Amco Asia Corporation and others v. Republic of Indonesia
ICSID · Investment (ICSID and treaty) · Indonesia · 31 Mar 1990
Why it matters
This resubmission award is a landmark in ICSID arbitration, clarifying the res judicata effect of annulment decisions and the limits of state responsibility for acts of military and police. It also established important principles on the valuation of lost profits and the burden of proof in investment disputes, influencing subsequent cases on expropriation and fair and equitable treatment.
Summary
The case arises from a dispute over the Hotel Kartika Plaza in Jakarta. Amco Asia, a US company, invested in the hotel under a 1968 Lease and Management Agreement with PT Wisma, an Indonesian cooperative linked to the army. In 1980, after a dispute over profit-sharing, PT Wisma, with the assistance of army and police personnel, took control of the hotel. Subsequently, the Indonesian Capital Investment Coordinating Board (BKPM) revoked Amco's foreign investment license, citing failure to meet capital requirements. Amco initiated ICSID arbitration, and the first tribunal (1984) found Indonesia internationally responsible for the unlawful takeover and the unjustified license revocation, awarding US$3.2 million. Indonesia sought annulment, and an ad hoc committee annulled the award in 1986, except for the finding that the army/police action was illegal. The case was resubmitted to a new tribunal. In this 1990 award, the tribunal confirmed that the military/police takeover was an internationally wrongful act attributable to Indonesia. It found that BKPM's revocation of the license was procedurally flawed (no fair hearing) and substantively unjustified, as Amco had not breached its capital obligations. The tribunal rejected Indonesia's counterclaim for restitution of tax benefits. On damages, the tribunal calculated lost profits from 1980 to 1999, applying a 6% non-compounded interest rate, and set off US$128,363.80 for Amco's share of annulment costs, resulting in a net award of US$2,567,966.20. The decision underscores the importance of due process in administrative decisions and the state's responsibility for acts of its organs.
The detail
Parties: Amco Asia Corporation and others v. Republic of Indonesia
Case number: ICSID Case No. ARB/81/1
Outcome: Indonesia ordered to pay US$2,567,966.20 with 6% interest to Amco; Indonesia's counterclaims rejected.
Quantum: US$2,567,966.20
Applicable law: ICSID Convention; Indonesian Foreign Investment Law (1967); Lease and Management Agreement; Profit-Sharing Agreement.
Issues in play: The case involved the collision between Indonesia's sovereign right to regulate foreign investment and the investor's right to fair treatment under international law, specifically regarding the legality of the revocation of Amco's investment license and the attribution of military/police conduct to the state.
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