ENFORCEMENT OF

LITIGATION AND ARBITRATION

ARBITRAL AWARDS
9 April 2019 M. Kumar & Reynalda Basya I.
Litigation in Indonesia
 Indonesian Civil Code (BW)
 Indonesian Civil Procedural Laws:
 HIR

 RBG (outside of Java and Madura)

 Rv

 Indonesian Penal Code (Kitab Undang-Undang Hukum Pidana)

 Indonesian Criminal Procedural Law (Kitab Undang-Undang
Hukum Acara Pidana)
Types of Litigation
 Contentious cases
 There is a dispute

 Condemnatoir relief

 Submission of lawsuit

 Application cases
 No dispute

 Declaratoir relief

 Submission of application
Examples of Contentious Cases
 Breach of contract
 Unlawful act
 Claim to determine ownership status of an immovable or
movable object
 Claim to determine inheritance status
 Claim to declare that a document or deed is valid
Examples of Application Cases
 Appointment of guardian for minors (below 18 years old)
 Appointment of caretaker for adults who lack memory or can no longer take care of their
property
 Marriage dispensation for men below 18 years old and women below 16 years old
 Marriage permit for a bride below 21 years old
 Annulment of marriage
 Adoption
 Appointment of arbitrator due to the parties’ inability or unwillingness
 Declaration of someone absent or dead
 Declaration as the representative or authority to sell inheritance
Absolute Jurisdiction
Article 18 of Law No. 48 Year 2009
General Court
 Civil
 Criminal
Military Court
Religious Court
State Administrative Court
Specialized Courts
Article 27 and its elucidation of Law No. 48 Year 2009
 Juvenile Court
 Commercial Court (Surabaya, Semarang, Central Jakarta, Makassar, and Medan)
 Suspension of Payment and Bankruptcy
 Intellectual Property Rights

 Human Rights Court

 Corruption Court
 Fishery Court (under General Court)
 Tax Court (under State Administrative Court)
Relative Jurisdiction
118 HIR
General principle: where the defendant is domiciled
The domicile of the plaintiff (in the event where the defendant’s
domicile is unknown)
Rei Sitae: where the immovable goods are located
Chosen domicile in the agreement
 Civil Lawsuits
 Breach of contract  Unlawful Act
 Article 1320 ICC:
 Article 1365 ICC:
 Consent
 Act against the law
 Capacity
 Fault
 Object
 Damage
 Lawful cause
 Article 1338 ICC – good faith  Causality

 Article 1243 ICC:  Only limited to compensation for

 Reimbursement of costs, losses material and immaterial losses

and interest  Articles 1371 (2) and 1372 (1) ICC
Are Warning Letters Necessary?
 Article 1238 ICC:
“The debtor is negligent, if there is a warrant or a similar deed
declaring so, or based on his or her own agreement that the
debtor must be deemed negligent with the passing of a specified
time.”
[unofficial translation]
 Supreme Court Circular Letter No. 3 Year 1963:
The Supreme Court considers Article 1238 ICC no longer valid
Civil Law Standard Procedure
 Statement of Claim
 Statement of Defense
 Exception
 Replik
 Duplik
 Evidentiary Stage
 Article 1886 ICC: written documents, witness (including expert), inferences,

confession, and oath

 Conclusion
 Decision
Mediation
 Supreme Court Regulation No. 1 Year 2016 (“Mediation Regulation”)
 Generally applies to civil cases
 In-court mediation
 The Panel of Judges will require the parties to conduct mediation after the first
hearing
 If a consensus is reached  Settlement Agreement (akta van dading) that is
final and binding
 Out-of-court mediation settlement (Article 36 Mediatoin Regulation)
 Registration by submitting a “civil lawsuit” with condemnatoir relief to obtain
executorial power similar to any court decision to allow execution
Cases Exempted from Mediation
Article 4(2) Mediation Regulation
 Disputes with a specified time limitation (e.g. Commercial court cases, industrial
relations cases, application for the annulment of award, etc.)
 Disputes with an examination conducted without the presence of an applicant or
defendant that was properly summoned
 Cases with counterclaim (rekonvensi) and joinder of third parties(intervensi)
 Disputes regarding the prevention, rejection, cancellation, and ratification of marriage
 Disputes that were submitted to court after out-of-court settlement was conducted
through mediation with a certified mediator that was registered but declared
unsuccessful based on a statement made by the parties and mediator
Suspension of Payment (“SOP”)
 Purpose: putting pressure on debtor
 Law No. 37 Year 2004 on Bankruptcy and SOP
 Requirements under Article 222:
 More than 1 creditors
 Debtor cannot pay one of its debt that is due and payable
 May be submitted by either the creditor or debtor itself
SOP Proceeding
 Proceeding under Article 225:
 Submission of SOP petition
 Pronouncement of court decision – 20 days after the submission of SOP petition
or first hearing?
 Court grants SOP petition
 Debtor is under provisional SOP
 Appointment of administrator(s) and supervisory judge
 Deliberation hearing 45 days after decision
 May be extended to permanent SOP that should not exceed 270 days
 Revocation of SOP claim before decision
Industrial Relations Disputes
Law No. 2 Year 2004 regarding Industrial Relations Dispute Resolutions
 Types of disputes:
 Rights: a certain right was not granted due to difference in implementing or
interpreting laws, employment agreement, company regulation or cooperation
agreement
 Interest: contradicting views on the making or changes in the employment conditions
within employment agreement, company regulation or cooperation agreement
 Employment termination: disagreement on termination
 Labor union within one company: differences in interpreting membership terms,
implementation of rights and obligations
Industrial Relations Dispute Resolutions
 Bipartite negotiations between the employer and employee within 30 days
 Consensus is reached  Collective Agreement registered to the Industrial
Relations Court
 No consensus  other dispute resolution mechanisms set under the law
 Mediation: all 4 types disputes
 Conciliation: only for disputes on interest, termination or labor union
 Arbitration: only for disputes on interest and labor union (based on arbitration
agreement in dispute resolution clause)
 Final and binding decision: only for disputes on labor union and interests
 Cassation to Supreme Court: only for disputes on termination and rights
Types of Court Judgments
 Declaratoir
 Declaring the lawfulness of a certain circumstance

 Change of name, birth certificate, adoption, etc.

 Constitutoir
 Creating or nullifying a legal relation

 Divorce, guardianship, bankruptcy, termination of agreement, etc.

 Condemnatoir
 Punishing nature – to perform or provide something

 Monetary damages, handover of property, etc.

Ordinary Legal Remedies
 Verzet (against Verstek)
 Appeal (to the High Court)
 Submitted 14 days after the decision has been rendered to the first

instance district court

 Memorandum of appeal and counter-memorandum of appeal

 Cassation (to the Supreme Court)

 Industrial Relations Disputes

 Decision on the objection on the enforcement of award

Extraordinary Legal Remedies
 Judicial Review (Peninjauan Kembali)
 Article 67 Law No. 14 Year 1985 amended by Law No. 5 Year 2004
 Decision was based on a lie or deception that is known only after the decision was rendered or
based on evidences declared as false by a criminal judge
 There are decisive evidence that were unable to be found when the case was examined (novum)
 The judge granted more than requested or a matter that was not requested at all (ne ultra petita)
 The decision contradicts with another decision with the same parties, same matter and same
basis
 The judge was negligent or committed a manifest error
 Derden Verzet
 Articles 378 and 382 Rv
 Submitted by third party who has legal interest and that his/her right was deprived
Litigation Illustration (1)
Breach of contract due to late and/or non-payment
 Commercial Court resolution: Suspension of Payment petition
 Amicable out-of-court resolution: Signing of Settlement Agreement
 Asset recovery:
 The Settlement Agreement may be ratified before the court to be executed

against the debtor’s assets

 Placement of security rights over the debtor’s lands (notary and National Land

Agency)
 Criminal approach: criminal report for fraud based on Article 378 KUHP
 Putting pressure on debtor: publication of press releases
Litigation Illustration (2)
A local employee’s embezzlement on his foreign employer’s monies
 Criminal approach: investigation
 Industrial relations dispute resolution:
 Employer: violation of the company regulation

 Employee: employer failed to provide sufficient termination rights to

the employee pursuant to the Indonesian Labor Law No. 13 Year 2003
 Civil approach: signing of Joint Agreement for a set-off arrangement
where the employee provides monetary compensation to the employer
Arbitration

 Arbitration is a form of Alternative Dispute Resolution to

resolve disputes outside court system, wherein the parties to a
dispute refer it to one or more persons (the "arbitrators",
"arbiters" or "arbitral tribunal"), by whose decision (the
"award") they agree to be bound.
 Contract – Primary and main source.
Why Arbitration
Nature of disputes – Cross border
Rigid Court procedure:
Belgium – Third party witness cannot discuss with the party and
lawyer before appearance.
Mexico – One witness is not sufficient proof.
Denmark – Without oral presentation evidences and legal
pleadings are of no value
Cont…
Party Autonomy
Adjudicator
Procedure
Seat
Neutrality – when state is involved
Wide Jurisdiction – Depending upon the contract
Continuity – One person for the whole procedure (Exception Singapore
International Commercial Court)
Enforceability – NYC 1958
Types of Arbitration
Domestic and International
Between Nation States
Investor-State
Between Private Entities (International commercial Arbitration)
- Institutional or
- Ad-Hoc
Online Arbitration – Successful in consumer cases
Important Instruments
The Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, 1958 (NYC)
Negative Law
159 contracting states
The UNCITRAL Model Law, 1985
Provides model law to be adopted by states
Adopted in 80 States in a total of 111 jurisdictions
Comes in effect upon getting translated into national law
Arbitration - Indonesia

 Law No. 30 Year 1999 regarding Arbitration and Alternative

Dispute Resolutions (“Arbitration Law”)

 Presidential Decision No. 34 Year 1981 regarding the

Ratification of the New York Convention on the Recognition
and Enforcement of Foreign Arbitral Awards
Prominent Features of Arbitration
 Scope: commercial matters
 Based on a written arbitration clause
 Court will no longer have jurisdiction

 Consent is the cornerstone of arbitration

 Only binding to the signatory parties

 Is it possible to compel non-signatories?

 Party autonomy
 Principle of severability
Arbitration Procedure
 Request/Notice to Arbitration
 Reply to Request/Notice to Arbitration
 Terms of Reference
 Statement of Claim
 Statement of Defense
 Procedural Hearings (including evidentiary)
Arbitral Award
 National Arbitral Award is undefined
 On the other hand, Article 1 (9) Arbitration Law provides:
“International Arbitral Award refers to a decision rendered by an
arbitral institution or arbitrators outside of the Indonesian
jurisdiction, or a decision of an arbitral institution or arbitrator
which according to the laws of the Republic of Indonesia is
considered as an international arbitral award.”
[unofficial translation]
Enforcement of National Awards
Articles 59 – 64 Arbitration Law
 Registration of award or its authentic copy by the arbitrator or his/her proxy
to the district court where the respondent is domiciled within 30 days
If the parties do not voluntarily execute the award, a party may submit an
application for execution
Within 30 days after the above, the Chairman of the District Court will issue
an Execution Order
Enforcement of International Awards
Articles 65 – 69 Arbitration Law
Similar procedure to the enforcement of national awards
Registration to the Central Jakarta District Court by submitting Application Letter with
the following supporting documents:
 Real or authentic copy of the award officially translated in Bahasa Indonesia
 Real or authentic copy of the agreement as the basis of the dispute officially
translated in Bahasa Indonesia
 An official statement from the diplomatic representative of Indonesia in the State
where the award was rendered stating that such State and Indonesia are bound to a
bilateral or multilateral agreement regarding the recognition and enforcement of an
international arbitration award
Enforcement of International Awards
 Issuance of Registration Deed
 Request and issuance of Exequatur or Enforcement Order from the
Chairman of the Central Jakarta District Court
 Warning letter (Aamanning)
 Execution of assets
 Must know the details of the assets

 Application Request for Execution

 Issuance of Executorial Attachment Order

Enforceability of International Awards
Article 66 Arbitration Law
a. Rendered by an arbitrator or arbitral tribunal in a State that is bound to a bilateral
or multilateral agreement with Indonesia regarding the recognition and
enforcement of an international arbitration award
b. Commercial matter
c. Not against public policy
d. Obtain an Exequatur from the Chairman of the Central Jakarta District Court
e. In the event where Indonesia is a named party to the dispute, the Exequatur shall
be obtained from the Supreme Court and then delegated to the Central Jakarta
District Court
Arbitral Awards: Final and Binding?
 Objection to award enforcement
 Annulment of award
 The award is deemed to never have existed

 Setting aside award at the seat of arbitration

 Other jurisdictions have basis to reject the award enforcement

 Refusal of award enforcement

 Award may still be enforced in other jurisdictions
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