INDONESIA Trends and Developments Contributed by: Emir Nurmansyah, Theodoor Bakker, Ulyarta Naibaho and Adithya Lesmana, ABNR Counsellors at Law
The Central Jakarta District Court then held that the court has no jurisdiction to examine the annulment of the CIETAC Arbitral Award as the award was ren - dered in China and therefore the authorised court to set aside or annul the award would be a Chinese court, in accordance with Article V(1)(e) of the New York Convention, 1958. Nevertheless, the Central Jakarta District Court argued that the execution writ can be challenged pursuant to Supreme Court Cir - cular Letter No 3 of 2018, which stipulates that legal remedies against a decree issued upon a unilateral (ex parte) application may be pursued by filing a lawsuit, objection or cassation appeal. As the application of execution writ is an ex parte application, therefore the court considers that it The court also agreed with the plaintiff’s assessment that the Technical Consulting Service Agreement appeared not to be validly made as the party who signed on the plaintiff’s behalf was not the director of the plaintiff. Moreover, the court assessed that the homologation decision resulting from the court-super - vised debt restructuring (PKPU) possesses binding legal force upon all creditors pursuant to Article 286 of Law No 37 of 2004 on bankruptcy. Therefore, the enforcement of an arbitral award that is inconsistent with a homologation decision constitutes a violation of the fundamental tenets of the Indonesian legal sys - tem. The court further observed that although violations concerning the language provisions in a contract are not expressly stated in Law No 30 of 1999 or the 1958 New York Convention as grounds for refusing enforce - ment (exequatur), such matters may nonetheless be considered as part of the assessment of the validity of the agreement under Indonesian law. It was taken into account that the preparation of the agreement solely in a foreign language, without an Indonesian version, particularly in connection with a contract relating to a project located in Indonesia, may indicate bad faith on the part of the party drafting the agreement. The court then held that the issuance of the execution writ (exequatur) is therefore in violation of Indonesian pub - lic policy and should be annulled. This case is particularly controversial because the court did not consider Supreme Court Regulation No
3 of 2023 on the Procedure for the Appointment of Arbitrators by the Court, Rights to Challenge Arbitra - tor, Examination of Applications for Enforcement and Annulment of Arbitral Awards (“Supreme Court Reg No 3/2023”). In Article 20 (1) of Supreme Court Reg No 3/2023, it is stipulated that the decision to recog - nise and enforce an International Arbitral Award or International Sharia Arbitral Award shall be final and not subject to any legal remedies. This case appears to demonstrate that there is an exception to the finality of the execution writ. The court may still consider the challenge of the execu - tion writ and steps into the jurisdiction of the tribu - nal which has the authority to examine the dispute, including the validity of the arbitration agreement. This may create precedents for any party who attempts to resist the enforcement of the arbitral award as this will prolong the enforcement process in Indonesia, which has been notorious for being unfriendly to arbitration. This case highlights inconsistencies in the recognition of the finality of arbitral awards. The Central Jakarta District Court demonstrated that, despite the prohi - bition of legal remedies as stated in Supreme Court Regulation No 3 of 2023, challenges to an execution writ may still be considered under certain conditions. Notably, in this case the court referenced Supreme Court Circular Letter No 3 of 2018, which allows for legal remedies against decrees issued on an ex parte basis. Overall, this case could further undermine Indo - nesia’s reputation for being unfriendly to arbitration and create more uncertainty for parties who would like to seek enforcement of international arbitral award in Indonesia. Key Updates of the 2025 BANI Arbitration Rules Recently, the Indonesian National Board of Arbitra - tion (Badan Arbitrase Nasional Indonesia or “BANI”) announced major updates to its Arbitration Rules. The 2025 BANI Arbitration Rules (the “2025 Rules”) now provide for the option of emergency arbitration, allow - ing parties to seek urgent interim measures before the arbitration tribunal is formed. Moreover, the rules introduce new provisions for arbitration proceedings with multiple parties or agreements and involvement of third parties and list an additional ground for arbitra - tor replacement.
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