含羞草社区

Indonesia ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 through Presidential Decree No. 34 on 5 August 1981. In addition, Indonesia also became the 27th member state in 1968 to ratify the Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (1965) (ICSID Convention).

The Indonesian courts are not bound by judgments rendered by foreign courts. Nevertheless, in practice and under certain circumstances, the judgment of a foreign court can be used in an Indonesian court as supplementary documentation only (inconclusive evidence) on the matter that has been decided by the foreign court. A party that has obtained a favourable foreign judgment is still required to file a suit (relitigate) against its Indonesian counterpart before an Indonesian court in order to enforce the foreign judgment in an Indonesian jurisdiction. Therefore, if the dispute relates to an Indonesian party or the object is in Indonesian jurisdiction, the best option to settle the dispute is through Indonesian national courts. This is the key difference with arbitration: foreign arbitral awards can be recognised and enforced in an Indonesian jurisdiction.

In Indonesia, arbitration framework commenced with the enactment of Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution dated 12 August 1999 (Arbitration Law). This legislation marked a significant milestone in the country’s legal landscape, providing a structured framework for the resolution of disputes through arbitration. With its enactment, Indonesia demonstrated its commitment to fostering a conducive environment for investment and business activities.

However, in spite of demand for revision of the Arbitration Law, on 17 October 2023, the Supreme Court of the Republic of Indonesia formulated Supreme Court Regulation No. 3 of 2023 on Procedures for Appointment of Arbitrators by the Court, Challenges against Arbitrator Appointments, Examination of Requests for Enforcement and Annulment of Arbitral Awards (SC Regulation No. 3/2023), which brings Indonesia closer to being an arbitration-friendly jurisdiction. With special attention on guidelines and the duration of procedures recognising and enforcing foreign arbitral awards in Indonesia, below are some key-points outlined under SC Regulation No. 3/2023.

Registration

Under the Arbitration Law, the enforcement of a foreign arbitral award can only be implemented after registering through the Central District Court of Jakarta (“CDCJ”). However, the Arbitration Law did not provide a deadline for the CDCJ to complete processes, resulting in lengthy registration and recognition times for foreign arbitral awards. Under the latest provisions in SC Regulation No. 3/2023, a foreign arbitral award is submitted and registered by the arbitrator or his proxy with the court registrar of the CDCJ, and this must be done by the court registrar within a period of 14 days after submission of the complete registration documents. This registration can be conducted electronically via the court’s electronic information system (SIP).

Exequatur

If one of the parties does not comply with the foreign arbitral award, either party has the option to request an exequatur from the chairman of the CDCJ. This request can be submitted electronically through the SIP. The CDCJ is to issue an exequatur or refuse to do so within 14 days after the submission of the exequatur request.

In the event that the request for exequatur is granted, the chairman of the CDCJ shall write the execution title on the original sheet and authentic copy of the foreign arbitral award. Furthermore, if the chairman of the CDCJ determines that the arbitration award falls outside the domain of commerce or violations against public policy (ketertiban umum), the chairman of the CDCJ can reject the request through a court ruling, with this ruling subject to an appeal to the Supreme Court (Kasasi).

Recognition and enforcement

Subsequently, the time limit for the CDCJ to rule on the recognition and enforcement of a foreign arbitral award is 30 days after the submission of a request.

This request can also be submitted electronically through the SIP. The SC Regulation No. 3/2023 emphasises that if the CDCJ recognises and enforces a foreign arbitral award, this ruling stands as final and binding, and there are no legal remedies available. However, if the CDCJ refuses to recognise and enforce the foreign arbitral award, this rejection can be subject to an appeal to the Supreme Court (Kasasi).

Public policy definition

In practice, the CDCJ, as the court having the jurisdiction to grant or otherwise the exequatur of a foreign arbitral award, has not always or automatically granted the decision on the exequatur.

The examination of the application of exequatur by the CDCJ is on a case-by-case basis. There are some cases in which the CDCJ has rejected granting the exequatur due to violations against public policy.

Moreover, the SC Regulation No. 3/2023 provides a further clear definition of public policy. Ketertiban umum as defined under Arbitration Law stipulates that the court must consider the likelihood of a public policy infringement while granting or refusing to accept and enforce a foreign arbitral award.

A noteworthy aspect of SC Regulation No. 3/2023 is that it introduces a broader definition of public policy, which includes: “anything that constitutes the essential foundation for the operation of the legal system, economic system, and socio-cultural system of the Indonesian community and nation.”

The ketertiban umum definition previously stipulated under Supreme Court Regulation No. 1 of 1990 on the Execution Procedures for Foreign Arbitral Awards, only defined it as “the fundamental principles of the entire legal system and society in Indonesia”. Therefore, SC Regulation No. 3/2023 contributes a more comprehensive perspective of Indonesia’s stance over public policy.

Conclusion

Enactment of SC Regulation No. 3/2023 demonstrates Indonesia to be anarbitration-friendlycountry. Beforehand, the process for the registration of foreign arbitral awards took a considerable time. The Supreme Court, through SC Regulation No. 3/2023 has streamlined electronic submissions through SIP for registering foreign arbitral awards and shortening timeframes during the following procedures:

1. Registration. The court registrar of the CDCJ must register foreign arbitral awards within 14 days of submission of all completed registration documents;
2. Exequatur. The CDCJ must issue an exequatur or non-exequatur of the foreign arbitral awards within 14 days of the submission of the exequatur request; and
3. Enforcement. The CDCJ must recognise and enforce, or reject, the foreign arbitral awards within 30 days of the submission of the enforcement request.

Subsequently, SC Regulation No. 3/2023 provides clarity and a broader definition of public policy, or ketertiban umum, as a basis for rejecting the enforcement of foreign arbitral awards.

HHR LAWYERS

Grha HHR Lawyers

Jl. Kawi Raya No. 45-46A

Guntur – Setiabudi

Jakarta 12980 – Indonesia

Tel: +62 21 5091 3991

Fax: +62 21 5091 3992

Email: hnr.jkt@hhrlawyers.com