Strategy to Resist Recognition and Enforcement of Foreign Arbitral Awards in Indonesia
Kenny Wiston
I. EXECUTIVE SUMMARY
Under the New York Convention 1958, to which Indonesia is a contracting state, foreign arbitral awards are generally enforceable across jurisdictions. However, enforcement is not automatic. Indonesian law does not recognize the authority of its courts to annul foreign arbitral awards. Instead, parties may resist recognition and enforcement based on specific legal grounds.
This memorandum outlines:
– The legal framework in Indonesia
– Available grounds to resist enforcement
– Procedural strategy before Indonesian courts
– Practical litigation considerations
II. LEGAL FRAMEWORK IN INDONESIA
Recognition and enforcement of foreign arbitral awards in Indonesia are governed by:
1. Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution
2. Presidential Decree No. 34 of 1981 (ratifying the New York Convention)
Key procedural requirements:
– Registration of the award at the Central Jakarta District Court
– Application for exequatur from the Supreme Court of Indonesia
III. LIMITATION: NO ANNULMENT IN INDONESIA
It is a well-established principle that:
“Indonesian courts do not have jurisdiction to set aside or annul foreign arbitral awards”.
Any attempt to invalidate an award must be brought before the courts of the seat of arbitration. Accordingly, the only viable legal strategy in Indonesia is to oppose recognition and enforcement.
IV. GROUNDS TO RESIST ENFORCEMENT
Indonesia adopts the grounds set out in Article V of the New York Convention.
A. Party-Initiated Grounds
A party may resist enforcement on the following bases:
1. Invalid Arbitration Agreement
The arbitration clause is not valid under applicable law.
2. Violation of Due Process
The resisting party was not given proper notice or opportunity to present its case.
3. Excess of Jurisdiction (Ultra Petita)
The arbitral tribunal exceeded the scope of its authority.
4. Award Not Yet Final and Binding
The award is not yet binding or is subject to ongoing annulment proceedings at the seat.
B. Court-Initiated Grounds (Ex Officio)
Indonesian courts may independently refuse enforcement where:
1. Public Policy Violation
The award contravenes Indonesian public policy (ketertiban umum).
2. Non-Commercial Dispute
The dispute does not fall within the scope of commercial law.
3. Lack of Reciprocity
The award originates from a non-contracting state.
V. INTERPRETATION OF “NOT FINAL AND BINDING”
An arbitral award may be considered not yet final if:
– It is subject to annulment proceedings at the seat of arbitration
– Enforcement has been suspended by a competent authority
– The award is conditional or incomplete
This ground is frequently used to delay enforcement proceedings pending the outcome of annulment actions.
VI. PROCEDURAL STRATEGY IN INDONESIA
Stage 1: Registration Phase (Central Jakarta District Court)
– Challenge formal admissibility
– Raise objections regarding jurisdiction and arbitrability
Stage 2: Exequatur Phase (Supreme Court)
– Submit formal objections to recognition
– Emphasize public policy and due process violations
– Present evidence of pending annulment proceedings
Stage 3: Post-Exequatur Remedies
If exequatur is granted:
– File resistance to execution (verzet)
– Initiate third-party opposition (derden verzet), if applicable
VII. STRATEGIC CONSIDERATIONS
Based on our experience, the most effective defense strategies include:
1. Public Policy Framing
Align arguments with Indonesian legal principles, sovereignty, and economic interests.
2. Parallel Annulment Proceedings
Initiate set-aside proceedings at the seat of arbitration to strengthen Article V(1)(e) arguments.
3. Procedural Fairness Challenges
Demonstrate lack of due process or irregularities in arbitral proceedings.
4. Jurisdictional Attack
Challenge the validity and scope of the arbitration agreement.
VIII. CONCLUSION
While Indonesia maintains a pro-enforcement stance under the New York Convention, enforcement is subject to judicial scrutiny.
Foreign arbitral awards:
– Cannot be annulled in Indonesia
– Can be resisted at the enforcement stage
A well-structured defense strategy—particularly one grounded in public policy, due process, and jurisdictional challenges—can significantly reduce enforcement risk.
