As cross-border business transactions continue to expand, international arbitration remains the preferred mechanism for resolving commercial disputes. For foreign investors, particularly those from China whose commercial engagements in Indonesia continue to grow, the enforceability of arbitration awards is a crucial element of legal certainty. Although Indonesia is generally pro-enforcement, challenges may still arise once a foreign arbitral award is brought to Indonesia for recognition and execution.

Regulatory Framework for Enforcement in Indonesia

Indonesia’s enforcement regime for foreign arbitral awards is grounded in the following instruments:

1. Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution
2. Supreme Court Regulation (PERMA) No. 1 of 1990 on the Enforcement of Foreign Arbitral Awards
3. The 1958 New York Convention, to which Indonesia is a signatory
4. General Indonesian civil procedure rules, applied only where relevant

Under this framework, foreign arbitral awards may be enforced through the Central Jakarta District Court, subject to final approval (exequatur) by the Chairman of the Supreme Court.

When Can Enforcement Be Challenged?

Indonesia adopts the exhaustive list of grounds under Article V of the New York Convention, codified into Article 66 of the Indonesian Arbitration Law. This means that a losing party (“award debtor”) may not challenge an award on the merits, but only under narrowly defined procedural or jurisdictional reasons.

Key Grounds for Challenge

Several grounds of opportunities open for challenges involve the following act:

1. Invalid or non-existent arbitration agreement
2. Lack of due process, including improper notice or inability to present one’s case
3. Tribunal composition or procedure inconsistent with the parties’ agreement
4. Award exceeds the scope of the arbitration submission
5. Award is not final or has been annulled/set aside at the seat of arbitration
6. Subject matter is not arbitrable under Indonesian law
7. Enforcement violates Indonesian public policy

In practice, public policy is the most frequently invoked ground and also the most unpredictable, making early legal assessment essential.

Challenging the Registration of a Foreign Award

Before an award can be enforced, it must be registered with the Central Jakarta District Court. At this stage, an award debtor may attempt to block or delay registration by raising procedural objections, including:

1. Incomplete or improperly certified supporting documents
2. Defects in authentication or translation of the award
3. Questions regarding whether the decision qualifies as a “foreign arbitral award”
4. Allegations that the award is not final or binding

While procedural in nature, these objections can prolong the enforcement timeline if not promptly addressed by the award creditor.

Challenging Enforcement (Exequatur Stage)

Once registration is accepted, the award creditor must apply for an exequatur. At this stage, the debtor may reiterate objections based on:

1. New York Convention Article V grounds
2. Procedural irregularities during registration
3. Claims that enforcement violates Indonesian public policy

Importantly, the decision of the Indonesian courts at this stage is final and cannot be appealed. This underscores the need for strategic preparation before filing for enforcement.

Indonesia maintains a pro-enforcement stance toward foreign arbitral awards in line with its commitments under the New York Convention. However, procedural irregularities or public-policy objections may still disrupt or delay enforcement efforts. With Indonesia’s continued growth as a major investment destination, ensuring enforceability of arbitration awards remains integral to safeguarding commercial interests.

If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.

Author:
Budhi Satya Makmur