PT Pertamina (Persero) and PT Pertamina EP v. PT Lirik Petroleum

PT Pertamina (Persero) and PT Pertamina EP v. PT Lirik Petroleum

PT Pertamina (Persero) and PT Pertamina EP v PT Lirik Petroleum, Decision No. 904 K/Pdt.Sus/2009, Supreme Court of the Republic of Indonesia (Harifin A Tumpa, Rehgena Purba and Hatta Ali JJ), decided 9 June 2010.

PT Pertamina (Persero) and PT Pertamina EP v PT Lirik Petroleum, Decision No. 56 PK/Pdt.Sus/2011, Supreme Court of the Republic of Indonesia (Mieke Komar, Abdurrahman and H Syamsul Maarif JJ), decided 23 August 2011.

Introduction

The effectiveness of international commercial arbitration depends on the willingness of domestic courts to recognise and enforce arbitral awards with minimal judicial intervention. PT Pertamina (Persero) and PT Pertamina EP v PT Lirik Petroleum is a landmark Indonesian arbitration case because it clarifies the classification of ICC arbitral awards under Undang-Undang Nomor 30 Tahun 1999 tentang Arbitrase dan Alternatif Penyelesaian Sengketa (Arbitration Law) and reinforces Indonesia’s pro-enforcement approach.

Facts of the Case

The dispute arose from an Enhanced Oil Recovery (EOR) Contract executed in 1991 between PT Pertamina and PT Lirik Petroleum (PTLP) for the development of several mature oil fields, including Lirik, North Pulai, South Pulai, and Sago. The contract defined the parties’ respective rights and obligations and contained an arbitration clause requiring disputes to be resolved under the Rules of Arbitration of the International Chamber of Commerce (ICC).[1]

Between 1995 and 1997, PTLP submitted plans seeking the commercial development of the four oil fields covered by the EOR Contract. While Pertamina approved the commercialization of the Lirik field, it refused commercial status for the North Pulai, South Pulai, and Sago fields. PTLP argued that the refusal breached the EOR Contract and prevented implementation of the agreed investment project, causing substantial losses.[2]

Following unsuccessful negotiations, PTLP commenced arbitration under the ICC Rules (Case No. 14387/JB/JEM), alleging that Pertamina and PT Pertamina EP had breached the EOR Contract by refusing to approve the commercial development of the remaining oil fields. Pertamina denied liability, arguing that its decisions were justified under the contract and Indonesian petroleum law.[3]

On 22 September 2008, the arbitral tribunal issued a Partial Award, followed by a Final Award on 27 February 2009. The tribunal found that Pertamina and PT Pertamina EP had breached the EOR Contract, held that the pipeline obstruction did not constitute force majeure, determined that the contract had terminated on 27 March 2006, and awarded PTLP approximately US$34.17 million in damages while dismissing Pertamina’s counterclaim.[4]

PTLP subsequently registered the Final Award before the Central Jakarta District Court, which granted an exequatur for its recognition and enforcement. Pertamina responded by commencing annulment proceedings, cassation before the Supreme Court, a petition for judicial review (Peninjauan Kembali), and separate civil proceedings challenging the award’s registration and enforcement. These proceedings ultimately resulted in Supreme Court decisions clarifying the legal status of ICC arbitral awards under Indonesian law and reaffirming the limited role of Indonesian courts in reviewing international arbitral awards.[5]

Legal Issues

1. Whether the ICC Final Award constituted an international arbitral award under Arbitration Law, thereby determining the applicable legal regime for its recognition, annulment, and enforcement in Indonesia?
2. Whether Indonesian courts had the authority to review or annul the substance of an international arbitral award, or whether their role was limited to recognition and enforcement proceedings?
3. Whether the grounds relied upon by Pertamina were sufficient under Arbitration Law to refuse recognition or annul the ICC Final Award?

Arguments Presented

PT Pertamina and PT Pertamina EP

PT Pertamina and PT Pertamina EP argued that the ICC Final Award should be treated as a domestic arbitral award because the arbitral proceedings were conducted in Jakarta and arose from Indonesia’s petroleum sector. They therefore contended that Indonesian courts had jurisdiction to review and annul the award. They further argued that the award violated public policy, exceeded the tribunal’s authority, and had been registered beyond the time limit under Article 59 of Arbitration Law.[6]

PT Lirik Petrolum (PTLP)

PTLP argued that the dispute had been validly submitted to ICC arbitration under the EOR Contract and that the Final Award was an international arbitral award entitled to recognition and enforcement under the Arbitration Law and the 1958 New York Convention. It further maintained that Pertamina had participated throughout the arbitral proceedings and that its objections merely challenged the merits of the award rather than any statutory ground for refusing recognition or enforcement.[7]

Court’s Reasoning and Analysis

The Supreme Court first addressed the legal status of the ICC Final Award to determine the applicable legal framework. It rejected Pertamina’s argument that the award should be treated as a domestic arbitral award merely because the arbitration proceedings had taken place in Jakarta. Instead, the majority held that the award possessed sufficient international elements, including the use of English in the EOR Contract, payment obligations denominated in United States dollars, and the parties’ choice of the ICC, an arbitral institution based in Paris, to qualify as an international arbitral award under Arbitration Law. Accordingly, the Court applied the legal regime governing international arbitral awards, which permits only limited judicial intervention.[8]

The judgment also expressly records a dissenting opinion by Prof. Rehgena Purba, S.H., M.S. Unlike the majority, however, his disagreement did not concern the classification of the award. He agreed that the ICC Final Award constituted an international arbitral award under Arbitration Law. His dissent instead focused on the scope of enforcement, arguing that part of the tribunal’s damages calculation was contrary to Indonesian public policy because it awarded compensation from 1995 even though the request for commerciality status had only been submitted in 1997. In his view, this amounted to an ultra petita violation falling within the public policy exception under Article 66(c) of Arbitration Law and therefore justified refusing enforcement of that part of the award.[9]

Having classified the award as international, the Court interpreted the Arbitration Law as limiting the role of Indonesian courts to recognition and enforcement, except where otherwise provided by statute. It rejected Pertamina’s challenges to the tribunal’s factual findings, contractual interpretation, and assessment of damages, holding that these objections concerned the merits of the dispute rather than the enforceability of the award. Reaffirming the principle of minimal judicial intervention, the Court emphasized that national courts are not appellate bodies empowered to review the substance of international arbitral decisions. It also attached significance to Pertamina’s execution of the Terms of Reference and its full participation in the arbitral proceedings, which precluded any subsequent challenge to the tribunal’s jurisdiction.[10]

The Court further held that the arbitration agreement in the EOR Contract was valid and that no procedural defect capable of invalidating the proceedings had been established. It rejected Pertamina’s reliance on public policy and the alleged late registration of the award, explaining that the statutory requirements governing domestic arbitral awards were inapplicable. The Court clarified that public policy (ketertiban umum) constitutes a ground for refusing recognition or enforcement of an international arbitral award, not for annulling it. Consequently, Pertamina’s objections were insufficient to justify either annulment or refusal of enforcement.[11]

Through these decisions, the Supreme Court adopted an interpretation of Arbitration Law that is broadly consistent with the principle of finality in international arbitration and Indonesia’s obligations under the 1958 New York Convention. By limiting judicial intervention to the grounds expressly recognised by law, the Court reinforced Indonesia’s pro-enforcement approach to international commercial arbitration while confirming that any public policy review must remain exceptional and confined to the statutory grounds for refusing recognition or enforcement.[12]

Judgement and Ratio Decidendi

The Supreme Court dismissed Pertamina’s challenge to the ICC Final Award and upheld the Central Jakarta District Court’s refusal to annul it in Decision No. 904 K/PDT.SUS/2009. It subsequently rejected Pertamina’s application for judicial review in Decision No. 56 PK/PDT.SUS/2011, reaffirming that no statutory basis existed for setting aside the award. Accordingly, the ICC Final Award remained valid and enforceable in Indonesia, including the damages awarded in favour of PT Lirik Petroleum.[13]

The ratio decidendi established by these decisions is that the international character of an arbitral award is determined by the legal framework under which it is rendered rather than merely by the location of the arbitral hearings. Consequently, Indonesian courts may not review the merits of such awards and may intervene only on the limited grounds expressly provided by Arbitration Law.[14]

Critical Analysis

• Classification of the ICC Award

The Supreme Court’s classification of the ICC Final Award as an international arbitral award reinforces Indonesia’s pro-enforcement approach by recognising that an ICC-administered award may be international even though the arbitral proceedings were conducted in Indonesia. This interpretation is consistent with the objectives of the 1958 New York Convention, which seeks to facilitate the recognition and enforcement of foreign arbitral awards. Nevertheless, the case exposed the ambiguity of Article 1(9) of Arbitration Law regarding the criteria for determining an international arbitral award. That uncertainty persisted until the Constitutional Court clarified the provision in Decision No. 100/PUU-XXII/2024.[15]

• Judicial Intervention and Finality

The Court reaffirmed that Indonesian courts may review only the recognition and enforcement of international arbitral awards, not their substantive correctness. By refusing to reconsider the tribunal’s findings on liability and damages, the Court reinforced arbitration as a final and binding dispute resolution mechanism and aligned Indonesian practice with the New York Convention. Although Justice Prof. Rehgena Purba dissented, his disagreement concerned the application of the public policy exception rather than the award’s international status, illustrating that judicial disagreement may arise without undermining the principle of arbitral finality.[16]

• Public Policy as a Limited Exception

The judgment adopts a restrictive interpretation of public policy (ketertiban umum), treating it as an exceptional ground for refusing recognition or enforcement rather than a basis for reopening the merits of the dispute. This approach discourages parties from using public policy to relitigate commercial disputes and reflects prevailing international arbitration practice. At the same time, the dissenting opinion illustrates the continuing difficulty of defining the scope of public policy, particularly where allegations of ultra petita are raised.[17]

• Tension with National Oil and Gas Policy

The case also illustrates the tension between international arbitration and Indonesia’s regulatory interests in the oil and gas sector. By rejecting Pertamina’s reliance on domestic regulatory considerations, the Court strengthened legal certainty and Indonesia’s reputation as an arbitration-friendly jurisdiction. At the same time, the judgment demonstrates that disputes involving state-owned enterprises will continue to test the boundary between legitimate public policy concerns and commercial objections that should remain within the exclusive competence of arbitral tribunals.[18]

Conclusion

PT Pertamina (Persero) and PT Pertamina EP v PT Lirik Petroleum is a landmark decision in Indonesian arbitration law. By classifying the ICC Final Award as an international arbitral award and limiting judicial intervention to the statutory grounds for recognition and enforcement, the Supreme Court reinforced Indonesia’s pro-enforcement approach and the finality of international commercial arbitration.

Reference(S):

Legislation

Undang-Undang Dasar Republik Indonesia Tahun 1945

Undang-Undang Nomor 30 Tahun 1999 Tentang Arbitrase dan Alternatif Penyelesaian Sengketa

Cases

Indonesia

Putusan Mahkamah Agung Republik Indonesia Nomor 904 K/PDT.SUS/2009, 8 Juni 2010

Putusan Mahkamah Agung Republik Indonesia Nomor 56 PK/PDT.SUS/2011, 23 Agustus 2011

Putusan Mahkamah Konstitusi Republik Indonesia Nomor 100/PUU-XXII/2024, 2024 

International

ICC Case No. 14387/JB/JEM, Partial Award, 22 September 2008

ICC Case No. 14387/JB/JEM, Final Award, 27 February 2009

 Secondary Sources

Journal Articles

Rosadi SD, ‘The Enforcement of International Arbitral Awards in Indonesia: An Overview’ (2015) 11 Indonesian Journal of International Law 245

 Expert Testimonies

Dewi YK, ‘Keterangan Ahli Pemohon’ in Perkara Nomor 100/PUU-XXII/2024 (Mahkamah Konstitusi, 18 November 2024)

Pangaribuan TMP, ‘Keterangan Ahli Pemohon’ in Perkara Nomor 100/PUU-XXII/2024 (Mahkamah Konstitusi, 18 November 2024)

Online Sources

‘Pertamina Ajukan Pembatalan Putusan Arbitrase ICC’ (Hukumonline, 7 September 2009) <https://www.hukumonline.com/berita/a/pertamina-ajukan-pembatalan-putusan-arbitrase-icc-hol22092/> accessed 30 July 2026

 International Instruments

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958)

 [1] Putusan Mahkamah Agung Republik Indonesia Nomor 904 K/PDT.SUS/2009, 8 Juni 2010, 10–12.

[2] Togi M. P. Pangaribuan, ‘Keterangan Ahli Pemohon’ dalam Perkara Nomor 100/PUU-XXII/2024 (Mahkamah Konstitusi, 18 November 2024) 12–14.

[3]‘Pertamina Ajukan Pembatalan Putusan Arbitrase ICC’ (Hukumonline, 7 September 2009) <https://www.hukumonline.com/berita/a/pertamina-ajukan-pembatalan-putusan-arbitrase-icc-hol22092/> accessed 30 July 2026.

[4] Putusan Mahkamah Agung Republik Indonesia Nomor 904 K/PDT.SUS/2009 (n 1) 14–16.

[5] Putusan Mahkamah Agung Republik Indonesia Nomor 56 PK/PDT.SUS/2011, 23 Agustus 2011, 8–10

[6] ‘Pertamina Ajukan Pembatalan Putusan Arbitrase ICC’ (n 3).

[7] Yetty Komalasari Dewi, ‘Keterangan Ahli Pemohon’ dalam Perkara Nomor 100/PUU-XXII/2024 (Mahkamah Konstitusi, 18 November 2024) 8–10.

[8] Putusan Mahkamah Agung Republik Indonesia Nomor 904 K/PDT.SUS/2009 (n 1) 20–22.

[9] ibid 30–32 (Dissenting Opinion of Prof. Rehgena Purba, S.H., M.S.).

[10] Putusan Mahkamah Agung Republik Indonesia Nomor 56 PK/PDT.SUS/2011 (n 5) 12–15.

[11] ibid 16–18.

[12] Sinta Dewi Rosadi, ‘The Enforcement of International Arbitral Awards in Indonesia: An Overview’ (2015) 11 Indonesian Journal of International Law 245, 252–254.

[13] Putusan Mahkamah Agung Republik Indonesia Nomor 56 PK/PDT.SUS/2011 (n 5) 20.

[14] Putusan Mahkamah Agung Republik Indonesia Nomor 904 K/PDT.SUS/2009 (n 1) 24–26.

[15] Putusan Mahkamah Konstitusi Republik Indonesia Nomor 100/PUU-XXII/2024, 2024, 15–18.

[16] Putusan Mahkamah Agung Republik Indonesia Nomor 904 K/PDT.SUS/2009 (n 1) 30–32.

[17] Rosadi (n 13) 256–258.

[18] ibid 260–262.