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eferring to the letter by Karen Mills in the March 1 edition of The Jakarta Post, I would like to clarify misconceptions regarding my article published on Feb. 27.

First, there is misunderstanding here caused by the modification of my early draft by the editor. In my early draft, I wrote “However, despite Freeport’s investment being protected by the CoW [Contract of Work], this protection is not formidable, as it is devoid of the Bilateral Investment Treaty under which the second layers of investment protection are usually placed.” However, the published version read, “However, despite Freeport’s investment being protected by the CoW, this protection is not powerful enough due to the fact that it is not covered by the Bilateral Investment Treaty, under which the second layers of investment protection are usually placed.” I am aware there is no Bilateral Investment Treaty between the US and Indonesia, which is why I wrote “devoid of”.

Second, my article deals with possibilities that can be undertaken by Freeport in framing claims if other dispute resolution mechanisms fail to succeed. Therefore, I do not want to limit my analysis solely to arbitrate the seat in Jakarta, even though it seems very clear that is what the CoW states.

If I was a foreign investor, I would avoid arbitration that is seated in the host state and governed by local law. That is why I wrote “Nonetheless, since the arbitration system lacks predictability and proliferates heterogeneity of interpretations, Freeport will likely delocalize the contract by referring to customary international law and like-minded arbitration awards.” This phrase suggests that there is a possibility that Freeport will internationalize or delocalize the CoW by examining legal undertakings in customary international law and other arbitral tribunal reasoning.

In my final conclusion, I argue that those possibilities are doubtful and improbable given the majority of arbitration, which will likely dismiss such a claim. It can be seen in my phrase “When Indonesia is ‘sued’ in international arbitration, the paucity of Freeport’s investment protection at the international level and the major ‘pro-state’ interpretations that are starting to shape current arbitration cases will give Freeport the upper-hand of government.”

Dimas Kuncoro Jati
London