Obtaining a winning award from an arbitral tribunal is gratifying, but it does not automatically translate into payment of any damages awarded from the losing party. In the absence of voluntary compliance with the award, the winning party will be forced to proceed with the enforcement of the award by using the court of the country where the assets of the losing party are located. This article gives an overview of how to enforce foreign or international arbitral award in Indonesia.
A. Regulatory Framework
There are several applicable laws and regulations with regard to the recognition and enforcement on foreign arbitral award, namely:
- Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution (“Arbitration Law”);
- 1958 UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) as ratified by Indonesian under Presidential Decree No. 34 of 1981;
- Supreme Court Regulation No. 1 of 1990 concerning Procedure for the Enforcement of Foreign Arbitral Awards (“SC Regulation No. 1/1990”)
B. Foreign Arbitral Awards
Foreign arbitral award or international arbitration award is defined as award handed down by an arbitration institution or individual arbitrator(s) outside the jurisdiction of the Republic of Indonesia, or awards of an arbitration institution or individual arbitrator(s) which under the provisions of Indonesian laws are deemed to be international arbitration award. From the definition of foreign arbitral award given by Arbitration Law and SC Regulation No. 1/1990, it should be clear that Indonesian laws adopt the territorial position on the characterization of arbitrations, i.e., whether it is domestic or foreign/international arbitral awards. This position seems to be in line with the provision of Article 1 of the New York Convention which states that the New York Convention shall apply to arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such
awards are sought.
C. Enforcement Procedures
Under the Arbitration Law, the District Court of Central Jakarta is the only court that has jurisdiction to handle matters of the recognition and enforcement of foreign arbitral awards in Indonesia.
Foreign arbitral awards may only be recognized and enforced within the jurisdiction of the Republic of Indonesia, if the awards fulfill the following requirements:
- The foreign arbitral awards must be rendered by an arbitrator or arbitration tribunal in a country which together with the Republic of Indonesia is a party to a bilateral or multilateral treaty on the recognition and enforcement of foreign arbitral awards;
- The foreign arbitral awards are limited to awards, which under Indonesian laws, fall within the scope of commercial law;
- The foreign arbitral awards do not contravene with public order;
- The foreign arbitral awards are enforceable after obtaining an order of “exequatur” from the Chairman of Central Jakarta District Court. If the Foreign Arbitral Award is involving the Republic of Indonesia as a party to the dispute, the award is enforceable only after obtaining an order of “exequatur” from the Supreme Court of the Republic of Indonesia, which order is then delegated to the Central Jakarta District Court.
Registration of Foreign Arbitral Awards
The first step in enforcement of foreign arbitral awards in Indonesia is to register the awards with the District Court of Central Jakarta. There is no time limit for registration of the foreign arbitral awards at the District Court of Central Jakarta.
The application for registration shall enclose the following documents:
- The original or certified copy of the award with an official translation of the award into Indonesian language;
- The original or certified copy of the agreement which become the basis of the award with an official translation into Indonesian language;
- A statement from the Indonesian diplomatic mission in the jurisdiction in which the award was rendered that such country and the Republic of Indonesia are bound by a bilateral or multilateral treaty on recognition and enforcement of foreign arbitral awards.
Upon registration of the foreign arbitral awards, the District Court of Central Jakarta shall issue Deed of Registration of International Arbitration Awards.
It is important to note that the registration must be carried out by the arbitrator/tribunal or by their proxy, and not by the parties themselves. For this purpose, the arbitrator/tribunal must provide a power of attorney or authorization to the proxy to register the awards at the Central Jakarta District Court.
In practice, the registration of the foreign arbitral awards by the arbitrator/tribunal may create an issue for arbitrators who are not familiar with the Arbitration Law. We have seen arbitrator/tribunal that refuses to register the awards or to provide a power of attorney or authorization for the registration of the awards on the reason that their duty have already completed at the time of the issuance of the awards. Hence, this requirement can give rise to delay in the registration process as it may take some time to explain and convince the arbitrators that the registration by the arbitrators/tribunal is required under the Arbitration Law. It is advisable therefore to obtain a power of attorney from the arbitrator/tribunal in advance of any award so that registration can be immediately processed.
Petition for Order of Exequatur
Following to the registration of foreign arbitral awards, the successful party must then apply for an order of exequatur to the District Court of Central Jakarta. The petition shall also enclose the same documents attached in the application for the registration of the awards as well as copy of the Deed of Registration of International Arbitration Award and power of attorney from the successful party to their proxy authorizing the latter to file the petition of order of exequatur.
The District Court of Central Jakarta shall thereafter issue an order of exequatur and will send the order of exequatur to both the successful party and the losing party. A refusal of the District Court of Central Jakarta to grant the petition for an Order of Exequatur can be appealed to the Supreme Court, but no appeal is available against the granting of an order of exequatur issued by the District Court of Central Jakarta. The Supreme Court has to render its decision not more than 90 days after the appeal is received.
Further Enforcement Process
With the issuance of order of exequatur, the successful party can further process with the enforcement of foreign arbitral awards. If the losing party or its assets are domiciled or located outside the jurisdiction of Central Jakarta District Court, further enforcement process will be done by the appropriate court, i.e., the court having jurisdiction over the domicile of the losing party or its asset.
The successful party may in this respect file a request to the appropriate court to issue an aanmaning (warning/reminder) to the losing party to comply with the foreign arbitral awards. If the awards is still not satisfied by the losing party, the successful party can apply for an attachment order over the assets of the losing party. Such assets can be then sold by way of a public auction and the proceeds thereof will be used to satisfy the awards.
In our experience, the enforcement process as set out above shall take some time to complete. But, it is interesting to note that, contrary to many belief, the record of former Chairperson of Central Jakarta District Court indicates that only a small number of enforcement application being rejected.