DeHeng Advised Some Chinese Contractor on Winning International Arbitration over a Coal-fired Power Station Project in Indonesia
2022-10-31
Recently, the China International Economic and Trade Arbitration Commission issued an arbitration award, ordering the project owner of an Indonesian coal-fired power station to compensate the Chinese contractor for 83% of the amount of the claim, including the payment of arbitration costs and compensation for Chinese lawyers' fees. This Indonesian international project arbitration case, represented by DeHeng lawyers against the Indonesian project owner and some Hebei-based company, finally ended in the victory of the Chinese contractor.
In 2007, a Chinese contractor signed an installation and debugging contract for a coal-fired power station in Indonesia with the Indonesian project owner and the owner's Chinese partner, a company based in Hebei. But as the global financial crisis broke out, Indonesia suffered a currency devaluation, and the financing costs of the Indonesian project owner soared, with the actual construction costs almost doubling the original budget. Faced with the loss, the Indonesian project owner intended to pass on its losses to various subcontractors, including the Chinese contractor, by defaulting and refusing to pay. After the owner failed to pay over and over, the Chinese contractor finally decided to initiate arbitration.
In this arbitration case, the project in question lasted for 15 years from 2007 to 2022, including 2 years for claims and 4 years for arbitration. The whole arbitration case involved 353 G of data, including 27 G of electronic evidence and more than 100,000 pages of evidence written in English. The amount of the claim exceeded RMB 100 million, while the amount of the counterclaim was more than 1.5 times of that. There were 159 disputes involved in the arbitration, covering the whole project process from contract signing, performance, modification, civil construction, procurement, installation, debugging, trial operation, commercial operation to the warranty period. In addition, the Chinese side hired four experts from China and the UK who issued seven expert reports on technology, construction period and cost, and the Indonesian owner hired three experts from China, the UK and Indonesia who produced six expert reports on technology, construction period and cost. There were also 14 factual witnesses (32 testimonies), and 65 attorneys appearing in court simultaneously from five countries. The law of the People's Republic of China applied in this case and the language of arbitration was English.
The Chinese legal team was led by Mr. Jia Huaiyuan, director of DeHeng's Dubai Office, and invited the Clyde&Co international engineering team from its London headquarters for assistance. The team clarified labor division and worked around the clock on the paperwork in shifts. The ruling just proved the importance of getting the team right.
The arbitral tribunal, composed of two well-known engineering lawyers at home and a King's Counsel from the UK, issued a 553-page arbitral award after a five-day hearing, ordering that: (1) the Indonesian owner should pay 83% of the amount of the Chinese contractor's claim; (2) the Indonesian owner's defense and counterclaim were only supported by 17%; (3) the Indonesian owner should bear 83% of all arbitration costs, including the Chinese party's legal fees. What is particularly commendable is that when it came to expert reports, all the opinions issued by experts hired by the Chinese side were adopted. This case has concluded with an absolute win on the Chinese side.
