INDONESIA Law and Practice Contributed by: Stephen Igor Warokka and Mutiara Kasih Ramadhani, SSEK Law Firm
judgment creditor (the winning party) in line with the relevant court decision. However, if there is no previous collateral sei - zure imposed prior to the decision, and it is the intention of the judgment creditor to arrest the ship owned by the judgment debtor for the pur - pose of enforcing the decision, then the judg - ment creditor may file a petition with the courts to execute the decision. As a result of this peti - tion, the State Auction Office will carry out a judi - cial sale in the form of an auction. The costs for such auction may vary depending on the district court. In addition, there are no detailed regula - tions or guidelines regarding the maintenance of assets during the period of arrest. However, the arrest of the vessel itself will be carried out by the relevant port authority. Under Article 316 of the ICC, the following claims are seen to have priority rights for the proceeds of auction sales: • costs for execution – ie, confiscation/seizure for judicial sale ( biaya sita-lelang ); • claims for the captain and crew of ships aris - ing from labour agreements; • fees for assistance, sea guides and signage, ports and other shipping costs; and • collision claims. Article 316a of the ICC provides that claims or receivables with priority rights as described above will take precedence over mortgages. 4.11 Insolvency Laws Applied by Maritime Courts Law No 37 of 2004 regarding Bankruptcy and Postponement of Debt Settlement Obligation (the “Indonesian Bankruptcy Law”), as last par - tially revoked by Law No 4 of 2023 regarding the Development and Strengthening of the Finan -
cial Sector, is analogous to Chapter 11 of the United States Bankruptcy Code. The Indonesian Bankruptcy Law regulates the reorganisation of a company to allow it to continue business while simultaneously paying its debts to its creditors. As discussed in 1.1 Domestic Laws Establish- ing the Authorities of the Maritime and Ship- ping Courts , the authority of Indonesia’s Mari - time Court is limited to the inspection of ship accidents and the enforcement of ethical codes for captains and officers. Therefore, under Article 222 of the Shipping Law, the arrest of a vessel will be ordered by the district court ( pengadi- lan negeri ), whereas the competent bankruptcy court in Indonesia is the Commercial Court ( Pen- gadilan Niaga ). However, Articles 242 and 245 of the Indonesian Bankruptcy Law prohibit the arrest of the vessel and judicial sales by the own - ers during “Chapter 11” proceedings before the Indonesian Commercial Court. 4.12 Damages in the Event of Wrongful Arrest of a Vessel Indonesia is a party to the International Conven - tion on Arrest of Ships, 1999 but has not yet ratified it into law. As discussed in 4.5 Arrest- ing a Vessel and 4.9 Releasing an Arrested Vessel , the lack of regulations concerning the procedure for vessel arrest results in uncertain - ty in the event of a wrongful arrest. If a party intends to get indemnified or obtain damages due to wrongful arrest, it will have to file a claim or lawsuit with the district court. The judges at the district court will determine whether to order payments for the wrongful arrest, using their dis - cretionary authority. It is important to note that Article 223 of the Shipping Law does elaborate on the circum - stances that constitute maritime claims that may
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