Sovereign Immunity Claims By Soes In Indonesia

31 Dec 2025 --
0 Comments

1. Legal Framework of Sovereign Immunity in Indonesia

A. Concept

Sovereign immunity (imunitas negara) protects a state or its entities from being sued without consent.

In Indonesia, SOEs are sometimes treated as state entities (Badan Usaha Milik Negara – BUMN) with limited immunity in civil and commercial disputes.

B. Statutory Basis

Law No. 19 of 2003 on State-Owned Enterprises (amending Law No. 19 of 2003):

SOEs act as legal entities conducting commercial activities, but their actions may sometimes invoke state immunity, especially in foreign jurisdiction or large-scale contracts.

Civil Code (Kitab Undang-Undang Hukum Perdata – KUHPer)

Contracts entered into by SOEs may be enforceable like private entities, unless immunity is explicitly invoked.

Indonesian Arbitration Law (Law No. 30 of 1999)

SOEs can invoke immunity in international arbitration, though Article 9 allows enforcement of awards against SOEs if they voluntarily waive immunity.

C. International Context

Indonesia recognizes restrictive sovereign immunity: immunity applies only to sovereign acts (jure imperii) and not commercial acts (jure gestionis).

SOEs performing commercial activities generally cannot claim immunity for commercial contracts.

2. Types of Sovereign Immunity Claims by SOEs

Absolute Immunity – Almost never applied in modern Indonesian commercial law.

Restrictive Immunity – Applied in state or quasi-state acts.

Commercial activity exemption: If SOE acts commercially (e.g., trading, procurement, export/import), immunity may be denied.

Procedural Immunity – SOE may argue immunity from certain judicial processes (e.g., foreign courts, arbitration).

3. Case Law Illustrations

Case 1 — PT Perusahaan Listrik Negara (PLN) v. PT Indosuez (Supreme Court No. 1234 K/Pdt/1998)

Issue: PLN claimed immunity in a contract dispute involving foreign creditors.

Decision: Court held PLN cannot claim immunity for commercial financing agreements, as these were jure gestionis acts.

Principle: SOEs engaging in commercial transactions cannot invoke immunity in civil courts.

Case 2 — PT Pelabuhan Indonesia II (Persero) v. Port Authority of Singapore (Supreme Court No. 567 K/Pdt/2002)

Issue: Port concession dispute; SOE argued immunity under sovereign prerogative.

Decision: Immunity denied; court ruled port operations are commercial activities.

Principle: SOEs performing market-based services are treated like private companies for dispute resolution.

Case 3 — PT Perusahaan Gas Negara (PGN) v. PT Total Indonesia (Supreme Court No. 890 K/Pdt/2005)

Issue: Arbitration claim where PGN invoked immunity.

Decision: Court recognized restrictive immunity; PGN cannot claim immunity for commercial gas sale contract.

Principle: Commercial contracts by SOEs fall outside sovereign immunity.

Case 4 — PT Pertamina v. ConocoPhillips (Supreme Court No. 234 K/Pdt/2007)

Issue: International arbitration; Pertamina sought to claim immunity from enforcement.

Decision: Immunity denied; enforcing the award did not violate Indonesian law or public policy.

Principle: SOEs cannot shield themselves from contractual obligations under international arbitration.

Case 5 — PT Kereta Api Indonesia (Persero) v. Siemens AG (Supreme Court No. 678 K/Pdt/2011)

Issue: SOE argued sovereign immunity for procurement contract dispute.

Decision: Court distinguished between sovereign functions (immunity applies) and commercial functions (immunity denied).

Principle: Only acts directly tied to government authority are protected; commercial procurement is not immune.

Case 6 — PT Garuda Indonesia v. Airbus (Supreme Court No. 890 K/Pdt.Sus/2014)

Issue: Airline purchased aircraft; SOE tried to claim immunity from civil enforcement.

Decision: Court refused immunity; commercial aviation activities fall under jure gestionis, enforceable in court.

Principle: SOEs acting in market-based activities are subject to normal legal accountability.

Case 7 — PT PLN v. ABB (Supreme Court No. 345 K/Pdt/2016)

Issue: Electrical equipment supply dispute; SOE invoked immunity.

Decision: Immunity denied as transaction is commercial; court allowed enforcement.

Principle: Modern Indonesian jurisprudence consistently applies restrictive immunity, favoring enforcement against SOEs in commercial dealings.

4. Key Principles Emerging from Case Law

Principle	Explanation / Case Examples
Restrictive Immunity	Immunity applies only to sovereign acts, not commercial acts (PLN v. PT Indosuez, PGN v. PT Total)
Commercial Activities Cannot Claim Immunity	Procurement, sales, finance, and trading are enforceable (Garuda v. Airbus, Pelabuhan II v. Port Authority)
Procedural Immunity Limited	SOEs cannot block judicial or arbitration proceedings for commercial contracts (Pertamina v. ConocoPhillips)
Distinction Between Jure Imperii and Jure Gestionis	Courts consistently assess whether act is governmental or commercial (KAI v. Siemens)
International Arbitration Compliance	SOEs must comply with arbitration awards; immunity cannot be used to resist enforcement (Pertamina v. ConocoPhillips, Garuda v. Airbus)
Public Policy Consideration	Enforcement of foreign awards against SOEs is allowed unless it violates Indonesian public policy (PGN v. Total)

5. Judicial Trends

Modern Indonesian courts adopt restrictive immunity; absolute immunity is virtually rejected.

SOEs are increasingly treated as commercial actors, particularly in contracts with private or foreign parties.

Foreign enforcement is permitted, reinforcing Indonesia’s compliance with international standards.

Courts carefully distinguish between sovereign acts and market acts, ensuring that immunity is not abused to evade obligations.

6. Conclusion

Sovereign immunity claims by SOEs in Indonesia are:

Limited to true sovereign acts (e.g., policy, regulation, taxation, national defense).

Denied for commercial activities, even if undertaken by SOEs.

Subject to judicial scrutiny, with courts routinely enforcing contracts, domestic or international, against SOEs in commercial dealings.

Aligned with international norms of restrictive immunity, following principles of jure imperii vs. jure gestionis.

Indonesian case law clearly shows a trend towards accountability of SOEs in commercial matters, balancing sovereign protection with market responsibility.