Professional Documents
Culture Documents
018 Indonesia 150
018 Indonesia 150
International
Arbitration
Indonesia
Emir Nurmansyah, Theodoor Bakker,
Ulyarta Naibaho and Desi Rutvikasari
ABNR Counsellors at Law
chambers.com 2020
INDONESIA
Law and Practice
Contributed by:
Emir Nurmansyah, Theodoor Bakker,
Ulyarta Naibaho and Desi Rutvikasari
ABNR Counsellors at Law see p.14
Contents
1. General p.3 7. Procedure p.8
1.1 Prevalence of Arbitration p.3 7.1 Governing Rules p.8
1.2 Trends p.3 7.2 Procedural Steps p.8
1.3 Key Industries p.3 7.3 Powers and Duties of Arbitrators p.8
1.4 Arbitral Institutions p.3 7.4 Legal Representatives p.8
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INDONESIA Law and Practice
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
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Law and Practice INDONESIA
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
All these functions, and many more, are set out in the arbitra- • an arbitration clause contained in a written agreement made
tion rules unique to each institution. before the dispute arises; or
• an agreement especially entered into by the parties after the
dispute arises.
2. Governing Legislation
If an arbitration agreement is made before the dispute arises, the
2.1 Governing Law Arbitration Law requires that it should state that all disputes that
Law No 30 of 1999 on Arbitration and Alternative Dispute arise or may arise from a legal relationship between the parties
Resolution (Arbitration Law) is the statute that governs arbi- must be settled by means of arbitration. If an arbitration agree-
tration and other forms of alternative dispute resolution, such ment is made after the dispute arises, it must include at least:
as mediation and expert determination. The Arbitration Law
has replaced the provisions on arbitration contained in the Civil • the subject matter of the dispute;
Procedure Code, which was inherited from the pre-independ- • the names and addresses of the parties;
ence period. • the names and residential addresses of the members of the
arbitral tribunal;
The Arbitration Law is not based on the UNCITRAL Model • the place where the arbitral tribunal will render the award;
Law on International Commercial Arbitration (Model Law), • the name of the secretary to the arbitral tribunal;
and deviates from the Model Law on several points, ie: • the time period within which the arbitration is to be com-
pleted; and
• Indonesian is the default language; • a statement from the members of the arbitral tribunal
• the arbitral tribunal is to complete its “examination of dis- accepting their appointment, and a statement from the dis-
putes” within 180 days of its constitution; and puting parties that they will bear all costs of the arbitration.
• grounds for annulment of Indonesian awards are limited to
fraud, forgery or concealment of material documents. The Arbitration Law does not require the seat of the arbitration,
the legal concept tying the arbitration to a legal jurisdiction,
Some of these points will be discussed in further detail in this to be mentioned in the arbitration agreement. However, if the
report. Generally, the role of the courts is relatively limited as place where the arbitral tribunal will render the award is Jakarta,
compared to the role granted to the courts in the Model Law. it is safe to assume that the Arbitration Law will govern the
arbitration, and that the Indonesian courts will have control
In addition, prior to the enactment of the Arbitration Law, in relation to the arbitration and the powers that are elsewhere
Supreme Court Regulation No 1 of 1990 on the Procedures granted to the courts of the seat of arbitration.
for the Implementation and Execution of Foreign Arbitration
Awards (Supreme Court Reg No 1/1990) had been used as ref- An arbitration agreement can be contained in an exchange of
erence for the enforcement and execution of foreign arbitral correspondence that provides a record of its content, and any
awards. dispatch by telex, telegram, facsimile, email or other means of
telecommunication must be accompanied by an acknowledg-
2.2 Changes to National Law ment of receipt. The Arbitration Law does not deal with optional
Minister of Finance Regulation No 80/PMK 01/2015 on the arbitration clauses that give one (or more) parties the ability to
Execution of Judicial Decisions (2015 Regulation) has provided make a choice after a dispute has arisen whether to arbitrate or
parties in disputes against the state of Indonesia with increased litigate that dispute.
assurance of obtaining payment of awards. No statutory amend-
ments with a significant impact on Indonesian arbitration prac- 3.2 Arbitrability
tices have been introduced more recently. As of the date of this Matters that may not be referred to arbitration are those in
report, no further major reforms are underway or expected. which, according to Indonesian law, no amicable settlement is
possible: eg, criminal matters, bankruptcy, adoption, etc. The
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INDONESIA Law and Practice
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
general approach to determine whether or not a dispute is arbi- • be legally capable to perform legal actions;
trable is found in Article 5 (1) of the Arbitration Law, which • be at least 35 years old;
states that a dispute can be settled by means of arbitration if • not have any family relationship by blood or marriage up to
the dispute is of a commercial nature and “falls within the full the second degree with any of the disputing parties;
legal authority of the disputing parties”. The latter requirement • not have any financial or other interest in the award; and
appears to give arbitrators the authority to examine whether • have a minimum of 15 years of experience and active profi-
particular parties, eg, government-owned entities, have the req- ciency in the field concerned.
uisite power to submit disputes to arbitration. As regards to the
meaning of “commercial nature”, the elucidation to Article 66 of The Arbitration Law also prohibits judges, prosecutors, court
the Arbitration Law states that these include commerce, bank- clerks and other court officials from being appointed as arbitra-
ing, finance, investment, industry, and intellectual property. tors. There is no restriction with regard to nationality.
Arbitration is not limited to dispute settlement. Under the There is no clear rule in the Arbitration Law which requires that
Arbitration Law parties may petition arbitrators to help settle there should be an uneven number of arbitrators. The Arbitra-
an equivocal contract provision, or provide for the amendment tion Law says that if parties each appoint an arbitrator, such
of a contract due to changing conditions. The Arbitration Law arbitrators have the authority (ie, not the obligation) to appoint
allows parties to ask for a binding opinion from the arbitrators, a third arbitrator. If they fail to do so, then one of the parties can
which opinion is not open to appeal. (but need not) apply for the appointment of a third arbitrator
by the court.
3.3 National Courts’ Approach
The national courts nowadays generally enforce arbitration 4.2 Default Procedures
agreements. Articles 3 and 11 of the Arbitration Law conclusive- Under the Arbitration Law, the parties have the freedom to
ly eliminate the national courts’ competence to hear any dispute choose the national or international arbitration institution
that has been referred to arbitration, and rule that the courts to which they wish to submit their disputes. The rules of that
must reject, and may not be involved in, disputes that should institution will apply unless otherwise decided (Article 34 of
have been settled by means of arbitration. This notion was the Arbitration Law). The parties may agree on a particular set
confirmed in the Supreme Court decision of the case between of rules on arbitrator selection, provided that the rules are not
PT Pertamina Hulu Energi Raja Tempirai (PHE Tempirai) v contradictory to the Arbitration Law, or to the appointment
PT Golden Spike Energy (Golden Spike) in 2015, in which the rules of the national or international arbitration institution they
Supreme Court overturned a decision of the High Court that have selected. In the event that the chosen method for selecting
had upheld a lower court decision. The lower court had ruled arbitrators fails or the parties do not choose a selection method,
that it had jurisdiction to examine a breach of contract lawsuit the chairman of the district court will have authority to appoint
despite the existence of an arbitration agreement. Therefore, the the members of the arbitral tribunal.
lower court did not have jurisdiction to examine the case.
Specifically for ad hoc arbitration, the Arbitration Law provides
3.4 Validity that in the event that the parties fail to appoint the members of
The Arbitration Law recognises the separability principle: an the arbitral tribunal, they may seek the assistance of the chair-
arbitral clause can be considered valid even if the rest of the man of the district court to appoint the members of the arbitral
contract in which it is contained is wholly or partly invalid. tribunal.
The arbitration clause is therefore separate from the agreement
in which it is set out. If there is no express law chosen for the However, if the parties agree to specific institutional arbitration
arbitration agreement, the law with which that agreement has rules or set out their own rules, these will apply as the default
its closest connection is either the law of the underlying contract procedure, provided they do not contradict the Arbitration Law.
or the law of the seat of the arbitration.
The Arbitration Law provides that the tasks of the arbitrators
end:
4. The Arbitral Tribunal
• after an award has been issued;
4.1 Limits on Selection • the deadlines determined in the arbitration agreement have
The Arbitration Law contains no limitation on the parties’ been exceeded; or
autonomy to select arbitrators but lists requirements for a valid • the parties have agreed to withdraw their dispute from
appointment as an arbitrator. An arbitrator must: arbitration.
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Law and Practice INDONESIA
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
The law specifies that the death of one of the parties does not in 5. Jurisdiction
itself affect the arbitration procedure, though the term of office
of arbitrators will automatically be extended by 60 days in such 5.1 Matters Excluded from Arbitration
an event. Subject matters that may not be referred to arbitration under
the governing law of Indonesia include those that are not com-
4.3 Court Intervention mercial in nature and disputes that cannot be settled amicably,
During the appointment process, the court can intervene in the such as criminal offences – see also 3.2 Arbitrability.
selection of arbitrators:
5.2 Challenges to Jurisdiction
• if one of the events described in Article 13 of the Arbitration An arbitral tribunal is itself authorised to rule on a party’s chal-
Law, discussed in 4.2 Default Procedures occurs; and lenge to the tribunal’s jurisdiction (the competence-competence
• if a recusal filed by one party is objected to by the other principle). The principle is generally accepted even though the
party or parties, or if the member of the arbitral tribunal Arbitration Law does not specifically confirm it. The applicabil-
concerned fails to step down. ity of this principle can be inferred from Articles 3 and 11 of the
Arbitration Law. Article 3 requires the courts to refer disputes
Thereafter, the court can only address the issue of the jurisdic- arising out of a contract (that has an arbitration clause) to arbi-
tion and competence of an arbitral tribunal within the frame- tration instead of assuming jurisdiction, and Article 11 states
work of enforcement of the award through a writ of execution that parties to a written arbitration agreement are no longer
(exequatur). entitled to initiate litigation proceedings at the courts.
4.4 Challenge and Removal of Arbitrators Several Indonesian arbitration institutions incorporate this
Section III of the Arbitration Law stipulates the provisions principle specifically in their arbitration rules, such as Article 19
governing the challenge or removal of arbitrators. It contains of the BANI Rules 2019 and Article 22(2) of the BAPMI Rules.
the requirements for a challenge or removal of members of an
arbitral tribunal by the parties or by the chairman of the district 5.3 Circumstances for Court Intervention
court. The Arbitration Law does not allow the courts to address the
issue of jurisdiction of an arbitral tribunal. The Arbitration Law
A challenge request to recuse members of an arbitral tribunal does set out the limited involvement of the courts, such as the
can be filed: appointment, discharge and recusal of an arbitrator; registra-
tion and issuance of exequatur for an arbitral award; and the
• if there is sufficient cause or authentic evidence that raises annulment of an arbitral award. However, as this is limited, the
doubt as to whether the arbitrator will perform the task courts tend to be reluctant to intervene in questions relating to
independently, neutrally and impartially when rendering an the jurisdiction of arbitral tribunals.
award; or
• if it is proven that the arbitrator has a family, work or finan- There have been cases in which the courts have assumed juris-
cial relationship with one or more of the parties or their diction where the claim was argued to represent not a breach
legal counsel. of contract subject to an arbitration clause, but a tort – see 5.6
Breach of Arbitration Agreement.
4.5 Arbitrator Requirements
Under the Arbitration Law, each member of the arbitral tribunal 5.4 Timing of Challenge
must be independent, neutral and impartial, as outlined in 4.1. The Arbitration Law does not provide any mechanism to chal-
Limits on Selection, but there are no specific references to the lenge the jurisdiction of an arbitral tribunal before the courts.
requirement for independence, impartiality and/or disclosure Therefore, unless there is ambiguity in the arbitration clause that
of a potential conflict. BANI has adopted a similar requirement, may trigger the courts’ jurisdiction, a challenge to the jurisdic-
yet it also does not have specific references. tion of an arbitral tribunal may only be heard by the arbitral
tribunal.
If the appointment of arbitrators is complete, then an arbitrator
cannot be released from his or her duties other than with the 5.5 Standard of Judicial Review for Jurisdiction/
agreement of the disputing parties. If the parties agree, then the Admissibility
arbitrator is released. If they disagree, the issue of the release can Admissibility and/or jurisdiction issues will first be addressed
be submitted to the district court chairman for final decision. by the arbitral tribunal at the beginning of the arbitration pro-
ceeding before examination of the substance of the dispute.
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INDONESIA Law and Practice
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
They may also be subject to court review during the enforce- 6. Preliminary and Interim Relief
ment stage. In either case, the standard should be de novo: the
Indonesian courts would not apply restraint in their review, par- 6.1 Types of Relief
ticularly not where it concerns due process and equality issues The Arbitration Law recognises that the availability of interim
such as the right to be heard. But an Indonesian court has not relief pending a final award is an important feature of arbitra-
yet confirmed this view – see also 3.2 Arbitrability. tion, including orders to prohibit actions that could cause immi-
nent harm or to preserve assets to satisfy an award. Pursuant to
5.6 Breach of Arbitration Agreement Article 32 of the Arbitration Law, an arbitral tribunal is permit-
Current trends show a strong tendency for Indonesian courts ted to award preliminary or interim relief. Types of relief that
to reject jurisdiction in breach of an arbitration agreement: can be awarded include:
where there is a clear and unambiguous arbitration clause, and
that clause is valid and enforceable and the dispute concerns • a security attachment;
an alleged breach of contract, the courts must refer the parties • a deposit of goods with third parties; and
to arbitration. • the sale of perishable goods.
In practice, there have been cases where the parties have initiat- Similar relief is often provided for in varying levels of detail in
ed court litigation based on tort in order to avoid application of the rules of arbitration institutions.
the arbitration clause. The argument typically used was that the
arbitration jurisdiction was limited to matters involving breach 6.2 Role of Courts
of contract, and hence could not extend to a tort-based claim. Preliminary and Interim Relief
However, Article 134 of the Revised Civil Procedural Law (HIR) The courts do not play a role in ordering preliminary or interim
opens up the possibility for parties wishing to invoke an arbitra- relief in arbitration proceedings. Arbitral tribunals do not have
tion clause to challenge the court if it assumes jurisdiction over the authority to grant or lift attachments in the same manner
a matter covered by an arbitration agreement. Indonesian law and with the same binding force as the Indonesian courts have.
requires that the arbitration agreement and the lack of jurisdic-
tion must be raised in the first written pleading. Although an arbitral tribunal is granted the power to render
relief within the parameters of an arbitral procedure, in practice,
5.7 Third Parties complications arise when the claimant party attempts to enforce
Third parties that are not a party to the arbitration agreement the relief granted by the arbitral tribunal. Indonesian law does
may join in the arbitration proceedings in the following cir- not regulate court implementation of preliminary or interim
cumstances: relief awarded in arbitration proceedings. It generally adopts
the position that only a final and binding decision awarded in
• if the third party has an interest in joining in the arbitration; arbitration proceedings can be enforced.
• if the participation is agreed by the disputing parties; and
• if the arbitral tribunal approves the third party’s joining in Emergency Arbitrators
the arbitration. The Arbitration Law does not contain any reference to the use
of emergency arbitrators. However, if the parties have agreed
The Arbitration Law does not limit this condition to domestic on specific rules for the arbitration – either institutional or ad
parties. Thus, it is applicable to both foreign and domestic third hoc – that allow the use of emergency arbitrators, the court
parties. should recognise the validity of an arbitral award rendered by
an emergency arbitrator.
In principle, a third party, ie, any person or entity that has
not signed an arbitration agreement, is not bound to become In light of Articles 3 and 11 of the Arbitration Law, both of
involved in the arbitration. An exception would be where the which stipulate that the national courts must refrain from exam-
rights under an agreement would have been assigned to a third ining disputes which the parties have agreed to refer to arbitra-
party. If that agreement contained an arbitration clause, that tion, the national court should not be able to intervene once an
third party would, as an assignee, be bound to the arbitration emergency arbitrator has been appointed in accordance with the
clause. applicable institutional or ad hoc arbitration rules.
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Law and Practice INDONESIA
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
6.3 Security for Costs witnesses. The testimony of the expert witnesses must be in
The Arbitration Law does not expressly allow the arbitral tribu- writing.
nal to order security for costs. However, institutional arbitration • In contrast to the UNCITRAL Model Law, the arbitration
rules sometimes contain security for costs provisions. proceedings must be completed within 180 days after the
panel of arbitrators has been established. As regards time
limits, the Arbitration Law states that arbitration procedures
7. Procedure may not extend beyond 180 days. This term can be extended
by the arbitrators at the substantiated request of one of the
7.1 Governing Rules parties, as a result of interim measures, or if the proper
The parties to a dispute that has been submitted to arbitration resolution of the dispute so requires, as determined by the
have the following options: arbitral tribunal. It is possible and common to waive this
provision in an arbitration clause.
• to draw up their own procedural rules or adopt the UNCI- • The award must follow the requirements set out in Article 54
TRAL rules or other rules for ad hoc arbitration; (1) of the Arbitration Law (for further explanation, see 10.
• to use the rules of a national or international arbitration The Award) and must be pronounced within 30 days of the
institution; or examination being completed.
• to use the default rules contained in the Arbitration Law,
which will in any event apply if neither of the preceding 7.3 Powers and Duties of Arbitrators
options have been chosen. The arbitrators, acting as an arbitral tribunal, have the follow-
ing authority:
7.2 Procedural Steps
Pursuant to the Arbitration Law, the following default proce- • to determine the tribunal’s own jurisdiction;
dural steps are prescribed. • to determine the rights and obligations of the disputing
parties;
• When a dispute arises, the respondent must be notified in • to render an interlocutory decision at the request of one of
writing via mail, telex, facsimile or email. The notification the disputing parties;
must include: • to conduct site visits if considered necessary;
(a) the name and address of the disputing parties; • to determine the seat of arbitration unless already agreed by
(b) evidence of the agreed arbitration clause; the parties; and
(c) the disputed issues; • to hear witnesses or experts.
(d) the basis for a claim and the claim amount;
(e) the agreed dispute settlement procedure; and The arbitrators have the following duties:
(f) the agreed or chosen number of arbitrators.
• Written submission must be presented to the arbitral tribu- • to adjudicate the claims based on:
nal for the purpose of examining the dispute. Oral submis- (a) applicable law; or
sions may be made if agreed by the parties and considered (b) the principles of fairness and appropriateness (ex aequo
necessary by the arbitrators. et bono), unless the parties have agreed to reject these
• At least one hearing must be held. If deemed necessary by principles;
either party or the arbitral tribunal, the parties must appear • to complete the examination of the case within 180 days of
at further hearings. the establishment of the panel of arbitrators, unless agreed
• The arbitrators must make an effort to settle the dispute by the parties to be extended; and
amicably prior to examination of the dispute. If such concili- • to decide on the arbitration costs (arbitrators’ fees, trans-
ation is in fact reached, then this must be set out in a deed portation costs and other relevant costs, costs to summon
which is final and binding upon both parties and instructs witnesses or experts that may be necessary for the examina-
them to abide by its provisions. The arbitration hearings tion of the dispute, and administration costs).
commence if a settlement cannot be reached.
• The examination of witnesses and experts follows the 7.4 Legal Representatives
Indonesian Civil Procedural Law. The arbitrators can decide No particular qualification is required for a legal representative
to summon witnesses either at their own initiative or at appearing before arbitration proceedings in Indonesia. In fact,
the request of the parties. The cost of witnesses must be there is no obligation to be admitted to any Bar association in
borne by the claimant. The arbitrators may also hear expert order to act as counsel in such proceedings. Moreover, there is
no obligation for the parties to be represented at all. Foreign
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INDONESIA Law and Practice
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
legal representatives require no specific qualification to act as the production of a document or require the attendance of wit-
their client’s representative. nesses. The arbitral tribunal should rely on the powers vested
in it pursuant to the arbitration agreement, the Arbitration Law
If a legal representative is an Indonesian legal counsel/advo- and the institutional arbitration rules where applicable.
cate, the requirements under the Advocates Law (Law No 18 of
2003) will apply. For capital market arbitration in BAPMI, the
legal representatives that can appear must be members of the 9. Confidentiality
Association of Capital Market Legal Consultants (Himpunan
Konsultan Hukum Pasar Modal or HKHPM). 9.1 Extent of Confidentiality
The examination of a dispute by arbitrators takes place in a
closed proceeding, and registration details, documents, submis-
8. Evidence sions and hearings can only be disclosed to third parties with
the consent of the disputing parties or if legally required by law.
8.1 Collection and Submission of Evidence Indonesian law is silent on whether information in arbitration
As Indonesia is a civil law country, under Indonesian procedural proceedings may be disclosed in subsequent arbitration pro-
law, a party must present its own evidence to substantiate its ceedings. The Arbitration Law does not expressly state that the
claim; hence the common law concept of discovery is generally award is confidential.
not recognised. Under the Arbitration Law, arbitrators do have
the power to request parties to provide additional information Most of the rules adopted by arbitration institutions have their
in writing, documents or other evidence necessary. However, own provisions on confidentiality. The BANI Rules, for instance,
arbitrators have no executorial authority to compel the parties specify that all matters relating to the arbitration must be kept
to provide the requested documents. in strict confidence amongst the parties, the arbitrators and
BANI itself.
8.2 Rules of Evidence
The Arbitration Law adopts a combination of rules of evidence
provided under the provisions of the Arbitration Law and the 10. The Award
Indonesian Civil Code. The approach taken to implement such
combination is the principle lex specialis derogit lex generalis; 10.1 Legal Requirements
thus, if the provisions in the Arbitration Law stipulate a specific Article 54 paragraph (1) of the Arbitration Law requires that an
subject matter, this would override the law governing general arbitral award must, at minimum, contain the following:
matters, ie, the Indonesian Civil Code. The Arbitration Law also
adopts the civil procedural law or HIR. • the statement “Berdasarkan Keadilan yang Berdasarkan
Ketuhanan Yang Maha Esa” (For the Sake of Justice based
A party may submit any of the following evidence recognised on the Almighty God), written at the top of the award;
under the Indonesian Civil Code and HIR: • the full names and addresses of the parties;
• a brief description of the dispute;
• documents/written evidence; • the positions of the respective parties;
• witness statements; • the full names and addresses of the arbitrators;
• presumptions/indications (vermoedens); • the considerations and conclusions of the tribunal concern-
• confessions or admissions; and ing the dispute;
• oaths. • the opinion of each of the respective arbitrators if there is a
difference of opinion within the tribunal;
In order to ensure that the evidence is admissible, there are spe- • the dictum of the award;
cific requirements for each type of evidence. The IBA Rules on • the place and date of the award; and
the Taking of Evidence in International Arbitration are often • the signatures of the members of the tribunal. The failure of
referred to as guidance in cross-border arbitrations seated in an arbitrator to sign an award, because of illness or death, if
Indonesia. noted in the award itself, will not affect the enforceability of
the award (Article 54(2) of the Arbitration Law).
8.3 Powers of Compulsion
With the absolute competence of arbitration and pursuant to The Arbitration Law does not expressly deal with the matter of
the limitation on court involvement in arbitration, there are no a member of the arbitral tribunal issuing a dissenting opinion.
powers of compulsion or court assistance for arbitrators to order
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Law and Practice INDONESIA
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
In addition, the Arbitration Law provides that the award must Grounds for Annulment
specify the time within which the award must be implemented. The Arbitration Law allows parties to apply for an annulment
The award must be delivered orally within 30 days of the arbi- – whole or partial – of an arbitral award on one or more of the
tration being closed. following grounds:
A request for registration of a domestic award must be made • letters or documents that were submitted in the hearings are
within 30 days after the date of the award on penalty of unen- acknowledged to be false or counterfeit, or are declared to be
forceability of the award. There is no limitation on the registra- forgeries, after the award is rendered;
tion period for a foreign arbitral award – see also 12.2 Enforce- • after the award is rendered, documents that are decisive
ment Procedure. in nature and were deliberately concealed by the opposing
party are discovered; or
10.2 Types of Remedies • the award is rendered as a result of fraud committed by a
The arbitral tribunal’s final award is usually an order for the pay- party.
ment of a sum of money or an order to engage in or refrain from
a certain conduct. However, Indonesian law does not contain The original Elucidation required the grounds to be proven in
any statutory limitations on the type of remedies an arbitral a final and binding court decision. This was problematic, as it
tribunal can award. As such, arbitrators can: could take several years to obtain a final and binding decision,
while the Arbitration Law only provides a 30-day deadline from
• render declaratory relief; registration of the award. As a result, arbitral awards were rarely
• order a party to pay damages; annulled in practice. However, the Elucidation was revoked in
• issue injunctions; and 2014 and the grounds for an annulment can now be invoked
• award costs. based simply on evidence deemed satisfactory by the court.
The award may provide that interest is payable on the amount The grounds for annulment of an award under Article 70 of the
awarded, at a rate and for a duration determined by the arbitral Arbitration Law are more restrictive than those of the UNCI-
tribunal, which has broad discretion. TRAL Model Law. The request for annulment must be submit-
ted to the chairman of the district court where the losing party
10.3 Recovering Interest and Legal Costs resides. The court must issue its decision within 30 days. If the
Unless agreed otherwise by the parties in the arbitration clause, request for annulment is granted, it must specify the conse-
legal costs incurred by the parties are borne by the parties but quences of the annulment.
may be ordered to be totally or partially paid by the losing party.
The costs of the arbitration are usually determined by the arbi- No Grounds for Annulment
tral tribunal. Costs include: Annulment of an arbitral award is not possible on the grounds
of the arbitral tribunal having exceeded the mandate established
• the arbitrators’ fees; by the arbitration agreement, the arbitral tribunal having been
• travel and lodging and other expenses incurred by the improperly composed, the arbitrators having lacked the proper
arbitrators; expertise, the award including matters that were not requested,
• witness or expert witness expenses; and or the award being in excess of what was claimed, all of which
• administration, hearing and other costs payable to an arbi- are recognised grounds in several other jurisdictions.
tration institution, if any.
Foreign arbitral awards are not subject to annulment. In
practice, losing parties have sought to challenge a request for
11. Review of an Award enforcement in Indonesia before the Central Jakarta District
Court (CJDC). The grounds used were those of refusal of
11.1 Grounds for Appeal enforcement of an arbitral award as provided under Article 66
An arbitral award is final and binding on the parties and can- of the Arbitration Law – mainly for breach of public policy.
not be appealed. The only available recourse is to file a request This practice is not something regulated under the Arbitration
for annulment (setting aside) of the award. This avenue is only Law – see 12.2 Enforcement Procedure.
applicable to domestic awards.
Correction of an Award
Correction of an award by the arbitral tribunal is not provided
for in the Arbitration Law. The rules of procedure chosen by
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INDONESIA Law and Practice
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
the parties or determined as applicable by the arbitrators in the be filed with the Supreme Court, even though the adjudication
absence of such agreement, will govern any correction or inter- will be assigned to the CJDC.
pretation of an arbitral award.
Conditions for Enforcement
11.2 Excluding/Expanding the Scope of Appeal In order to seek enforcement in Indonesia, the enforcing party
Exclusion and expansion of the scope of appeal, or annulment must observe Article 66 of the Arbitration Law, which requires
in the context of the Arbitration Law, are not regulated under fulfilment of the following:
Indonesian law. Arbitration agreements sometimes provide for
a waiver of the right to challenge an arbitration award, but the • the award was rendered by an arbitrator or arbitral tribunal
validity of such waiver has not been ruled on by the Indonesian in a state that has a bilateral or multilateral convention on
courts. the recognition and enforcement of arbitral awards with
Indonesia (the reciprocity principle);
11.3 Standard of Judicial Review • the subject matter of the dispute falls within the scope of
In the context of an annulment, the review will analyse the facts commercial law (the commerciality principle);
against the ground(s) brought forward in the application. Indo- • the execution of the awards would not violate public policy;
nesian law does not clearly define the standard of review that and
would be relevant in determining whether an award must be • an exequatur (writ of execution) has been obtained from the
annulled, but it is safe to assume that the standard is de novo. chair of the CJDC.
For elaboration on annulment, see 11.1 Grounds for Appeal.
There are three relevant steps to enforcing a foreign arbitral
award in Indonesia:
12. Enforcement of an Award
• registration;
12.1 New York Convention • obtaining an exequatur; and
Indonesia has ratified the New York Convention (United • execution (eksekusi).
Nations Convention on the Recognition and Enforcement of
Foreign Arbitral Awards – New York, 10 June 1958) with the Registration
contracting state reciprocity reservation and the commercial Registration of a foreign arbitral award is effected by the arbitral
nature of the dispute reservation. tribunal or its attorney at the CJDC. The application must be
accompanied by the following documents:
Indonesia has also ratified the 1965 Convention on the Settle-
ment of Investment Disputes between States and Nationals of • the original or a certified true copy of the award and a sworn
Other States (ICSID Convention), and it has complied with Indonesian translation;
several awards issued pursuant to that treaty. • the original or a certified true copy of the arbitration clause
or agreement and a sworn Indonesian translation; and
12.2 Enforcement Procedure • a confirmation from the Indonesian embassy in the country
International and Domestic Arbitration where the award was issued that that country is bound by
An international arbitration award is defined by the Arbitration the New York Convention or another international agree-
Law as an award handed down by an arbitration institution or ment on recognition and enforcement of arbitration, to
individual arbitrator outside the jurisdiction of the Republic ensure that the reciprocity requirement is fulfilled.
of Indonesia, or an award by an arbitration institution or indi-
vidual arbitrator which, under the provisions of the laws of the All documents produced or signed outside Indonesia must first
Republic of Indonesia, is deemed as an international arbitral be consularised by the Indonesian Embassy where they were
award. According to the Indonesian Supreme Court, arbitration produced or signed, by virtue of Articles 68 and 70 of the Regu-
under ICC Rules of an award issued in Jakarta is international lation of Ministry of Foreign Affairs No 09/A/KP/XII/2006/01
arbitration (Supreme Court Case No 904K/PdtSus/2009). on General Guidelines on the Procedure for International Rela-
tions and Co-operation.
The enforcement procedure for international arbitration is dif-
ferent to that for domestic arbitration only in that there is no A power of attorney from the arbitral tribunal is required if the
time limit to file for application and the CJDC is the only court award is registered by an attorney. The Arbitration Law assumes
authorised to deal with enforcement applications. However, if that arbitrators themselves register the award. Obviously, this
the dispute involves Indonesia as a state, the application must will be difficult to achieve in practice, also because, as discussed
11
Law and Practice INDONESIA
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
in 4.2 Default Procedures, the function of the arbitrators ends then be carried out with the assistance of the court bailiff. The
after an award has been issued. For this reason, parties often liquidation of assets can finally be achieved through an auction.
request in their claim that the arbitrators grant a power of attor- This process will be performed in accordance with Indonesian
ney at the time of issuance of the award, allowing an attorney to Civil Procedural Law.
register the award. The power of attorney must be consularised
by the Indonesian Consulate or Embassy having jurisdiction If there is a challenge to the process of executorial attachment,
over the place of signing by the arbitrators or arbitration institu- the challenge will be entertained as in a civil case and will be
tion (for an institutional arbitration). The examination in this subject to the normal appeal process in the High Court and cas-
phase is limited to whether it has fulfilled all administrative sation and civil review process in the Supreme Court. There is
requirements. The CJDC will then issue a deed of registration no definite time limit within which a final and binding decision
once the documents are found to be complete. on a challenge can finally be obtained.
12
INDONESIA Law and Practice
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
13
Law and Practice INDONESIA
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
ABNR Counsellors at Law was founded in 1967 and is Indone- it the scale needed to simultaneously handle large and complex
sia’s longest-established law firm. It pioneered the development transnational deals across a range of practice areas. It also has
of international commercial law in the country following the global reach as the exclusive Lex Mundi (LM) member firm
reopening of the economy to foreign investment after a period for Indonesia since 1991. LM is the world’s leading network of
of isolationism in the early 1960s. With over 100 partners and independent law firms, with members in more than 100 coun-
lawyers (including two foreign counsel), ABNR is the largest tries. ABNR’s position as the LM member firm for Indonesia
independent, full-service law firm in Indonesia and one of the was reaffirmed for a further six-year period in 2018.
country’s top-three law firms by number of fee earners, giving
Authors
Emir Nurmansyah is a senior partner at Ulyarta Naibaho is an experienced and
ABNR and a member of the firm’s versatile litigator and joint head of ABNR’s
management board. With some 30 years in award-winning disputes and alternative
legal practice, he is one of the most dispute resolution (ADR) department. Her
respected and versatile lawyers in work in contentious matters extends across
Indonesia today. Emir is a market-leading all industry sectors and practice areas, with
lawyer for project finance and a particular emphasis on commercial,
development, banking and finance, corporate/mergers and shipping, FDI, mining, cybersecurity/cybercrime, and
acquisitions (M&A), and foreign direct investment (FDI). He administrative law, corporate crime and environmental
also offers extensive experience and expertise in restructuring disputes. She also frequently represents clients in arbitration
and insolvency, shipping, aviation and technology, media and proceedings and ADR forums. Uly holds an LLM degree in
telecommunications (TMT). In addition to a law degree from mineral law and policy from the University of Dundee,
the University of Indonesia, Emir has an LLM in international Scotland.
transactions from Bond University, Australia.
14
INDONESIA Law and Practice
Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Desi Rutvikasari, ABNR Counsellors at Law
15