This country-specific Q&A provides an overview of Litigation that may occur in Indonesia.
This Q&A is part of the global guide to Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/litigation-second-edition/
Published June 2019
What are the main methods of resolving commercial disputes in your jurisdiction?
The main methods of resolving commercial disputes in Indonesia are:
a. litigation; and
b. alternative dispute resolution, including but not limited to, arbitration proceeding.
a. Litigation through civil courts
There are 4 types of courts in Indonesia: (a) general courts, (b) military courts, (c) administrative courts, and (d) religious courts. Each type of court has its own separate jurisdiction. General commercial disputes fall under the jurisdiction of the general courts, except for commercial disputes relating to a Sharia transaction, which must be brought before the religious courts based on the Constitutional Court Decision Number 93/PUU-X/2012.
Indonesian law also established the commercial court to handle commercial disputes relating to insolvency and bankruptcy issues.
b. Alternative dispute resolution (e.g. arbitration)
Other than the above, Law Number 30 of 1999 also recognizes the following means of alternative dispute resolution:
- binding opinion.
Please note that alternative dispute resolution is subject to an agreement between the disputing parties. As such, the decision resulting from alternative dispute resolution has absolute authority and – theoretically speaking – is not subject to any court’s jurisdiction.
What are the main procedural rules governing commercial litigation?
The procedure for a commercial dispute that is brought before a court is generally governed by Herziend Indonesisch Reglement, - “HIR”. Please note that if the dispute concerns certain commercial matters governed under a particular regulation, the procedural rules of the commercial dispute will follow the procedure provided in such regulation.
In addition to the above, if both parties agreed to resolve a dispute before an arbitration tribunal, the procedural rules governing the arbitration are the rules of the agreed arbitration institution. In the event that both parties agreed to resolve a dispute before an ad-hoc arbitration, both parties must determine which procedural rules would apply in such proceeding.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
The general courts are divided into 3 levels. The court of the first instance is the District Court. The District Court’s decision may be appealed to the High Court and in turn, the High Court’s decision may be appealed to the Supreme Court. The Supreme Court’s decision is called a cassation judgment. These stages are defined as ordinary legal remedies. In addition, the law also empowers the Supreme Court to adjudicate an extraordinary legal remedy, namely a judicial review.
The grounds to file a judicial review lies on extraordinary circumstances, e.g. inter alia the finding of a new evidence that was not available before the issuance of a cassation judgment. In this regard, to ensure legal certainty for the winning party, the cassation judgment is considered as a final and binding judgment. Hence, the judicial review process will not hinder the execution of the cassation judgment. Nevertheless, if the judicial review process results in a different judgment, the cassation judgment will be overruled by the restitution from the remedies obtained.
How long does it typically take from commencing proceedings to get to trial?
In practice, the registration of a case up to the first day of hearing will take between 2 weeks to 1 month. Please note that if the defendant is domiciled outside of the jurisdiction of the Republic of Indonesia, the court will allow 3 months between the summon and the hearing.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
Generally, all court hearings are open to the public, except if the law prohibits the hearings from being accessible to the public e.g. sexual harassment cases, family cases, child criminal cases, and decency cases.
The only publicly accessible documents are the court’s decisions, which are published in the court’s website. Other court briefs, such as claims, responses, replies, rejoinders, evidence and concluding statements are generally not available to the public, unless a relevant party submits a formal request to view such brief and access will only be given based on the discretion of the chairman of the relevant court.
In light of the above, from the Case Tracking System (“SIPP”) developed by the Supreme Court, the public may access brief information of any submitted, ongoing, or completed case from all courts within the jurisdiction of the Supreme Courts. One of the information published in the SIPP is the name of plaintiff and defendant as well as the prayer of relief from the lawsuit.
As for arbitration proceeding, please note that Law Number 30 of 1999 on Arbitration and Alternative Dispute Resolution states that an arbitration proceeding is private and confidential. Hence, all documentation relating to an arbitration proceeding will not be accessible to the public.
What, if any, are the relevant limitation periods in your jurisdiction?
Under Article 1967 of the Indonesian Civil Code, the right to submit any claim, both material and individual claims, will expire after 30 years. The law does not specify when this period will start, but in practice, it will start when the right to make the claim first arises.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
In terms of a civil claim, under Article 1238 of the Indonesian Civil Code, a defaulting party must first be declared to be in default. This will become the norm for the court in considering if both parties have attempted to amicably settle the dispute. To ensure that the parties have exhausted an amicable settlement, the Supreme Court has issued Regulation Number 1 of 2016 on In-Court Mediation, which obliges the disputing parties to mediate before proceeding into trial. The parties are given a minimum 30 days for mediation. If the mediation fails, the case will then proceed to the examination of the case.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
The first hearing commences with the summoning of the disputing parties by the court bailiff appointed for the case. The procedure for a proper summon is regulated under Articles 122 to 127 of the HIR. Service is necessary and this is done by the court or its authorized agent.
First, the court bailiff will summon the plaintiff for the first hearing. If the plaintiff fails to attend the first hearing, the presiding judge will request the bailiff to re-summon the plaintiff. A maximum of 3 summons will be attempted by the court. If the plaintiff still fails to attend the claim will be declared as inadmissible. In such case, the plaintiff has the right to re-submit the claim once after paying the fees of the unattended court hearings. Similarly, the same mechanism will be applied to the defendant. If the defendant fails to attend the first hearing, the court may decide the claim and issue an ex parte decision, which may be challenged by the defendant by requesting a retrial of the case.
How does the court determine whether it has jurisdiction over a claim?
Under Article 10 of Law Number 48 of 2009 on Judicial Power, the court is prohibited from denying adjudication of a case. However, the court’s jurisdiction may be challenged based on certain grounds.
The Indonesian law recognizes 2 types of judicial jurisdiction:
a. absolute jurisdiction; and
b. relative jurisdiction.
Absolute jurisdiction is a classification of authority based on forums. For example, a violation of a military conduct by military personnel is to be adjudicated by the military court. Under such circumstances, if the claim is filed to a general court or religious court, the claim will be declared as inadmissible. To invoke absolute jurisdiction, Article 134 of the HIR stipulates that the presiding judges must initiatively declare that they are incompetent to adjudicate the case at any stage of the proceeding.
Different from absolute jurisdiction, a challenge against relative jurisdiction refers to jurisdiction based on territory. For example, if a claim is supposed to be filed in the South Jakarta District Court but is instead filed in the West Jakarta District Court, the defendant may challenge the relative jurisdiction of the South Jakarta District Court. Please note that this challenge can only be submitted with the defendant’s response towards the claim.
How does the court determine what law will apply to the claims?
The hierarchy of the source of law is regulated by Article 7 of Law Number 12 of 2011 on Formulation of Legislation, which ranks the precedence of Indonesian legislation as follows:
a. the 1945 Constitution;
b. a decision of the People’s Consultative Assembly;
c. a law or a government regulation in replacement of the law;
d. a government regulation;
e. a presidential regulation;
f. a provincial government regulation; and
g. a regional government regulation.
Cases are argued based on the aforesaid sources of the law. The validity of the argument will depend on whether the plaintiff can defend and prove their argument with evidence.
In what circumstances, if any, can claims be disposed of without a full trial?
In a civil proceeding, a case may be disposed of without a full trial if the parties reach a settlement and concludes a deed of settlement prior to the issuance of the court’s decision.
What, if any, are the main types of interim remedies available in your jurisdiction?
Indonesian law acknowledges the following interim decisions:
a. uit voerbaar bij voorraad or an immediate decision requesting that the district court’s decision be executed despite an appeal or a challenge against the decision by one of the disputing parties;
b. provisional measures requesting for security, usually over the defendant’s assets, to ensure payment of compensation; and
c. for administrative courts, withheld enforcement of a government stipulation during the process of an administrative claim.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
Once a claim is commenced, the first step is the first hearing, where the court will check the identity of the disputing parties and determine the mediator for court-annexed mediation.
The subsequent steps are detailed in the illustration below:
Each of the box above represents a hearing scheduled for the stated agenda. Practically speaking, each hearing is usually 2 weeks apart. Consequently, in general, the first hearing until the issuance of a decision will take approximately 5 months.
The documents to be submitted in a civil court proceeding are:
a. a claim (from the plaintiff);
b. a demurrer and response (from the defendant);
c. a reply (from the plaintiff);
d. a rejoinder (from the defendant);
e. an evidence/witness’ statement/expert’s opinion (from the plaintiff);
f. anevidence/witness’ statement/expert’s opinion (from the defendant); and
g. a concluding statement (from both parties).
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
Indonesian law does not recognize a discovery process or the obligation to disclose certain documents.
How is witness evidence dealt with in commercial litigation in your jurisdiction (and in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
While Indonesian law does not recognize depositions, it does, however, recognizes affidavits and witnesses’ statements. According to Article 1866 of the Indonesian Civil Code, the following documents are acknowledged as evidence:
a. a written document;
b. a witness;
c. an inference;
d. a confession; and
e. an oath.
In relation to witnesses, their affidavits will be regarded as both written documents and witness since affidavits are, in principle, written statements of the witness. However, they may also be presented in a court proceeding to provide an oral statement under oath. There is no written rule regarding cross-examination.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert’s opinion is recognized by the court as an acceptable evidence. A written affidavit from an expert, just like a witness’s written statement, is recognized as a written document. The disputing parties can appoint anyone who they consider as an expert and whose statement will help to support their argument. However, Article 154 of the HIR also empowers the court to summon their own expert.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
According to Article 9 of Law Number 20 of 1947 on Appeal, an interim decision may only be appealed together with a final decision. The only exception to this rule will be an appeal against an interim decision in relation to the absolute jurisdiction of a court. An interim decision on the court’s absolute jurisdiction is considered as a final decision.
What are the rules governing enforcement of foreign judgments in your jurisdiction?
Please be advised that Indonesian law does not recognize, nor will it enforce a foreign court’s judgment in its jurisdiction. The only way to execute a foreign judgment in Indonesia is to use the foreign decision as a legal basis/evidence of a new claim filed before an Indonesian court.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
Pursuant to Article 181 of the HIR, the losing party to a decision will bear the costs and fees incurred for the court proceeding. However, please note that Article 379 of the HIR limits the types of fee that can be recovered from the losing party and fees incurred for instructing lawyers, experts and other professionals are not recoverable. This is because the appointment of lawyers, experts and/or professionals as representatives of a party is not mandatory in nature.
What, if any, are the collective redress (e.g. class action) mechanisms in your jurisdiction?
In Indonesia, a class action is regulated by the Supreme Court Regulation Number 1 of 2002 on Class Action Claim. A class action is represented by an appointed proxy of the class members. The prerequisites to file a class action are regulated under Article 2 of the said regulation whereby:
a. the number of the members will make the claim ineffective and inefficient if the claims are submitted individually or even severally;
b. the claims have the same factual backgrounds and legal grounds;
c. the class representative is honest and sincere in defending the legal interests of the class members; and
d. the presiding judge may suggest to the class representative that the lawyer be changed if the lawyer acts in contrary to the obligation to defend and protect the legal interest of the class members.
What, if any, are the mechanism for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings in your jurisdiction?
The involvement of a third party into an ongoing case differs depending on the context of the third party’s involvement. In a civil case, an intervention is one of the means for a third party to participate in an ongoing case as one of the parties. This is based on the ground that the intervention applicant has a valid legal interest to the merits of the case.
In particular, the Indonesian civil procedural law acknowledges 3 forms of intervention
a. Voeging: a voluntary intervention where the interested party has sided with either the plaintiff or the defendant;
b. Tussenkomst: a voluntary intervention without siding with either of the disputing parties and internvetion is based only on the ground that the third party’s interests are affected; and
c. Vrijwaring: a requested intervention by one of the disputing parties to support their arguments.
According to Articles 279 to 282 of the Reglement op de Rechtsvordering (“RV”), an intervention is petitioned by a party who claims to have an interest in the merits of an ongoing case. The petition will be decided through an interlocutory injunction by the presiding judge. If the injunction approves the petition, the intervening party can then participate as a party to the dispute.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Indonesian law does not recognize third-party funders.
What is the main advantage and the main disadvantage of litigating international commercial disputes in your jurisdiction?
As a signatory to the New York Convention, it is beneficial to pursue litigation through arbitration in Indonesia for its universal enforceability. By attempting to settle an international commercial dispute in an arbitration in Indonesia, the rendered award can be enforced in multiple jurisdictions. On the other hand, there are a few disadvantages in resolving an international commercial dispute in Indonesia. The disadvantages are, among others: non-execution of a foreign judgment in the Indonesian court as mentioned earlier and the non-enforceability of a foreign arbitral award if the award contradicts with Indonesian public policies.
One of the arguments that many uses to challenge the enforceability of a foreign arbitral award is that the underlying contract from which the dispute arises is written in a foreign language, despite the involvement of an Indonesian party in the contract. Many international commercial contracts involving an Indonesian party used a foreign language as the language of the contract (English/Chinese/etc.). However, under Law Number 24 of 2009 on Flag, Language, State Symbol and National Anthem (Language Law), a memorandum, agreement or contract that involves any Indonesian government institution, Indonesian private entity or Indonesian citizen must use the Indonesian language. The absence of Indonesian language may be a ground for a party to nullify the contract based on violation of the Language Law.
What is the most likely growth area for disputes in your jurisdiction for the next 5 years?
We expect to see the continuous growth of small claim cases (cases seeking compensation of less than IDR 200,000,000 (two hundred million Rupiah).
We are also of the view that disputes over land and construction projects will rise in the next 5 years as a result of infrastructure growth in Indonesia.
Will be the impact of technology on commercial litigation in your jurisdiction in the next 5 years?
From the blueprint of judicial reform for 2010 - 2025 published by the Supreme Court, in the next 5 years, the Supreme Court will modernize the public service and cases management to an electronic-based system. By 2035, the Supreme Court envisions to have an online adjudication and a single login system for advocates. This system has been introduced last year but has not been effectively implemented yet.
It is a feasible vision as in the recent years, there have been many technological developments introduced by the Supreme Court, which maximize the use of technology to simplify the judicial system.