PT Arutmin Indonesia v PT Thiess Contractors Indonesia

The case between PT Arutmin Indonesia and PT Thiess Contractors Indonesia involved contracts for the provision of mining services in Indonesia. PT Thiess Contractors Indonesia, a foreign company, was contracted to provide certain mining services. However, a change in Indonesian mining law mandated that such services be provided by an Indonesian national or local mining services company. This change in law rendered the contracts effectively impossible to perform as PT Thiess Contractors Indonesia could no longer provide the required services due to its foreign status. PT Arutmin Indonesia sought to have the contracts declared frustrated, arguing that the change in law constituted a supervening illegality and impossibility of performance.

The court needed to determine whether the contracts were frustrated due to the supervening illegality and impossibility of performance, and whether the Indonesian government’s guidance on the operation of the change in law constituted a State Administrative Decision, impacting the validity of the guidance under Indonesian law. The court examined the nature of the contracts, the implications of the change in law, and the applicability of the doctrine of frustration. It also considered whether the guidance provided by the Indonesian government amounted to a State Administrative Decision and whether it should be reviewed under Indonesian law.

The court concluded that the contracts were not frustrated by the change in Indonesian mining law. It found that the contracts contained provisions for changes necessitated by a change in authorisation, which effectively addressed the situation created by the new law. The court held that the change in law did not render the contracts impossible to perform, as the contracts allowed for substitutions in the event of such changes. Furthermore, the court determined that the Indonesian government's guidance did not amount to a State Administrative Decision, and therefore, it was not required to determine the validity of the guidance under Indonesian law. Consequently, the claims made by PT Arutmin Indonesia were dismissed, and PT Arutmin Indonesia was ordered to pay the costs of the respondent.

The court’s order was that the claims made by the application and the amended statement of claim are dismissed, and the applicant is to pay the respondent’s costs of those claims.