Enforcement of International Arbitral Award in Asia in Indonesia’s Perspective
Meriam Webster dictionary defines arbitration as the hearing and determination of a case in controversy by an arbiter. Arbitration is one of dispute resolution that is conducted by agreement between the parties. As we all know, Asia region exactly play an important role in the world trade. On the other hand, there are large numbers of disputes which today arise in connection with international trade and business related to Asian transactions and involves even larger numbers of Asian parties. Based on this fact, arbitration is needed to play an increasingly important role in business sector.
Arbitration in Indonesia dates back to the mid-19th century conducted by the Dutch Code Civil Procedure, Burgelijke Reglemet of de Rechtsvordering (RV) coupled with the general freedom of contract provisions in the Indonesian Civil Code. Before Indonesia ratified the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention), enforcement of any arbitral award had been handled in the same way as enforcement of a final and binding court judgment. However, since Article 463 of the RV provides that, except for general average awards, judgments of foreign courts can’t be enforced in Indonesia, it had previously been assumed that the same applied to foreign-rendered arbitration awards and thus these could not be enforced in Indonesia.
The courts in Indonesia are reluctant to enforce foreign-rendered awards, even though that position violated the provisions in New York Convention. It is stipulated in the Article III of the New York Convention that every contracting state must recognize and enforce awards rendered in other contracting states without imposing substantially more onerous conditions than are imposed upon recognition or enforcement of domestic awards. Then the Supreme Court Regulation no. 1 of 1990 emerged and set out the implementing regulations for enforcement of arbitral awards rendered in a country which, together with Indonesia, is a party to an international convention regarding implementation of foreign arbitral awards.
On 12 August 1990, Indonesian promulgated its new Arbitration Law. This New Law effect immediately upon promulgation and rescinded and superseded Article 615-651 of the RV, those covering Arbitration. Although the new Law does not also specifically rescind the provisions of Supreme Court Regulation 1 1990, a law is superior to a regulation I the legal hierarchy and thus to the extent two are inconsistent to the provisions of the New Law will prevail.
From the explanation above we can conclude that there are several discomposure between the convention which has already ratified and the national law that regulate about arbitration. The arbitration decision which should be final and binding based on the convention still must be justified by the court in Indonesia. Because of this condition, there are many disputes that find it hard to enforce the arbitration award in Indonesia.
The case between Bankers Trust Company & Banker Trust International vs. PT. Jakarta International Hotels and Development, tbk, and Bankers Trust Company & Banker Trust International vs. Pt. Mayora Indah, is about the first applications for exequatur under new legislation have brought further embarrassment for Indonesia’s reputation in the world because of arbitration. The enforcement of international awards have been rejected by the court since the promulgation of the new law in this case. These case had actually been arbitrated, and the awards rendered, prior to August 1999 but, as they had not been enforced by such time, subjected to the new law with respect enforcement.
