INDONESIA Trends and Developments Contributed by: Nico Angelo Putra Mooduto, Mahareksha Singh Dillon, Talitha Amanda Ekadhani and Bagas Ananta, SSEK Law Firm
Key Developments in Arbitration In 2023, the Indonesian Supreme Court enact- ed Supreme Court Regulation No 3 of 2023 regarding the Procedure for the Appointment of Arbitrators by Courts, Challenge of Arbitrators, Examination of Applications for Implementation, and Annulment of Arbitration Awards (“PERMA 3/2023”). PERMA 3/2023 emphasises the role of national courts in arbitration. It reaffirms their jurisdiction over the annulment of domestic awards, specify- ing that when annulment and enforcement appli- cations are filed concurrently, enforcement pro- ceedings must be suspended until an annulment decision is reached. This provision ensures that enforcement actions are appropriately paused, preventing premature enforcement of awards. It also provides for courts to accept electroni- cally submitted applications for award enforce- ment. Additionally, PERMA 3/2023 addresses the reg- istration of arbitration awards, distinguishing between national and international awards and setting a clear 30-day deadline for the registra- tion of national awards. This distinction removes previous ambiguities and simplifies the registra- tion process. In terms of enforcement, PERMA 3/2023 intro- duces the concept of partial enforcement for both national and international arbitration awards, allowing for more flexibility in the imple- mentation of these awards. This is particularly beneficial in complex cases where full enforce- ment might not be feasible or desirable. Significantly, PERMA 3/2023 defines “pub- lic order”. This is a critical term for courts to assess whether an award contravenes societal
norms and values. The term is vital for courts when deciding on the enforceability of arbitration awards and ensuring that decisions align with the broader legal and social framework. Disputes Arising From the Absence of the Indonesian Language in Commercial Agreements In 2023, the Supreme Court also issued Circular Letter No 3 of 2023 (“CL 3/2023”), addressing concerns regarding agreements drafted in for- eign languages by private entities. CL 3/2023 provides clarity on the contentious issue of lan- guage requirements in agreements, which has been a source of numerous legal disputes. By way of background, Law No 24 of 2009 con- cerning the Flag, Language, National Emblem, and National Anthem (the “Language Law”) stip- ulates the mandatory use of the Indonesian lan- guage in memorandums of understanding and agreements involving an Indonesian party. This requirement has sparked considerable debate, particularly as agreements involving Indonesian and foreign entities are frequently executed in English. As a result, numerous disputes have arisen, with Indonesian courts annulling agree- ments for non-compliance with the Indonesian language requirement. CL 3/2023 was issued to clarify this legal ambi- guity and states that agreements should not be annulled solely on the grounds of lacking an Indonesian language version unless it is demon- strated that the absence of such a version was due to bad faith by one of the parties involved. This clarification helps resolve uncertainties regarding the validity of agreements executed exclusively in a foreign language. However, it is important to recognise that CL 3/2023 serves as a guideline for judicial interpretation and does
646 CHAMBERS.COM
Powered by FlippingBook