INDONESIA Law and Practice Contributed by: Stephen Igor Warokka and Mutiara Kasih Ramadhani, SSEK Law Firm
The freedom of contract principle under Article 1338 of the Indonesian Civil Code will apply to a bill of lading if the requirements for a legitimate contract are met. This principle allows the par - ties to choose the law applicable to their con - tract and the jurisdiction to settle any disputes arising from the contract. The implementation of this principle was applied in a Supreme Court decision in January 1986 meaning the freedom of contract principle is recognised and utilised by Indonesian courts as a basis to adhere to the parties’ choice of law. In the 1986 Supreme Court decision, the bill of lading of the parties contained the follow - ing statement: “The contract evidenced hereby or contained herein shall be governed by Eng - lish Law. Any claim or other dispute thereunder shall be solely determined by the English Court, unless...” The Court concluded that, by this agreement, the dispute was to be decided by a court in England according to English law, so the Indonesian courts were not authorised to exam - ine and adjudicate this dispute. 6.2 Enforcement of Law and Arbitration Clauses Incorporated Into a Bill of Lading As discussed in 6.1 Enforcement of Law and Jurisdiction Clauses Stated in Bills of Lading , the courts will recognise and enforce a law and arbitration clause in a bill of lading as long as the bill is a legitimate contract as defined by Article 1320 of the Indonesian Civil Code. The courts will consistently uphold the principle of freedom of contract, even when it is in relation to a char - terparty. In addition, under Article 1(3) of Law No 30 of 1999 regarding Arbitration and Alternative Dispute Resolution (the “Indonesian Arbitra - tion Law”), an arbitration clause within a writ - ten agreement is considered a valid arbitration
agreement. Furthermore, Article 3 of the Indo - nesian Arbitration Law explicitly states that the courts do not have the authority to adjudicate matters governed by an arbitration agreement. The existence of an arbitration clause in a bill of lading automatically removes the courts’ juris - diction over the dispute. 6.3 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards The 1958 New York Convention on the Recogni - tion and Enforcement of Foreign Arbitral Awards was ratified by Indonesia on 5 August 1981 and is therefore applicable. Other than that, the Indo - nesian Arbitration Law will apply in the case of arbitration. 6.4 Arrest of Vessels Subject to Foreign Arbitration or Jurisdiction Article 222 of the Shipping Law states that the courts will only order an arrest of a vessel or an attachment where the relevant claim is subject to a court order. However, Indonesia is a signa - tory to the New York Convention and, as further confirmed by Article 66 of the Indonesian Arbi - tration Law, this participation enables overseas arbitration decisions to be enforced in Indonesia, including an attachment or an arrest of a vessel. Nonetheless, this is only possible if the arbitra - tion award is issued by an arbitration institution in a contracting state of the New York Conven - tion. In order to request the execution of an inter - national arbitration award in Indonesia, Article 67 of the Indonesian Arbitration Law states that the relevant party or its proxy must file a request of execution to the registrar of the Central Jakarta District Court. When the relevant claim is subject to a foreign jurisdiction clause that gives rise to a decision by
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