisionmaking.        In the Award, the Tribunal accepted Pertamina’s

argument that Swiss procedural law applied.                   The district court

adopted Pertamina’s position that Swiss law applied in delaying the

enforcement proceedings pending the Swiss court’s resolution of the

appeal.54     Pertamina’s argument that Indonesian procedural law

governed the arbitration is clearly inconsistent with its prior

position     that     Swiss    procedural        law   controlled.55      Pertamina

belatedly suggests that its positions are not inconsistent because

      51
        Hall, 327 F.3d at 396; Ahrens, 205 F.3d at 833; Coastal Plains,
179 F.3d at 206.
      52
           Coastal Plains, 179 F.3d at 206.
      53
           See note 24.
      54
        See Coastal Plains, 179 F.3d at 206 (noting that the acceptance
prong of judicial estoppel can be satisfied by a court’s acceptance of
a party’s position “as a preliminary matter”).
     55
         See Hall, 327 F.3d at 396; Ahrens, 205 F.3d at 833; Coastal
Plains, 179 F.3d at 206.

                                            30
the New York Convention permits multiple primary jurisdictions. As

addressed more fully below, this record makes it clear that only

the   Swiss    courts    had   primary    jurisdiction       over    this   Award.

Judicial estoppel provides an additional ground for concluding that

Swiss procedural law applied to the arbitration proceeding.56

      C.      The Procedural Challenges to the Arbitral Award

      1.      Consolidation of the Claims under the JOC and ESC into
              One Arbitration Proceeding

      Under Article V(1)(d) of the New York Convention, a court may

refuse to enforce an arbitration award if “[t]he composition of the

arbitral authority or the arbitral procedure was not in accordance

with the agreement of the parties, or, failing such agreement, was

not in accordance with the law of the country where the arbitration

took place.”57     Pertamina argues that because the JOC and ESC were

separate contracts with separate arbitration clauses, and because

neither contract expressly allowed the consolidation of claims, the

Tribunal improperly consolidated the claims into one arbitration

proceeding.       Pertamina     also   contends     on     appeal   that    because

Indonesian      rather   than    Swiss        procedural    law     governed   the

      56
         See Hall, 327 F.3d at 396; Coastal Plains, 179 F.3d at 206;
Ahrens, 205 F.3d at 833. The High Court of Hong Kong Court estopped
Pertamina from asserting application of Indonesian procedural law for
the same reasons. Hong Kong decision at 9-12. The High Court also
emphasized the dilatoriness of Pertamina’s argument:        “Pertamina’s
position on the [applicable procedural law] only changed 30 months after
the preliminary award was published, 15 months after the Final award
(December 2000) and seven months after the Swiss Court dismissed the
petition for revision (August 2001).” Id. at 11.
      57
           9 U.S.C. § 201, Art. V(1)(d).

                                         31
arbitration, the Tribunal’s reliance on Swiss procedural law to

consolidate the claims was erroneous.

     The Tribunal carefully analyzed the parties’ contracts in

concluding that a consolidated arbitration of KBC’s claims against

Pertamina and PLN under the JOC and ESC was appropriate.             In

factual findings set out in the Preliminary Award, the Tribunal set

out the basis for concluding that the two contracts were integrated

such that “the parties did not contemplate the performance of two

independent contracts but the performance of a single project

consisting   of   two   closely   related   parties.”58   The   Tribunal

continued:

           In such circumstances, the conclusion of this
           Arbitral Tribunal is that KBC’s single action
           should   be    admitted,   provided    it   is
           appropriate.   The Arbitral Tribunal has not
           the slightest doubt in this respect. Due to
           the integration of the two contracts and the
           fact that the Presidential Decrees, the
           consequences of which are at the origin of the
           dispute, affected both of them, the initiation
           of   two  separate   arbitrations   would   be
           artificial and would generate the risk of
           contradictory decisions. Moreover, it would
           increase the costs of all the parties
           involved, an element of special weight in the
           light of difficulties faced by the Indonesian
           economy, to which counsel for [Pertamina]

     58
         Article 15.3 of the ESC provided that “the terms of [the ESC]
and the Joint Operation Contract constitute the entire agreement between
the parties hereto.” Article 1.2 of the JOC stated that “[e]ach such
Energy Sales Contract shall be an integral part of this contract, and
to the extent the provisions of the Energy Sales Contract obligate the
parties hereto, shall be deemed incorporated into this contract for all
purposes.” Pertamina and KBC entered into the JOC and ESC on the same
day.   The JOC and the ESC contained virtually identical arbitration
provisions.

                                    32
            legitimately      drew     the      Arbitral   Tribunal’s
            attention.

The record provides ample support for the Tribunal’s findings and

conclusion that the two contracts were integrated such that the

parties contemplated a single arbitration.

     The Tribunal cited the Swiss law concept of “connexity” in

analyzing the legal relations among KBC and Pertamina under the JOC

and KBC, Pertamina, and PLN under the ESC as one of the factors

justifying the consolidation of claims under the two contracts into

one arbitration proceeding.                The Tribunal concluded that the

relationship     of   the   JOC      and     ESC   exceeded   the   standard   of

“connexity” under Swiss law.          “The use of the word ‘connexity’ to

describe the relationship between the JOC and the ESC would be an

understatement.       In reality, the two contracts are integrated.”

Courts    and   arbitration    tribunals        have   recognized   that   claims

arising under integrated contracts may be consolidated into single

arbitrations.59    The Tribunal cited one other factor that supported

     59
         See, e.g., Conn. Gen. Life Ins. Co. v. SunLife Assur. Co. of
Canada, 210 F.3d 771, 774 (7th Cir. 2000); Maxum Found., Inc. v. Salus
Corp., 817 F.2d 1086, 1087-88 (4th Cir. 1987). Pertamina cites cases
decided under the FAA and the law of different American jurisdictions
for the proposition that courts do not have the authority to order
arbitrations without the parties’ approval.     See, e.g., Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985) (“The preeminent
concern of Congress in passing the [FAA] was to enforce private
agreements into which parties had entered, and that concern requires
that we rigorously enforce agreements to arbitrate, even if the result
is ‘piecemeal’ litigation . . . .”); Gov’t of the United Kingdom and N.
Ireland v. Boeing Co., 998 F.2d 68, 74 (2d Cir. 1993); Protective Life
Ins. Co. v. Lincoln Nat. Life Ins. Corp., 873 F.2d 281, 282 (11th Cir.
1989). These cases do not involve contracts so closely related as to
manifest the parties’ agreement to be joined in arbitration proceedings
involving parties and claims under those integrated contracts.

                                           33
consolidation:     “appropriateness.”      The parties agreed to the

application of the UNCITRAL Rules, which permit a tribunal to

conduct    an   arbitration   “in   such   manner     as   it   considers

appropriate.”60   Pertamina does not dispute the application of the

UNCITRAL Rules to the arbitration proceeding.

     Courts are reluctant to set aside arbitral awards under the

New York Convention based on procedural violations, reflected in

cases holding that the Convention embodies a proenforcement bias.61

The Tribunal emphasized in its Preliminary Award that although the

claims would be consolidated, “the position of each party has to be

considered independently when discussing the substance of the case,

on the basis of their respective legal and contractual situations.”

The record reflects that the Tribunal kept this promise.         There is

no prejudice arising from the consolidation that would justify a

refusal to enforce the Award.

     2.     The Composition of The Tribunal

     Under Article V(1)(d), a court may refuse enforcement of an

arbitral award if the composition of the tribunal is not in

     60
          UNCITRAL Arbitration Rules at Art. 15(1).
     61
         See, e.g., China Minmetals Materials Imp. and Exp. Co., Ltd. v.
Chi Mei Corp., 334 F.3d 274, 282-83 (3d Cir. 2003); Glencore Grain
Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1120 (9th
Cir. 2000); Alghanim, 126 F.3d at 20; Parsons & Whittemore Overseas, 508
F.2d at 973; Compagnie des Bauxites de Guinee v. Hammermills, Inc., 1992
WL 122712, at *5 (D.D.C. May 29, 1992); Am. Constr. Mach. & Equip. Corp.
Ltd. v. Mechanised Constr. of Pakistan, Ltd., 659 F. Supp. 426, 428
(S.D.N.Y. 1987).

                                    34
accordance with the parties’ agreement.62       The JOC provided for the

appointment of arbitrators, as follows:

              Each Party [KBC and Pertamina] will appoint an
              arbitrator within thirty (30) days after the
              date of a request to initiate arbitration, who
              will then jointly appoint a third arbitrator
              within thirty (30) days of the date of the
              appointment of the second arbitrator, to act
              as Chairman of the Tribunal. Arbitrators not
              appointed within the time limits set forth in
              the preceding sentence shall be appointed by
              the Secretary General of the International
              Center for Settlement of Investment Disputes.

The   ESC    procedure   for   arbitrators’   appointment   was    slightly

different:

              PLN on one hand, and [KBC] and PERTAMINA, on
              the other hand, will each appoint one
              arbitrator, in each case within thirty (30)
              days after the date of a request to initiate
              arbitration, who will then jointly appoint a
              third arbitrator within thirty (30) days of
              the date of the appointment of the second
              arbitrator, to act as Chairman of the
              Tribunal.   Arbitrators not appointed within
              the time limits set forth in the preceding
              sentence shall be appointed by the Secretary
              General of the International Center for
              Settlement of Investment Disputes, upon the
              request of any Party.

Each contract required the appointment of arbitrators within thirty

days of the notice of arbitration and provided for appointment by

the ICSID in the event that a party did not do so.

      In its notice of arbitration sent to Pertamina, KBC appointed

Professor Piero Bernardini to serve as an arbitrator.             Pertamina

did not designate an arbitrator within thirty days, nor did it

      62
            9 U.S.C. § 201, Art. V(1)(d).
                                     35
object to KBC’s selection at that time.                      By letter dated June 2,

1998, KBC notified the ICSID of Pertamina’s inaction and requested

the    appointment      of    a    second          arbitrator    under     the     default

appointment provisions of the contracts. Pertamina did not respond

to this letter.        The ICSID questioned KBC about the consolidation

of    claims   under    the       JOC   and    the     ESC     and   KBC’s   unilateral

appointment of an arbitrator.             KBC responded by letter dated June

22, 1998.      The ICSID confirmed receipt of KBC’s letters and in a

June    29,    1998    letter      to    all        parties,    recapped     the     prior

correspondence, noted Pertamina’s failure to respond, and expressed

its intent to grant KBC’s request to appoint the second arbitrator.

The ICSID Secretary-General identified Dr. Ahmed El-Kosheri as its

candidate and asked for any objections by July 13, 1998.                         The ICSID

sent all the preceding correspondence to PLN by courier and to

Pertamina by fax and courier.                  Despite the Secretary-General’s

invitation to do so, neither Pertamina nor PLN lodged objections or

responses to the proposed appointment.                   On July 13, 1998, having

received no communications from Pertamina, the ICSID notified

Pertamina and PLN of its intent to appoint Dr. El-Kosheri and made

the appointment on July 15, 1998.                  Under the JOC and ESC, Professor

Bernardini and Dr. El-Kosheri then selected the chairman of the

arbitration panel, Yves Derains.

       In its Preliminary Award, the Tribunal rejected Pertamina’s

argument that KBC’s selection of an arbitrator violated the ESC’s

requirement that KBC and Pertamina jointly make the nomination.

                                              36
The   Tribunal    found     that     the   parties      intended       to    limit    that

requirement to disputes in which PLN was opposed to KBC and

Pertamina.      Because the ESC did not expressly address the method

for appointing arbitrators when KBC and Pertamina opposed each

other, the Tribunal found that UNCITRAL Arbitration Rules for

appointment applied.           The Tribunal ruled that the appointment

procedures used did not violate these rules or create an inequality

of treatment.          The Tribunal emphasized Pertamina’s failure to

nominate an arbitrator or object to those nominated.                        The district

court agreed with the Tribunal’s reasoning and added that Pertamina

had failed to demonstrate any prejudice from the appointment

proceedings.

      On     appeal,    Pertamina     reasserts        its     argument      that    KBC’s

unilateral      selection      of     an   arbitrator          violated      the     ESC’s

requirement that “PLN on the one hand and [KBC] and Pertamina, on

the other hand, will each appoint one arbitrator.”                            Pertamina

contends that its interests would always be aligned with KBC under

the   ESC,    which     required     PLN   to    purchase       from   Pertamina         the

electricity      that    KBC   provided,         and    that    this    explains         the

contractual      requirement        that   KBC    and    Pertamina      agree       on    an

arbitrator in a dispute arising under that contract.                        In response,

KBC argues that the Tribunal correctly found that a dispute between

KBC and Pertamina was possible under the ESC, but in the event of

such a dispute, the ESC did not provide a procedure for choosing an

arbitrator. KBC asserts that the Tribunal correctly found that the

                                           37
general UNCITRAL rules for selecting an arbitrator would apply,

under      which    KBC,   Pertamina,      and   PLN   would      each     appoint     an

arbitrator.         In addition, KBC argues that the district court

correctly found that Pertamina had failed to object to KBC’s

selection of Professor Bernardini as an arbitrator and failed to

nominate an arbitrator despite the ICSID’s requests.                     Finally, KBC

argues that Pertamina cannot show prejudice that would make the

Award unenforceable.

      The     ESC    arbitration     clause      refers      to   “any     dispute     or

difference of any kind whatsoever” arising among “the Parties.”

Section 2 of the ESC defines “parties” to include PLN, Pertamina,

and KBC.      By its terms, the arbitration clause covers a dispute

between KBC and Pertamina arising under the ESC, as well as a

dispute in which the interests of KBC and Pertamina are aligned.

If   the    ESC     required   KBC   and   Pertamina        jointly   to      select   an

arbitrator for disputes in which KBC and Pertamina were opposed, as

Pertamina contends, Pertamina could effectively block arbitration

under the ESC simply by refusing to agree with KBC to the selection

of an arbitrator.           Such an interpretation would make the ESC

arbitration clause illusory.            In addition, Pertamina had numerous

opportunities early in the proceedings to object to KBC’s selection

of Professor Bernardini as an arbitrator and to nominate its own

arbitrator.         Pertamina did not challenge the composition of the

arbitral panel until after the entire panel had been selected and

seated.       Pertamina’s      failure     timely      to    object      to   Professor

                                           38
Bernardini’s selection and to nominate its own arbitrator was, as

the district court noted, a strategic decision that Pertamina

should not now be able to assert as a defense to enforcing the

Award.63

     Pertamina has failed to meet its burden of showing that the

Tribunal was improperly constituted.            The Tribunal reasonably

interpreted the ESC’s arbitration provisions and reasonably applied

the UNCITRAL arbitration rules.          Despite numerous opportunities,

Pertamina failed to challenge the Tribunal’s composition until

after the arbitrators were selected.         The procedural infirmities

Pertamina alleges do not provide grounds for denying enforcement of

the Award.

     D.      The Due Process Challenges to the Arbitral Award

     Under Article V(1)(b), enforcement of a foreign arbitral award

may be denied if the party challenging the award was “not given

proper notice of the appointment of the arbitrator or of the

arbitration proceedings or was otherwise unable to present [its]

case.”64   Article V(1)(b) “essentially sanctions the application of

the forum state’s standards of due process,” in this case, United

     63
         Pertamina apparently argued to the Tribunal that it did not
name an arbitrator because it was contesting the legitimacy of the
arbitration and further contended that it did not receive certain
correspondence from ICSID regarding KBC’s request that the ICSID appoint
a second arbitrator. Pertamina, however, did not make these arguments
before the district court.
     64
           9 U.S.C. § 201, Art. V(1)(b).
                                    39
States standards of due process.65           A fundamentally fair hearing

requires that a party to a foreign arbitration be able to present

its case.66   A fundamentally fair hearing is one that “meets ‘the

minimal requirements of fairness’ – adequate notice, a hearing on

the evidence, and an impartial decision by the arbitrator.”67             The

parties must have an opportunity to be heard “at a meaningful time

and in a meaningful manner.”68       “The right to due process does not

include the complete set of procedural rights guaranteed by the

Federal Rules of Civil Procedure.”69

     1.     The Claim that the Final Award “Reversed” the Preliminary
            Award

     Pertamina    first   contends    that    the   Tribunal   reversed   the

Preliminary Award in the Final Award without notice, denying

Pertamina the opportunity to be “meaningfully heard.”             Pertamina

emphasizes the Tribunal’s ruling that “a governmental decision

which prevents KBC [from] perform[ing] its obligations is not

deemed to be a breach of contract by Pertamina or PLN but a Force

     65
        Iran Aircraft Indus. v. Avco Corp., 980 F.2d 141, 145 (2d Cir.
1992) (quoting Parsons & Whittemore Overseas, 508 F.2d at 975).
     66
        Slaney v. Int’l Amateur Athletic Fed’n, 244 F.3d 580, 592 (7th
Cir. 2001); Generica, Ltd. v. Pharm. Basics, Inc., 125 F.3d 1123, 1130
(7th Cir. 1997).
     67
        Slaney, 244 F.3d at 592 (quoting Sunshine Mining Co. v. United
Steelworkers, 823 F.2d 1289, 1295 (9th Cir. 1987)); Generica, 125 F.3d
at 1130 (quoting same).
     68
          Iran Aircraft Indus., 980 F.2d at 146 (citations omitted).
     69
         Matter of Arbitration Between Trans Chem. Ltd. and China Nat.
Mach. Imp. & Exp. Corp., 978 F. Supp. 266, 310 (S.D. Tex. 1997), aff’d,
161 F.3d 314 (5th Cir. 1998).
                                     40
Majeure event excusing KBC’s nonperformance.”

     The Tribunal stated in the Preliminary Award that the force

majeure clause in the JOC and ESC made a “government-related event”

an event of force majeure only with respect to KBC.                  The Tribunal

stated that Pertamina and PLN were so closely related to the

Indonesian government that a decision by the Indonesian government

was not a force majeure event as to them.                  In its briefing before

the Tribunal made its Final Award, KBC argued that under the

contract     language    and    given    the       close    relationship   between

Pertamina and the Indonesian government, Pertamina bore the risk of

loss from a force majeure event under the JOC and ESC.                  Pertamina

responded that in the Preliminary Award, the Tribunal had ruled

that acts of force majeure by the Indonesian government are not

breaches of the JOC and ESC and that to award KBC damages would be

incompatible with that ruling.            In the Final Award, the Tribunal

found that the Indonesian government’s actions were an event of

force majeure that excused KBC’s failure to perform under the JOC

and ESC.     The Tribunal stated that this finding did not contradict

its ruling in the Preliminary Award that the Indonesian government

was not a party to the JOC or ESC, because that ruling “was not

meant   to     express    any     view        as    to     the   consequences   to

Pertamina . . . of a Governmental decision which prevents the

performance of the Contracts.”

     The record shows that Pertamina knew it could be found liable

for nonperformance after the Preliminary Award had issued.                  After

                                         41
the Preliminary Award issued, KBC argued to the Tribunal that

Pertamina bore the risk of nonperformance under the JOC and ESC in

the event of force majeure.              KBC’s argument clearly assumed that

the Preliminary       Award     allowed     the    Tribunal   to   find    that   the

contracts     placed      the     risk     of,     and    liability       for,    such

nonperformance       on   Pertamina.        In     response   to   that    argument,

Pertamina had, and took, the opportunity fully to present its

arguments against KBC’s theory of liability.

       The   Final   Award      shows    that     the   Tribunal   considered     and

rejected Pertamina’s argument in making its liability decision.

The Tribunal concluded that the JOC and ESC allocated the risk of

government interference with the project solely to Pertamina and

PLN.    In this enforcement proceeding, Pertamina is essentially

repeating the arguments it made to the Tribunal.                    The fact that

those arguments were presented to and considered by the Tribunal is

inconsistent with Pertamina’s claim that it had no notice of the

need to make the argument to that Tribunal or the opportunity to do

so. Pertamina did not suffer the fundamental unfairness it claims,

so as to support a refusal to enforce the Award.70

       2.    The Tribunal’s Denial of a Continuance and Request for
             Additional Discovery

       To challenge KBC’s contention that FPL was willing to finance

the project, Pertamina sought in the arbitration proceeding a

     70
         See Europcar Italia, 156 F.3d at 315 (“Absent extraordinary
circumstances, a confirming court is not to reconsider the arbitrator’s
findings.”).
                                          42
continuance and discovery of the following documents from KBC, FPL,

and Caithness regarding the financing of the KBC project:

             (1)   All documents relating to efforts to
                   obtain financing for the Karaha-Bodas
                   project during the period September 1997
                   through June 1998.

             (2)   All documents showing any consideration
                   of providing direct financing (whether
                   through   bridge   financing,   a   loan
                   guarantee, or direct equity investment)
                   for the Karaha-Bodas project during the
                   period September 1997 through June 1998.

             (3)   All documents relating to FPL’s, its
                   subsidiaries’,   or   its   predecessors’
                   consideration of whether to invest in the
                   Karaha-Bodas project.

             (4)   All documents relating to FPL’s, its
                   subsidiaries’,   or   its   predecessors’
                   decision to invest in the Karaha-Bodas
                   project,   stated   variously   to   have
                   occurred in mid-1996 or mid-1997.

             (5)   All documents sent by KBC to FPL, its
                   subsidiaries,    or   its    predecessors
                   following the investment identified in
                   ¶ 4 and concerning geothermal exploration
                   and development in the Karaha-Bodas
                   concession area (whether such exploration
                   occurred before or after the investment).

             (6)   All documents relating to evaluation by
                   each, any and all of KBC, FPL (or
                   subsidiaries   or   predecessors),  and
                   Caithness whether to proceed with the
                   Karaha-Bodas project during the period
                   September 1997 through June 1998.

The Tribunal denied Pertamina’s request.

     After     Pertamina   discovered     that   FPL    and   certain    other

investors     in   KBC   owned   a   political   risk    insurance      policy

underwritten by Lloyd’s of London, which had paid $75 million after

                                     43
the project suspension, Pertamina sought reconsideration of the

district court’s summary judgment enforcing the Award under Rule

60(b).      The district court found that Pertamina’s inability to

introduce evidence of the insurance policy at the arbitration did

not prevent the presentation of its case to the Tribunal.             The

district court also held that KBC’s failure to bring the insurance

policy to the Tribunal’s attention did not make enforcing the Award

a violation of public policy.       We agree.

     “An ‘arbitrator is not bound to hear all of the evidence

tendered by the parties . . . .     [He] must give each of the parties

to the dispute an adequate opportunity to present its evidence and

arguments.’”71 It is appropriate to vacate an arbitral award if the

exclusion of relevant evidence deprives a party of a fair hearing.72

“Every failure of an arbitrator to receive relevant evidence does

not constitute misconduct requiring vacatur of an arbitrator’s

award.    A federal court may vacate an arbitrator’s award only if

the arbitrator’s refusal to hear pertinent and material evidence

prejudices     the   rights   of   the   parties   to   the   arbitration

proceedings.”73

     71
         Generica, 125 F.3d at 1130 (quoting Hoteles Condado Beach, La
Concha and Convention Ctr. v. Union de Tronquistas Local 901, 763 F.2d
34, 39 (1st Cir. 1985)); see Slaney, 244 F.3d at 592 (cautioning that
“parties that have chosen to remedy their disputes through arbitration
rather than litigation should not expect the same procedures they would
find in the judicial arena”).
     72
          Generica, 125 F.3d at 1130; Slaney, 244 F.3d at 592.
     73
            Hoteles Condado Beach, 763 F.2d at 40 (internal citations
omitted).
                                    44
     Although the Tribunal denied Pertamina the specific discovery

it sought on the issue of FPL financing, Pertamina was able to

cross-examine the KBC witnesses who testified that FPL was willing

to provide financing for the project, Leslie Gelber and Robert

McGrath.   Before those witnesses testified, Pertamina had already

presented substantial evidence in its response to KBC’s Statement

of Claim as to why KBC would not have been able to secure financing

for the project, emphasizing the depressed state of the Indonesian

economy and its unattractiveness to investors. Pertamina argued to

the Tribunal that KBC had presented no documentary evidence of

FPL’s willingness to finance the project and asserted that FPL

would have required such a high rate of interest because of the

risk involved as to make the KBC venture unprofitable.

     The Tribunal found that “the issue remained open in 1998 of

the terms and conditions upon which financing could have been

obtained for the Project development.”    The Tribunal noted that

“the worsening of the economic and political situation in Indonesia

at the time has to be taken into account as regards both the

conditions at which financing could have been obtained and possible

delays in arranging the same.”   The Tribunal, however, noted that

the parties contemplated the possibility of a delay in arranging

financing, because the ESC provided that the contract could be

suspended for   up to two years if KBC was unable to arrange

financing for the project.   The Tribunal also noted KBC’s efforts

to reinstate the project after the initial government suspension

                                 45
order, finding that KBC was ready and willing to secure financing

for the project.             The Tribunal found the testimony of KBC’s

witnesses        on     financing   credible,        stating   that    it   had   “no

reason . . . to cast doubts about KBC’s readiness, directly and/or

through     its       shareholders,   to     make     provision     thereof.”       In

determining the lost profits, the Tribunal considered all the risks

of the project, including the potential difficulties in arranging

financing that Pertamina cited, and “significantly reduc[ed]” the

amount of lost profits claimed by KBC.

      In Generica, Ltd. v. Pharmaceutical Basics, Inc.,74 the party

opposing enforcement of an international arbitration award argued

that the tribunal curtailed cross-examination of a witness, in

violation of the party’s due process right to present its case.75

The   tribunal,         recognizing   that      it   had   curtailed      the   cross-

examination,           placed   diminished       reliance      on   the     witness’s

testimony.76          The court found that by limiting the reliance on the

witness’s testimony, the arbitrators eliminated the possibility of

prejudice to the party claiming a due process violation.77                         The

court confirmed the award.78          As in Generica, the Tribunal appears

to have given all the evidence as to damages, including the

      74
           125 F.3d 1123 (7th Cir. 1997).
      75
           Id. at 1129-31.
      76
           Id. at 1131.
      77
           Id.
      78
           Id.
                                           46
availability     of     financing,   appropriate   weight   in   determining

liability and damages.

     In Tempo Shain Corp. v. Bertek, Inc.,79 the arbitral panel did

not allow a potential witness to testify on the basis that the

witness’s    testimony     was   cumulative.80     The   court   vacated   the

arbitral award.81        The record showed that the witness would have

testified to facts that only he could have known, making his

testimony essential.82        Similarly, in Hoteles Condado Beach, La

Concha and Convention Center v. Union de Tronquistas Local 901,83

the court vacated an award because the arbitral panel refused to

give any weight to the only evidence available to the losing

party.84    In the present case, by contrast, the Tribunal’s language

in the Final Award and the record show that the testimony about

FPL’s willingness to provide financing was only one factor relevant

to damages.     KBC raised the possibility of FPL’s direct financing

only in response to Pertamina’s affirmative defense that KBC could

not have financed the project. Pertamina did not seek discovery on

KBC’s efforts to finance the project in the arbitration proceeding

until after KBC filed its rebuttal to the response to the Statement

     79
           120 F.3d 16 (2d Cir. 1997).
     80
           Id. at 20.
     81
           Id. at 21.
     82
           Id. at 20.
     83
           763 F.2d 34 (1st Cir. 1985).
     84
           Id. at 40.
                                       47
of Claim, despite the fact that Pertamina raised the issue as an

affirmative defense.

     The record shows that the Tribunal’s refusal to grant a

continuance and additional prehearing discovery did not “so affect

the rights of [Pertamina] that it may be said that [it] was

deprived of a fair hearing.”85         Pertamina was able to present

comprehensive evidence of investment conditions in Indonesia and

expert opinions on the availability of financing, as well as cross-

examine Gelber and McGrath on FPL’s asserted willingness and

ability to provide financing.86

     Pertamina contends that the late revelation of the political

risk insurance policy refutes KBC’s contention in the arbitration

that FPL was willing to finance KBC to protect the $40 million it

had previously invested in KBC.        The existence of the political

insurance policy was not “central or decisive” to Pertamina’s

case.87   In order to show damages, KBC had to show that if the

project had not been suspended, KBC could have proceeded to perform

     85
        Newark Stereotypers’ Union No. 18 v. Newark Morning Ledger Co.,
397 F.2d 594, 599 (3d Cir. 1968).
     86
        Pertamina acknowledges that it specifically examined Gelber and
McGrath about the existence of documents regarding FPL’s willingness to
finance the project. Pertamina states that the Tribunal had to instruct
McGrath to answer the question directly, demonstrating that McGrath was
an “evasive” witness. The Tribunal observed McGrath testify and was
able to make the credibility judgment that he either lacked knowledge
of such documents or was unwilling to discuss them. Cf. United States
v. Garza, 118 F.3d 278, 283 (5th Cir. 1997) (noting that a district
court is in the best position to judge the credibility of witnesses and
refusing to “second-guess” the lower court’s judgment on the issue).
     87
         Cf. Hoteles Condado Beach, 763 F.2d at 40 (denial of party’s
only evidence was ground for vacating award).
                                  48
by obtaining financing.      The record amply supports KBC’s position

that KBC and FPL had already invested substantial money before the

Indonesian government issued its suspension order.                 The existence

of the political risk insurance policy is not inconsistent with the

testimony of Gelber and McGrath that FPL intended to finance the

project and would have done so but for the suspension decreed by

the government of Indonesia.             The existence of political risk

insurance     for   the   project    is       not   inconsistent     with    FPL’s

willingness to invest had the project not been suspended, that is,

if the risk insured against had not occurred.                    The Tribunal’s

damages analysis      and   the   lost    profits     award     depended    on   the

assumption that the project continued, that is, that the suspension

had not taken place.

     Pertamina’s     argument     that    KBC’s     political    risk   insurance

policy undermines the Tribunal’s finding that the JOC and ESC

placed the risk of a government-related event on Pertamina is also

unavailing.     The Tribunal determined that the JOC and ESC placed

the risk of nonperformance due to a government-related event on

Pertamina based on a well-reasoned, detailed analysis of the

contract terms.88 The existence of a political risk policy does not

     88
         See, e.g., Talman Home Fed. Sav. & Loan Ass’n of Ill. v. Am.
Bankers Ins., 924 F.2d 1347, 1351 (5th Cir. 1991) (quoting Republic
Nat’l Bank of Dallas v. Nat’l Bankers Life Ins. Co., 427 S.W.2d 76, 79
(Tex. App. – Dallas 1968, writ ref’d)) (“The cardinal rule of
construction as applied to all contracts is to ascertain the intention
of the parties as expressed in the language used in the instrument
itself. It is the intention and purpose of contracting parties, as
disclosed within the four corners on the instrument which should
control.”).
                                         49
undermine   this   result.   Moreover,   the   political   risk   policy

contained a subrogation provision that required KBC to reimburse

the insurer if KBC recovered its losses from another source.89       The

existence of the political risk policy is not inconsistent with the

contractual allocation of risk.

     The Tribunal asked McGrath whether FPL had purchased “OPIC

insurance,” a form of political risk insurance.      McGrath responded

that he did not know the answer to the question.           Pertamina’s

counsel did not follow up on the Tribunal’s questioning.          At the

conclusion of the hearing, the Tribunal chair asked the parties

whether the discovery requests were “maintained, all of them, part

of them, because we would like to know on what we have to decide.”

The response from counsel for Pertamina was as follows:

            [T]he purpose of discovery is to prepare for
            the hearing, it is not to supplement the
            record after the hearing.     So I think the
            discovery requests are moot, and if discovery
            is now permitted, then you have to re-open the
            proceedings and so on.        So I treated,
            notwithstanding   the   fact   that   it   was
            theoretically open, I treated this request as
            effectively being denied, and we went forward.

     89
         This subrogation provision undermines Pertamina’s additional
argument that, in the alternative, it is entitled to a $75 million
offset from the political risk insurance payout. Pertamina argues that
enforcement of the judgment, in combination with the insurance proceeds,
will permit KBC double recovery in violation of the single-satisfaction
rule. See Tompkins v. Cyr, 202 F.3d 770, 785 (5th Cir. 2000). The
subrogation provision of the political risk insurance policy, however,
requires that to the extent the insured obtains any recovery from a
judgment against Pertamina, the insured is obligated to repay the
insurer. In addition, payment by a collateral source does not typically
diminish a judgment debt.     See Global Petrotech, Inc. v. Engelhard
Corp., 58 F.3d 198, 202 (5th Cir. 1995).       There will be no double
recovery, and Pertamina is not entitled to a credit.
                                  50
           Our request went to the purported financial
           ability, the purported financing that would
           have been made available and other things, and
           I think the record on that has been fully
           made. I am prepared to rest on that record,
           and so I think the discovery requests should
           no longer be in the picture.

The parties submitted extensive posttrial briefs.         In the Final

Award, issued in December 2000, the Tribunal stated that all

parties had “waived their respective requests for discovery” at the

conclusion of the hearing.

     Pertamina asserts that it did not waive its requests for

discovery because the Tribunal denied the request before the

hearing, when the discovery could have been of use.           Pertamina

ignores the fact that in international commercial arbitration, it

is not uncommon to ask for additional discovery or information

after a hearing, to request additional sessions of a hearing to

submit more evidence, or to file posthearing submissions.90      Rather

than renew its requests for discovery into FPL’s willingness to

finance the project or to assert a request for discovery into FPL’s

political risk insurance, Pertamina’s counsel expressly stated that

     90
         See, e.g., UNCITRAL Arbitration Rules at Art. 15(2), 29(2)
(stating that a party may request at any stage of the proceeding a
hearing for presentation of evidence and that a tribunal may reopen
hearings at any time upon request of a party); Jay E. Grenig,
Alternative Dispute Resolution with Forms, § 5.76 (2d ed. 1997)
(including in a description of the customary order of arbitration
proceedings the “submission of post-hearing briefs”). See also Lincoln
Nat’l Life Ins. Co. v. Payne, 286 F. Supp. 2d 1023, 1026 (S.D. Ia. 2003);
Techcapital Corp. v. Amoco Corp., 2001 WL 267010, at * 2 (S.D.N.Y. March
19, 2001); Mays v. Lanier Worldwide, Inc., 115 F. Supp. 2d 1330, 1342
(M.D. Ala. 2000); I. Appel Corp. v. Katz, 1999 WL 287370, at * 3 n.2
(S.D.N.Y. May 6, 1999); United Foods, Inc. v. W. Conference of Teamsters
Pension Trust Fund, 816 F. Supp. 602, 607 (N.D. Ca. 1993).
                                  51
the record had been “fully made” and that he was “prepared to rest

on the record.” The record supports the Tribunal’s conclusion that

the discovery requests made before the hearing had been waived.

Pertamina did not ask for discovery into political risk insurance

until it filed its Rule 60(b) motion in the district court.

     The   Tribunal’s    denial   of    a   continuance   and   additional

discovery did not prevent Pertamina from presenting its case, so as

to deprive it of a fair hearing.             Pertamina presented ample

evidence in support of its position that KBC would be unable to

find financing.   The Tribunal considered Pertamina’s evidence and

gave it considerable weight, awarding KBC damages substantially

lower than the amount it sought.91 Pertamina has failed to show the

prejudice required to decline enforcement of the Award on this

ground.

     3.    The District Court’s Denial of Pertamina’s Rule 56(f)
           Discovery Request

     In the district court, after KBC moved for summary judgment on

its application   to    enforce   the   Award,   Pertamina   moved   for a

continuance under Rule 56(f) and sought the same discovery on

FPL’s willingness and ability to provide project financing that it

had sought in the arbitration.     The district court denied the Rule

56(f) motion.

     91
          KBC sought $512.5 million in lost profits.      The Tribunal
awarded KBC $150 million in lost profits. The Tribunal also awarded KBC
$111.1 million in lost expenditures.
                                   52
     The denial of a Rule 56(f) discovery request is reviewed for

abuse of discretion.92     The district court may not simply rely on

vague assertions that additional discovery will produce needed, but

unspecified, facts.93     “If it appears that further discovery will

not produce evidence creating a genuine issue of material fact, the

district court may, in the exercise of its discretion, grant

summary judgment.”94    As one court has explained:

            In judging discovery requests in this context
            [of   an    arbitration   award   confirmation
            proceeding], the court must weigh the asserted
            need for hitherto undisclosed information and
            assess the impact of granting such discovery
            on the arbitral process. The inquiry is an
            entirely practical one, and is necessarily
            keyed to the specific issues raised by the
            party challenging the award and the degree to
            which    those   issues   implicated   factual
            questions that cannot be reliably resolved
            without some further disclosure.95

     The record shows that in the arbitration, Pertamina was able

to present substantial evidence regarding the Indonesian economy,

the problems in securing financing for projects in Indonesia, and

the projected electrical generating capacity of the project.            The

Tribunal    took   Pertamina’s   arguments   into   account   in   awarding

     92
        Resolution Trust Corp. v. Sharif-Munir-Davidson Dev. Corp., 992
F.2d 1398, 1401 (5th Cir. 1993).
     93
          Int’l Shortstop v. Rally’s, Inc., 939 F.2d 1257, 1267 (5th Cir.
1991).
     94
           Krim v. BancTexas Group, Inc., 989 F.2d 1435, 1442 (5th Cir.
1993).
     95
         Lummus Global Amazonas S.A. v. Aguaytia Energy del Peru S.R.
Ltda., 256 F. Supp. 2d 594, 626 (S.D. Tex. 2002) (citations omitted).
                                    53
significantly    less    in   lost   profits   than   KBC   had   sought.   The

Tribunal did not solely rely on FPL’s willingness to finance the

project in determining that KBC was ready to “directly, and/or

through its shareholders,” finance the project.             The Tribunal also

looked to KBC’s efforts to convince the Indonesian government to

restart the project in making this finding.            The record supports

the district court’s denial of a continuance to permit further

discovery on KBC’s ability to finance the project.

     The district court also noted Pertamina’s counsel’s statement

at the conclusion of the arbitration hearing that “the record on

[the financing issue] ha[d] been fully made.” Pertamina has failed

to show that the discovery it sought in the district court would

have created disputed fact issues material to determining whether

Pertamina     received   a    fundamentally    fair    hearing    before    the

Tribunal.96     Because the issue of financing could be reliably

resolved without the requested discovery, the district court did

not abuse its discretion in denying Pertamina’s Rule 56(f) motion.97

     96
          See Krim, 989 F.2d at 1442.
     97
         See Lummus Global Amazonas, 256 F. Supp. 2d at 626; Resolution
Trust Corp., 992 F.2d at 1401. For the same reasons, the district court
did not err by refusing to permit additional discovery or host an
evidentiary hearing before ruling on Pertamina’s Rule 60(b) motion. See
Provident Life and Accident Ins. Co. v. Goel, 274 F.3d 984, 999 (5th
Cir. 2001) (noting that the only issues on an appeal of a Rule 60(b)
motion are the propriety of the denial of relief and whether the
district court abused its discretion in denying relief).
                                      54
     E.      The Public Policy Challenge to the Arbitral Award

     Pertamina      asserts   that   the    Award   violated   public   policy

because it violated the international law doctrine of abuse of

rights.     Pertamina contends that the Award imposes punishment for

obeying a government decree.          Pertamina also asserts that KBC’s

failure to disclose the political risk insurance policy during the

arbitration makes enforcement of the Award a violation of public

policy.

     Under Article V(2)(b) of the New York Convention, a court may

refuse to recognize or enforce an arbitral award if it “would be

contrary to the public policy of that country.”98 The public policy

defense is to be “construed narrowly to be applied only where

enforcement would violate the forum state’s most basic notions of

morality     and    justice.”99      “The   general   pro-enforcement      bias

informing the convention . . . points to a narrow reading of the

public     policy     defense.”100      Erroneous     legal    reasoning     or

misapplication of law is generally not a violation of public policy

within the meaning of the New York Convention.101

     98
           9 U.S.C. § 201, Art. V(2)(b).
     99
         M & C Corp., 87 F.3d at 851 n.2 (quoting Fotochrome, Inc. v.
Copal Co., Ltd., 517 F.2d 512, 516 (2d Cir. 1975)); see Parsons &
Whittemore Overseas, 508 F.2d at 974; Slaney, 244 F.3d at 593.
     100
           Parsons & Whittemore Overseas, 508 F.2d at 973.
     101
         Coutinho Caro & Co. U.S.A., Inc. v. Marcus Trading, Inc., 2000
WL 435566, at *12 (D. Conn. March 14, 2000).
                                       55
       An action violates the abuse of rights doctrine if one of the

following three factors is present: (1) the predominant motive for

the action is to cause harm; (2) the action is totally unreasonable

given the lack of any legitimate interest in the exercise of the

right        and   its   exercise   harms    another;    and    (3)   the    right    is

exercised for a purpose other than that for which it exists.102                      The

abuse of rights doctrine is not established in American law103 and

KBC’s actions do not meet the factors required to trigger its

application.            The evidence in the record is that KBC pursued the

arbitration to recover its costs, expenses, and lost profits from

the nonperformance of the JOC and ESC.104                    The record does not

support Pertamina’s argument that enforcing the Award penalizes

obedience to a governmental decree.                The Tribunal explained in the

Final Award that the JOC and ESC shifted the risk of loss resulting

from    a     government-ordered       suspension     onto     Pertamina     and   PLN.

Pertamina          is    challenging   the       substance     of   the     Tribunal’s

interpretation of the JOC and ESC.                   An arbitration tribunal’s

contract interpretation does not violate public policy unless it

“violates the most basic notions of morality and justice.”105                        The

       102
         Joseph M. Perillo, Abuse of Rights: A Pervasive Legal Concept,
27 P. L. J. 37, 47 (Fall 1995).
       103
         The abuse of rights doctrine is not even fully established in
Louisiana, the American jurisdiction that has invoked it. See Lloyd v.
Georgia Gulf Corp., 961 F.2d 1190, 1193 n.4 (5th Cir. 1992).
       104
              See Perillo, 27 P. L. J. at 47.
       105
              Slaney, 244 F.3d at 593.
                                            56
Tribunal’s interpretation of the JOC and ESC does not approach this

steep threshold.

      KBC’s failure to disclose the political risk insurance policy

does not provide a basis for refusing to enforce the Award.

Enforcement       of   an   arbitration   award   may   be   refused      if   the

prevailing party furnished perjured evidence to the tribunal or if

the award was procured by fraud.106          Courts apply a three-prong test

to determine whether an arbitration award is so affected by fraud:

(1) the movant must establish the fraud by clear and convincing

evidence; (2) the fraud must not have been discoverable upon the

exercise of due diligence before or during the arbitration; and (3)

the   person      challenging    the   award   must   show   that   the    fraud

materially related to an issue in the arbitration.107               It is not

necessary to establish that the result of the arbitration would

have been different if the fraud had not occurred.108                  Courts,

however, have held that an arbitration award is not fraudulently

obtained when the protesting party had an opportunity to rebut his

opponent’s claims at the hearing.109

      106
            Karppinen v. Karl Kiefer Mach. Co., 187 F.2d 32, 34 (2d Cir.
1951).
      107
         Bonar v. Dean Witter Reynolds, Inc., 835 F.2d 1378, 1383 (11th
Cir. 1988).
      108
            Id.
     109
         See Biotronik Mess-Und Therapiegeraete GmbH & Co. v. Medford
Med. Instrument Co., 415 F. Supp. 133, 137-38 (D.N.J. 1976).
                                        57
     In Biotronik Mess-Und Therapiegeraete GmbH & Co. v. Medford

Medical Instrument Co.,110 the party opposing enforcement of the

award argued that the prevailing party knowingly withheld evidence

of an agreement that undermined its case.111           The court stated that

while      the    party   opposing   enforcement    urged   fraud,   the   real

complaint was that the party prevailing in the arbitration should

have presented evidence favorable to its opponent’s case.112                The

court rejected this argument, stating that “a party cannot complain

about the nonproduction of evidence when it failed to offer such

evidence itself.”113        In Catz American Co. v. Pearl Grange Fruit

Exchange Inc.,114 the party opposing enforcement did not ask the

arbitrators to bring certain witnesses before the panel, although

the prevailing party offered to make the witnesses available.115

The panel never called for the witnesses’ testimony.116              The party

opposing enforcement of the award argued that the prevailing party

should nonetheless have produced the               witnesses.117     The court

rejected this argument, stating that “[a]rbitrators must be given

     110
            415 F. Supp. 133 (D.N.J. 1976).
     111
            Id. at 137.
     112
            Id. at 138.
     113
            Id.
     114
            292 F. Supp. 549 (S.D.N.Y. 1968).
     115
            Id. at 553.
     116
            Id.
     117
            Id.
                                        58
discretion to determine whether additional evidence is necessary or

would simply prolong the proceedings.”118       Because the witnesses

were not solely within the prevailing party’s control and there was

other evidence in the record supporting the other party’s position,

the court rejected the challenge to the award.119

     Pertamina argues that KBC’s failure to reveal its political

risk insurance policy amounts to misconduct warranting a refusal to

enforce the Award.    There is no evidence in the record that KBC

deliberately misled the Tribunal.      When the question of political

risk insurance arose and was not clearly resolved, Pertamina had

the opportunity to ask additional questions, which it chose not to

pursue.     The Tribunal gave Pertamina an opportunity to pursue

discovery requests, which it declined.      KBC’s failure to produce

evidence of political risk insurance, given Pertamina’s decisions

not to pursue the subject, does not violate public policy.          The

district court did not err in refusing to deny enforcement of the

Award on the basis of a public policy violation or in refusing to

grant a new trial on the basis of Rule 60(b).120

     F.     The Effect of the Indonesian Court’s Annulment of the
            Arbitral Award

     118
           Id.
     119
           Id.
     120
         Cf. Biotronik, 415 F. Supp. at 138; Catz American, 292 F. Supp.
at 553; see Goel, 274 F.3d at 999 (noting that the only issues on an
appeal of a Rule 60(b) motion are the propriety of the denial of relief
and whether the district court abused its discretion in denying relief).
                                  59
     Pertamina filed an annulment action in the Central District

Court of Jakarta, Indonesia in March 2002. That court annulled the

Award      on    August   27,    2002.     Pertamina        now   contends   that   the

Indonesian court’s annulment is a defense to enforcement under the

New York Convention.              KBC responds that Indonesia cannot be a

proper forum for annulment because Switzerland is the country of

primary jurisdiction.

     Pertamina argues that the New York Convention permits more

than one country to have primary jurisdiction over an arbitration

award.           Pertamina      contends     that    the     Convention’s    language

permitting annulment by a court in “the country in which, or under

the law of which, that award was made” allows for two potential

primary         jurisdiction     countries    –     the    country   who   hosted   the

arbitration proceeding, and the country whose arbitral procedural

law governed that proceeding.121              Using this reasoning, Pertamina

suggests that both Switzerland (the host country) and Indonesia

(the country of governing law) have primary jurisdiction over the

arbitration in this case.

     Pertamina correctly observes that the Convention provides two

tests for determining which country has primary jurisdiction over

an arbitration award:            a country in which an award is made, and a

     121
         The language, “‘the competent authority of the country . . .
under the law of which, that award was made’ refers exclusively to
procedural and not substantive law, and more precisely, to the regimen
or scheme of arbitral procedural law under which the arbitration was
conducted, and not the substantive law . . . applied in the case.”
Int’l Standard Elec. Corp., 745 F. Supp. at 178; see Alghanim, 126 F.3d
at 21; M & C Corp., 87 F.3d at 848.
                                             60
country under the law of which an award is made.122            The New York

Convention suggests the potential for more than one country of

primary jurisdiction.       Courts and scholars have noted as much.123

Pertamina cites one such scholar as support for its position:

              [A]mbiguity is derived from the fact that the
              formula does not indicate whether the party
              seeking the annulment of the award must choose
              between the court at the seat of the
              arbitration and the one located in the country
              under the law of which the award is made – if
              the two are distinct – or whether it may seek
              annulment jointly or alternatively before both
              courts. . . . Article V(1)(e) of the New York
              Convention could [ ] be construed as referring
              to the courts of only one country while giving
              the   party   seeking    the   annulment   the
              possibility   to   choose   between  the   two
              countries should the two be distinct.124

Although an arbitration agreement may make more than one country

eligible for primary jurisdiction under the New York Convention,

the predominant view is that the Convention permits only one in any

given      case.125   “[M]any   commentators   and   foreign   courts   have

concluded that an action to set aside an award can be brought only

     122
             9 U.S.C. § 201, Art. V(1)(e).
     123
         See, e.g., Int’l Standard Electric Corp., 745 F. Supp. at 177
(quoting Albert Jan van den Berg, The New York Arbitration Convention
of 1958 350 (Kluwer 1981)); Paul Sanders, The New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, 6 Netherlands
Int’l L. Rev. 43, 56 (1956).
     124
          Hamid G. Gharavi, The International Effectiveness of the
Annulment of An Arbitral Award (2002).
     125
          “The reality, however, seems to be that the Article V(1)(e)
formula enables enforcement courts to refuse enforcement of an award
annulled by the competent court of the country in which the award was
made even if (i) the award was rendered pursuant to the laws of a third
State and (ii) annulment proceedings were pending before the court of
the country under the law of which the award was made.” Id.
                                     61
under the domestic law of the arbitral forum.”126                     Pertamina’s

expert on international arbitration filed a report in the district

court, stating that “there can be only one country in which the

courts have jurisdiction over an annulment.”127                In its motion to

the   district     court    to   set   aside    judgment     under   Rule   60(b),

Pertamina conceded that “[a] primary jurisdiction has exclusive

authority to nullify an award on the basis of its own arbitration

law.”       Such “exclusive” primary jurisdiction in the courts of a

single      country   is   consistent    with    the   New   York    Convention’s

purpose; facilitates the “orderliness and predictability” necessary

      126
         Alghanim, 126 F.3d at 22 (citing commentary that the country
of origin of the award is the only country with primary jurisdiction).
      127
         Supplemental Expert Report of Albert Jan van den Berg, p. 20.
Others agree. Professor Paul Sanders concludes that regardless of any
ambiguity, Article V(1)(e) grants primary jurisdiction to the courts of
only a single country:

              [T]he suspension must have been ordered by or the
              application for suspension must have been made to
              a “competent authority of the country in which, or
              under the law of which, that award was made.”
              Here only one competent authority is meant; either
              the Court of the country where the award was made,
              or the Court of the country under the law of which
              the award was made. These last words were added
              on a Russian proposal to cover the case that an
              award has been made f.i. in Germany under French
              procedural law. In that case the suspension . .
              . according to the Convention should have to be
              demanded in France and not in Germany.

Sanders, New York Convention at 56.     In his expert report for KBC,
Professor Allen Scott Rau emphasized that “there is only one national
court system that has jurisdiction to consider an application for
annulment of an award.” Scholar Jan Paulsson submits “the fact is that
setting aside awards under the New York Convention can take place only
in the country in which the award was made.” The Role of Swedish Courts
in Transnational Commercial Arbitration, 21 Va. J. Int’l L. 211, 242
(1981).
                                        62
to international commercial agreements; and implements the parties’

choice of a neutral forum.128

      In this case, both of the New York Convention criteria for the

country with primary jurisdiction point to Switzerland – and only

to Switzerland.129     The Award was made in Switzerland and was made

under Swiss procedural law.        The parties’ arbitration agreement

designated Switzerland as the site for the arbitration.             This

designation presumptively designated Swiss procedural law as the

lex arbitri, in the absence of any express statement making another

country’s procedural law applicable.

      Pertamina’s own conduct during and after the arbitration

evidences its intent to have Swiss procedural law apply and to have

      128
          For example, “having a double test, i.e. that of the place of
arbitration and that of the law governing the arbitration, can give rise
to   discrepancies.”      Andreas  Bucher   and   Pierre-Yves   Tschanz,
International Arbitration in Switzerland 164 (1988). As one source has
explained:

             For instance, the Federal Republic of Germany does
             not define German awards as awards made in Germany
             but as awards governed by German law wherever they
             are made. As a result, an award purporting to be
             made in Switzerland under German arbitration law
             is considered as a Swiss award in Switzerland and
             as a German award in Germany, with the result that
             such award could be challenged in both countries.
             In the reverse situation of an award made in
             Germany purportedly under Swiss arbitration law,
             such award is considered as Swiss in Germany and
             as German in Switzerland (since the place of
             arbitration is in Germany). As a result, such an
             award cannot be challenged in either country, but
             can only be recognized (or denied recognition)
             under the New York Convention.
Id.
      129
            See Alghanim, 126 F.3d at 21; M & C Corp., 87 F.3d at 848.
                                    63
Switzerland be the country of primary jurisdiction over the Award.

During the arbitration, Pertamina asserted that Swiss procedural

law applied.          When it lost the arbitration, Pertamina asked the

Swiss court to set aside the Award, acknowledging that the Swiss

courts had primary jurisdiction.                      While that appeal was pending,

Pertamina urged the district court in the enforcement proceeding

that the Swiss court had exclusive primary jurisdiction – until the

Swiss courts rejected Pertamina’s appeal.130

       Under       the    New    York    Convention,       the   parties’    arbitration

agreement, and this record, Switzerland had primary jurisdiction

over    the       Award.131       Because       Indonesia     did   not     have    primary

jurisdiction         to   set     aside    the    Award,     this   court    affirms     the

district court’s conclusion that the Indonesian court’s annulment

ruling       is   not     a    defense     to    enforcement     under    the      New   York

Convention.

                                    III.        Conclusion

       Pertamina’s            challenges    to     the   district    court’s       decision

affirming the Award are without merit.                           The summary judgment

enforcing the Award is AFFIRMED.

       130
           The district court found that Pertamina “specifically,
repeatedly and unequivocally” argued that Swiss arbitration law applied
in the arbitration. See note 24.
       131
          The Hong Kong court enforced the Award after the Indonesian
court issued its annulment ruling, stating that “the fact that the court
in Indonesia has now annulled the award under its own law is also a
matter which has no effect on this court’s task.” Hong Kong decision
at 12.
                                                 64