INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Adithya Lesmana, ABNR Counsellors at Law
3.4 Validity The Arbitration Law recognises the separability prin - ciple: an arbitral clause can be considered valid even if the rest of the contract in which it is contained is wholly or partly invalid. The arbitration clause is there - fore separate from the agreement in which it is set out. If there is no express law chosen for the arbitration agreement, the law with which that agreement has its closest connection is either the law of the underlying contract or the law of the seat of the arbitration. The Arbitration Law contains no limitation on the par - ties’ autonomy to select arbitrators, but lists require - ments for a valid appointment as an arbitrator. An arbitrator must: • be legally capable to perform legal actions; • be at least 35 years old; • not have any family relationship by blood or mar - riage up to the second degree with any of the disputing parties; • not have any financial or other interest in the award; and • have a minimum of 15 years’ experience and active proficiency in the field concerned. 4. The Arbitral Tribunal 4.1 Limits on Selection The Arbitration Law also prohibits judges, prosecu - tors, court clerks and other court officials from being appointed as arbitrators. There is no restriction with regard to nationality. There is no clear rule in the Arbitration Law requiring an uneven number of arbitrators. The Arbitration Law says that if parties each appoint an arbitrator, such arbitrators have the authority (ie, not the obligation) to appoint a third arbitrator. If they fail to do so, one of the parties can (but need not) apply for the appoint - ment of a third arbitrator by the court. 4.2 Default Procedures Under the Arbitration Law, the parties have the free - dom to choose the national or international arbitration institution to which they wish to submit their disputes. The rules of that institution will apply unless otherwise
of the Arbitration Law states that these include com - merce, banking, finance, investment, industry and intellectual property disputes. Arbitration is not limited to dispute settlement. Under the Arbitration Law, parties may petition arbitrators to help settle an equivocal contract provision, or provide for the amendment of a contract due to changing con - ditions. The Arbitration Law allows parties to ask for a binding opinion from the arbitrators. This opinion is not open to appeal. 3.3 National Courts’ Approach The national courts nowadays generally enforce arbi - tration agreements, although several court decisions have disregarded the arbitration clause, with the plain - tiff having filed the lawsuit under a tort claim. Articles 3 and 11 of the Arbitration Law conclusively eliminate the national courts’ competence to hear any dispute that has been referred to arbitration, and rule that the courts must reject – and may not be involved in – disputes that should have been settled by means of arbitration. In a recent case, the Central Jakarta District Court ren - dered a controversial ruling by annulling an execution writ of recognised CIETAC arbitral award previously granted under Decision No 200/Pdt.Sus-Arb/2023/ PN Jkt.Pst dated 24 April 2025 ( PT Mahkota Sentosa Utama v China Light Industry, et al ), concerning PT Mahkota Sentosa Utama v China Light Industry Inter- national Engineering Co. Ltd and the China Interna- tional Economic and Trade Arbitration Commission . This is controversial because Article 20 (1) of Supreme Court Reg No 3/2023 stipulates that there is no legal recourse to challenge the decision to recognise the arbitral award. It should be noted that this case is not yet final and binding. The court determined that the annulment was par - tially warranted on the basis that the arbitration agree - ment was drafted solely in Chinese and English. This is deemed to be in contravention of Indonesian law, which mandates that agreements involving Indone - sian parties must be prepared in the Indonesian lan - guage or in bilingual documents. The court deemed this consideration relevant to the evaluation of the agreement’s validity under Indonesian law.
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