INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Ulyarta Naibaho, Adithya Lesmana and Adrian Panata, ABNR Counsellors at Law
3. The Arbitration Agreement 3.1 Enforceability
tion must be accompanied by an acknowledgement of receipt. The Arbitration Law does not deal with optional arbitration clauses that give one or more of the parties the ability to decide after a dispute has arisen whether to arbitrate or litigate that dispute. 3.2 Arbitrability Matters that may not be referred to arbitration are those in which, according to Indonesian law, no ami - cable settlement is possible (eg, criminal matters, bankruptcy, adoption). The general approach to deter - mine whether or not a dispute is arbitrable is found in Article 5 (1) of the Arbitration Law, which states that a dispute can be settled by means of arbitration if it is of a commercial nature and “falls within the full legal authority of the disputing parties”. The latter require - ment appears to give arbitrators the authority to exam - ine whether particular parties (eg, government-owned entities) have the requisite power to submit disputes to arbitration. As regards the meaning of disputes of a “commercial nature”, the elucidation to Article 66 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
The Arbitration Law requires an arbitration agreement to be made in writing and signed by the parties. It may be in the form of: • an arbitration clause contained in a written agree - ment made before the dispute arises; or • an agreement entered into especially by the parties after the dispute arises. If an arbitration agreement is made before the dispute arises, the Arbitration Law requires that it should state that all disputes that arise or may arise from a legal relationship between the parties must be settled by means of arbitration. If an arbitration agreement is made after the dispute arises, it must include at least: • the subject matter of the dispute; • the names and addresses of the parties; • the names and residential addresses of the mem- bers of the arbitral tribunal; • the place where the arbitral tribunal will render the award; • the name of the secretary to the arbitral tribunal; • the time period within which the arbitration is to be completed; • a statement from the members of the arbitral tribu- nal accepting their appointment; and • a statement from the disputing parties that they will bear all costs of the arbitration. The Arbitration Law does not require the seat of the arbitration – the legal concept tying the arbitration to a legal jurisdiction – to be mentioned in the arbi - tration agreement. However, if the place where the arbitral tribunal will render the award is Jakarta, it is safe to assume that the Arbitration Law will govern the arbitration, and that the Indonesian courts will have control in relation to the arbitration and the powers that are elsewhere granted to the courts of the seat of arbitration. An arbitration agreement can be contained in an exchange of correspondence that provides a record of its content, and any dispatch by telex, telegram, facsimile, email or other means of telecommunica -
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