- Tuesday, January 13, 2015
An UNCITRAL panel chaired by Bernardo Cremades of B. Cremades y Asociados (Madrid, Spain) issued on 15 December 2014 a widely observed award under the 1981 investment agreement of the Organisation of Islamic Cooperation (OIC). Saudi investor Hesham Talaat M Al-Warraq claimed US$ 19 million from Indonesia arguing that the bailout of an Indonesian bank amounted to unlawful expropriation. The state filed a counterclaim of US$ 360 million to recover the amounts it had spent in bailing out the bank.
Al-Warraq was a shareholder and commissioner of Bank Century (now known as Bank Mutiara), which Indonesia bailed out during the global financial crisis of 2008. In 2010, the Indonesian courts found him guilty of contributing to the bank’s collapse by siphoning funds offshore and thus convicted him in absentia of corruption and money laundering and ordered to pay US$ 300 million.
The panel dismissed both claims in their entirety and ordered each party to bear its own costs. It concluded that Indonesia’s criminal prosecution of al-Warraq had breached international law but that his own negligence in supervising the bank means he is not entitled to treaty protection. The award is final and binding.
Both sides hail the outcome as a victory. Indonesia emphazises that the Tribunal's ruling clearly states that al-Warraq's misdeeds rendered his claims, whereas al-Warraq signals the tribunal's determination of the wrongful use of state power, so that his conviction would now be legally meaningless.
About B. Cremades y Asociados
B. Cremades y Asociados has a strong presence in the Spanish legal services market, providing competitive services as litigators, in commercial and corporate law, transactions as well as finance and capital markets. For many years, the firm has earned special recognition for its work in international commercial and investment arbitration. For more information, please visit www.bcremades.com.