In October 2023, the Indonesian Supreme Court (“MA”) issued the latest implementing regulation relating to arbitration, namely Supreme Court Regulation Number 3 Year 2023 concerning Procedures for Appointment of Arbitrators by the Court, Rights to Challenge, Examination of Applications for Enforcement and Annulment of Arbitral Awards (“SC Regulation 3/2023“).
The SC Regulation 3/2023 is a derivative regulation or implementing regulation for The Law Number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution (“Arbitration and ADR Law“) which has been effective for more than two decades and has not undergone substantive changes. For this reason, along with the development of legal practices and changes in the situations of arbitration dispute resolution, especially on the scope and authority of the court, arbitration procedures, implementation of awards, and annulment of the awards, there are matters that shall be elaborated from SC Regulation 3/2023, as follows:
I. Scope and Authorities of the Court
a. Court Jurisdiction (Article 2 of SC Regulation 3/2023) In this regard, an application for annulment or enforcement of arbitral award may be submitted through in two courts jurisdictions, namely the District Court for an arbitral award, and the Religious Court/Sharia Court for a sharia arbitral award.
b. Post Issuance of an Arbitral Award in The Court (Article 3 of SC Regulation 3/2023)
Post issuance of an arbitral award, the Civil Clerk Official at the District Court shall be authorized to accept the registration of applications for enforcement or annulment of arbitral awards, where the application for annulment shall be examined by a tribunal of judges. Whereas, the Lawsuit Clerk Official at the Religious Court/Sharia Court shall be authorized to receive the registration of applications for enforcement and annulment of sharia arbitration award, where an application for annulment of sharia arbitration award shall be examined by a tribunal of judges.
II. Requirements for Appointment of Arbitrators and Rights to Challenge
a. Requirements for Appointment of Arbitrators (Article 4 paragraph (1) – (3) of SC Regulation 3/2023)
If the parties failed to reach an agreement to appoint their arbitrators (either tribunal or single judge), then an application for an appointment of arbitrators may be submitted to The Chairman of the Court with its underlying arguments for disagreement, and the proposed arbitrators (tribunal/single),
b. Rights to Challenge (Article 4 paragraphs (4) – (7) and Article 5 of SC Regulation 3/2023)
The parties shall have the right to challenge the arbitrator’s appointment (tribunal/single) to The Chairman of The Court by no later than 14 days. This right to challenge may be applied if there is an indication of family relationship, financial or employment relationship with one of the parties (i.e. conflict of interests).
III. Registration and Enforcement of Arbitral Awards
a. Registration and Enforcement of National/Indonesian Arbitral Awards Registration (Article 6 and Article 7 SC Regulation 3/2023)
The registration for a Indonesian arbitral award / Indonesian sharia arbitral award shall be conducted by the arbitrator or his attorney or the administrator of the sharia arbitration/arbitration institution to the Clerk of the Court by no later than 30 days by submitting the original document or authentic copy of the award. Registration can also be done electronically through the Service Information System (“SIS”).
Enforcement (Article 8 – 15 SC Regulation 3/2023)
If the parties do not voluntarily comply to the arbitral/sharia arbitral award that has been duly registered, then an application for an order to enforce parts of the award may be submitted to the Chairman of the Court by one of the parties in dispute, with a 30-days time limit to complete the process.
The enforcement registration process can be done electronically through the court SIP. However, if there is an annulment petition for said enforcement, the Chairman of The Court shall postpone the enforcement until there is a decision by the court of first instance for the annulment petition.
b. Registration and Enforcement of International Arbitration Awards
Registration (Article 7 SC 3/2023)
Registration of international arbitral awards (arbitral awards/sharia arbitral), is carried out by arbitrators or their proxies or administrators of international arbitration/international sharia arbitration institutions to the Court Clerk Office at the Central Jakarta District Court.
Registration can also be done electronically through the Service Information System (“SIS”). With regard to the time limit period for registration, there is no time limit for registration of international arbitration awards.
Enforcement (Articles 16 – 23 SC Regulation 3/2023)
If the parties do not voluntarily comply with the international arbitral award / sharia award, then one of the parties may submit an exequatur application for parts of the international arbitral award to the Chairman of the Central Jakarta District Court/Chairman of the Central Jakarta Religious Court, the request can be submitted electronically through SIP and shall be processed by no later than 14 days since its registration.
IV.Annulment of Arbitral Award
Annulment of Arbitral Award (Article 24 SC Regulation 3/2023)
The application for annulment shall be made in writing electronically or directly to the District Court/Religious Court or Sharia Court by no later than 30 days from the submission and registration date of the arbitral/shariah arbitral award to the Clerk of the Court.
There are several basis for submission of arbitral award annulment application:
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- The letters/documents used in the case that are admitted being false or declared to be false.
- After the verdict was taken, a new decisive document was found, which was hidden by the opposing party; or
- The award was granted based on a fraud conducted by one of the parties.
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Author: M. Rafizafran Emirzon, SH., and Gilang Mursito Aji, SH., LL.M.