Twitter Logo Youtube Circle Icon LinkedIn Icon

Publishing firms

Legal Developments worldwide

ENFORCEMENT OF AN INTERNATIONAL/FOREIGN ARBITRATION AWARD

August 2010 - Litigation & Dispute Resolution. Legal Developments by Makarim & Taira S..

More articles by this firm.

Requirements and Procedures under the Arbitration Law

The requirements and procedures for enforcement of an international/foreign arbitration award in Indonesia are regulated in the Indonesian Arbitration Law (Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolution, particularly Articles 65 to 69). Previously, enforcement of an arbitration award is governed by Supreme Court Regulation Number 1 of 1990. The Arbitration Law does not specifically revoke this Supreme Court regulation. However, as the Arbitration Law now provides greater legal certainty, it is usually assumed that the parties will now enforce arbitration awards under the Arbitration Law.

Under the Arbitration Law, the Central Jakarta District Court is authorized to process enforcement of an international arbitration award in Indonesia, provided that:

1. The award is granted by an arbitrator or a board of arbitrators in a country with which Indonesia is bound by an agreement, either bilateral or multilateral on the confirmation and implementation of a foreign arbitration award (such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the 1958 New York Convention).

2. Enforcement is limited to awards that, under Indonesian laws, are included in the scope of trade/commerce law.

3. The award is not contrary to public policy.

4. A writ of execution (exequatur) of the award has been obtained from the Chairman of the Central Jakarta District Court.

Below are the procedures for executing an international arbitration award in Indonesia.

1. Registration of the award by the Arbiter or Proxy (Deponir).

The first step in enforcement of an international arbitration award is by submitting an application for enforcement to the Central Jakarta District Court. The application is submitted by the arbiter or proxy (Article 67.1 of the Arbitration Law). The registration application must be accompanied by:

a. The original or an authenticated copy of the foreign arbitration award and the agreement to submit the matter to foreign arbitration, including their official Indonesian translations, and

b. An explanation from the diplomatic representative of Indonesia in the country where the foreign arbitration award is awarded which states that the applicant country is bound by an agreement, either bilateral or multilateral, with Indonesia on the confirmation and implementation of foreign arbitration awards.

If the above requirements have been completed, the Registrar of the Central Jakarta District Court will issue a Registration Deed of the award. The Court may reject the registration if part or all of requirements are not completed by the applicant or the Court considers that the award does not meet the requirements in the Arbitration Law. In practice, this deed will usually be issued within approximately one week of submission of the complete application. This deed will become evidence in the next step, ie to obtain the writ of execution (exequatur), as explained in 2. below.

2. Apply for an exequatur to the Central Jakarta District Court.

Application for the writ of execution (exequatur) of an international arbitration award is submitted after the award has been registered with the Central Jakarta District Court and the Registration Deed has been issued. The requirements to submit an application for an exequatur are the same as those for the registration of the award. In practice, the Central Jakarta District Court may first ask for the Registration Deed as explained in 1. above. The Central Jakarta District Court will then issue the Exequatur Order (Penetapan Exequatur).

3. Submit a request to the Central Jakarta District Court to summon the respondent to comply with the Exequatur Order through the Court (Aanmaning Submission).

Having obtained the Exequatur Order, an international arbitration award can be enforced in Indonesia by requesting the Central Jakarta District Court to summon the respondent to comply with the Exequatur Order.

The Central Jakarta District Court will then summon the respondent to appear in court to be officially warned to comply with the arbitration award and the Exequatur Order. If the respondent complies with the award, the case will be closed. However, the respondent may also refuse to directly and voluntarily comply with the award, or to appear in court.

4. Apply for an executorial seizure (executoriale beslag/sita eksekusi) of the respondent's assets in Indonesia to the Central Jakarta District Court

If the respondent denies or refuses to comply with the court's demand as explained above for whatever reasons, the applicant can submit an application to the Central Jakarta District Court to seize the respondent's assets in Indonesia. The applicant must identify all of the respondent's assets, and provide the list of the assets to the Central Jakarta District Court. The court will then issue a Executorial Seizure Order (Penetapan Sita Eksekusi) on the respondent's assets and order the Bailiff to carry out the seizure. If the assets are not located within the jurisdiction of the Central Jakarta District Court, further process will be delegated to the competent court having jurisdiction over the location of the assets.

In practice, it is not uncommon that the respondent will not voluntarily comply with the arbitration award (and the Exequatur Order, once issued). During the enforcement process, the respondent may not be cooperative and may try to prolong or complicate the process. This is a common strategy used by an Indonesian respondent to hold up cases relating to international arbitration award. Indonesia is also not a very efficient jurisdiction. It can be very complex and may take a long time, and often require unofficial fees for undertaking legal work here compared to in other jurisdictions, such as for attending court sessions.

 

Possible Remedy under the Arbitration Law

Below are the possible remedies provided under the Arbitration Law against an international arbitration award that has been registered.

1. Appeal to the Supreme Court.

An appeal to the Supreme Court can be filed only against a decision of the Chairman of the Central Jakarta District Court that refuses to acknowledge and implement an international arbitration award. The Supreme Court must consider and rule on the appeal application within 90 days of receipt of the appeal case. Decision of the Chairman of the Central Jakarta District Court that confirms and implements an international arbitration award cannot be appealed either in the High Court or the Supreme Court.

2. Annulment.

In Indonesia, under Article 70 of the Arbitration Law, an arbitration award that has been registered with the court can be annulled. The annulment request must be made in writing and submitted to the Head of the relevant district court within 30 days of the submission and registration date of the award in the Registrar's office of the relevant district court. Reasons for the annulment are limited and must be proved by a court ruling. The following are the reasons underlying the request for an annulment, which should be evident under a court decision:

  1. After the award has been rendered, the letters or documents submitted for the examination are admitted or declared as false/forged.
  2.  

  3. After the award has been rendered, important decisive documents, which were previously concealed by the opponent, are revealed.
  4.  

  5. The award is rendered on the basis of a fraud committed by either of the disputing parties.

Below is the procedure for submitting a request for the annulment of an arbitration award.

  1. The request should be made in writing and submitted to the Head of the relevant district court within at the latest 30 days of the submission and registration of the arbitration award to the Registrar's office of the relevant district court.
  2.  

  3. The District Court decision on the request is made within no more than 30 days as from receipt of the request. If the request is granted, the Head of the District Court further determines the consequences of the annulment of the whole or part of the award, and can also decide that the same or other arbitrator may re-hear the dispute or that the dispute cannot be settled through arbitration.
  4.  

  5. The District Court decision is open to an appeal (banding) to the Supreme Court. The Supreme Court decides on the appeal as the court of final instance within no more than 30 days as from receipt of the appeal by the Supreme Court.

The time limit for the District Court and the Supreme Court to decide on the request for an annulment and the appeal considerably reduces the time available for any delay in enforcement.

It is actually still being contested whether a district court in Indonesia can annul a foreign arbitration award that has been registered at the court. In the case involving Karaha Bodas Company (KBC), after the international award has been registered with the Central Jakarta District Court, Pertamina asked for an annulment of the award to the Central Jakarta District Court. Upon the request from Pertamina, the court then cancelled the international arbitration award rendered in Geneva, because, among other things, the award was contrary to public policy in Indonesia. However, the Supreme Court overturned the Court ruling on the basis that the cancellation should have been requested to the competent court in the Switzerland.

 

www.makarim.com)


Authors:

Rahayu Ningsih Hoed (Rahayu.Hoed@makarim.com) is a Partner and Alexandra Gerungan (Alexandra.Gerungan@makarim.com).is a Senior Associate with the Indonesian law firm of Makarim & Taira S.