AMCO v Indonesia

  • Full summary
  • 1984 Award (89 ILR 405)
  • 1986 Annulment Decision (89 ILR 514)
  • 1990 Award (89 ILR 580)

Year of the award: 1984-1990
Forum/Rules: ICSID
Applicable law: Indonesian law, international law

First Arbitral Tribunal (1984 Award):
Prof Berthold Goldman - President
Mr Edward Rubin
Prof Isi Foighel

Annulment Committee (1986 Annulment Decision):
Prof Ignaz Seidl-Hohenveldern - Chairman
Dr Florentino Feliciano
Prof Andrea Giardina

Second Arbitral Tribunal (1990 Award):
Ms Rosalyn Higgins - President
Mr Marc Lalonde
Mr Per Magid

Executive summary

In 1968, Amco, an American Corporation, and PT Wisma, an Indonesian company operating under the guidance of the Indonesian government, entered into a Lease and Management Agreement whereby Amco was to invest in, and manage a hotel/office complex for the duration of 30 years, until 1999. In April 1980, after growing differences between the parties, PT Wisma forcibly took over management of the hotel. In July 1980, the Indonesian government revoked Amco's license to engage in business ventures in Indonesia.

Amco initiated ICSID arbitration, claiming compensation for damages incurred due to the unlawful taking of the hotel and the termination of the license. In the First Arbitral Award of 1984, the Tribunal held that Indonesia's actions were in breach of international law and awarded damages of US$ 3,200,000. However, that Award was annulled in 1986 on the grounds that the Tribunal had failed to state the reasons for its findings on several substantive issues.

Subsequently, Amco resubmitted the dispute to ICSID arbitration, with essentially the same claims. The Second Tribunal (1990 Award) found that both the takeover of the hotel as well as the revocation of the license had been internationally unlawful acts attributable to the Indonesian government. With regard to the question of relevant compensation, the Tribunal decided that to approximate as closely as possible in monetary terms to the principle of restitutio in integrum, the measure of damages should include compensation for the 'general disturbance' suffered by Amco due to the Hotel takeover, as well as for the profits lost by it as a result of license revocation.

The Tribunal awarded a discretionary lump sum of US$ 10,000 for the 'general disturbance' that had occurred in April-July 1980. As for profits lost by Amco from July 1980 onwards, the Tribunal distinguished between two time periods, the first one immediately following the revocation of the license until the year preceding the year of the Award (1980-89), and the second period starting with the year of the Award until the envisioned end of the Lease and Management Agreement (1990-99). To quantify lost profits for the first period, the Tribunal used data already available at the time of deliberations; for the second period, it applied the DCF analysis to determine the present value of future profits. In total, the Tribunal awarded damages in the amount of US$ 2,696,330 including 6% simple interest to the date of the Award.