INTERNATIONAL ARBITRATION COMPARATIVE GUIDE
A. General Legal Framework of International Arbitration
1. What are the relevant legislations on arbitration in your jurisdiction?
In Indonesia, Arbitration is generally governed under Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution, partially amended in 2014 under Constitutional Court (Mahkamah Konstitusi) Decision No. 15/PUU-XII/2014 on the judicial review over elucidation of Article 70 of the Arbitration Law on the application for annulment that can only be filed against an arbitration award that has been registered in court (together, "Arbitration Law").
2. Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?
The Arbitration Law governs all domestic and foreign arbitrations recognized under the Indonesian law. The law provides distinctions between arbitral awards rendered by domestic arbitration bodies and those rendered by foreign arbitration ones. Each is defined as follows:
- Domestic Arbitration Awards: all awards conferred by the Indonesian arbitration body (i.e., Badan Arbitrase Nasional Indonesia or "BANI"), or arbitrators based in Indonesia;
- Foreign Arbitration Awards: all awards conferred by foreign arbitration bodies or arbitrators, under the Indonesian prevailing laws and regulations (i.e., arbitrations done outside the Indonesian territory regardless of the parties' nationalities, governing laws, or locations of the subjects of dispute).
3. Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?
No. Indonesia's Arbitration Law is not based on the UNCITRAL Model Law on International Commercial Arbitration.
4. Are there any current plans to amend the arbitration legislation in your jurisdiction?
No. According to the Indonesia's priority national legislation program (Program Legislasi Nasional/ Prolegnas), there are no plans to amend Arbitration Law.
On the other hand, BANI, as an independent institution that provides a variety of services related to arbitration, continues to issue arbitration regulations on the applicable arbitration mechanism.
5. Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?
Yes. Indonesia has ratified the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention") enacted into Presidential Decree No. 34 of 1981 on Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
6. Is your jurisdiction a signatory to any other treaties relevant to arbitration?
Yes. Indonesia has ratified the 1966 Convention on the Settlement of Investment Disputes between States and Nationals of Other States ("ICSID Convention") and other bilateral and multilateral treaties including the ASEAN Charter, which stipulates arbitration as a dispute resolution mechanism in Southeast Asian countries in its protocol.
With regard to ICSID Convention, Indonesia has limited the jurisdiction of ICSID through the issuance of Presidential Decree No. 31 of 2012 ("PD 31/2012"), which excludes settlement by ICSID of any dispute arising from state administrative decrees issued by regency governments.
B. Arbitrability and Restrictions on Arbitration
7. How is it determined whether a dispute is arbitrable in your jurisdiction?
Pursuant to Article 5 of the Arbitration Law, only disputes that are a commercial in nature, or those involving rights which according to laws and regulations, are within the full legal authority of the disputing parties, can be resolved through arbitration. Furthermore, disputes that cannot be resolved through arbitration are those, which can be settled amicably. Settlements that can be deemed to have permanent legal force shall be considered not arbitrable.
8. Are there any restrictions on the choice of seat of arbitration for certain disputes?
No, based on the Arbitration Law, there are no restrictions on the choice of the seat of arbitration for any arbitration disputes.
C. Arbitration Agreement
9. What are the validity requirements for an arbitration agreement in your jurisdiction?
An arbitration agreement shall be considered valid if the disputing parties have agreed in writing to resolve the dispute exclusively through arbitration, this would usually be stipulated in one of the clauses of the relevant agreement ("Arbitration Agreement").
The Arbitration Agreement must also meet the requirements stipulated under the prevailing laws and regulations, such as: (i) Law Number 24 of 2009 on the Flag, Language, State Emblem, and National Anthem, and (ii) fulfill the basic requirements of Article 1320 of the Civil Code, which are:
- the parties agree to be bound by a contract;
- the parties are competent to enter the relevant agreement;
- the contract has a specific object; and
- the subject matter of the agreement is permitted under Indonesian law.
Article 9 of Arbitration Law also stipulates additional formal requirements for parties resolving their dispute through arbitration but have no arbitration agreement to commence the proceeding in the form of a notarial deed drawn by a Notary Public in Indonesia.
10. How is the law of the arbitration agreement determined in your jurisdiction?
The law of the Arbitration Agreement shall be determined based on the jurisdiction stipulated in the agreement.
11. Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?
Yes. The principle of separability is provided in Article 10 of Arbitration Law, which reads, "an arbitration agreement shall not become null or void due to the following circumstances: ...(h) expiration or non-applicability of the principal agreement".
12. Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?
In the absence of the agreement, or the seat and/or language of the arbitration procedure between the disputing parties, Article 31 paragraph 2 of Arbitration Law stipulates that all disputes whose resolutions are submitted to the arbitrators or arbitral tribunals will be examined and decided according to the provisions of Arbitration Law.
Furthermore, Article 28 of Arbitration Law provides that Bahasa Indonesia shall be used as the language of the arbitration, unless the parties have agreed otherwise. Please note that this provision generally refers to domestic arbitrations.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
