International Commercial Arbitration at Indonesia
International Commercial Arbitration in Indonesia is primarily governed by the Arbitration Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution. Here's a comprehensive overview:
🔹 Legal Framework
Law No. 30 of 1999 is the main legislation for arbitration in Indonesia.
Indonesia is a signatory to the New York Convention (1958) on the Recognition and Enforcement of Foreign Arbitral Awards (ratified in 1981).
Indonesia follows a dualist legal system, so international treaties need to be ratified to have legal effect.
🔹 Arbitration Institutions
BANI (Badan Arbitrase Nasional Indonesia) – the most prominent arbitral institution in Indonesia.
Handles both domestic and international commercial disputes.
Offers rules for expedited procedures and has an international division (BANI Arbitration Center).
Other institutions:
SIAC (Singapore International Arbitration Centre) is frequently used for Indonesian disputes.
HKIAC, ICC, and LCIA are also preferred for neutrality and enforcement.
🔹 Scope of Arbitrability
Disputes must be commercial in nature and involve parties who have agreed in writing to resolve disputes through arbitration.
Non-arbitrable matters: criminal law, family law, bankruptcy (under certain conditions), and administrative law disputes.
🔹 Arbitration Agreement
Must be in writing (contract clause or separate agreement).
Must clearly indicate the parties' intention to arbitrate.
🔹 Enforcement of Foreign Arbitral Awards
Recognized under the New York Convention.
Enforced via the Central Jakarta District Court.
Conditions:
Award must not violate public order (ordre public).
Must be final and binding in the country of origin.
Translated into Bahasa Indonesia.
Authenticated by Indonesian diplomatic officials.
🔹 Advantages of Arbitration in Indonesia
Confidentiality.
Faster resolution compared to courts.
Expert arbitrators.
Avoids court backlogs and delays.
🔹 Challenges
Concerns over judicial interference or inconsistent court decisions.
Sometimes unclear procedures for enforcement.
Limited experience of some local arbitrators with complex international matters.
🔹 Recent Developments
Discussions around updating the 1999 Arbitration Law to modern standards.
Push towards digital arbitration and online dispute resolution.
✅ When to Use Arbitration in Indonesia
Cross-border commercial contracts (especially involving Indonesian parties).
Industries like energy, construction, shipping, and trade.
Where enforceability and neutral dispute resolution are crucial.
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