Indonesia

Indonesia does not have a fully separate commercial court system. Most commercial disputes between private parties are heard in the ordinary general courts, with some matters allocated to specialist courts.

General courts (Peradilan Umum). District courts are the main first-instance forum for civil and commercial claims (e.g. contract, tort and other business disputes). Appeals go to the provincial high courts, which re-examine facts and law. Further appeal is by cassation to the Supreme Court, which reviews legal issues and may also hear a civil review (peninjauan kembali) as an extraordinary remedy.

Commercial courts (Pengadilan Niaga). Commercial courts are specialist chambers within certain district courts (including Jakarta, Medan, Surabaya, Semarang and Makassar). They have first-instance jurisdiction over bankruptcy, suspension of debt payment obligations (Penundaan Kewajiban Pembayaran Utang or PKPU) and most civil intellectual property cases. Their decisions bypass the high courts and go directly to the Supreme Court by cassation.

Industrial relations courts (Pengadilan Hubungan Industrial or PHI). These specialist labour courts, attached to designated district courts, handle employment and industrial-relations disputes. Their judgments are also generally subject only to cassation before the Supreme Court.

Other forums relevant to commercial activity. State administrative courts hear challenges to government acts and decisions (e.g. licences, sanctions), while the tax court hears appeals against tax assessments. Both have their own procedures and appeal routes, but their decisions can ultimately be challenged by cassation to the Supreme Court.

Commercial litigation is generally governed by the same civil procedure rules as other civil cases, supplemented by Supreme Court Regulations and specialist regimes.

Core civil procedure framework. The principal civil procedure codes are the Herziene Indonesisch Reglement (HIR) for courts in Java and Madura and the Rechtsreglement voor de Buitengewesten (RBg) for courts outside Java and Madura, complemented by older provisions in the Reglement op de Rechtsvordering (Rv). Framework statutes such as the Law on Judicial Power and the Law on General Courts regulate jurisdiction, court hierarchy and remedies (appeal, cassation and civil review). In practice, commercial cases follow the usual sequence of written pleadings, submission of documents and witness evidence, followed by judgment and execution proceedings.

Supreme Court Regulations and practice directions of general application. Several Supreme Court Regulations (Peraturan Mahkamah Agung or PERMA) shape day-to-day practice. Key examples are PERMA No. 1 of 2016 on Mediation in Court, which requires court-annexed mediation in most civil and commercial cases before the merits are examined, and PERMA No. 2 of 2015 on Small Claims, as amended by PERMA No. 4 of 2019, which introduces the simplified gugatan sederhana procedure for straightforward contractual or tort claims up to IDR 500 million, heard by a single judge.

Indonesia has no general, court-mandated pre-action protocol. Parties are not legally required to take specific steps before filing, and there are no formal sanctions for failing to do so. In practice, however, certain pre-action conduct is expected and can help demonstrate good faith.

Customary pre-action conduct. In commercial matters it is common to send one or more demand or warning letter setting out the basis of the claim, requested relief and a deadline. Parties are generally expected to attempt good-faith negotiations or informal mediation, especially where escalation clauses refer to negotiation or mediation. These steps are not compulsory but are often viewed favourably by the court.

Contractual dispute resolution framework. Before filing, parties should review dispute resolution clauses, including arbitration agreements, choice-of-court, escalation and governing-law provisions. If a valid arbitration clause exists, general courts will typically decline jurisdiction. Where a foreign court is chosen, parties must factor in that foreign court judgments are not directly enforceable in Indonesia and may need to be re-litigated on the merits.

Statutes of limitation. The default limitation period for civil suits is 30 years under Article 1967 of the Indonesian Civil Code, unless a specific statute sets a shorter period. Generally, time runs from when a right is infringed or an obligation falls due; in tort, it is commonly understood to run from when the claimant knew or reasonably should have known of the injury and the responsible party. Limitation issues should be checked early and incorporated into case strategy.

Jurisdiction, forum and strategy. The claimant should confirm that the intended court has subject-matter and territorial jurisdiction. In cross-border cases, parties should weigh Indonesian court proceedings against arbitration or foreign litigation, considering enforceability, expected duration, cost and interim relief. It may also be appropriate to consider related steps such as insolvency proceedings, criminal complaints or administrative challenges.

Evidence and documentation. Key documents (contracts, purchase orders, invoices, correspondence, board resolutions and internal approvals) should be collected, organised and, where relevant, stamped with Indonesian stamp duty. Foreign documents intended as evidence should be legalised/apostilled and translated by a sworn translator. Potential witnesses and experts should be identified, and electronic and other records preserved.

Parties and standing. The identities, legal standing and addresses of all parties should be verified. A specific power of attorney (surat kuasa khusus) must be prepared for external counsel in line with procedural rules.

Mandatory steps in specific regimes. Some disputes are subject to statutory pre-litigation stages. Employment and industrial relations disputes, for example, require bipartite negotiations and, in many cases, mediation or conciliation at the Manpower Office before filing in the industrial relations court. Similar preliminary or administrative review steps may apply in regulated sectors or in challenges to government acts and should be confirmed in advance.

Large commercial disputes in Indonesia are mainly resolved through arbitration, mediation (including court-annexed mediation) and negotiated/consensual processes.

Arbitration is the dominant ADR mechanism for high-value cases. Parties may opt for domestic arbitration (often under BANI) or foreign-seated arbitration (such as SIAC or the International Chamber of Commerce (ICC)). Awards are final and binding, and as a New York Convention state, Indonesia allows qualifying foreign awards to be recognised and enforced, subject to statutory requirements.

Mediation is used both as a contractual step and within court proceedings. Supreme Court regulations require most civil and commercial cases in the general courts to go through court-annexed mediation before trial. Any settlement can be recorded as a court deed of settlement with the same force as a judgment.

Good-faith negotiation is usually the first step and is often mandated in escalation clauses requiring meetings between senior management. Other consensual tools — such as conciliation, expert determination and dispute boards in technical sectors — are generally contract-based and designed to complement, rather than replace, arbitration as the final forum.

There is no fixed statutory period, but in a typical commercial case with domestic parties the first substantive hearing on the merits (i.e. once summons and mandatory mediation are completed) is usually reached within about one to three months of filing. Delays mainly arise from difficulties in serving summons, non-attendance, or extended mediation. For foreign defendants, service alone can add several months; it is common for courts to issue up to three summonses before proceeding in their absence.

Supreme Court Circular Letter No. 2 of 2014 instructs district courts to complete first-instance cases within five months and high courts to decide appeals within three months, but complex cases — especially those involving technical evidence or foreign parties — often exceed these guidelines and can take around nine to 12 months or more to reach judgment at first instance. Appeals to the high court typically add at least six months, and cassation before the Supreme Court can add a further 12 months or more, depending on backlog. By contrast, small-claims cases (disputes below IDR 500 million) follow an expedited procedure that must be finished within 25 days from the first hearing.

Indonesian civil procedure does not recognise common law-style discovery. There is no general obligation to exchange all relevant documents (helpful or unhelpful) before trial, and no mechanism for a party or the court to compel broad disclosure of documents that a party has chosen not to rely on. Each party bears the burden of proving the facts it asserts and is only required to submit the evidence on which it wishes to rely.

In civil and commercial cases, witnesses are primarily put forward by the parties themselves. A party that wishes to rely on witness evidence will identify the witness and produce him or her at the hearing designated for the examination of witnesses. If the party ultimately does not produce that witness, it is generally treated as having waived the right to rely on that testimony.

Witnesses testify under oath and may be questioned by both sides, but questioning is formally supervised and controlled by the panel of judges. The process is therefore not common law-style adversarial cross-examination, yet a witness who attends can be required to answer questions from both parties in open court, subject to the judge’s control over relevance and manner of questioning.

In Indonesian civil and commercial cases, “costs” mainly refer to court fees and related disbursements, not lawyers’ fees. As a general rule, the losing party is ordered to bear these court costs. The amounts themselves are modest and follow court tariffs. Attorney’s fees are normally not recoverable; each party bears its own legal fees, and courts will only exceptionally award them when they are specifically claimed and clearly proven as part of substantive damages.

Indonesian courts have a relatively narrow range of interim remedies, focused mainly on preserving assets or the status quo rather than granting broad, common law-style injunctions.

The most common interim remedy in commercial cases is provisional attachment (sita jaminan/conservatoir beslag), where the court orders the temporary seizure or freezing of the defendant’s assets (movable or immovable) to secure enforcement of a future judgment and prevent dissipation of property. Variants of civil seizure (including execution and revindication seizure) are recognised in the civil procedure codes and are widely used in practice.

Indonesian courts generally take a pro-arbitration, non-interventionist approach, consistent with Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution (“Indonesian Arbitration Law”), which provides that courts shall not intervene in matters covered by an arbitration agreement. Where a valid arbitration clause exists and a party nonetheless sues in court, judges are required to refer the parties to arbitration. Courts do not review the merits of arbitral awards and are confined to narrow procedural review, such as in annulment or foreign enforcement proceedings. Annulment of domestic awards is permitted only on limited grounds — including forged or concealed documents, fraud or bad faith — as set out in Article 70.

Indonesia’s arbitration regime is not based on the UNCITRAL Model Law. The Indonesian Arbitration Law predates its widespread adoption and, although some concepts align with international practice, it contains its own rules, including relatively prescriptive provisions on timelines and annulment grounds and more limited court supervision mechanisms.

Foreign arbitral awards are recognised and enforced under Article 66 of the Indonesian Arbitration Law, read together with Indonesia’s obligations under the 1958 New York Convention (ratified by Presidential Decree No. 34 of 1981). Recognition and enforcement are handled exclusively by the Central Jakarta District Court.

Overall, although it does not follow the UNCITRAL Model Law, Indonesia’s statutory framework and case law reflect a broadly supportive stance toward arbitration and the finality of awards.

Yes, under Indonesian Arbitration Law, arbitrators are empowered to grant interim or interlocutory measures. Article 32 of the Indonesian Arbitration Law expressly authorises the arbitral tribunal to issue provisional decisions or orders during the proceedings to regulate the due process of dispute examination. Such interim measures may take the form of orders for determination of collateral, ordering the deposit of goods with a third party, the sale of perishable goods, or other relief deemed necessary to ensure the effectiveness of the arbitration.

However, the Indonesian Arbitration Law does not provide a mechanism for court-ordered interim measures in support of arbitration. Unlike jurisdictions that adopt the UNCITRAL Model Law, Indonesian courts generally do not issue interim relief (such as freezing orders or injunctions) in aid of arbitral proceedings. Interim measures must therefore be sought exclusively from the arbitral tribunal.

In practice, the effectiveness of interim orders depends on the parties’ compliance, as the statute does not expressly provide for judicial enforcement of tribunal-ordered interim measures. Parties requiring strong enforceability may need to incorporate express contractual obligations to comply with such orders or select institutional rules (e.g. BANI rules) that reinforce the tribunal’s authority.

Under Indonesian law, arbitral awards cannot be appealed. The Indonesian Arbitration Law states that awards are final and binding, and courts may not review the merits or re-examine the tribunal’s factual or legal findings.

Domestic awards may, however, be challenged by a limited annulment application, which is not an appeal. Under Article 70, annulment must be filed within 30 days of registration and only on these grounds:

• a document used in the arbitration is later proven to be forged or declared forged;
• decisive documents are discovered after the award that were deliberately concealed by the opposing party; and/or
• the award was obtained through fraud or bad faith (tipu muslihat) by one of the parties.

Annulment is brought before the District Court where the arbitral tribunal issued the award, and the court’s decision is final with no further appeal.

Foreign arbitral awards are only subject to recognition and enforcement proceedings before the Central Jakarta District Court and cannot be annulled or appealed in Indonesia.

Indonesia is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, acceded to by Presidential Decree No. 34 of 1981, with two reservations:

• Commercial reservation. Indonesia applies the convention only to disputes arising out of legal relationships considered “commercial” under Indonesian law.
• Reciprocity reservation. Indonesia enforces awards made in the territory of other contracting states.

Indonesia is also a party to:

• the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) (1965), ratified by Law No. 5 of 1968, enabling recognition and enforcement of ICSID awards in accordance with ICSID procedures; and
• the ASEAN Comprehensive Investment Agreement (ACIA), which provides for investor–state arbitration, with enforcement relying on either the New York Convention or ICSID framework, depending on the forum chosen.

Indonesia is not party to any multilateral convention on foreign court judgments and has no general statutory regime for their enforcement. Foreign court judgments cannot be recognised or executed and may only be used as evidence in new proceedings.

Accordingly, Indonesia’s international enforcement regime is centred on the New York Convention and ICSID Convention, implemented domestically through the Indonesian Arbitration Law and the Central Jakarta District Court’s exclusive role in enforcing foreign arbitral awards.

Enforceable judgments (domestic). Indonesian courts only recognise and enforce domestic court judgments. A judgment issued by an Indonesian court is enforceable once it has obtained permanent legal force (inkracht van gewijsde). This generally includes:

• final civil and commercial court judgments;
• decisions ordering payment, delivery of goods, or specific performance;
• bankruptcy and PKPU decisions issued by Indonesian commercial courts;
• interim injunctions or provisional orders issued by Indonesian courts, if explicitly enforceable; and
• approved settlement agreements recorded before an Indonesian court (akta perdamaian).

Once a judgment becomes final, enforcement (eksekusi) is carried out by the district court (Pengadilan Negeri) through writs of execution, seizure orders, and auctions.

Excluded or non-enforceable judgments. Indonesia does not recognise or enforce foreign court judgments. Indonesia is not a party to any treaty on enforcement of foreign judgments, and there is no statutory mechanism for their recognition. As a result:

• Foreign court judgments (civil or commercial) are not enforceable in Indonesia.
• Such foreign judgments may only be used as evidentiary documents in fresh proceedings before an Indonesian court.
• Indonesian courts will re-examine the case on its merits, applying Indonesian law and procedure.

Also excluded from enforcement are:

• Judgments contrary to Indonesian public policy (ketertiban umum).
• Judgments issued by courts lacking jurisdiction under Indonesian procedural law.
• Penal judgments, criminal fines, or criminal restitution orders (these are enforced through the criminal justice system, not civil execution).
• Tax or administrative decisions, which are enforceable only through their own statutory mechanisms, not civil execution rules.
• Arbitral awards that fall outside the scope of the New York Convention (e.g. awards from non-convention countries, non-commercial matters, or awards violating public policy).

Arbitral awards (special regime). While foreign court judgments are not enforceable, foreign arbitral awards are, provided that:

• the award originates from a New York Convention state;
• the dispute is commercial; and
• enforcement does not violate Indonesian public policy.

Recognition and enforcement of foreign arbitral awards is handled exclusively by the Central Jakarta District Court.

Indonesia does not recognise or enforce foreign court judgments and has no registration mechanism for them. Indonesia is not party to any treaty on reciprocal enforcement of foreign judgments, so a foreign judgment cannot be directly executed in Indonesia. It may only be submitted as evidence in a new lawsuit before an Indonesian court, which will re-examine the dispute under Indonesian law and procedure. The judgment may be persuasive but has no binding force and cannot be converted into an Indonesian judgment.

By contrast, foreign arbitral awards can be recognised and enforced under the 1958 New York Convention, as implemented by Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution (“Indonesian Arbitration Law”). The award must be registered with the Central Jakarta District Court, which has exclusive jurisdiction. The applicant files a petition for recognition and enforcement, enclosing the original or certified copies of the award and arbitration agreement, plus sworn Indonesian translations. The court reviews compliance with procedural requirements and the limited refusal grounds under Indonesian law and the New York Convention.

If satisfied, the court issues an exequatur granting leave to enforce. For awards against the Indonesian state or a state instrumentality, an additional exequatur from the Supreme Court is required. Once the exequatur is issued, the foreign arbitral award is enforceable like a final Indonesian court judgment, including through seizure and auction of assets.

Once a judgment or arbitral award has enforceable status in Indonesia (including foreign awards recognised by exequatur), it is executed under the Indonesian civil procedure regime. Execution is carried out by the district court that issues the writ of execution (penetapan eksekusi), typically through the court bailiff (jurusita).

The main method is seizure and auction of assets (sita eksekusi); the debtor’s movable and immovable property is identified, placed under court seizure and sold by public auction, with proceeds applied to satisfy the judgment or award.

Other available methods include orders requiring the debtor to hand over specific assets, vacate real property, or perform other obligations expressly ordered in the decision. For monetary awards, courts may also order garnishment of bank accounts or receivables, subject to cooperation from banks and other institutions and compliance with banking and administrative rules. If the decision includes coercive fines (dwangsom), these may be enforced, but courts generally do not create new coercive sanctions at the execution stage.

There are no criminal penalties for failing to comply with civil judgments. However, persistent non-compliance can support follow-on insolvency or bankruptcy proceedings, and the practical effectiveness of execution will largely depend on the debtor’s asset profile and the ability to locate assets in Indonesia.

Indonesian law offers only limited interim relief pending enforcement of a judgment or arbitral award. The main mechanism is pre-judgment attachment (sita jaminan), under which a court may place the debtor’s movable or immovable assets under temporary seizure to prevent dissipation or transfer. Once the judgment or award becomes enforceable, this attachment can be converted into execution seizure (sita eksekusi) to permit auction of the attached assets.

For arbitration, Indonesian courts generally do not grant interim measures in support of arbitral proceedings, and the Indonesian Arbitration Law does not provide for court-ordered freezing orders or injunctions pending enforcement. Interim measures must instead be ordered by the arbitral tribunal, but such orders are not expressly enforceable through the courts and depend largely on voluntary or contractual compliance.

Beyond pre-judgment attachment, there are no broader statutory categories of interim protection. Creditors therefore typically seek early attachment or, where appropriate, apply pressure through bankruptcy or PKPU proceedings if a debtor fails to honour a final award. In practice, pre-judgment attachment remains the only meaningful judicial tool to preserve assets pending enforcement.

Proceeding on the assumptions outlined in the Model Answer, would a court in this jurisdiction recognise and enforce the arbitral award under the New York Convention?

In particular:

• Does the award fall within the scope of Article V(1) of the Convention, or would any of the grounds in Article V(1) justify refusal on the assumed facts?
• Is the subject matter of the dispute capable of settlement by arbitration under domestic law for the purposes of Article V(2)(a)?
• Would recognition or enforcement of the award be contrary to public policy within the meaning of Article V(2)(b)?

Response

Proceeding on the stated assumptions, an Indonesian court would, in principle, recognise and enforce the arbitral award as an international arbitral award under the New York Convention framework as implemented in Indonesia through the Arbitration Law.

Under Article 1(9) of the Arbitration Law, an international arbitral award includes an award rendered by an arbitral tribunal outside the jurisdiction of Indonesia. Article 65 further provides that the Central Jakarta District Court has authority over the recognition and enforcement of international arbitral awards in Indonesia.

On the assumed facts, the award is not a foreign court judgment. Rather, it is an arbitral award ordering payment of a contractual sum and interest arising from the non-payment of a final judgment. This distinction is important from an Indonesian perspective because foreign court judgments are generally not directly enforceable in Indonesia, whereas foreign arbitral awards may be recognised and enforced if the statutory requirements are satisfied.

Article V(1): scope, validity, and procedural grounds

On the stated assumptions, none of the grounds under Article V(1) of the New York Convention should justify refusal of recognition or enforcement in Indonesia.

First, under Article V(1)(a), enforcement may be refused if the arbitration agreement is invalid under either the law chosen by the parties or the law of the seat. On the assumed facts, both the governing law and the law of the seat treat the non-payment of the contractual obligation as giving rise to a dispute capable of arbitration, and the arbitration agreement is valid. An Indonesian enforcing court applies a non-interventionist stance and would not conduct an independent merits review of the seat court’s characterisation. No ground of refusal arises under this limb. The arbitration agreement is assumed to be valid under the law governing the arbitration agreement and the law of the foreign seat.

Second, Article V(1)(c) permits refusal where the award deals with matters beyond the scope of the submission to arbitration. Here, the tribunal’s mandate was expressly and narrowly confined to: (i) confirming that the Judgment was final and remained unpaid after 28 days; and (ii) ordering payment of the agreed contractual sum and interest. The tribunal was expressly prohibited from re-litigating the underlying merits. The award therefore falls squarely within the terms of the submission. No excess of mandate arises.

It might be argued that the arbitration is in substance an attempt to enforce or circumvent a foreign court judgment, which is a step Indonesian courts are not authorised to take directly. That argument would fail on the assumed facts. The tribunal does not purport to enforce the foreign judgment as a judgment, nor does it sit as an appellate body over it. The award enforces a separate and independent contractual obligation which the parties agreed would arise upon non-payment. The legal distinction between enforcing a court judgment and enforcing the contractual consequences of non-payment is material and recognised under Indonesian law’s respect for party autonomy.

Third, with regard to Article V(1)(b), (d), and (e), there is no suggestion of procedural unfairness under Article V(1)(b), irregular composition under Article V(1)(d), or that the award has been set aside or suspended under Article V(1)(e). All three limbs are satisfied on the assumed facts.

Article V(2)(a): arbitrability under Indonesian law

Article V(2)(a) requires the Indonesian court to consider whether the subject matter of the dispute is capable of settlement by arbitration under Indonesian law.

Under Article 5(1) of the Arbitration Law, disputes in the field of commerce and concerning rights fully within the parties’ disposal are arbitrable. The subject matter here, namely a contractual monetary obligation and contractual interest arising upon non-payment, is commercial in nature and falls entirely within the autonomous disposition of the contracting parties. Accordingly, it satisfies the arbitrability requirement.

A separate question arises as to whether “non-payment” alone, without express denial of liability, constitutes a dispute for the purposes of Indonesian law. Indonesian arbitration practice and doctrine do not require that liability be contested or denied for a dispute to exist. A failure or refusal to perform a due payment obligation is sufficient to constitute a dispute referable to arbitration.

Indonesian law also does not require a broad merits dispute in order for arbitration to exist. A failure to pay an amount said to be contractually due is sufficient to constitute a dispute or difference of opinion capable of being submitted to arbitration, provided the parties have agreed to do so in writing.

Article V(2)(b): public policy

Recognition and enforcement of the award should not be contrary to Indonesian public policy, provided the award is limited to the contractual payment obligation and does not require anything unlawful under Indonesian law.

Under Article 66 of the Arbitration Law, an international arbitral award may be recognised and enforced in Indonesia only if, among other things, it falls within the scope of commercial law and does not conflict with public order. The award must also obtain an exequatur from the Chairman of the Central Jakarta District Court.

Supreme Court Regulation No. 3 of 2023 further confirms that the Central Jakarta District Court assesses enforcement applications for international arbitral awards by reference to Article 66 of the Arbitration Law. Public policy (or public order) is defined under this regulation as all fundamental elements essential for the functioning of the legal, economic, and socio-cultural systems of the Indonesian community. The regulation also provides that the court must refuse enforcement if the award is outside the scope of trade or contrary to public order.

On the assumed facts, there is no obvious Indonesian public policy objection. The award does not require the Indonesian court to enforce the foreign court judgment directly. It also does not require the Indonesian court to re-examine the merits of the foreign judgment. Instead, the award gives effect to the parties’ agreed contractual mechanism: if the judgment is final and unpaid, a contractual obligation to pay an equivalent sum arises, and disputes concerning non-payment of that obligation are referred to arbitration.

That structure may be unusual, but novelty alone should not amount to a public policy violation. Indonesian courts may examine whether the award satisfies the statutory requirements for enforcement, but they should not review the substantive reasoning or merits of the award. For domestic awards, Article 62(4) of the Arbitration Law expressly provides that the Chairman of the District Court does not examine the reasons or considerations of the arbitral award, reflecting the limited nature of judicial review in enforcement.

Conclusion

On the assumed facts, an Indonesian court would recognise and enforce the arbitral award under the New York Convention. None of the grounds under Article V(1) or Article V(2) would justify refusal. The award:

• falls within the scope of a valid arbitration agreement (Article V(1)(a));
• does not exceed the tribunal’s mandate (Article V(1)(c));
• concerns a subject matter that is arbitrable under Indonesian law (Article V(2)(a)); and
• does not contravene Indonesian public policy (Article V(2)(b)).

The mechanism (converting the contractual consequences of non-payment of a foreign court judgment into an enforceable arbitral obligation) can be pursued under Indonesian law and represents a legitimate exercise of party autonomy. The award would be submitted to the Central Jakarta District Court for recognition and enforcement in the ordinary course, and the court’s review would be confined to the statutory refusal grounds.