Applicable Law
· Article 66 (c) of Indonesian Law Number 30 Year 1999 regarding Arbitration and Alternative Dispute Resolutions (“Indonesian Law Number 30 Year 1999”)
“ The execution of foreign arbitral award can only be conducted with an exequatur issued by the Chairman of Central jakarta District Court.”
· The Indonesian Supreme Court Regulation Number 1 Year 1999 regarding the Procedures on the Enforcement of Foreign Arbitral Awards; (“PERMA 1/1999”)
· Presidental Decree Number 34 Year 1981 regarding Indonesia’s accesion to the 1958 New York Convention;(“KEPPRES 34/1991”)
· The 1958 New York Convention on Recognition and Enforcement of International Arbitral Award (“The 1958 New York Convention”).
Analysis
Indonesia’s accesion to the 1958 New York Convention is accomodated through KEPPRES 34/1991. Subsequent to this accession, Indonesian Supreme Court issued PERMA 1/1999 concerning the procedures on the enforcement of foreign arbitral awards. The reason of this issuance is that the existing civil procedural law is deemed insufficient to regulate the matter of execution of foreign arbitral awards.
As a development, Indonesia then enacted the Law Number 30 Year 1999 regarding Arbitration and Alternative Dispute Resolution to govern all substantial and procedural matters concerning arbitration and alternative dispute resolutions. This law basically adopts the previous rules and regulations with a few modifications. These adoptions and modifications are, inter alia :
a. in article 3 (4) of PERMA 1/1999, the award can be enforced if there is an exequatur from the Supreme Court. This is different with the regime of Indonesian Law Number 30 Year 1999 which regulate that the exequatur shall be issued by the Chief of Central Jakarta District Court unless the Republic of Indonesia is involved in the award then exequatur shall be issued only by the Supreme Court.
b. Article 66 of the Indonesian Law Number 30 Year 1999 compiles all registration requirements contained in Article 3 and 4 of PERMA 1/1999.
c. PERMA 1/1999 never specify who should register the award to the Chief of Central Jakarta District Court. This is later regulated by Indonesian Law Number 30 Year 1999 which stated that the registration shall be conducted by arbiter or his/her representative/s.
The execution of arbitral award in
- Registration
Every arbitral award shall be registered by the arbiter or its representative/s in the District Court of Central Jakarta as the authorized court according to the law (Article 65 of Indonesian Law Number 30 Year 1999). Since there is no specific rule regarding the time limit for registration of foreign arbitral award, one can conclude that the time limit is similar with the registration of national arbitral award which is 30 (thirty) days subsequent to the declaration of the award. (Article 59 (1) of Indonesian Law Number 30 Year 1999)
The registration shall be made by providing required documents as follows: (Article 67 (2) of Indonesian Law Number 30 Year 1999)
a. an authentic documents of foreign arbitral award or its authentic copy with its official translation into Bahasa Indonesia;
b. authentic documents of the agreement which the award was based or its authentic copy with its official translation into Bahasa Indonesia;
c. a notification from diplomatic representative of the Republic of Indonesia where the award was made. This notification shall confirm that the State where the award was made is bound by a treaty, both bilateral or multilateral, along with the Republic of Indonesia regarding the recognition and enforcement of foreign arbitral award.
- Execution
After registration, the Chief of Central Jakarta District Court will examine whether the award can be recognized and enforced or not. There are several considerations in this examination, namely: (Article 66 of Indonesian Law Number 30 Year 1999)
a. The Foreign Arbitral Award was adjudged by an arbiter or arbitration board in a State which bound by treaties, both bilateral or multilateral, with the Republic of Indonesia regarding the Recognition and Execution of International Arbitral Award (The 1958 New York Convention);
b. The award is, according to Indonesian law, considered to be within the scope of business law. The term “within the scope of business law” means other activities in the field of trading, banking, finance, investment, industry and intellectual property. (Explanation of Article 66 (b) of Indonesian Law Number 30 Year 1999)
c. The award shall be in conformity with public order.
A mere recognition is not sufficient to enforce the award. Subsequent to the award’s recognition by the Chief of Central Jakarta District Court, he/she will issue an exequatur to grant the execution of the award in Indonesia. (Article 66 (d) of Indonesian Law Number 30 Year 1999) In short, exequatur means an execution order or a title of execution attached to the arbitral award. An exequatur issued by the Chief of Central Jakarta District Court is considered as final and binding. There is no further legal action can be invoked against this exequatur. (Article 68 (1) of Indonesian Law Number 30 Year 1999) However in the event that the Chief of Central Jakarta District Court refuses to issue an exequatur, a party can submit the refusal to the Indonesian Supreme Court for cassation. (Article 68 (2) of Indonesian Law Number 30 Year 1999)
Basically, a further legal action can be brought against the decision of Supreme Court. (Article 23 of the Indonesian Law Number 4 Year 2004 regarding the Judicial Power) However, in the realm of recognition and enforcement of foreign arbital award, there is no further legal action can be invoked against the refusal delivered by Indonesian Supreme Court. This is since the Supreme Court in this stage only examines the formalities of the award, not substantial. In other words, in this stage the Supreme Court does not examine the legal facts (judex factie) but it only examines the formalities set forth in Article 66 of Indonesian Law Number 30 Year 1999. This is in line with article 60 of Indonesian Law Number 30 Year 1999 which recognized that an arbital award is deemed final and binding. Consequently, there is no substantial examination can be conducted towards foreign arbitral award.
Case
The matter of execution of foreign arbitral awards in Indonesia ever occurred in a dispute between Bankers Trust Company and Bankers Trust International PLC (together BT) vs. PT Mayora Indah Tbk. (Mayora). This case is regarding the currency and interest rate swap transactions based on the International Swaps and Derivatives Association (ISDA) Master Agreement dated 25 April 1997. The dispute was adjudged by arbitrators from London in 1999 according to the Rules of the London Court of International Arbitration (“LCIA”). In this dispute, the award rules in favor of BT and further obliges PT. Mayora to pay some amount of money to BT.
Subsequently, PT. Mayora brought this dispute to South Jakarta District Court. The judgment of South Jakarta District Court No. 46/Pdt.G/1999 dated 9 Desember 1999 further rules in favor of PT. Mayora. In the meantime, BT request an exequatur for the award. Nonetheless, The Chief of Central Jakarta District Court refuses to issue an exequatur. (Decree No.001 and 002/Pdt/Arb.Int/1999/PN.JKT.PST juncto 02/Pdt.P/2000/PNJKT.PST, dated 3 February 2000) The reason is since both BT and PT Mayora has an ongoing process of similar dispute in South Jakarta District Court. The Chief stated that in court proceeding, the execution of an award (in this vein, foreign arbitral award) shall be postponed until the judgement by South Jakarta District Court is considered as final and binding. Otherwise, it will be in contravention with civil procedural law.
After this judgment, BT then submitted the refusal of the Chief of Central Jakarta District Court to the Supreme Court for cassation. In this level, the Supreme Court further strengthen the refusal to execution of the award. (The Decision of Supreme Court No. 02K/Ex’r/Arb.Int/Pdt/2000 dated 5 September 2000) The rationale for this refusal is basically similar with the reason declared by the Chief of Central Jakarta District Court that the enforcement of foreign arbitral awards shall be postponed until the judgement by South Jakarta District Court is considered as final and binding. The Supreme Court stated that if otherwise, it will be in contravention with civil procedural law and therefore it also contravenes public order. If the award contravenes the public order, thus an exequatur shall not be issued. (Article 66 (c) of Indonesian Law Number 30 Year 1999) Following the decision of the Supreme Court, which is final and binding, BT has no further legal action can be brought against this refusal.
Conclusion
The procedures of foreign arbitral award’s execution are regulated under civil procedural law. (Article 69 (3) of Indonesian Law Number 30 Year 1999) Under this law, following the issuance of exequatur, the execution of Foreign Arbitral Award subsequently will be transferred to the Chief of any District Court who is relatively authorized to conduct it. (Article 69 (1) of Indonesian Law Number 30 Year 1999; Article 3777 of Het Herziene Indonesisch Reglement (“HIR”); Article 705 of Reglemen voor Buiten gewesten(“RBg”)) For example, the Defendant’s asset is located in North Jakarta therefore the Chief of North Jakarta District Court is authorized to conduct and control the execution. The authorized Chief of District Court will summon a warning (aanmaning) to the defendant and ordering it to voluntarily fulfill its obligation in 8 (eight) days. (Article 196 of HIR/Indonesian Civil Procedural Code; Article 207 of RBg) If subsequent to the time limit the Defendant still has not fulfill its obligation, the Chief of the District Court will order the Defendant’s assets to be confiscated. Bearing in mind that the exequatur also empowers the party to confiscate Defendant’s assets. (Article 69 (2) of Indonesian Law Number 30 Year 1999) This confiscation shall be conducted by a registrar and confiscator supervised by the Chief of the District Court. (Article 60 and 65 the Law Number 2 Year 1986 regarding the General Court; Article 195 (1) of HIR/Indonesian Civil Procedural Code; Article 206 (1) of RBg)
