Dispute Resolution in Indonesia
In most cases, foreign companies doing business in Indonesia prefer resolving disputes in jurisdictions outside of Indonesia. This kind of, however, may not be advantageous since the best dispute resolution option may actually be where the relevant assets are located, which is actually most likely in Indonesia.
Disputes between contracting parties are normally resolved by means of arbitration or litigation, either in Indonesia or a foreign jurisdiction.
Indonesian litigation
Litigation can be costly in addition to time-consuming in most jurisdictions, in addition to Indonesia is actually no exception. Litigation in Indonesia normally will have numerous court hearings in addition to disputing parties may delay a case by just simply failing to attend such hearings.
A civil clam is actually initiated by filing with the relevant District Court. Normally the claim is actually to be submitted to the District Court where the defendant (or any of the defendants) is actually domiciled. In certain cases, the item is actually possible which the disputing parties have chosen a specific District Court inside the contract on which the claim is actually based.
In a case where the claimant does not know who the defendant is actually or where the defendant is actually domiciled, a claim can be filed to the District Court where the claimant is actually domiciled or the object of the dispute is actually located. In This kind of case, the object of the dispute will be immovable assets. For example, a claim relating to a land dispute, where the plaintiff does not know the domicile of the defendant, could be submitted at the district court where the land is actually located.
In Indonesia, a claim inside the local District Court, followed by an appeal to the High Court in addition to then a final in addition to binding decision by the Supreme Court, may possibly take over three years.
Indonesian arbitration
Arbitration in Indonesia is actually governed by Law No. 30 of 1999 on Arbitration in addition to Alternative Dispute Resolution (Indonesian Arbitration Law), whereas the Indonesian National Board of Arbitration (BANI) is actually the principal domestic arbitration institution in Indonesia. BANI was established in 1977 in addition to has its own rules in addition to procedures. the item is actually located in Jakarta with offices in some Indonesia major cities including Surabaya, Bandung, Pontianak, Denpasar, Medan, Palembang in addition to Jambi.
If parties submit a dispute to BANI, they are obliged to use BANI registered arbitrators, in addition to BANI has over 100 listed arbitrators, consisting of both Indonesian in addition to foreign nationals.
Enforcing a BANI award as a domestic arbitral award is actually easier in addition to faster than enforcing a foreign award. Firstly, the BANI award must be registered using a District Court in addition to if one party does not comply with the award, then the additional party may request the Chief of the relevant District Court to issue an order for compliance. Enforcement of BANI arbitral awards then follows the Indonesian Civil Procedural Law.
In recent years there is actually an increasing trend for disputing parties to submit their disputes to BANI, in addition to BANI arbitral awards are normally effectively executed against assets within Indonesia.
Aside via BANI, there are also additional arbitration institutions in Indonesia such as the Capital Market Arbitration Board for capital market disputes in addition to the Commodities Futures Trading Arbitration Board for futures trading disputes.
Foreign arbitration
Indonesian Arbitration Law recognizes in addition to facilitates the enforcement of foreign arbitral awards in Indonesia, subject to certain requirements. Also, Indonesia is actually a party to the 1958 completely new York Convention on the Recognition in addition to Enforcement of Foreign Arbitral Awards.
A foreign arbitral award must be registered at the Central Jakarta District Court. Thereafter for enforcement purposes, the same court shall issue a writ of execution. If a party does not comply with the writ, then the additional party may apply for an order for compliance. Again, with such an order, enforcement follows the ordinary civil procedure.
the item is actually possible for a party to challenge a foreign arbitral award on the basis which the item does not meet the relevant criteria under the Arbitration Law, for example by alleging the item is actually not a commercial law matter or is actually contrary to public policy or order. inside the absence of a clear definition or guidelines on the interpretation of ‘public policy or order’, unsuccessful parties to a foreign award have often sought to avoid enforcement by relying on an alleged breach of This kind of criterion. However, in recent years claims to annul foreign arbitral awards are mostly denied by Indonesian courts.
Foreign litigation
Indonesian law does not recognise foreign court judgments, so consequently such judgments are not enforceable in Indonesia. A foreign court judgment must be re-litigated in Indonesia in order for the item to be enforceable. Although the Indonesian courts are not bound by the foreign court decision, the item may, however, be considered as evidence inside the completely new proceedings. Therefore, foreign litigation could not be effective against assets in Indonesia.
Conclusion
Foreign companies doing business in Indonesia should choose carefully on how in addition to where to carry out any dispute resolution. Such preferred dispute resolution mechanisms must also be clearly stated inside the governing contracts.
The contents of This kind of article is actually intended to convey general information only in addition to not to provide legal advice or opinions. If you require legal assistance, you may contact:
HADROMI & PARTNERS LAW FIRM
Setiabudi Atrium, 4th Floor, Suite 404 – 405
Jl. H.R. Rasuna Said Kav. 62, Jakarta 12920, Indonesia
Telephone : (62-21) 520 7040 (hunting)
Facsimile : (62-21) 520 7046
Email: info@hadromi.com or hadromi@centrin.net.id
Website : www.hadromi.com
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Dispute Resolution in Indonesia
Dispute Resolution in Indonesia