The dispute

resolution
­Review

Fifth Edition

Editor
Richard clark

Law Business Research

 The Dispute Resolution Review

Reproduced with permission from Law Business Research Ltd.

This article was first published in The Dispute Resolution Review, 5th edition
(published in February 2013 – editor Richard Clark).

For further information please email

Adam.Sargent@lbresearch.com
The Dispute
Resolution
Review

Fifth Edition

Editor
Richard Clark

Law Business Research Ltd

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 acknowledgements

The publisher acknowledges and thanks the following law firms for their learned
assistance throughout the preparation of this book:

Advokatfirmaet BA-HR DA (BA-HR)

Arthur Cox

ASHTAR ALI & CO, ADVOCATES AND CORPORATE CONSULTANTS

Attias & Levy

Arzinger

AZB & Partners

BAKER & MCKENZIE SOUTH AFRICA

Barun Law

Bedell Cristin

BIZLINK Lawyers & Consultants

Bonelli Erede Pappalardo – Studio Legale

Bredin Prat

Bufete Hernández Romo

CAMILLERI PREZIOSI

Cravath, Swaine and Moore LLP

Croci, Silva y Cajina Abogados

De Brauw Blackstone Westbroek

i
 Acknowledgements

Dittmar & Indrenius

Fontes Tarso Ribeiro Advogados

FULBRIGHT & JAWORSKI LLP IN ASSOCIATION WITH

MOHAMMED AL-GHAMDI LAW FIRM

Gatmaytan Yap Patacsil Gutierrez & Protacio

Hengeler Mueller

Hergüner Bilgen Özeke Attorney Partnership

Homburger

Hutabarat Halim & Rekan

JUN HE LAW OFFICES

KBH Kaanuun

Lansky, Ganzger & Partner (LGP)

ŁASZCZUK & PARTNERS

Lloreda Camacho & Co

Loyens & Loeff

Maples and Calder

Mannheimer Swartling

Miyake & Yamazaki

MOLITOR avocats Á la cour

Motieka & AudzeviČius

Osler, Hoskin & Harcourt LLP

Oxford & Beaumont Solicitors

ii
 Acknowledgments

Pellegrini & Urrutia

Pinsent Masons LLP

Piper Alderman

Plesner law firm

POTAMITISVEKRIS

Schreck Law Offices

Slaughter and May

Sofunde, Osakwe, Ogundipe & Belgore

Szecskay Attorneys At Law

TOMAIER LEGAL ADVOKÁTNÍ KANCELÁŘ S.R.O.

TSMP Law Corporation

Ţuca Zbârcea & Asociaţii

Uria Menendez

Uría Menéndez – Proença de Carvalho

Uteem Chambers

Young Conaway Stargatt & Taylor LLP

iii
 contents

Editor’s Preface ���������������������������������������������������������������������������������������������������xi

Richard Clark

Chapter 1 AUSTRALIA������������������������������������������������������������������������������ 1
Malcolm Quirey and Gordon Grieve

Chapter 2 AUSTRIA��������������������������������������������������������������������������������� 32
Helena Marko and Anna Zeitlinger

Chapter 3 BAHRAIN������������������������������������������������������������������������������� 47
Haifa Khunji, Kaashif Basit and Jessica Lang Roth

Chapter 4 BELGIUM������������������������������������������������������������������������������� 59
Geert Bogaert, Etienne Kairis, Aude Mahy and
Stéphanie De Smedt

Chapter 5 BRAZIL����������������������������������������������������������������������������������� 80
Marcus Fontes, Max Fontes and Juliana Huang

Chapter 6 BRITISH VIRGIN ISLANDS������������������������������������������������� 99

Arabella di Iorio and Victoria Lord

Chapter 7 CANADA������������������������������������������������������������������������������� 113

David Morritt and Eric Morgan

Chapter 8 CAYMAN ISLANDS������������������������������������������������������������� 128

Aristos Galatopoulos and Caroline Moran

Chapter 9 CHILE����������������������������������������������������������������������������������� 141

Enrique Urrutia and José Manuel Bustamante

Chapter 10 CHINA���������������������������������������������������������������������������������� 152

Xiao Wei, Zou Weining and Stanley Xing Wan

Chapter 11 COLOMBIA�������������������������������������������������������������������������� 162

Bernardo Salazar and Natalia Caroprese

iv
 Contents

Chapter 12 CZECH REPUBLIC�������������������������������������������������������������� 174

Jan Tomaier and Matúš Hanuliak

Chapter 13 DELAWARE�������������������������������������������������������������������������� 190

Elena C Norman and Lakshmi A Muthu

Chapter 14 DENMARK��������������������������������������������������������������������������� 202

Peter Schradieck and Peter Fogh

Chapter 15 ENGLAND & WALES���������������������������������������������������������� 214

Richard Clark and Damian Taylor

Chapter 16 FINLAND����������������������������������������������������������������������������� 234

Jussi Lehtinen and Heidi Yildiz

Chapter 17 FRANCE�������������������������������������������������������������������������������� 246

Tim Portwood

Chapter 18 GERMANY���������������������������������������������������������������������������� 261

Henning Bälz and Carsten van de Sande

Chapter 19 GHANA��������������������������������������������������������������������������������� 279

David A Asiedu and Joseph K Konadu

Chapter 20 GIBRALTAR�������������������������������������������������������������������������� 292

Stephen V Catania

Chapter 21 GREECE�������������������������������������������������������������������������������� 301

Konstantinos P Papadiamantis

Chapter 22 GUERNSEY��������������������������������������������������������������������������� 312

Alasdair Davidson and Jon Barclay

Chapter 23 HONG KONG���������������������������������������������������������������������� 323

Mark Hughes

Chapter 24 HUNGARY���������������������������������������������������������������������������� 345

Zoltán Balázs Kovács and Dávid Kerpel

Chapter 25 INDIA������������������������������������������������������������������������������������ 360

Zia Mody and Shreyas Jayasimha

v
 Contents

Chapter 26 INDONESIA������������������������������������������������������������������������� 371

Pheo M Hutabarat

Chapter 27 IRELAND������������������������������������������������������������������������������ 392

Andy Lenny, Claire McGrade, Gareth Murphy and
Sara Carpendale

Chapter 28 ISRAEL���������������������������������������������������������������������������������� 406

Shraga Schreck and Daniella Schoenker-Schreck

Chapter 29 ITALY������������������������������������������������������������������������������������� 432

Monica Iacoviello, Vittorio Allavena and Paolo Di Giovanni

Chapter 30 JAPAN������������������������������������������������������������������������������������ 455

Tatsuki Nakayama

Chapter 31 JERSEY���������������������������������������������������������������������������������� 469

David Cadin and Dina El-Gazzar

Chapter 32 KOREA���������������������������������������������������������������������������������� 481

Tae Yong Ahn, Nathan D McMurray and Rieu Kim

Chapter 33 KUWAIT������������������������������������������������������������������������������� 492

Kaashif Basit and Basem Al-Muthafer

Chapter 34 LITHUANIA������������������������������������������������������������������������� 504

Ramūnas Audzevičius and Mantas Juozaitis

Chapter 35 LUXEMBOURG������������������������������������������������������������������� 518

Michel Molitor and Paulo Lopes Da Silva

Chapter 36 MALTA���������������������������������������������������������������������������������� 527

Marisa Azzopardi and Kristina Rapa Manché

Chapter 37 MAURITIUS������������������������������������������������������������������������� 540

Muhammad R C Uteem

Chapter 38 MEXICO������������������������������������������������������������������������������� 553

Miguel Angel Hernández-Romo Valencia

Chapter 39 NETHERLANDS������������������������������������������������������������������ 567

Ruud Hermans and Margriet de Boer

vi
 Contents

Chapter 40 NIGERIA������������������������������������������������������������������������������� 586

Babajide Ogundipe and Lateef Omoyemi Akangbe

Chapter 41 NORWAY������������������������������������������������������������������������������ 601

Jan B Jansen and Sam E Harris

Chapter 42 PAKISTAN����������������������������������������������������������������������������� 615

Ashtar Ausaf Ali, Zoya Chaudary and Nida Aftab

Chapter 43 PERU������������������������������������������������������������������������������������� 632

Claudio C Cajina and Marcello Croci G

Chapter 44 PHILIPPINES������������������������������������������������������������������������ 643

Ben Dominic R Yap, Jesus Paolo U Protacio, Erdelyne C Go
and Jess Raymund M Lopez

Chapter 45 POLAND������������������������������������������������������������������������������� 657

Justyna Szpara and Agnieszka Kocon

Chapter 46 PORTUGAL�������������������������������������������������������������������������� 672

Francisco Proença De Carvalho

Chapter 47 ROMANIA���������������������������������������������������������������������������� 683

Levana Zigmund

Chapter 48 SAUDI ARABIA�������������������������������������������������������������������� 697

Mohammed Al-Ghamdi, John Lonsberg, Jonathan Sutcliffe
and Sam Eversman

Chapter 49 SCOTLAND�������������������������������������������������������������������������� 717

Jim Cormack and David Eynon

Chapter 50 SINGAPORE������������������������������������������������������������������������� 732

Thio Shen Yi, Karen Teo, Peter John Ladd and Adeline Chung

Chapter 51 SOUTH AFRICA������������������������������������������������������������������ 745

Gerhard Rudolph and Nikita Young

Chapter 52 SPAIN������������������������������������������������������������������������������������ 766

Esteban Astarloa and Patricia Leandro Vieira da Costa

viii
 Contents

Chapter 53 SWEDEN������������������������������������������������������������������������������ 789

Jakob Ragnwaldh and Niklas Åstenius

Chapter 54 SWITZERLAND������������������������������������������������������������������� 800

Balz Gross, Claudio Bazzani and Julian Schwaller

Chapter 55 TURKEY�������������������������������������������������������������������������������� 818

Noyan Göksu

Chapter 56 UKRAINE������������������������������������������������������������������������������ 840

Sergiy Shklyar and Markian Malskyy

Chapter 57 UNITED STATES����������������������������������������������������������������� 851

Nina M Dillon and Timothy G Cameron

Chapter 58 VIETNAM����������������������������������������������������������������������������� 869

Do Trong Hai

Appendix 1 about the authors���������������������������������������������������� 885

Appendix 2 Contributing Law Firms’ contact details�� 925

ix
 editor’s preface
Richard Clark

Following the success of the first four editions of this work, the fifth edition now extends
to some 58 jurisdictions and we are fortunate, once again, to have the benefit of incisive
views and commentary from a distinguished legal practitioner in each jurisdiction. Each
chapter has been extensively updated to reflect recent events and provide a snapshot of
key developments expected in 2013.
As foreshadowed in the preface to the previous editions, the fallout from the
credit crunch and the ensuing new world economic order has accelerated the political
will for greater international consistency, accountability and solidarity between states.
Governments’ increasing emphasis on national and cross-border regulation – particularly
in the financial sector – has contributed to the proliferation of legislation and, while
some regulators have gained more freedom through extra powers and duties, others have
disappeared or had their powers limited. This in turn has sparked growth in the number
of disputes as regulators and the regulated take their first steps in the new environment
in which they find themselves. As is often the case, the challenge facing the practitioner
is to keep abreast of the rapidly evolving legal landscape and fashion his or her practice to
the needs of his or her client to ensure that he or she remains effective, competitive and
highly responsive to client objectives while maintaining quality.
The challenging economic climate of the last few years has also led clients to
look increasingly outside the traditional methods of settling disputes and consider more
carefully whether the alternative methods outlined in each chapter in this book may
offer a more economical solution. This trend is, in part, responsible for the decisions by
some governments and non-governmental bodies to invest in new centres for alternative
dispute resolution, particularly in emerging markets across Eastern Europe and in the
Middle East and Asia.
The past year has once again seen a steady stream of work in the areas of insurance,
tax, pensions and regulatory disputes. 2012 saw regulators flex their muscles when they
handed out massive fines to a number of global banks in relation to alleged breaches of
UN sanctions, manipulation of the LIBOR and EURIBOR rates and money-laundering

xi
 Editor’s Preface

offences. The dark clouds hanging over the EU at the time of the last edition have lifted
to some degree after the international efforts in 2012 saved the euro from immediate
and catastrophic collapse, although the region continues to prepare for a period of
uncertainty and challenging circumstances. It is too early to tell what, if any, fundamental
changes will occur in the region or to the single currency, but it is clear that the current
climate has the potential to change the political and legal landscape across the EU for
the foreseeable future and that businesses will be more reliant on their legal advisers than
ever before to provide timely, effective and high-quality legal advice to help steer them
through the uncertain times ahead.

Richard Clark
Slaughter and May
London
February 2013

xii
 Chapter 26

indonesia
Pheo M Hutabarat1

I INTRODUCTION TO DISPUTE RESOLUTION FRAMEWORK

Indonesia is a unitary state that consists of 33 provinces as autonomous regions, with a

uniform system of laws and regulations. The Supreme Court is vested with the power to
govern the judicial system and the same procedures for dispute resolution are applicable
throughout the country.
In Indonesia, disputes may be adjudicated through a litigation process in front of
the relevant courts or through private alternative dispute resolution, such as arbitration
proceedings. Section VII infra further discusses the private forms of dispute resolution
in Indonesia. Although the use of private dispute resolution mechanisms is increasing
rapidly in Indonesia, litigation still resolves the vast majority of disputes in Indonesia.
If the relevant parties have not agreed to use private dispute resolution as the proper
means of reaching an agreement, the court remains the only forum that can be used to
adjudicate the dispute.
The following is a brief explanation of the structure of the courts in Indonesia.
The litigation process in Indonesia can be brought before: the general civil and
criminal court; through other special courts, such as the Administrative Court, Labour
Court or Commercial Court (‘the Special Courts’); and other quasi-judicial powers, such
as the antitrust commission, the consumer commission, etc.
The Administrative Court is authorised to adjudicate and to make decisions on
cases related to state administrative law. In such forum, a private person (including a
company) that has suffered losses caused by an administrative decision can make a claim
against the relevant government bodies before this Administrative Court to annul the
said administrative decision. The Commercial Court is part of the civil courts and is the

1 Pheo M Hutabarat is the founder and managing partner at Hutabarat Halim & Rekan.

371
 Indonesia

appropriate forum for hearing bankruptcy and intellectual property rights cases, and the
Labour Court specifically deals with labour disputes.
The litigation process in both the general civil court and the Special Courts
involves examination and decisions at the following levels of the court system.

i Courts of first instance

All civil cases will be brought at the first instance before the District Court. Administrative
cases must be brought before the First Level of the Administrative Court, bankruptcy
and intellectual property cases must be brought before the Commercial Court and
labour cases will be submitted to the Labour Court. These courts are of a first instance to
adjudicate and decide the relevant cases. In the Commercial Court and Labour Court,
any party appealing against a decision at this first instance can only submit its final
appeal to the Supreme Court, as is further explained in (iii), infra.

ii Second instance
The High Courts form the courts of second instance at the provincial level, both for civil
and administrative cases. However, the High Court for civil cases is a separate institution
from the High Court for administrative cases. Both the High Court for civil cases and
the Administrative Court give judgments on appeal from the judgments of the lower
courts. As the appellate court, both High Courts generally do not examine the facts
and evidence submitted by the disputed parties, since these matters should have been
examined and verified by the first level of the courts. In practice, if the facts and the
evidence have been taken into consideration at the first instance, the presiding judges of
the High Courts will mostly focus their review on the legal interpretation, legal reasoning
and legal basis of the decision made by the first level of the courts. Generally, there will
be no public hearing requirements to be conducted by the presiding judges of the High
Court in making a decision on cases at this appeal stage.

iii The Supreme Court

Once the decision of the High Court (both for civil and administrative cases) has been
decided, either party may also request a second appeal of the decision to the Supreme
Court, as the last level of the court, in order to make a final and binding decision over the
civil case and the administrative case. The presiding judges at the Supreme Court level
make decisions in a closed hearing to decide the relevant case. As explained supra, the
Supreme Court is the last appeal instance for bankruptcy, intellectual property rights and
labour cases decided by the Commercial Court or the Labour Court (in their capacity as
first instance courts).

iv Judicial review
Under certain limited conditions, following the final and binding decision of the
Supreme Court, the losing party may use an extraordinary means to request a judicial
review in order to nullify the final and binding court judgments that have been made
by the Supreme Court over civil, administrative, bankruptcy, intellectual property rights
and labour cases. The decision to be granted at the judicial review stage will be decided
by other members of the panel of presiding judges of the Supreme Court. If the Supreme

372
 Indonesia

Court is of the opinion that the application for judicial review could be accepted for
re-examination, the presiding judges at the judicial review stage will decide either of the
following:
a to reject the application for the judicial review by declaring that the final and
binding judgment made by the Supreme Court for which re-examination is
requested shall remain in force, by giving the legal basis for its considerations; or
b to annul the final and binding judgment of the Supreme Court for which re-
examination is requested, and render a new judgment over the case.

For as long as the final and binding judgment has not been turned down or annulled
by the judicial review process, the said final and binding court judgment made by the
Supreme Court can be executed and enforced by the winning party.

II THE YEAR IN REVIEW

i Lippo Group v. Astro Group

This case relates to a refusal by the Indonesian court to accept the anti-suit jurisdiction of
an arbitration award decided by the Singapore International Arbitration Centre (‘SIAC’).
The dispute is between Lippo Group, an Indonesian group of conglomerate companies,
and Astro Group, a Malaysian-based group of conglomerate companies. The case is
related to a joint venture arrangement between them in an Indonesian pay-TV company
known as ‘PT Direct Vision’ (Kabel Vision). Lippo Group, through its subsidiary
company (PT Ayunda Prima Mitra), as a plaintiff, lodged a civil case (tort) against several
subsidiary companies of Astro Group and its related parties before the District Court of
South Jakarta (the Tort case) on 2 September 2008, by claiming US$2,024,846,199
in material and immaterial damages against Astro Group. On 6 October 2008, one
week after the registration of the Tort case, eight subsidiary companies of Astro Group
initiated a counter action by submitting an arbitration case in front of SIAC, against
three subsidiary companies of Lippo Group.
In the arbitration process, the SIAC tribunal issued an award on the preliminary
issues, dated 7 May 2009, which relates to an anti-suit jurisdiction arbitration award. Inter
alia, this award ordered Lippo Group to discontinue the Indonesian legal proceedings
in the Tort case and prohibited Lippo Group from bringing any further proceeding in
Indonesia against Astro Group and its related parties. However, on 28 October 2009
the chairman of the District Court of Central Jakarta issued a decision to set aside the
award on the preliminary issues and declare that the anti-suit jurisdiction award is non-
enforceable (non-exequatur) in Indonesia, and therefore this award can not be enforced
in the territory of Indonesia.
An appeal has been submitted by Astro Group against this decision to refuse the
enforcement of the anti-suit jurisdiction award. The Indonesian Supreme Court, as the
final court able to adjudicate and finally decide this matter, has reconfirmed that the
decision made by the District Court of Central Jakarta is in line with the Arbitration
Law 30/1999. It considered that the purpose of the anti-suit jurisdiction award issued
by SIAC was merely to discontinue the trial process in Indonesia, and therefore this
arbitration award violates the principle of the sovereignty of the Republic of Indonesia

373
 Indonesia

and public policy in Indonesia, and there is no foreign power that can interfere with
any existing legal process in Indonesia. This refusal of the international arbitration
award on an anti-suit jurisdiction creates a new precedent in Indonesian legal practice.
Furthermore, in relation to the enforcement of the final award of the same arbitration
case, on 11 September 2012, the chairman of the District Court of Central Jakarta issued
a decision to set aside all final awards issued by the SIAC tribunal for the reason that the
final awards are an inseparable and integral part of the award on the preliminary issues,
and since the final awards contained an anti-suit jurisdiction these arbitration awards
violate the principle of the sovereignty of the Republic of Indonesia and public policy
in Indonesia, and therefore these final awards of the SIAC tribunal are non-enforceable
in Indonesia. An appeal has been submitted by Astro Group against this decision and to
date this matter is still being processed.

iii COURT PROCEDURE

i Overview of court procedure

There are no uniform rules of civil procedure applicable in Indonesian courts. The
Emergency Law No. 1 of 19512 was intended to establish a single unified court system.
Prior to this Law (during the colonial period) the Dutch established a plural court
system. At the time Emergency Law No. 1 was enacted, it was anticipated that a new
Civil Procedure Law would soon be adopted. To date, no such code has been enacted and
the provisions of Emergency Law No. 1 continue to be in force in practice. Emergency
Law No. 1 provides for the applicability of two Dutch colonial laws relating to the civil
procedure in the courts in Indonesia. In the courts of Java and the Madura islands,
the Herziene Indonesisch Reglement of 1847 (‘the Revised Indonesian Regulation’ or
‘the HIR’) is applied, and in the other islands in Indonesia outside Java and Madura,
the Rechstreglement Buitengewesten (‘the RBg’) is applied. The RBg essentially follows
the HIR but provides for longer terms of notice, service and limitation periods. When
the HIR or RBg is silent on a particular matter, the courts turn to the Reglement of de
Burgelijke Rechtsvordering voor de Rad van Justitie op Java en het Hoogerechtshof van
Nederlandsh – Indie, also known as the Reglement op de Rechvordering (‘the RV’).3
The following are brief highlights of certain important and relevant rules governing
litigation in Indonesia.

Civil law system and no stare decisis

Indonesia’s legal system follows the tradition of the civil law system and does acknowledge
the principle of jurisprudence (stare decisis principle). Under Indonesian civil procedural
laws, the judges are not bound by prior decisions of the High Court or the Supreme
Court. Nevertheless, they are known to apply such decisions, whether by way of consensus
among the judges or because of the persuasive weight of such decisions. This, again,
inevitably leads to some element of uncertainty for any litigation process in Indonesia,

2 State Gazette 1951 No. 9.

3 Staatsblad 1847 No. 52 as amended.

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since there are no official rules to govern the use of prior jurisprudence. This is mostly
because the persuasive value of any one particular case to the panel of judges cannot be
known with any particular certainty.

Burden of proof
In the general civil proceedings, namely, in breaches of contract actions, tort actions and
class actions, the pleading must be proved by the plaintiff or claimant. This principle, in
which the party who asserts any claim to the court has the burden of proving its existence
(onus of proof or burden of proof principle), is stipulated in Indonesian civil procedural
laws.4
There are no clear standards that determine when the burden has been satisfied in
a case. However, in practice, the plaintiffs should meet the following three fundamental
key tests in asserting their claim in the court:
a the course of action of the defendants can be proven by the plaintiffs in court and
these actions have breached the relevant contract (in a breach of contract case) or
violated the prevailing laws, customary laws or prudential principles or the right
of the plaintiffs (in a tort case);
b the plaintiffs must be able to prove that as a consequence of these actions
conducted directly or indirectly by the defendants, the plaintiffs have suffered
damages; and
c the causality of points (a) and (b) supra.

If the plaintiffs are not able to prove these three fundamental factors in relation to
the case, but on the other hand, the defendants are able to prove otherwise, then the
defendants might potentially have the chance to set aside the merit of the case. Unlike
the plaintiff’s position supra, the more the defendants are able to prove their positions
contrary to the plaintiff’s assertions (which are supported by valid evidence, arguments
and a legal basis), the more difficult it is for the presiding judges to justify the plaintiff’s
claim, and the more chance there is for the defendants to potentially win the case.
Based on the general practice of litigation in Indonesia, in representing the
defendants’ position and in implementing the defence strategy, the lawyers must assert
and explain the arguments in relation to exceptions, that is, the motion to dismiss the
case; and the arguments in relation to the merit of the case, insofar as these assertions and
arguments on the exceptions and the merits of the case are clearly and properly justified
under the circumstances of the case and the prevailing Indonesian laws.
In practice, the following are the general arguments that may be asserted and
raised by the defendants as a basis for their request for the motion to dismiss the case:
a the relevant court does not have any competence or jurisdiction to decide the
matter (absolute exception). If this argument is lodged, the presiding judges

4 This principle is contained in Article 1865 of the Indonesian Civil Code, Article 163 of the
HIR and Article 50 of the RV, which stipulates that the party or plaintiff who asserts any claim
has the burden of proving its existence in front of the court.

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should first decide this motion before they make a decision in relation to the
merit of the case;
b the claim contains error in persona (the claim is addressed to the wrong party);5
c the list of parties to the lawsuit is incomplete (lack of parties – plurium litis
consortium);6
d the lawsuit is obscure (obscuur libel);7
e there exists inconsistency between the background (posita) and the petitions
requested in the pleading;8
f the claim is invalid due to the incorrect construction of the pleading, namely, the
breach of contract claim and the tort claim have been combined in one pleading.
These two matters should be claimed separately;9
g the claim is invalid due to too many claims being combined into a single lawsuit;10
or
h the lawsuit is premature, due to the reason that the plaintiff has not fulfilled the
obligations that are required under the relevant contract or the prevailing laws to
be fulfilled before it may submit the claim to the court.11

Role of judges
The Indonesian general legal system and its court system adopt the continental system,
in which the roles of the presiding judges in a trial process are generally passive. This is
different from the common law (adversarial) system. The presiding judges have a passive
role in the examination of the case in the sense that the scope of the disputed matters
to be examined by the presiding judges will principally be determined by the disputed
parties and not by the presiding judges.
In addition to the above passive role of the judges, the presiding judges who are
examining and deciding the case will also be bound to the following general principles
in making the decision:
a Article 25 Paragraph (1) of Law No. 4 of 2004 regarding the Judiciary (‘Law No.
4/2004’), stipulates the basic requirement as follows: ‘All court decisions, besides

5 Vide the Jurisprudence No. 10/G/Pdt/1978, dated 15 January 1979, the Jurisprudence No.
195 K/AG/1994, dated 20 October 1995 and the Jurisprudence No. 205 K/Pdt/2001, dated
31 January 2003.
6 Vide the Jurisprudence No. 437 K/Sip/1973, dated 9 December 1972, the Jurisprudence No.
151 K/Sip/1975, dated 13 June 1975 and the Jurisprudence No. 878 K/Sip/1977, dated 19
June 1977.
7 Vide the Jurisprudence No. 492 K/Sip/1970, dated 16 December 1970.
8 Vide the Jurisprudence No. 67.K/Sip/72, the Jurisprudence No. 565.K/Sip/1973, dated 21
August 1974 and the Jurisprudence No. 28.K/Sip/1973, dated 5 November 1975.
9 Vide the Jurisprudence No. 879.K/Pdt/1999, dated 29 January 2001 and the Jurisprudence
No. 879K/Pdt/1997.
10 Vide the Jurisprudence No. 415 K/Sip/1975, dated 20 June 1979 and the Jurisprudence No.
962 K/PDT/95, dated 17 December 1995.
11 Vide the Jurisprudence No. 2743 K/Pdt/1995.

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containing reasons and the basis for the decision, must also contain certain articles
of the said laws and regulations or unwritten legal sources used as the basis for the
judgment.’
b In practice, any decision of the court that is not in accordance with Article 25
Paragraph (1) of Law No. 4 /2004 will be deemed as a court judgment that is not
legally motivated, and as a consequence thereof this decision must be overruled
and cancelled by the appellate courts.12
c A court decision that is based on a consideration that is different or deviates
from the basis of the claims stated in the lawsuit must be annulled by the higher
court.13
d If a lower court has wrongly interpreted the laws, this decision is made not in
accordance with fairness and justice.14

Language barrier
In formal court proceedings in Indonesia, the foreign party may face a language barrier,
where all proceedings before the Indonesian courts must be conducted in Indonesian; all
relevant documents in English must be translated into Indonesian by a sworn translator
before they can be submitted to court; and all witnesses will be questioned in Indonesian
and all answers must be translated into Indonesian before they enter the court records.
As a result, there is much room for error or translation problems in preparing and
submitting the court documents and understanding the court directions or decisions.

ii Procedures and time frames

The court of first instance (district court)
Before the presiding judges commence with the formal court proceedings, based on
Supreme Court Regulation No. 2 of 2003 regarding the Mediation Procedures in Court
(‘SCR No. 2/2003’) the presiding judges have the mandatory obligation to require the
parties to the dispute to implement the court mediation process in an attempt to reach an
amicable settlement in the case. In this court mediation process, the presiding judges will
appoint a court mediator (which is usually another judge in the same court) and request
the disputed parties to appear before this court mediator. The mediation process should
be conducted within 22 working days as of the appointment of the court mediator. If the
parties fail to reach an amicable settlement, the statement and acknowledgment of each
party in the mediation process cannot be used as evidence in the court hearing of the
related lawsuit or any other lawsuit, and the court mediator must destroy all documents
received during the mediation process. If, during the mediation process, the parties agree
with the out-of-court settlement, the court mediator will help the parties to enter into an
agreement, which inter alia must contain the agreement to withdraw and settle the case
amicably, and this agreement may at a later stage be reinstated by the presiding judges

12 Vide Indonesian Jurisprudences No.: 443-K/Pdt/1986; No.: 2589.K /Pdt/1988, dated 26

October 1993; and No.: 638/K/Sip/1969, dated 22 July 1970.
13 Vide Indonesian Jurisprudence No.: 372 K/Sip/1970, dated 1 September 1971.
14 Vide Indonesian Jurisprudence No.: 3901 K/Pdt/1985, dated 29 November 1988.

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as a formal settlement agreement in the decision relating to this case.15 If the mediation
process fails, the court will commence the first hearing of the case with the agenda of
submitting the claim from the plaintiffs to the defendants.
The legal proceedings in this first instance, especially if the claim is somewhat
complicated, will generally consist of several hearings. Each of the above hearings is
normally one or two weeks apart. The length of time is solely at the discretion of the
court. If the claim is somewhat simple, the parties on the day of the first hearing of the
court may immediately bring with them all their means of evidence, written documents,
if any, and the witnesses they want to be examined. In more complicated cases, it is
common practice that only after the examination of the facts to be proven by each of the
parties can the witnesses be brought before the court. Any third party having an interest
in the civil proceeding may intervene in the case.
On the basis of guidance on the implementation of duties and the administration
of courts issued by the Supreme Court, the duration for a lawsuit starting from the
registration of the claim until the judge renders his or her decision shall not exceed six
months. However, in practice, court proceedings in the district court in a number of
cases continue much longer. In some cases, the judgment can take anything from one
to two years; this is particularly true if most of the defendants reside outside Indonesia.

Pre-judgment attachment and interim court injunction

Remedies for plaintiffs can be obtained by court order (in the general civil litigation
process) by instituting a claim through a civil lawsuit. In this civil case, any plaintiff who
has a claim may request a court attachment (pre-judgment attachment) of the particular
related property and an interim court injunction. Both of the legal remedies may only be
submitted to the court of first instance and may only be granted by the court after the
claim is submitted by the plaintiff.
The pre-judgment attachment is only preliminary in nature and gives the claimant
security until the enforcement of the claim is realised by the court. It should be noted,
however, that civil proceedings to obtain a final, binding and enforceable court judgment
in Indonesia is a time-consuming process and may take years to complete, during which
the defendants may dispose their assets if the court has not granted a pre-judgment
attachment over the defendants’ assets. This would have the effect that the judgment
made in favour of the plaintiff would not be enforced effectively if there was no prior
pre-judgment attachment and, at the time of the final judgment, the defendants’ assets
were insufficient to cover the claims submitted by the plaintiff. This motion may be
submitted together with the claim or submitted before the judgment made by the court
of first instance. Based on Circular Letter of Indonesian Supreme Court No. 5 of 1975,
the pre-judgment attachment may only be granted by the court of first instance after the
presiding judges have examined all evidence in relation to the case. In practice, this pre-
judgment attachment may only be granted after the court hearing on the examination
of evidence has taken place.

15 In practice, this mandatory court mediation process has not effectively been used by the
disputed parties to settle the case out of court.

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The plaintiff also may seek an interim court injunction to prevent the defendant
from conducting any action that might hamper or jeopardise the interests of the plaintiff
in submitting its claim in the court. To enable the interim court injunction to be
considered by the presiding judges, there are some requirements to be fulfilled by the
plaintiff, which include that the submission of this application must be based on prima
facie evidence or written valid evidence to support the necessity of requesting of this
motion. In practice, the presiding judges will also reject the motion if the substance
of the matter is similar or a duplicate of the claims on the merit of the case submitted
by the plaintiff in the lawsuit. If this interim court injunction is granted by the court,
this judgment will be treated like a specific relief decision (i.e., a court order to direct
or prohibit certain conduct of the defendants or the co-defendants). Based on Circular
Letter of the Indonesian Supreme Court No. 3 of 2000, an interim court injunction
can only be granted by the court after the presiding judges have examined all evidence
in relation to the case. In practice, this injunction may only be granted after the court
hearing on the examination of evidence has taken place.

The second instance (High Court)

Each of the disputed parties is entitled to appeal to the High Court. However, neither
party is obliged to file a memorandum of appeal with the High Court. Even if this is
done, the High Court may, at its sole discretion, hold a hearing, request the court of
first instance to conduct a hearing, decide that no such hearing is required or order that
the files and documents of the courts of first instance are sent to the High Court for
examination and evaluation. There is no fixed time for the rendering of a judgment by
the High Court. Judgment may take between one and three years. The appellant bears
the cost of the appeal at the court registrar of the same district court that rendered the
decision.

The highest court (Supreme Court)

Once the decision of the High Court has been rendered, either party may request a
second appeal for the decision to be considered by the Supreme Court. Such request must
be in the form of a notice of cassation, which must be submitted to the Supreme Court
through the district court that rendered the decision within 14 days after the receipt of
the High Court decision by the disputed parties. The memorandum of cassation must
be filed by the appellants within 14 days after the registration of the notice of cassation.
This memorandum of cassation must contain reasons as to why the decision of the High
Court is incorrect. After this memorandum of cassation has been received by the non-
appellants (appellees), the appellees must submit their contra-memorandum of cassation
if they would like to use their right to support the decision that has been made by the
High Court on the case.
The Supreme Court, based on the court documents (including the decisions
made by the first level of the court and the High Court, the memorandum of cassation
and the contra-memorandum of cassation), will then decide whether or not to consider
the appeal. The presiding judges in the Supreme Court’s level will make their decision
by having a closed hearing among them in deciding the case, and there is no public
hearing to be made by the presiding judges in this Supreme Court’s level. Each member
judge in the panel will have an authorisation to review and gives his or her opinion on

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all court documents and evidences that have been submitted by the disputed party for
this examination in this cassation stage, and there is no statutory limitation of time for
the panel of the presiding judges to make a decision on this cassation stage. The legal
process in this second appeal in the Supreme Court can generally take anything from
two to five years.

The peninjauan kembali

Under certain limited conditions, following the binding decision of the Supreme Court
being given, the losing party may request a peninjauan kembali (similar to a judicial
review) in order to nullify the final and binding court decisions that have been made in
the case. One of the popular legal bases for a party to make a peninjauan kembali is the
condition that a new fact has been found after the court decisions have been made, which
is important and may affect to the case. Such peninjauan kembali must be submitted to
the court of first instance that first decided the case. As in the second appeal process, the
presiding judges at this peninjauan kembali level will make a decision by having a closed
hearing among them in deciding the case, and there is no public hearing to be made
by the presiding judges at this level. The legal process of the peninjauan kembali can
generally take anything from two to five years.

Execution of a judgment
In order that a final and binding court judgment may be executed, the party in whose
favour judgment is given must apply to the Chairman of the court of first instance for
execution of such judgment. The district court upon receipt of the execution order will,
within a period of time, which is entirely within the discretion of the court, call the
party against whom judgment is given to fulfil the obligations in the judgment, at the
latest within eight days thereof. If that party still fails to comply, the Chairman of the
court may issue a written order to attach (secure) the property of that party (moveables
as well as immoveables), the value of which, according to his or her evaluation, will be
adequate to fulfil the judgment debt and the execution fee. The sale of property must
be carried out by the State Auction Office. The above process may take up to one year
to complete. Problems may arise if there are third-party claimants to such property who
wish to contest the execution. Although such objections to executing do not in law
postpone the execution, in practice the execution will inevitably be delayed.

iii Class actions

Class action cases are common in Indonesia. Several laws in Indonesia have also
specifically endorsed the possibility of submitting class action petitions to the general
civil court of the first instance.16
The basic requirements and general procedures for submitting class action
petitions are regulated in Indonesian Supreme Court Regulation No. 1 of 2002, dated
26 April 2002 regarding the Procedures for Class Action (‘SC Regulation No. 1/2002’).

16 These stipulations, among others, are clearly set forth in the law of consumer protection,
environmental law, telecommunication law and water law, etc.

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The following are some important general requirements and procedures in submitting
the class action petition in Indonesia:
a Any class action petition may be filed if: the number of class members is so large
that it is ineffective and inefficient to make an individual claim; there are common
questions of fact or situation and common questions of law that are substantial,
and there are same claims among class representatives and their class members;
and a class representative must fairly and seriously protect the interests of the
represented members (adequacy of representation).
b In a preliminary hearing, a judge must hear and consider whether the above
criteria of the class action petition have been fulfilled or not. If the petition has
complied with the above criteria, through a court order the judge will certify
the validity of the class action and order the plaintiff to submit a draft of the
proposed model of a notice for the judges’ approval. If the judges determine that
the petition is not valid or has not complied with the above criteria, the judges
will discontinue the proceedings by issuing a court judgment.
c To represent the legal interests of class members, class representatives shall not be
required to have a special power of attorney from the class members.
d The general civil procedural laws will generally be applicable in class action court
proceedings, while some lex specialis or specific requirements need to be observed,
as set forth in SC Regulation No. 1/2002.
e The presiding judges may recommend a class representative to replace a lawyer
if the lawyer has performed acts against an obligation to defend and protect the
interests of the class members.
f The procedures for serving notice to class members may be made through media,
government officers or directly served to the class members, and this notice must
be served promptly after the judges have declared that the class action petition
is valid, and at the stage of the settlement and distribution of damages when the
claim is granted by the court.
g The notice must also provide the mechanism of opt-outs (i.e., the right of a class
member within a period of time to have the chance to opt out from the class
membership by submitting a specific form as provided in the attachment of SC
Regulation No. 1/2002). A class member who has stated to opt out shall not be
legally bound by any judgment of the class action case concerned.
h If there exist ‘overlapping class action cases on a similar matter’, pursuant to
which the same class action petitions have been lodged in several district courts by
the different plaintiffs, but representing the same class members, the Indonesian
Supreme Court as the highest court in Indonesia must make a judgment to merge
these several class actions and to determine which plaintiffs have the quality,
capability and credibility to continue in representing the class members in this
class action case.

iv Representation in proceedings
Parties to a dispute may directly appear in the court or be represented by their licensed
lawyers (licensed advocates). The Indonesian civil procedural laws do not oblige the
parties to appoint lawyers in representing their interest in the legal proceedings. The

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disputed parties may appoint a law firm that in the relevant case can be represented by
one or more lawyers or appoint an individual licensed lawyer (advocate). All lawyers
representing the disputed parties must obtain a licence from the relevant bar association
before they are allowed to appear before the courts. It is a common practice that at the
first hearing, the presiding judges will examine the licence of the lawyers appointed in
the relevant case.

v Service out of the jurisdiction

If one of the defendants is a non-Indonesian national (i.e., either a non-Indonesian natural
person or legal entity) and such party resides outwith the Indonesian jurisdiction, the
Indonesian court will effectuate the service of notice to such non-Indonesian nationals
by requesting the assistance of the Ministry of Foreign Affairs to effectuate the service
of notice. Upon receipt of this request, the Ministry of Foreign Affairs will delegate this
matter and request the nearest Indonesian embassy where the non-Indonesian national
is resided to effectuate the service of notice.
On the other hand, if any foreign court document needs to be served to Indonesian
nationals who are residing in the territory of Indonesia, based on the Indonesian civil
procedural laws, the service of such foreign court document must be made by the court
bailiffs or messengers appointed by the relevant court in whose jurisdiction the document
is served. This mode of service applies to both local and foreign court documents to be
effectuated to Indonesian nationals resident in Indonesia.
In relation to this service of notice, please note that Indonesia is not a party to
the Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil
or Commercial Matters 1969, or any other convention relating to the service of foreign
process, other than a bilateral agreement with Thailand.17
Therefore, if the notice of the foreign court document will be served in Indonesia
by way of regular communication without complying with the above requirement under
the Indonesian civil procedural laws, any such purported service shall not be valid and
not in accordance with Indonesian law.

vi Enforcement of foreign judgments

In choosing the foreign court as the forum for settling commercial disputes in Indonesia,
please note that Indonesia is not a party to any multilateral or bilateral treaty with other
countries for the reciprocal enforcement of judgments. In the absence of an applicable
bilateral or multilateral treaty, a judgment rendered by a foreign court shall not be
enforced in Indonesia.
In addition to the above, the Indonesian civil procedural laws, especially Article
436 of the Regulation on Civil Procedures (RV), stipulates that a foreign judgment
cannot be executed in the territory of Indonesia. Therefore, as a general rule, foreign

17 The Convention 1969 applies in all cases, in civil or commercial matters, where there is occasion
to transmit a judicial or extrajudicial document for service abroad, and it is stipulated that each
contracting state shall be free to effect service of judicial documents upon persons abroad,
without application of any compulsion, directly through its diplomatic or consular agents.

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judgments are not enforceable in Indonesia. The only single exception to this general rule
will be further discussed below.
Article 436 of the Regulation on Civil Procedures stipulates as follows:
Apart from the events mentioned in article 724 of the Commercial Code and in other legal
stipulations, no sentences that have been passed by foreign judges or courts may be executed within
Indonesia. (AB.34; ISR.159; K.568J, 658, 711, 724; Rv.440; F.2-6º; IR. 224; RBg.258;
Cons.7; Pr.546.). The lawsuits may be handled and settled anew by the judge in Indonesia.

Article 724 of the Indonesian Commercial Code as referred to in the above article relates
to the calculation of damages arising from carriage of goods by sea.18 It is therefore clear
based on the above that, other than the foreign judgment in relation to the calculation
and division of general damages in relation to carriage of goods by sea, as a single
exception, other foreign judgments cannot be enforced in Indonesia.
A party who has obtained a favourable foreign judgment is still required to
file suit (re-litigate) against its Indonesian counterpart before an Indonesian court.
The Indonesian courts are not bound by the judgments rendered by foreign courts.
Nevertheless, in practice and under certain circumstances, the judgment of a foreign
court can be used in Indonesia court as a supplementary documentation only (non-
conclusive evidence) on the matter that has been decided by the foreign court. In the
recent case of JP Morgan v. PT Kalbe Farma,19 which was registered in the District Court
of Central Jakarta (‘DCCJ’), the presiding judges of the DCCJ rejected the submission
of a decision of an English court to be enforced in Indonesia. This decision followed the
previous jurisprudence as set forth in Supreme Court Decision No. 2944K/Pdt/1983,
dated 29 November 1984.
Notwithstanding the above, in practice, the choosing of the foreign court is only
recommended if secured assets (including cash deposits) belonging to the Indonesian
counterparts are located or placed in the foreign country, or there exists a bona fide
guarantor (corporate or individual), such as foreign nationals who reside outside of the
Indonesian jurisdiction. If there exists no arbitration clause and the assets to be recovered
are located in Indonesia or the relevant defendant is an Indonesian national, the plaintiff
should consider the use of the Indonesian courts to pursue the matters.

18 Article 724 of the Indonesian Commercial Code stipulates as follows: ‘Calculation and division
of general damages is based upon a request by the shipmaster and experts. The experts are
appointed by parties or by a judge within its legal territory upon which such calculation and
division must be drawn up. The experts must be sworn-in prior to the execution of their duties.
The division must be legalised by a judge within its jurisdiction. Outside the territory of
Indonesia, the general damages are drawn up by the relevant competent foreign authority’.
19 89/PDT/G/2009/PN.JKT.PST.

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vii Assistance to foreign courts

To the best of our knowledge, Indonesia has only entered into a bilateral agreement with
Thailand on judicial cooperation (‘the Bilateral Judicial Cooperation Agreement’).20 The
Bilateral Judicial Cooperation Agreement basically stipulates judicial cooperation and the
procedures for submitting court documents and obtaining documents from the relevant
authorities of each country. However, it clearly stipulates that the implementation of
judicial cooperation between the two countries under this bilateral treaty will be subject
to and must honour the national laws of each country. Other than the Bilateral Judicial
Cooperation Agreement, the Indonesian courts may give no general assistance to foreign
courts.

viii Access to court files

Since the independence of Indonesia to date, there has been no comprehensive and
systematic reporting of lower court decisions and binding court judgments in Indonesia.
This is primarily due to the restrictive access in the past to the court files. The result of
all this is that the court decisions have not been interpreted in a detailed fashion so as to
allow a thorough examination of the merits of any one individual case.
This situation might change in the future, since in 2007 the Indonesian Supreme
Court issued Decision No. 144/KMA/SK/VIII/2007, dated 28 August 2007, on the
Disclosure of Information in Court (‘Decision No. 144/2007’). Based on this, any
party other than the disputed parties may request any information or a copy of court
documents to the Supreme Court, particularly in relation to the final and binding court
judgment, information on the stage of the case and data statistics of the cases.

ix Litigation funding
No specific stipulation under the laws of Indonesia exists on this particular matter. Based
on Advocate Law No. 18 of 2003 and the Indonesian Lawyers Code of Ethics 2002, the
parties are free to agree on the legal fee to be paid by the client to its lawyers (freedom of
contract). This agreement for the provision of the legal fees can be made either verbally
or in writing.
It is not uncommon in practice that the litigation funding be facilitated by a
disinterested third party. However, there are no specific circumstances or prohibitions on
concluding funding for litigation cases. The Advocate Law of 2003 only requires that the
amount of the legal fee must be agreed based on the fairness principle, which means that
the determination of the legal fees should consider the risk, time, capability and interest
of the client. Article 4 of the Indonesian Lawyers Code of Ethics 2002 only stipulates
that in determining the legal fee, lawyers must consider the client’s ability to pay, and
lawyers cannot impose unnecessary expenses on their clients.

20 An Agreement on Judicial Co-operation between the Republic of Indonesia and the Kingdom
of Thailand, dated 8 March 1978, which has been ratified by the Indonesian government based
on Presidential Decree No. 6 of 1978.

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Iv LEGAL PRACTICE

i Conflicts of interest and Chinese walls

The Indonesian Lawyers Code of Ethics 2002, particularly in Article 4, contains the
general provisions on conflicts of interest. Generally, lawyers may not represent the
interest of more than one party if such interests are in conflict or if there is real chance
of such conflict. However, this rule does not prevent lawyers from acting for two or
more clients if the clients share a common or similar interest. A lawyer who represents
the interests of more than one party with conflicts of interest must withdraw from the
relevant case.
As a general rule, a lawyer is prohibited to act against a former or existing
client of his or her own or of a colleague within the same firm. In practice, conflicts of
interest cannot be merely avoided by creating an artificial administrative separation of
representation of interests and the relevant files or ‘Chinese walls’. An exception to this
rule applies if the new client, and the former or existing client, both have given prior
written consent to the said lawyer to represent both parties in this conflicting matter, on
the basis of proper information being supplied to them. This mostly applies in relation
to commercial transactions rather than in litigation cases.
The conflict of interest case has been tested in Indonesian legal practice. One
famous conflict of interest case relates to Todung Mulya Lubis, an Indonesian lawyer
(‘TML’). He had been reported to the Indonesian Advocates Association (‘Peradi’) and as
a result, Peradi issued its final decision to revoke permanently his practising or advocate
licence due to his serious violation of the Indonesian Advocate Code of Ethics relating to
matters of conflicts of interest.21
After TML’s practising licence was permanently revoked by Peradi, he was then
involved in the establishment of a new Indonesian bar association, namely the Congress
of Indonesian Advocates (‘KAI’), and was appointed as the vice president of KAI. TML’s
conflict of interest case was re-examined by KAI, and this new bar association imposed a
sanction to suspend his advocate licence for one month and 15 days only.22 Recently, the
Supreme Court has issued its ruling that the Supreme Court does not acknowledge the
existence of KAI, and therefore only advocates registered with Peradi are valid advocates
in Indonesia.

ii Money laundering, proceeds of crime and funds related to terrorism

Any money laundering and other related activities (including protection against dealing
in the proceeds of crime or funds related to terrorism) are strictly prohibited under
the Money Laundering Act of 2002, as amended. Any person who violates the Money
Laundering Act of 2002, including lawyers in their capacity as the attorney dealing

21 A decision of Peradi No. 036/Peradi/DKD/DKI-Jakarta/Putusan/V/08, dated 16 May 2008.

This matter was also widely published in the Indonesian newspapers. Peradi was initially formed
as a single Indonesian bar association and the sole self-regulatory body governing all advocates
in Indonesia under the Indonesian Advocate Act of 2003.
22 A decision of KAI No. 01/MK-DK KAI/XII/2008, dated 3 December 2008.

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with these criminal transactions, may be subject to a general criminal sanction of

imprisonment for a minimum of five years and a maximum of 15 years, and a fine of at
least 100 million rupiahs and at most 15 million rupiahs. However, no specific provision
or decree in the prevailing laws in Indonesia specifically regulates the responsibility of
lawyers to eradicate these criminal activities.
The growth in money laundering activities and terrorism financing using financial
institutions requires concrete action to eradicate these criminal activities. The diversity
of products, activities and information technology available in the commercial sector has
resulted in an increase in the use of commercial banks, financial service providers, money
changer and money transfer companies for such activities. In an attempt to prevent such
activities, the prevailing Indonesian laws stipulate specific responsibilities for commercial
banks, financial service providers and money changer and money transfer companies
to eradicate money laundering criminal activities or to protect against dealing in the
proceeds of crime or funds related to terrorism.

V DOCUMENTS AND THE PROTECTION OF PRIVILEGE

i Privilege
Based on the applicable laws in Indonesia, the relationship between the client and its
advocate is subject to and specifically protected by Law No. 18 Year 2003 regarding
Advocates (‘the Indonesian Advocate Act’).
As to the files and documents, and particularly documents and files submitted
by the advocate (lawyer) in the legal proceedings, the Indonesian Advocate Act has
guaranteed the strict confidentiality over the files and documents related to a case that
is being handled by the advocate for the interest of the client (‘attorney-privileged
documents’). This matter inter alia is stipulated in Article 19 (2) of the Indonesian
Advocate Act, which states as follows: ‘An advocate is entitled to confidentiality over
his/her relationship with his/her client, including protection on the files and documents
against seizure or investigation; and protection against any acts of taping on any electronic
communication made by the advocate.’
It is clear that the Indonesian Advocate Act itself guarantees that the attorney-
privileged documents shall be excluded from any disclosure in any legal proceedings. The
Indonesian Advocate Act has also guaranteed that the attorney-privileged documents
must be free from any attempt to seize, examine, investigate or tape them in whatsoever
manner.
No provision under Indonesia’s laws that gives privilege applies to in-house lawyers’
documents. However, if the in-house lawyer has a licence to practice as an advocate in
Indonesia, the said in-house lawyer advocate can have privilege and protection under the
Indonesian Advocate Act on his or her documents by mentioning that, as the in-house
lawyer, he or she is acting as the Indonesian advocate.

ii Production of documents
Indonesian procedural law follows the tradition of a civil law system, and it does not
commonly acknowledge the disclosure of documents and other disclosure or discovery.
There is no mechanism to enforce any order relating to disclosure or discovery in the

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Indonesian courts. As a matter of practice, if a party requests the disclosure of documents

by the other party, and the other party refuses to disclose such documents, the presiding
judges may draw whatever inference they deem appropriate from such non-disclosure.
The general rules on evidence of civil procedure could be found in the Indonesian
Civil Procedure Law and Article 1866 up to and including Article 1993 of the Civil Code.
Indonesian courts hold a strong preference for original evidence and documentation,
but authenticated duplicates are acceptable. Article 1866 of the Civil Code and Article
164 of the HIR define that evidence consists of written evidence (including electronic
information or document – based on Law No. 11 of 2008 regarding Information and
Electronic Transaction), testimony of witnesses, inference, acknowledgements and oath.
Indonesian law distinguishes between authentic written evidence and privately made
written documents. Authentic written evidence in the form as prescribed by the laws
and made before the government official is considered as the strongest evidence (prima
facie evidence). Affidavits sworn outside Indonesia must be notarised and legalised by the
appropriate embassy or consulate for the documents to be recognised in the Indonesian
courts.
Indonesian judges play an active role in relation to the examination of evidence
and have the discretion to call for or reject direct or expert testimony. Their wide
discretionary powers also provide for refusal of evidence as they see appropriate and
individual interpretation of evidence and arguments presented. Therefore, the ability
to require testimony and the production of documents and to examine the witnesses is
entirely within the court’s discretion.
There is no procedure for compelling the opposite side to present facts or
documents reflecting examination outside the court hearings.
As explained earlier, the court retains no verbatim transcript. The clerk takes notes
of the testimony and of any cross-examination that takes place. Frequently, these notes
are incomplete and inaccurate, particularly if the subject matter is technical and new to
the appointed clerk. This record forms the basis of the court’s decision on factual matters.
Copies are not made available to counsel either during the trial or at the appellate stage.
Although counsel may review and has access to such records at the clerk’s office, neither
counsel nor the party to the action may officially take copies.
New evidence may be presented on appeal to a High Court; however, this practice
is not generally permitted in the Supreme Court, although the Court has the discretion
to admit new evidence in the interests of justice.

Vi ALTERNATIVES TO LITIGATION

i Overview of alternatives to litigation

Since litigation in Indonesia is mostly still a time-consuming exercise, and there is
relatively little certainty as to the likely outcome of the case, arbitration as one of the
alternatives to litigation is currently in the process of becoming the preferred method
for settling commercial disputes in Indonesia. This is also driven by the enactment of
Law No. 30 Year 1999 on Arbitration and Alternative Dispute Resolution (‘Indonesian
Arbitration Law of 1999’). Mostly in all complex and cross-border types of the transaction

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documents, it is common that the parties will stipulate the arbitration clause as the
proper forum to settle any possible future dispute arising out of such agreements.
The following advantages may be the reasons why many business people tend to
choose arbitration proceedings rather than a formal court proceeding in Indonesia:
a since the arbitrator will mostly be an expert in the area and familiar with the issue
in dispute, the parties may have more confidence as to the likely outcome of the
case;
b privacy is also one of the important factors in the arbitration proceedings, since
the proceeding is closed to the public, and the award is presented only to the
limited parties;
c in arbitration proceedings, the parties can choose the English language as a
governing language for the whole process of the proceedings;
d appeal or judicial review of an arbitration award is limited and therefore there
may be assurance of certainty and finality; and
e the choice of arbitration enables the parties to give predictability and certainty as
to the dispute settlement process and the parties can choose that the award will
be based on the principle of equity (ex aequo et bono), although in some instances
this creates inconsistency in deciding the same case.

ii Arbitration
The basic provisions relating to the arbitration in Indonesia are set out in Law No. 30 of
1999 dated 12 August 1999 (‘the Indonesian Arbitration Law’), and the law stipulates
that an agreement to arbitrate must be made in writing either before or after the dispute
arises. The parties to the contracts are free to determine the applicable procedural rules in
a written arbitration clause before the dispute arises; or a separate arbitration agreement
after the dispute has arisen. Not only an individual person but also a government body
or a state-owned company in Indonesia could be a party to the arbitration agreement.
Through the Presidential Decree No. 34 of 1981, dated 5 August 1981, Indonesia ratified
the New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards 1958.23
In addition to the above, Indonesia also signed and ratified (as the 27th Member
State) the Washington Convention on the Settlement of Investment Disputes Between
States and Nationals of Other States (1965) (‘the ICSID Convention’).24 In the bilateral
sphere, Indonesia until 2005 had entered into 24 bilateral investment treaties (‘BITs’)
with several countries. The arbitration mechanism under the ICSID Convention has

23 Following this ratification and before the enactment of the Indonesian Arbitration Law, the
Supreme Court issued Regulation No. 1 of 1990 regarding the ‘Procedures for the Enforcement
of Foreign Arbitral Awards’.
24 The ICSID Convention was signed on 16 February 1968, ratified on 28 September 1968 and
entered into force in Indonesia on 28 October 1968. One of the landmark cases involving
Indonesia through the ICSID arbitration tribunal was AMCO ASIA Corp, PAN American
Development Ltd, and PT. AMCO Indonesia v. the Republic of Indonesia. The case took almost
12 years: it was registered on 21 February 1981 and resolved on 17 December 1992.

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mostly been stipulated in these BITs. No standard terms or model languages have been
adopted in the BITs to which Indonesian is a party. However, the BITs mostly contain
similar provisions in promoting and protecting investment bilaterally.
The Indonesian Arbitration Law stipulates that only disputes that are commercial
in nature or those concerning rights that, according to the laws and regulations, are
fully under the control of the parties in dispute may be settled through arbitration. In
addition, disputes that, according to Indonesian laws, cannot be settled amicably, cannot
be submitted to arbitration. In practice, disputes that cannot be submitted to arbitration
are, among others: criminal cases; industrial relationship cases; administrative cases;
bankruptcy cases; and other related family matters (divorce and adoption).
In general, litigation in Indonesia is mostly still an expensive and very time-
consuming exercise, and there is relatively little certainty as to the likely outcome of the
case in the litigation process. Arbitration as an alternative to litigation is becoming the
preferred method for settling commercial disputes. Many contracts between Indonesian
nationals have used the local arbitration institution, Badan Arbitrase Nasional Indonesia
(‘BANI’) as the proper forum to settle their disputes. In cross-border contracts, it
is not uncommon that the parties (including Indonesian nationals as a party to the
contract) will choose the Singapore International Arbitration Centre (‘SIAC’), ICC or
UNCITRAL as the arbitration institution to settle their disputes.
Under Indonesian law, international arbitral awards will only be recognised and
may only be enforced within the jurisdiction of Indonesia if they fulfil the following
requirements:
a the foreign arbitral award is rendered by an arbitration body or an individual
arbitrator in a country that is bilaterally bound to Indonesia or jointly with
Indonesia to an international convention regarding the recognition and
enforcement of foreign arbitration awards. The enforcement thereof is based on
the principle of reciprocity;
b the foreign arbitral awards are only limited to awards that, according to Indonesian
law, fall within the definition of commercial law;
c the foreign arbitral awards are not in contravention of public order under
Indonesian law;
d the foreign arbitral awards may be enforced in Indonesia only after the Central
Jakarta District Court has issued an order of execution (exequatur);
e if the Republic of Indonesia is a party to the foreign arbitration award, this award
may be enforced in Indonesia only after the Supreme Court of the Republic of
Indonesia has issued an exequatur; and
f the application for the enforcement of the foreign arbitral awards must be
accompanied by:
• the original or duplicate of the foreign arbitration award, authenticated
pursuant to the provisions regarding authentication of foreign documents,
and an official translation thereof, pursuant to the legal provisions in force in
Indonesia;
• the original or duplicate of the agreement, as the basis for the foreign
arbitration award, authenticated in accordance with the provisions regarding
authentication of foreign documents, and the official translation thereof,
pursuant to legal provisions in force in Indonesia; and

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• a statement from the Indonesian diplomatic representative in the country

where the foreign arbitration award was rendered, stating that such country
is bilaterally bound to Indonesia or jointly bound with Indonesia in an
international convention regarding the recognition and enforcement of a
foreign arbitration award.

The Indonesian Arbitration Law clearly stipulates that arbitral awards shall be a final,
binding and enforceable decision against the parties, therefore there is no possibility to
appeal an arbitration award. If one of the parties refuses to enforce the domestic arbitral
award, the enforcement would be implemented based on the order of the Chairman of
the district court based on the request of one of the disputed parties. The decision of
the Chairman to reject or accept the application for the execution of the arbitral award
cannot be appealed. The enforcement of a foreign (international) arbitral award relating
to legal persons in Indonesia (other than the government of Indonesia) can only be
implemented after having obtained an exequatur issued by the Central District Court
of Jakarta. The granting of the exequatur by the Central District Court of Jakarta is not
subject to an appeal. However, if the Central District Court of Jakarta refuses to issue the
exequatur, this rejection is subject to an appeal to the Supreme Court. The enforcement
of a foreign arbitral award in which the Republic of Indonesia is a party can only be
implemented in Indonesia after having an exequatur from the Supreme Court of the
Republic of Indonesia, and this is not subject to an appeal.
The Indonesian Arbitration Law stipulates that, in the event that the parties
have agreed that disputes between them will be settled through arbitration and the
parties have given the authorisation, the arbitrator is competent to rule on his or her
own jurisdiction, and the Indonesian courts do not have the jurisdiction to adjudicate
a dispute where the parties to the contract are bound to an arbitration agreement, since
any arbitration agreement concluded in writing by the parties will preclude any right
of the parties in the future to submit the dispute to the district court. Therefore, the
Indonesian courts must reject, and should not be involved in, any dispute agreed to be
under the arbitration proceedings.
Although the above non-involvement of the Indonesian courts in arbitration
matters is clearly stipulated in the Indonesian Arbitration Law, legal practice in Indonesia
shows that some jurisprudence decided by the Supreme Court has justified the non-
applicability of the arbitration awards. This is particularly so if the cases are not related
to the breach of contract of agreements per se, but relating to tort or illegal actions. In
these cases, the plaintiffs have proved that the cases are relating to the tort claim, which
are outside the applicability of the arbitration agreements agreed by the parties. The
plaintiffs have argued that arbitration agreements only cover any disputes arising out of
the implementation or breach of contract of the agreements between the parties. One
recent case in this matter related to Lippo Group v. Astro Group, as explained supra in
Section II.
Since the enforcement of the international arbitration awards in Indonesia will
require an exequatur from the Chairman of the DCCJ, in practice, this has created much
‘room’ for the disputed party to avoid the enforcement of the arbitration awards by
requesting an annulment or refusal of the awards through the Chairman of the DCCJ.

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A lot of cases have shown that the Chairman of the DCCJ has refused and annulled the
international arbitration awards.

iii Mediation and other forms of alternative dispute resolution

The Indonesian Arbitration Law of 1999 acknowledges mediation, conciliation and
expert determination as other alternative dispute resolution forms for litigation. However,
this Law focused its stipulations on the arbitration issue in great detail; only one article
stipulates mediation and expert determination issues.
Other than the court mediation as discussed previously, a private mediation is
currently being introduced in Indonesian legal practice. However, a private mediation
will only be relevant and applicable to solve any dispute in relation to family law matters
(particularly in divorce cases). Under the Indonesian Arbitration Law of 1999, both
disputed parties can make a written agreement to appoint an expert or mediator to
solve their dispute. The mediation process must be solved within 30 days in the form
of a written agreement that is a final and binding agreement on the parties and must be
registered in the relevant district court no later than 30 days after the signing of such
agreement. If no agreement results from this mediation process, both parties can agree
to settle the dispute through an arbitration proceeding, or either party may pursue the
litigation process against another party.
Expert determination is still not generally used in practice. This alternative
dispute mechanism will only be relevant and used in practice if the transaction at
hand is in relation to a specific, technical and complex transaction that needs an expert
determination to decide any possible dispute arising out of this specific transaction.

ViI OUTLOOK AND CONCLUSIONS

The rule of law and the reliability of the judicial system, including the Indonesian court
system, are still developing and are far from a clear system. When contemplating legal
proceedings in Indonesia, the following factors should be taken into account:
a execution of any judgment in Indonesia is often cumbersome and problematic.
The old Dutch civil procedural rules and regulations, despite their obsolescence,
still apply in practice;
b there are many factors that may inevitably lead to some element of uncertainty for
any litigation process and there is relatively little certainty as to the likely outcome
of a case; and
c litigation in Indonesia is a relatively expensive and time-consuming process, and
much of the cost that the disputing party will incur may not be automatically
recoverable from the other party.

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about the authors

Pheo M Hutabarat
Hutabarat Halim & Rekan
Mr Hutabarat is the founder and managing partner of Hutabarat Halim & Rekan, and
he is the chairman of the commercial dispute resolution practice group within the firm.
He has, over the years, represented various domestic and international clients in complex
commercial litigation and arbitration proceedings.
Mr Hutabarat has been acknowledged in the area of practice of commercial
dispute resolution by the Asia Pacific Legal 500 for three consecutive years since 2006
and is regarded as one of the leading individuals in Indonesia in dispute resolution.
Mr Hutabarat is a member of: the Association of Indonesian Advocates (Peradi)
and has a licence to practice as an advocate in Indonesia; the Indonesian Association of
Capital Market Legal Consultants and has a licence as a capital market legal consultant;
the INSOL International; the International Bar Association; and the Inter-Pacific Bar
Association. He has also been a guest speaker at various seminars and conferences in both
domestic and international forums.

Hutabarat Halim & Rekan

Wisma 46 – Kota BNI, 34th Floor
Jl. Jend. Sudirman Kav. 1
Jakarta 10220
Indonesia
Tel: +62 21 574 9820
Fax: +62 21 574 9821
pheo.hutabarat@hnrlawyers.com
hnr.jkt@hnrlawyers.com
www.hnrlawyers.com

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