Investor-State Dispute Settlement and Indonesian Reform Policy in Mining Downstream Sector

Abstract

To date, Indonesia has been facing the seventh ISDS (Investor-State Dispute Settlement) lawsuit case in ICSID, the most number of ICSID cases a particular country has in ASEAN. In the meantime, Indonesia had to initiate reform in its minerals mining sector policy since the sector had provided little benefit in Indonesian sustainable economic development thus far–a policy reform which is potentially highly exposed to ISDS lawsuit case. Yet, the reform once issued has no turning back and thus it should move forward. Indonesian reform policy to support more its mining downstream by Minerba Act issuance is intended to benefit from its scarce, limited non-renewable minerals so as to support national development and maintain its long-term interest and economic sustainability. Undoubtfully, the policy reform will be beneficial for Indonesian economy sustainability and thus it should be protected from any potential ISDS claims in the future. This study seeks to address such real, critical current challenges arising from contingent ISDS claims towards Indonesia. This study adopts a descriptive analytical method, which combines literature review, authors’ shared expertise in this field, and results of interviews and discussions with several other experts in relevant fields. This study concludes that in addressing ISDS contingent problems threatening Indonesian current reform policy in mining downstream sector, Indonesia should focus the emphasis on the prevention endeavor, those are a review of BITs and IIAs containing ISDS provisions; improvement in investment dispute management; which are mainly supported by continuous bureaucracy reform, capacity building, and better coordination.