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Commercial Arbitration in Indonesia

Commercial Arbitration in Indonesia

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Published by Dedy Andiwinata

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Published by: Dedy Andiwinata on Apr 18, 2009
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By : Prof. Mr. Dr. Sudargo GautamaI. INTRODUCTION.The regulation on arbitration in the Republic of Indonesia is contained inarticles 615-651 of the Regulation on Civil Procedure (abbreviated: R.C.P.). which has beenin force since 1847 (state gazette 1847 no. 52 jo. 1849 no. 63). It is primary a copy of the Dutch Code of Civil Procedure which in her turn is based on the French "Code deProcedure Civile". The R.C.P. is in general no longer valid for Indonesia since theoccupation of the Netherlands Indies by the Japanese forces in 1942.
However, the articles on arbitration have to be regarded as still valid untillnow. It is valid for persons living under European (Western) law (the population group of Europeans and Foreign Orientals-Chinese), but it is also used for persons who in civilaffairs, according to the lawmaker, were placed on the group of persons livingunder their own customary law (the population-group of Autochtonous Indonesiansand Foreign Orientals-non Chinese).
Prasaran pads LAWASIA CONFERENCE di Jakarta, 1973. This paper a revised version of my essay :"International Commercial Arbitration , The Republic of Indonesia", in the series "Arbitrage InternationalCommercial. International Commercial Arbitration" published by the "Union Internationale des Avocats", Rap porteur GeneralPieter Sanders, Dalloz et Sirey (Paris), Martinus, Nyhoff (The Hague).
Before the Second World War separate courts exist for the respective population-groups in the Netherlands Indies.With the Japanese occupation the special courts for Europeans and Foreign Orientals the
"Ratlen van Justine" 
were withdrawnand transformed into courts for 
 population-groups, the
 Pengadilan Negeri
"State Courts" a
revised form of the pre-war 
the courts for indigenous population-group). Unification of Civil Courts and its procedural law wasobtained. The R.C.P. is no longer uphold and the
 Revised Indonesian Regulation
(abbreviated R.I.R.,
 Herziene Indonesisch Reglement, Reglemen Indonesia Diperbaiki.
State Gazette nr. 16/1848, nr. 44/1941) is now used by the State Courts. However,the provisions of the R.C.P. may be used by the Civil Courts if it is required for the realisation of the civil law and the rulescontained in the R.I.R. are insufficient or do not exist at all.
The inhabitants of the Netherlands Indies were according to law divided into three main population-groups :First, the group of "Europeans", then the
"Foreign Orientals" 
(subdivided into
and the
"Oriental-non Chinese",
such Arabs, British-Indians, Malayans etc.) and lastly the "Natives" (indig-enous population of Indonesia). (Sec. art. 163 and 131 of the
"Indische Staatsregeling",
the Constitution for the Netherlands Indies). See Sudargo Gautama and R. Hornick, An Introduction to Indonesian Lawja:karta-Bandung 1973,Chapter 1:
The articles concerning arbitration as stipulated in the above articles of theR.C.P. have not been amended since their enforcement. The judge in a free Indonesiaregards the respective articles of the R.C.P., as all the other articles of it, asguidings-line,. so that he is not strictly bound to the text of the respective articles.
Therefore the Indonesian Judge is free to set aside or to remould certain parts of theregulations on arbitration complied in the R.C.P., which he deems no longer suitable in the sphere of independence. For example the rules concerning theimpossibility to appoint women as arbitrators (art. 617 alines 2) could be mentionedhere. In independent Indonesia due respect is given to the status of women. As women areon an equal footing with men, the limitations concerning the eligibility of women, haveto be regarded as no longer valid. We will discuss this issue further below.As the R.C.P. for Indonesia is based on the Dutch Code of Civil Procedure, which is inher turn founded on the French Code de Procedure Civile it is obvious that much whatis valid for arbitration in the Netherlands and for France is also valuable for Indonesia.
Arbitration has been frequently practised in Indonesia, although due to thegeneral economic decline in previous years, the number of arbitration cases has droppedsignificantly. There were permanent arbitral tribunals operative in several fields of trade.The tribunals have been created by verious associations and trade organisations. Foexample could be mentioned here :
The Association of Exporters of Indonesian Products (Organisasi Eksportir Hasil BumiIndonesia), in Jakarta;
The Indonesian Association of Fire Insurance Underwriters, Jakarta;
The Indonesian Accident Underwriters Association, Jakarta.However, the above mentioned arbitration panels are at the moment inactive. TheIndonesian Association of Exporters and Indonesian Chamber of Commerce have
"The pluralism of Indonesian Law".
According Section II of the Transitory Regulation of the Constitution of 1945 now in force for Indonesia, the old laws of the Netherlands Indies are generally still valid, "provided that they are not contrary tothe 1945 Constitution". Based on the last wordings the old codifications inherited from the Dutch were moreregarded as guidelines which could be set
recently made preparations to re-active the institute of arbitration.International contracts often mention arbitration by international commercialarbitration tribunals, such as the International Chamber of Commerce in Paris, theLondon Copra Association, Chamber of Commerce in Zurich, or Tokyo.In some administrative fields related with trade and enterprises arbitration is oftenresorted to. As example is worthwhile mentioning here, the arbitration procedure in labor disputes arising between an employer and his employees, based on the "Emergency Actno. 16 of 1951 for the Settlement of Labor Disputes
(Undang-undang Darurat no. 16 tahun 1951 tentang penyelesaian perselisihan perburuhan,
later revoked and amended by Law no. 22 of 1957, State 1957 no. 42). The parties in dispute may on their own initiative or at the suggestion of the Regional Committee for the Settlement of Labor Disputes submit their case to an arbitrator. Further is mentioned here the provision adopted in the recent Foreign Capital Investment Law no. 1 of 1967(State Gazette 1967 no. 1), where the arbitration procedure is used as guarantee for the foreign investor in case his property is expropriated or nationalised. Thearbitrators will fix the amount, means and ways of payment of the compensation (art. alinea 2).
According to Indonesian law parties are given much freedom to enter into arbitralagreements. Generally speaking any dispute which could be submitted before thecourt may be settled by way of arbitration. In principle parties may subject toarbitration all rights of which they have free disposition. This is outlined in theopening article concerning arbitration of the R.C.P. (art. 615). The same provisionis made by the legislator concerning the possibility to settle disputes by means of acompromise (dading, perdamaian)
So, disputes con-cerning gifts and baquests for maintenance, lodging and clothing, concerning judical separation or divorce and the partitionof joint property, in short disputes concerning personal status and all other mattersconcerning which a compromise may not be affected, are excluded from arbitration.It is specific for the situation and condition in Indonesia, that arbitration is
See art. 1852 of the Indonesian Civil Code (abbreviated C.C.).

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