The Petitioner’s legal counsel Aji Setiadi (left) at the ruling hearing for the judicial review of Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution, Friday (1/3/2025). Photo by MKRI.

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JAKARTA (MKRI) — The Constitutional Court (MK) rejected the judicial review petition of Article 67 and Article 68 paragraphs (1) and (2) of Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution (Arbitration Law or AAPS Law) against the 1945 Constitution petitioned by PT Tanjung Bersinar Cemerlang. The verdict of Decision No. 131/PUU-XXII/2024 was read by Chief Justice Suhartoyo at the ruling hearing on Friday, January 3, 2025. “[The Court] ruled to reject the petition for its entirety,” he announced.

The Court holds that in the context of legal provisions applicable in Indonesia, the judicial institution authorized to handle issues of recognition and enforcement of international arbitration is the Central Jakarta District Court (vide Article 65 of Law No. 30 of 1999). Furthermore, according to Article 66 of the AAPS Law, an international arbitration award is only recognized and can be enforced in the jurisdiction of the Republic of Indonesia if it meets five criteria.

First, the international arbitration award is rendered by an arbitrator or arbitration panel in a country which is bound to the Republic of Indonesia by a bilateral or multilateral treaty on the recognition and enforcement of international arbitration awards. Second, the international arbitration awards as referred to in the first condition are limited to those included within the scope of commercial law under Indonesian law.

Third, the international arbitration awards as referred to in the first criterion, which may only be enforced in Indonesia, are limited to those which do not conflict with public order. Fourth, an international arbitration award may be enforced in Indonesia after obtaining a writ of execution from the chief judge of the Central Jakarta District Court.

Lastly, an international arbitration award, as referred to in the first condition, in which the Republic of Indonesia is one of the parties to the dispute, may only be enforced after obtaining a writ of execution from the Supreme Court of the Republic of Indonesia, which is then delegated to the Central Jakarta District Court for execution.

“Application for enforcement of an international arbitration award shall be made after the award is submitted for registration by the arbitrator or the legal representative to the chief registrar of the Central Jakarta District Court. To honor the applicable international conventions, the submission of documents to the award, among others, must be accompanied by a certification from the diplomatic representative of the Republic of Indonesia in the country in which the award was rendered, which states that the country is bound by a treaty,” said Justice M. Guntur Hamzah.

The award recognized and enforced by the chief judge of the Central Jakarta District Court cannot be appealed (vide Article 68 paragraph (1) of Law No. 30 of 1999). An appeal may be filed with the Supreme Court against a decision of the chief judge of the district court who refused to recognise and enforce an international arbitration award.

Justice Guntur elaborated that there would be legal uncertainty if the execution respondent is allowed to further appeal after a request for the execution of an international arbitration award is granted. In essence, such an appeal is due to a breach committed by one of the parties, which in this case is the execution respondent.

“Therefore, if an execution respondent does not accept an award ruled by an international arbitration institution on the basis of an evidence found after said award, the execution respondent may file a request for withdrawal of the award before the execution application is filed,” he explained.

“If one does not attempt to file a request for withdrawal, then one can not simply disregard the international arbitration award,” he continued.

Justice Guntur elaborated that if the execution respondent could appeal after an execution application is granted, it would leave room for subsequent or new disputes. Such practice is in clear violation of the principle litis finiri oportet, which means that all proceedings must end.

In addition to the legal considerations, the Court views that for every execution application that is awarded, the execution of said international arbitration award must be followed based on the execution procedure referring to the applicable civil procedural law.

“Based on the legal considerations, the Petitioner’s argument that the phrase ‘cannot be appealed or cassated’ in Article 68 paragraph (1) of Law No. 30 of 1999 is in conflict with the 1945 Constitution and not legally binding if not interpreted as “can be appealed or cassated” due to the discrimination that only execution applicant may appeal in the case of rejected execution application is rejected is, the Court holds, legally groundless,” Justice Guntur asserted.

Also read:

Coal Export Company Challenges Arbitration Law on International Dispute

Expecting to Lose International Arbitration Dispute Case, Coal Exporter Revises Petition

PT Tanjung Bersinar Cemerlang (Petitioner) might likely lose its international arbitration case, thus could immediately suffer constitutional impairment. The trial was to take place in Kuala Lumpur, Malaysia in October 2024.

The coal export company’s executive director Eric Kurniadi revealed that the company has suffered constitutional impairment due to the enforcement of the a quo articles on international arbitration disputes. It was working out a dispute with a foreign company through the Singapore International Arbitration Centre (SIAC).

In an arbitration dispute at SIAC, the claimant may win or lose. If they win, they will be able to apply for recognition, enforcement, and execution of the SIAC arbitration award in the country of the counterpart’s domicile or wherever the counterpart has assets. This is possible because arbitral awards rendered in a country can in principle be recognized and enforced in all other countries that have ratified or acceded to the 1958 New York Convention, currently around 172 countries including Indonesia.

Similarly, if the claimant loses the dispute at the SIAC, the SIAC arbitral award in question, which is an international arbitral award for Indonesia, will be able to be recognized, enforced, and executed in Indonesia against the claimant. In Indonesia, the recognition and enforcement of international arbitral awards are regulated in Articles 65 to 69 of Law No. 30 of 1999.

Author            : Nawir Arsyad Akbar
Editor            : Lulu Anjarsari P.
PR                 : Raisa Ayuditha Marsaulina
Translator       : M. Hafidh Al Mukmin/Yuniar Widiastuti (NL)

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.

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