The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge
On February 14, 2003 petitioner Karaha Bodas Company L.L.C. ("KBC")
filed a motion seeking an order (1) directing Bank of America to transfer
to KBC approximately $266 million, which was being held in certain
accounts pursuant to a restraining notice; and 2) directing Bank of
America to transfer to KBC certain additional funds on a monthly basis.
Respondent Pertamina opposes the motion. The Ministry of Finance of the
Republic of Indonesia ("the Republic") has been permitted to participate
in this proceeding as a "Non-Party with Interest." The Republic also
opposes the motion.
Almost simultaneously with the above motion, Pertamina filed a motion
to stay execution, contending that the court should hold the proceedings
brought by KBC in abeyance pending the outcome of the
underlying litigation then pending in the Fifth Circuit and the outcome
of a certiorari petition to the Supreme Court from a Second Circuit
decision dealing with the funds held at Bank of America.*fn1
On April 28, 2003 the Republic filed a motion seeking the release of
approximately $262 million from Bank of America accounts, claiming that
those funds belonged to the Republic of Indonesia and could no longer be
At a hearing held on May 23, 2003 the court decided certain issues
raised by KBC's February motion and the Republic's April motion, but left
certain issues for further consideration. No funds were actually turned
over or released.
On June 27, 2003 KBC filed a new motion, which in effect replaced KBC's
February 2003 motion. The new motion refined the issues dealing with
KBC's rights in funds held by Bank of America and funds passing through
Bank of America, and requested an order requiring Bank of America to turn
funds over to KBC.
KBC is a corporation located in the Cayman Islands with its center of
operations in the United States. Pertamina is an Indonesian state-owned
oil and gas company. KBC and Pertamina entered into contracts in 1994 for
a joint venture involving the development of facilities in the Karaha
area of West Java. In 1997 the projects were suspended as a result of
Indonesian government decrees. This termination of operations led KBC to
seek arbitration in Switzerland for breach of contract by Pertamina.
On December 18, 2000 the arbitral panel made an award of $261.1 million
to KBC against Pertamina. On December 4, 2001 the award was confirmed by
the U.S. District Court for the Southern District of Texas, and judgment
was entered in that court for $261.1 million. Pertamina has appealed that
judgment to the Fifth Circuit, and that appeal is still pending.
Pertamina declined to file a supersedeas bond under Fed.R.Civ.P.
62(d), and therefore there is no stay of execution.
Wholly apart from the contracts with KBC, Pertamina's business
activities involved the marketing of oil and gas products. It had at
times carried this out through joint ventures with private contractors,
pursuant to agreements known as Production Sharing Contracts. The sales
some of these ventures were channeled through trust accounts held
in Pertamina's name at Bank of America and the Bank of New York. A total
of twenty-four such accounts are at issue in this proceeding.
The court has heard extensive evidence regarding fifteen of these
accounts, all at Bank of America, now referred to as the "adjudicated
accounts." These bear the names of the joint venture projects in