This country-specific Q&A provides an overview to Litigation laws and regulations that may occur in Indonesia.
What are the main methods of resolving commercial disputes?
The methods of resolving commercial disputes in Indonesia are:
b. Dispute resolution, including but not limited to, arbitration.
a. Adjudication through courts
There are 4 types of courts in Indonesia: (a) general courts, (b) military courts, (c) administrative courts, and (d) religious courts. Each type of court has its own separate competence. General commercial disputes fall under the jurisdiction of the general courts. Except the commercial disputes that concern Sharia transaction, they shall be brought before the religious courts based on Indonesia’s Constitutional Court Decision Number 93/PUU-X/2012.
Additionally, Indonesian laws also established the commercial court for commercial disputes related to insolvency and bankruptcy issues.
b. Alternative Dispute Resolution (e.g. Arbitration)
Other than the above, Indonesian Law Number 30 of 1999 also recognizes several means of alternative dispute resolution as follows:
Please note that alternative dispute resolution is subject to agreement between the disputing parties. As such, the decision resulted from alternative dispute resolution has absolute authority and – theoretically speaking – does not subject to any court’s jurisdiction.
What are the main procedural rules governing commercial litigation?
If the commercial disputes are brought before the court, the procedure is governed by the Herziend Indonesisch Reglement, – “HIR”. On the other hand, if the disputes will be resolved through arbitration, parties can mutually designate any arbitral institution to administer the arbitration. The procedural rules will be governed by the rules of the designated institution. However, if an institution or rules are not designated, the rules provided in the Indonesian Arbitration Law may be used as a reference.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
The general courts are organised in 3 levels. The court of first instance is the District Court. The District Court decision may be appealed to the High Court and the decision of the High Court may be appealed to the Supreme Court. The Supreme Court decision is called a cassation judgement. These stages are defined as the ordinary legal remedies. In addition, the laws also empower the Supreme Court to adjudicate an extraordinary legal remedy, namely a judicial review against the cassation decision.
The grounds to file a judicial review lies on extraordinary circumstances, e.g. inter alia the finding of a new evidence that was not available before the issuance of a cassation judgment. In this regard, to ensure legal certainty for the winning party, the cassation judgment is considered as a final and binding judgment. Henceforth, the process of a judicial review will not hinder the execution of the cassation judgment. Nevertheless, if the judicial review process results in a different judgment, the cassation judgment will be overruled with restitution of the remedies obtained.
How long does it typically take from commencing proceedings to get to trial?
Theoretically, the Supreme Court set the following timeframe for commencing proceedings of a case filling for a trial:
In practice, the registration of a case until the first hearing day will take between 2 (two) weeks to 1 (one) month.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
Generally, all court hearings are open to the public. In exception, several types of hearings are prohibited by the law to be accessible by the public e.g. criminal cases, sexual harassment cases, family cases, child criminal cases, and decency cases.
The Law Number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution provides that arbitration proceedings are private and confidential.
On a separate note, the only publicly accessible documents are published in the court websites, i.e. the court decision of the case Other filed documents such as claims, responses, replies, rejoinders, and especially concluding statements are limited to public access unless formally requested by the relevant parties. These documents will be given to the applicant based on the discretion of the Chairman of the District Court.
What, if any, are the relevant limitation periods?
Under Article 1967 of the Indonesian Civil Code, the right to submit all claims, both material claims or individual claims expires after 30 (thirty) years. The law does not specify the beginning of this period, but in practice it starts when the right to make the claim first arises.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
In terms of a civil claim, under Article 1238 of the Indonesian Civil Code, a defaulting party has to, first, be declared as in default. This becomes the norm for the court to consider if both parties have attempted to amicably settle the dispute. To ensure that amicable settlement is exhausted, the Supreme Court further issued a regulation number 1 of 2016 concerning In-Court Mediation which obliges the disputing parties to mediate before proceeding for trial. The parties are given a minimum 30 (thirty) days for the mediation, and if the mediation is declared failed, the case will then proceed to trials.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
The first hearing commences with the summoning of the disputing parties by the court bailiff appointed for the case. What is considered as being properly summoned is regulated under Articles 122 to 127 of the HIR where if the plaintiff has been summoned for the first hearing but failed to attend, the presiding Judge will request the bailiff to re-summon the plaintiff. If after 3 (three) summons, the plaintiff does not attend the proceedings, the submitted claim shall be declared inadmissible. In such case, the plaintiff has the right to re-submit the claim only once more after making payment for the fees of the unattended court hearings. Similarly, if through the same mechanisms, the defendant fails to attend the court proceeding, the court will decide and issue an ex parte decision to which the defendant may challenge by requesting a retrial of the case.
How does the court determine whether it has jurisdiction over a claim?
Under Article 10 of the Law Number 48 of 2009, the court is prohibited to deny adjudication of a case; however, there are issues to challenge the jurisdiction of the court over a certain case. Indonesian laws recognize 2 (two) types of judicial jurisdiction:
a. Absolute jurisdiction; and
b. Relative jurisdiction.
Absolute jurisdiction is a classification of authority that differs in forums. For example, a violation of a military conduct by military personnel is to be adjudicated by the military court. Under such circumstances, if the claim is filed to a general court or religious court, the claim shall be declared inadmissible. To invoke absolute jurisdiction, Article 134 of the HIR stipulates the presiding judges must initiatively declare that they are incompetent to adjudicate the case at any stage of the proceedings.
Different from absolute jurisdiction, challenge against relative jurisdiction refers to the territorial jurisdiction. For example, if the claim is supposedly filed in the South Jakarta District Court but is then filed in the West Jakarta District Court, then the defendant may argue to challenge the relative jurisdiction of the South Jakarta District Court. Please note that this challenge shall only be submitted along with the defendant’s response towards the claim.
How does the court determine what law will apply to the claims?
The hierarchy of the sources of law is regulated by Article 7 of the Law Number 12 of 2011 concerning the Formulation of Legislation as follows:
a. The 1945 Constitution;
b. Decision of the People’s Representatives Assembly;
c. The laws or government regulation in replacement of the laws;
d. Government regulations;
e. Presidential regulations;
f. Provincial government regulations;
g. Regional government regulations.
Cases are argued based on the aforesaid sources of law. The validity of the arguments depends on whether the accusing party can defend and prove against such arguments with evidence.
In what circumstances, if any, can claims be disposed of without a full trial?
In civil proceeding, the case may be resolved prior to full trials if the parties reach a settlement and concludes a deed of settlement prior to the issuance of the court decision.
What, if any, are the main types of interim remedies available?
Indonesian laws acknowledge interim decisions, among others:
a. uit voerbaar bij voorraad or an immediate decision, requesting that the district court decision to be executed although the disputing party submits an appeal or a challenge towards it;
b. provisional measures, requesting for security, usually over the defendant’s assets, to ensure payment of compensation;
c. in administrative courts, interim measure is also recognized to withhold enforcement of a government stipulation while in the process of an administrative claim.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
For your ease of reference, please find below the illustrated timeline for a case trial.
Each box represents a hearing scheduled for the stated agenda. , Each hearing are 2 weeks apart . Consequently, in general the first hearing until the issuance of a decision will take approximately 4 (four) to 5 (five) months.
The documents to be submitted in a civil court proceeding are listed below:
a. Claim (from plaintiff);
b. Demurrer and response (from defendant);
c. Reply (from plaintiff);
d. Rejoinder (from defendant);
e. Evidence/witness statements/experts opinions (from plaintiff);
f. Evidence/witness statements/experts opinions (from defendant);
g. Concluding statements (from both sides).
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
Indonesian laws do not recognize discovery process or the obligation to disclose any documents.
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
Indonesian laws do not recognize depositions; however, affidavits and witnesses’ statements are recognized. According to Article 1866 of the Indonesian Civil Code, below are acknowledged as evidence:
a. Written documents;
d. Confession; and
In relation to witnesses, their affidavits will be used as both written documents and witness since affidavits are in principal written statements of the witness. However, they may also be presented in court proceeding to provide an oral statement under oath. There is no written rule regarding cross-examination.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Experts’ opinions are recognized as one of evidences accepted in courts. Written affidavits from experts, just like witness’s written statements, are recognized as written documents. Parties can appoint whom they consider as an expert and whose statement will help to support their arguments. However, Article 154 of the HIR also empowers the courts to summon their own experts.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
According to Article 9 of the Law Number 20 of 1947 on Appeal, an interim decision may only be appealed together with a final decision. The only exception to this rule will be an appeal against an interim decision in relation to the absolute jurisdiction of a court. An interim decision on the absolute jurisdiction are considered as a final decision.
What are the rules governing enforcement of foreign judgments?
Please be advised that Indonesian Law does not recognize the enforceability of foreign court judgments in its jurisdiction. The only way to execute foreign judgements in Indonesia is to use the foreign decision as a legal basis/evidences of a new claim filed before the Indonesian courts.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
Pursuant to Article 181 of the HIR, the losing party to a decision shall bear the costs and fees incurred for the court proceedings. However, please note that Article 379 of the HIR limits types of fees which are recoverable from the losing party, whereby legal fees incurred when hiring professionals as the legal consultants are not recoverable. This is because appointment of legal consultants, lawyers, and/or professionals as representatives are not mandatory for each party.
What, if any, are the collective redress (e.g. class action) mechanisms?
In Indonesia, a class action is regulated by the Supreme Court Regulation Number 1 year 2002. A class action is represented by an appointed proxy of the class members. The prerequisites to file a class action are regulated under Article 2 of the said regulation where a class action shall fulfil below:
a. The number of the members will make the claim ineffective and inefficient if the claims are submitted individually or even severally;
b. The claims have the same factual backgrounds and the same legal grounds;
c. The class representative is honest and sincere in defending the legal interests of the class members;
d. It is possible for the presiding judges to suggest to the class representative for a change of lawyer if the lawyer act in contrary to the obligation to defend and protect the legal interests of the class members.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
Involvement of a third party into an ongoing case differs depending on the context of the involvement. In civil cases, an intervention is one of the means to participate in an ongoing case as one of the parties. It is based on the ground that the intervention applicant has a valid legal interest to the merits of the case.
In particular, Indonesian civil procedural laws acknowledge 3 (three) forms of intervention elaborated below:
a. Voeging: voluntary intervention where the interested party has sided with either the plaintiff or the defendant
b. Tussenkomst: voluntary intervention without siding with either disputing parties, only on the ground that the party’s interests are affected
c. Vrijwaring: requested intervention by one of the disputing sides whether the plaintiff or the defendant to support their arguments.
According to Articles 279 to 282 of the Reglement op de Rechtsvordering (“RV”), intervention is petitioned by a party who claims interests to the merits of an ongoing case. The petition shall be decided through an interlocutory injunction by the presiding judge. Should the injunction approve the petition, the intervening party can then participate as the party to the dispute.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Indonesian laws do not recognize third-party funders.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
As a signatory to the New York Conventions, it is beneficial to pursue litigation through arbitration in Indonesia for its universal enforceability. By pursuing international commercial disputes before Indonesian arbitration, the rendered awards can be enforced in multiple jurisdictions. On the other hand, there are a few disadvantages to resolve international commercial disputes in Indonesia. The disadvantages involve: non-execution of a foreign judgment through Indonesian courts as aforesaid and non-enforceability of a foreign arbitral award if the award contradicts with Indonesian public policies.
One of the arguments that many use to challenge the enforceability of a foreign arbitral award is that the underlying contract from which the dispute arises from is written in foreign languages while one of the contracting parties is an Indonesian entity. Many international commercial contracts involving Indonesian party used foreign language as the language of the contract (English/Chinese/etc). However, under Indonesia Law Number 24 of 2009 on Flag, Language, State Symbol and National Anthem (Language Law), it is mandatory to use Indonesian language in a memorandum, agreement or contract which involves Indonesian government institutions, Indonesian private entities or Indonesian citizens. The absence of Indonesian language may open the possibility for the opposing party to nullify the contract on the ground that the contract is violating Indonesian Language Law.
What, in your opinion, is the most likely growth area for disputes for the next five years?
We expect to see the continuous growth of small claim cases which claim for compensation under IDR 200,000,000.00 (two hundred million rupiah) as they have been growing over the years now.
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
From the blueprint of judicial reform of the period of 2010 – 2025 published by the Supreme Court, it is shown that in the next 5 years, the Supreme Court will modernize the public services and cases management to electronic based system. By 2035, the Supreme Court envisions to have an online adjudication and a single login system for advocates.
It is a feasible vision as in the recent years there are many technological developments introduced by the Supreme Court which maximize the usage of technology to simplify the judicial system. One of the technologies that was successfully developed by the Supreme Court is the Information Case Searching System (“SIPP”). The SIPP allows a person to search for any submitted, ongoing, or completed case from all courts within the jurisdiction of the Supreme Courts.