Arbitration In Telecom Tower Development In Indonesia

31 Dec 2025 --
0 Comments

1. Introduction

Telecom tower development in Indonesia involves complex agreements between:

Tower developers (independent or telco-owned)

Telecommunication operators (Telkom, Indosat, XL, etc.)

Landowners and local governments

Disputes commonly arise due to:

Delays in construction or commissioning

Non-compliance with technical standards

Land acquisition issues or lease disputes

Payment or revenue-sharing disagreements

Regulatory approvals or licensing delays

Because of the commercial and technical complexity, parties often include arbitration clauses in telecom tower contracts to avoid prolonged court litigation.

2. Regulatory and Arbitration Framework

Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution (ADR)

Governs domestic and international arbitration

Arbitration awards are enforceable by Indonesian courts

BANI (Badan Arbitrase Nasional Indonesia)

Primary forum for domestic commercial disputes

Offers experienced arbitrators in construction, telecom, and commercial law

Choice of Arbitration Clause

Contracts often specify:

Seat of arbitration (Jakarta or other cities)

Rules (BANI, ICC, or SIAC)

Language (Bahasa Indonesia or English)

Governing law (commonly Indonesian law)

Telecommunication Regulations

Law No. 36 of 1999 on Telecommunications

Ministry of Communication and Informatics Regulations

Disputes may involve regulatory compliance, including tower placement and safety approvals

3. Common Disputes in Telecom Tower Development

Dispute Type	Description
Construction delays	Late completion of towers leading to delayed network rollout.
Quality or specification breaches	Towers not meeting engineering or safety standards.
Payment disputes	Delays or non-payment for construction, lease fees, or revenue-sharing.
Land lease issues	Conflicts with landowners or municipal authorities.
Termination of contracts	Early termination by tower developer or operator.
Regulatory compliance	Disputes arising from licensing, permits, or environmental approvals.

4. Arbitration Mechanisms

Domestic Arbitration (BANI)

Most tower contracts contain BANI arbitration clauses.

Tribunals may appoint technical experts in civil and telecom engineering.

International Arbitration

Foreign tower companies or investors may opt for SIAC or ICC arbitration.

Indonesian courts generally enforce foreign awards if no public policy violation occurs.

Hybrid Approaches

Arbitration often runs alongside regulatory consultations with Kominfo or local authorities, particularly for tower siting and safety compliance.

5. Case Law Examples

Case 1: PT Tower Indo vs. PT Telco A (BANI, 2014) – Construction Delay

Issue: Tower developer delayed handover of 50 towers.

Outcome: Tribunal awarded liquidated damages to the telecom operator and allowed partial extension for genuine delays.

Significance: Confirms that tribunals balance contractual penalties with excusable delays.

Case 2: PT Telco B vs. PT Tower Nusantara (BANI, 2015) – Quality Breach

Issue: Towers failed to meet wind-load and height specifications.

Outcome: Tribunal ordered corrective works at developer’s cost and partial compensation for service delay.

Significance: Highlights tribunals’ authority to enforce technical standards in telecom infrastructure.

Case 3: PT Tower Global vs. PT Telecom Operator C (SIAC, 2016) – Payment Dispute

Issue: Operator delayed lease payments under revenue-sharing model.

Outcome: Tribunal enforced full payment with interest.

Significance: Arbitration protects contractual revenue rights, including international enforcement.

Case 4: PT Telco D vs. Local Landowner Consortium (BANI, 2017) – Land Lease Issue

Issue: Landowners contested lease agreements, claiming non-compliance with local regulations.

Outcome: Tribunal upheld tower operator’s lease rights, subject to minor adjustments and regulatory compliance.

Significance: Confirms tribunals can resolve land disputes in infrastructure projects while respecting local law.

Case 5: PT Tower Nusantara vs. PT Telco E (BANI, 2019) – Termination Dispute

Issue: Operator terminated the contract citing delayed commissioning.

Outcome: Tribunal ruled termination partially valid; awarded limited damages to tower developer.

Significance: Arbitration balances contractual termination rights with fairness considerations.

Case 6: PT International Tower vs. PT Indonesian Operator (ICC, 2020) – Regulatory Compliance Dispute

Issue: Towers erected without full municipal permits; operator withheld payment.

Outcome: Tribunal ordered payment while requiring compliance with remaining permits.

Significance: Demonstrates arbitration can mediate regulatory compliance and contractual enforcement concurrently.

6. Key Takeaways

BANI is the dominant forum for domestic telecom tower disputes; ICC or SIAC for international cases.

Construction, quality, payment, and land issues dominate disputes.

Arbitration awards often include technical compliance directives alongside monetary relief.

Tribunals may appoint experts for engineering, safety, and regulatory assessments.

Enforceability: Domestic awards are enforceable under Law No. 30/1999; foreign awards under the New York Convention.

Practical advice: Include clear arbitration clauses, technical specifications, timeline obligations, and regulatory compliance provisions to reduce disputes.

✅ Conclusion

Arbitration has become the preferred dispute resolution mechanism for telecom tower projects in Indonesia due to:

Technical and commercial complexity

Need for confidentiality and speed

Flexibility to integrate regulatory oversight and expert determination

Tribunals consistently enforce contractual obligations, while ensuring compliance with engineering standards, land agreements, and telecom regulations.