Courts' assistance in the constitution of a tribunal
The Arbitration Law (Article 13) stipulates the courts' roles in the appointment of arbitrator(s) when (i) the parties cannot reach agreement on the choice of arbitrators, or no terms have been established concerning the appointment of arbitrators, or (ii) in an ad-hoc arbitration, the parties disagree on the appointment of one or more arbitrators. The Arbitration Law (Article 23) further provides that challenges against the appointment of an arbitrator made by the Chairman of a District Court must be submitted to the same court.
The Supreme Court regulation provides further details on the mechanism for making requests to a District Court to appoint arbitrators and to challenge appointments made by the court. Most notably, the regulation requires the court to issue a decree appointing arbitrators within 14 calendar days after receiving a request. A 14-calendar day timeline also applies for submission of any challenges against the appointment of an arbitrator made by the court (the timeline starts from the issuance of the court's decree) and for the court to issue a decision (from the receipt of submission).
All these provisions are intended to apply in the specific circumstances set out above and should not supersede the rules of arbitration (institutional or ad-hoc) providing certain autonomous or alternative mechanisms for appointments of arbitrators and challenges against the appointment of arbitrators, to which the parties have bound themselves.
Courts to assist in the enforcement of conservatory attachment awards
The Arbitration Law authorizes tribunals to order interim measures, including conservatory attachment awards, during the course of arbitration proceedings. However, there are no written guidelines/procedures that courts can follow in administering requests to enforce interim measures where the assistance of the courts is required. As a result, courts are typically reluctant to assist in the enforcement process. Under Indonesian law, if enforced, a conservatory attachment freezes ownership of assets until a final award is obtained, mitigating frustration of the enforcement of the final award/judgment by the losing party.
The Supreme Court regulation now clarifies that courts are to assist in the enforcement of conservatory attachment awards. Article 29 of the regulation provides that conservatory attachment awards should be registered by the tribunal at the relevant court, following which a party may submit a request to the court to enforce the award. It is not very clear if after the conservatory attachment award is registered at the court, the petitioner needs a declaration from the court that the award is enforceable (in the same way as a final award does) before the court proceeds with the subsequent process of placing attachment over the relevant assets.
There is no express timeline stipulated in the Supreme Court regulation for these processes of registration and enforcement of conservatory attachment awards. The regulation is also silent on whether the provision applies for conservatory attachment awards rendered by arbitration tribunals seated overseas. It is also noteworthy that other types of interim measures that according to the Arbitration Law may be awarded by arbitral tribunals in arbitration proceedings are not mentioned in the regulation.
Enforcement of awards is now anticipated to be faster and more predictable
The regulation introduces new policies of the Supreme Court to make the process of enforcing foreign and domestic arbitral awards faster and more predictable.
- Registration of foreign awards
There is no timeline provided under the Arbitration Law to submit applications to courts to register foreign awards. The Supreme Court officially states now that the 30-day timeline under the Arbitration Law to register domestic awards (as of the award date) does not apply to foreign awards, meaning there is no statutory timeline to register foreign awards. In addition, the Supreme Court requires a faster processing time for courts to register foreign awards, i.e., 14 days after submission of a complete request, compared to the 30-day timeline for domestic awards. Another new procedural matter stipulated by the regulation is that for foreign proceedings administered by tribunals appointed by arbitral institutions, registration must be applied for by the board of the institutions or its proxy.
- Enforcement of foreign and domestic awards
To supplement the Arbitration Law provision requiring writ of execution for domestic awards to be issued within 30 days, the regulation requires court orders granting (or refusing) exequatur over foreign awards to be issued within 14 calendar days after submission of a complete request. Submissions to seek partial enforcement of awards are now expressly allowed.
The regulation provides that if there is a petition to a court to annul an award, which petition must be filed no later than 30 days after the award is registered at the court, any ongoing enforcement process must be suspended to allow the petition to be heard and decided first. The court should resume the enforcement process forthwith following a court decision at the first instance level dismissing the petition or otherwise declaring the petition inadmissible. Note that while no express reference is provided in the regulation, Supreme Court precedents have recognized that annulment of awards under the Arbitration Law only applies to domestic awards. And by virtue of the 1958 New York Convention, which was ratified through Presidential Decree No. 34 of 1981, Indonesian courts do not have jurisdictions to set aside foreign awards.
The regulation also sets out guidelines for panels of judges in administering hearings in court proceedings to annul domestic awards to ensure the decisions are pronounced within 30 days as mandated by the Arbitration Law. It is worth noting that according to the regulation, the 30-day timeline counts from the first hearing, which deviates from the stipulation of the Arbitration Law that the timeline commences on the day the annulment petition is filed to the court. There are no special provisions in the regulation on how the court should manage proceedings involving foreign parties taking into account the additional bureaucracy and timing required in the service of summonses to foreign jurisdictions, which may end up in prolonged court proceedings and may delay the ongoing enforcement processes.
Public policy grounds for refusal of enforcement
Another notable highlight of the Supreme Court regulation is the definition of public policy. In general, the Arbitration Law requires courts to examine the possibility of a public policy violation in granting or refusing to recognize and enforce domestic and foreign arbitral awards ex officio. In this regard, the Supreme Court regulation defines public policy as "everything that constitutes fundamental aspects essentially required in the operation of the legal system, economic system and socio-cultural system of the Indonesian people and nation." A similar definition was previously used in Regulation No. 1 of 1990, which set out procedural guidance for the recognition and enforcement of foreign awards issued by the Supreme Court prior to enactment of the Arbitration Law.
It is interesting to note that the Supreme Court regulation elaborates the methods to be observed by courts in examining the possibility of a public policy violation. Articles 10 and 19 of the regulation provide that the court's examination should take into account the request/arguments of the applicant and the contents of the awards, meaning strictly speaking there is no duty to consider arguments from the counterparty. We do not think that the provision is intended to prevent any filings of objections and requests to refuse enforcement from the parties against whom enforcement is being sought. However, the provisions may imply that the court is under no obligation to first assess or decide on the objections before issuing an exequatur or an order that the award is enforceable, also noting that courts are now required to quickly make an order, i.e., within 14 calendar days (for foreign awards) or 30 calendar days (domestic awards) from submission of a complete request.
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