1999 - Expropriation (Arbitration Award Default) Indonesia
Sovereign paid an expropriation claim to CalEnergy (now MidAmerican Energy Holdings), an equity sponsor of two geothermal power projects in Indonesia. The loss occurred as a result of a series of actions by the Indonesian government to deny the Insured its right to own and operate the power plants. Those actions included the refusal by PLN, the government’s electricity utility, to perform its obligations under the Power Purchase Agreement with the Insured. The policy required that the Insured obtain an arbitral award against PLN and if PLN did not honour the award, the sponsors would then attempt to enforce the award against the Indonesian Ministry of Finance. The Insured obtained the arbitral award in its favor and the Ministry of Finance refused to honor the award. The claim was paid in full and on time and Sovereign and its co-insurers obtained a near full recovery following a settlement with the Government of Indonesia two years later.