By Immanuel A. Indrawan – Partner (Commercial Dispute Resolution)
In Indonesia, enforcement of arbitral awards requires the leave of the court. The enforcement process is conducted in the same manner as enforcement of court judgments, in accordance with the civil procedural rules. Particularly for arbitral awards made outside the jurisdiction of Indonesia, an exequatur from the District Court of Central Jakarta is required to initiate the enforcement process.
The Law of the Republic of Indonesia number 30 of 1999 on Arbitration and Alternative Dispute Resolution (“Arbitration Law”) and the Indonesian civil procedural rules do not provide certain period for the issuance of exequatur and the enforcement of arbitral awards. Therefore, it is difficult to estimate the time needed to enforce arbitral awards in Indonesia.
Foreign and domestic arbitral awards
The Arbitration Law does not provide clear definitions of foreign and domestic arbitral awards. It only defines international arbitral award as a decision handed down by an arbitration institution or individual arbitrator outside the jurisdiction of Indonesia, or decision of arbitration institution or individual arbitrator which, according to Indonesian laws, is deemed as an international arbitral award. Accordingly, arbitral awards made in Indonesia shall be regarded as ‘domestic arbitral awards’, regardless of the nationality of the parties or the arbitration institution.
Enforcement of international (foreign) arbitral awards in Indonesia
The enforcement of an international arbitral award is initiated by firstly submitting an application for exequatur with the District Court of Central Jakarta. Whereas, the enforcement process of domestic arbitration award can be initiated directly after issuance of the award. Hence, compared to the enforcement of domestic arbitral awards, the enforcement of international arbitral awards in Indonesia is more complicated and likely to be more lengthy, not to mention the available legal remedies if the application for exequatur is denied.
Choosing Indonesia as the seat of arbitration
If the enforcement of an arbitral award is likely to be sought in Indonesia, choosing Indonesia as the seat of arbitration may help to simplify the enforcement process. It means the juridical seat of arbitration is Indonesia and the Indonesian law would be the lex arbitri or the law that governs the arbitration. Having Indonesia as the seat of arbitration does not mean that all hearings and meetings must be held in Indonesia or prevent referring dispute to international or non-Indonesian arbitration institution. Arbitration institution such as ICC or SIAC may still be referred to administer the arbitration, subject to the applicability of their rules.
By choosing Indonesia as the seat of arbitration, the arbitral award should be deemed to be made in Indonesia. And since the award is made in Indonesia, it will be enforced as a domestic arbitral award under simpler process than the enforcement of an international arbitral award.
Things to be considered when choosing Indonesia as the seat of arbitration
If Indonesia is chosen as the seat of arbitration, the conduct of arbitration must adhere to the provisions of Indonesian law including formalities in the making of the award. Application of the arbitration rules must also be considered, if the parties submit to the rules of non-Indonesian arbitration institution. In addition, grounds for setting aside an arbitral award in Indonesia must also be taken into consideration by the parties.
*Firstly published in Asian Legal Business magazine vol. November 2016 Asia Edition