The International Centre for Settlement of Investment Disputes (ICSID) has registered PNG Sustainable Development Program Ltd's request for international arbitration over the expropriation without compensation of the company's 63.4% shareholding in Ok Tedi Mining Ltd.
This means that ICSID has accepted the case and that it will proceed.
The arbitration hearing is separate to all other litigation relating to the expropriation of the mine, including the latest National Court action.
The chairman of PNGSDP, Sir Mekere Morauta, said PNGSDP is seeking restitution of the 63.4% of OTML illegally expropriated by the State, or failing that, compensation for the shares.
"The State's expropriation of the shares through the 10th Supplemental Agreement Act last year, without compensation, is in breach of international law," he said.
"It also breaches the normal standards of behaviour of a State towards a foreign company.
"PNGSDP is well within its rights to seek restitution," he said.
"PNGSDP believes it has a strong case and looks forward to having its property returned to it."
Sir Mekere said the next step was for an arbitration tribunal of three eminent international jurists to be set up.
“The members will be appointed by agreement between PNGSDP, the State and ICSID,” he said.
“It is likely that this will happen towards the middle of the year, with hearings possible soon afterwards.
“When the mine is returned to PNGSDP, the company will begin talks with the Western province community so that agreement can be reached on the most appropriate arrangements for the future of the province
“PNGSDP is very keen to resume its social and economic development programme in Western province.”
ICSID is an international institution set up under the International Convention on the Settlement of Investment Disputes Between States and Nationals of Other States.
It facilitates arbitration proceedings allowing independent tribunals to decide cases under its rules, and all contracting member states agree to enforce and uphold arbitral awards in accordance with the Convention.
PNG became a signatory to the Convention with the passing of the Investment Disputes Convention Act in 1978. One hundred and fifty other countries are signatories.
International arbitration by ICSID is available to PNGSDP under Section 39 of the Investment Promotion Act.
From its creation in 1965 to 30 June 2012, ICSID has registered 390 investment dispute cases, of which 250 have been concluded.
Of the outcomes for arbitration proceedings, as of June 30. 2012, 62% of disputes have been resolved and 38 percent have been settled or discontinued.
Further information about ICSID and the registration of the PNGSDP case can be found at https://icsid.worldbank.org/.