Misconception over foreign arbitral awards in Indonesia

Indonesia has been a signatory to the New York Convention (1958 UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards) since 1981. Nonetheless, the question of whether it is possible to enforce a foreign-rendered award in Indonesia seems to come up with surprising frequency, both in various conferences and in enquiries from offshore lawyers and clients, to most of the firms active in dispute resolution in this jurisdiction. Why the misconception?

In fact it was not until 1990 that the necessary regulation was promulgated to facilitate enforcement of foreign awards. Before then, enforcement of arbitral awards was handled in the same manner as enforcement of final and binding court judgments. Both arbitration and civil litigation were regulated under the mid-19th century Dutch Code of Civil Procedure, Reglement op de Rechtsvordering (generally known as the RV), which, along with other Dutch procedural laws, had been adopted by Indonesia upon its independence in 1945.

Under the RV, registration and application for enforcement of domestic awards was to be made to the District Court (Pengadilan Negeri) in the district in which the award was rendered. Thus, it was assumed that an award rendered outside the boundaries of Indonesia, and thus not within the jurisdiction of any District Court, could not be registered or enforced. Furthermore, article 463 of the RV provides that, except for general average awards, judgments of foreign courts cannot be enforced in Indonesia at all. Therefore, prior to ratification of the New York Convention and issuance of Supreme Court regulation No. 1 of 1990, an attempt to enforce a foreign-rendered award in Indonesia would usually prove futile.

KAREN MILLS is a chartered arbitrator and international legal consultant with KarimSyah Law Firm in Jakarta