in most cases, foreign companies doing business in Indonesia prefer to settle disputes in jurisdictions outside Indonesia. This, however, may not be advantageous as the best dispute resolution option may actually be where the assets concerned are located, which is more likely in Indonesia.
Disputes between the Contracting Parties are normally resolved by arbitration or litigation, either in Indonesia or in a foreign jurisdiction.
Indonesian disputes
Litigation can be expensive and time consuming in most jurisdictions, and Indonesia is no exception. Litigation in Indonesia normally have many hearings and the parties to the dispute can delay a case by simply not attending the hearings.
A civil clam is initiated by filing with the competent district court. Normally, the application must be submitted to the District Court where the defendant (or one of the defendants) is domiciled. In some cases, it is possible that the litigants have chosen a specific district court in the contract on which the claim is based.
If the applicant does not know who the defendant is or where the defendant is domiciled, a complaint may be filed with the District Court where the plaintiff is domiciled or in dispute is located. In this case, the subject matter will be real estate. For example, an application for a land dispute, which the applicant does not know the address of the defendant could be submitted to the district court where the land is located.
In Indonesia, demand for the Court to local district, followed by an appeal to the High Court, then a final and binding decision of the Supreme Court, may possibly take more than three years.
Indonesian arbitration
Arbitration in Indonesia is regulated by Law No. 30 of 1999 on arbitration and alternative dispute resolution (Indonesian Act of arbitration), while the Indonesian National Council of arbitration (BANI) is the institution of the main domestic arbitration in Indonesia. BANI was established in 1977 and has its own rules and procedures. It is located in Jakarta with offices in major cities in Indonesia, including Surabaya, Bandung, Pontianak, Denpasar, Medan, Palembang and Jambi.
If the parties submit a dispute to BANI, they are obliged to use registered BANI BANI arbitrators and has more than 100 arbitrators listed, consisting of two Indonesians and foreigners.
a BANI Exercise price as an internal award is easier and faster than the enforcement of a foreign award. First, the BANI price must be registered with a district court and if a party does not comply with the award, the other party may request the head of the relevant District Court to issue an order conformity. Enforcement of arbitral awards BANI then follows the law of Indonesian civil procedure.
In recent years, there is a growing trend for the conflicting parties to submit their disputes to BANI BANI and arbitral awards are normally executed effectively against active in Indonesia.
Apart BANI, there are also other arbitration institutions in Indonesia such as the Arbitration Commission of the capital markets to the Arbitration Commission Commodities Futures Trading disputes in the financial markets and for disputes futures trading.
outside arbitration
Indonesian arbitration law recognizes and facilitates the enforcement of foreign arbitral awards in Indonesia, subject to certain requirements. Moreover, Indonesia is a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
A foreign arbitral award must be registered with the District Court of Central Jakarta. Thereafter, for the purpose of execution, the same court issued a writ of execution. If a party does not comply with the order, the other party may request a compliance order. Again, with such an order, the application follows the ordinary civil proceedings.
It is possible for a party to challenge a foreign arbitral award on the basis that it does not meet the relevant criteria under the Arbitration Act, for example by claiming that it is not a issue of commercial law or is contrary to policy or public order. In the absence of a definition or guidelines on the interpretation of "political or public order" clear unsuccessful parties to a foreign award have often sought to avoid the application based on an alleged violation this criterion. However, in recent years, claims to cancel the foreign arbitral awards are mostly rejected by the Indonesian courts.
Counsel for Foreign Affairs
Indonesian law does not recognize foreign judgments, so that, therefore, such judgments are not enforceable in Indonesia . A judgment of the foreign court should be retried in Indonesia so that it is enforceable. Although the Indonesian courts are not bound by the decision of a foreign court, it can however be considered as evidence in the new procedure. Therefore, foreign litigation would not be effective against active in Indonesia.
Conclusion
Foreign companies doing business in Indonesia should choose carefully how and where to conduct any dispute resolution. Such preferred dispute resolution mechanisms should also be clearly stated in the contracts governing.
The content of this article is intended to convey general information and does not provide legal advice or opinions. If you need legal assistance, you can contact:
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