The Dispute Resolution Review: Indonesia

Introduction to the dispute resolution framework

i Structure of law

The Republic of Indonesia inherited most of its legal system from the Dutch colonies. Indonesia is a civil law country and is characterised by codified legal provisions, and written laws and regulations are the primary sources of law.

The formulation of laws in Indonesia is carried out in accordance with Law No. 12 of 2011 on Formulation of Laws and Regulations as last amended by Law No. 15 of 2019. This Law stipulates the type and hierarchy of Indonesian laws and regulations as follows:

  1. the 1945 Constitution;
  2. the Decree of the People's Consultative Assembly;
  3. law, or government regulation in lieu of law;
  4. government regulation;
  5. presidential regulation;
  6. provincial regulation; and
  7. regency or municipality regulation.

The foregoing hierarchy must be understood in conjunction with the principle of lex superior derogat legi inferiori (a law higher in the hierarchy repeals the lower one). The purpose of this principle is to ensure conformity with all of the laws and regulations listed in the hierarchy.

Although Indonesia does not acknowledge the binding force of precedents, former precedents that have frequently been referred to in adjudicating similar cases are considered to have persuasive power among judges. If judges find such a precedent to be relevant to a case, they will refer to it in the final ruling of the case, and thus judges have the choice of whether to follow a precedent or not.

Another aspect of precedents in Indonesia is they tend to set a trend in understanding laws and regulations. In some cases, precedents may provide a fully different interpretation of laws and regulations – compared to the one provided by the relevant laws and regulations – on the grounds of equity or public policy. This often provokes concerns about the degree of legal certainty in Indonesia. However, some precedents may also be worthy of appreciation owing to their ground-breaking legal importance.

In addition, customary laws and shariah law also influence the Indonesian legal system. The above laws are applicable with the following limitations:

  1. customary laws only prevail to the extent that they do not contravene prevailing written laws and regulations; and
  2. shariah law only prevails for:
    • civil matters stipulated under the prevailing laws and regulations (e.g., marriage and inheritance for Muslims); and
    • regions stipulated under the prevailing laws and regulations (i.e., the province of Nanggroe Aceh Darussalam).

ii Structure of courts

The judiciary of Indonesia comprises the Constitutional Court and the Supreme Court. The Constitutional Court holds the authority to conduct a constitutional review of laws, which may result in revocation of certain provisions or the whole law if it is found to contravene the 1945 Constitution. As for regulations having hierarchy below the laws, the Supreme Court has the authority to review whether a regulation contradicts certain laws that again may result in certain provisions or the whole regulation being annulled by the Supreme Court.

Aside from the above, the Supreme Court serves as the highest court of appeal for the following judicial bodies:

  1. general courts whose jurisdiction encompasses civil and criminal cases;
  2. state administrative courts that deal with state administrative disputes;
  3. religious courts that have jurisdiction over civil disputes between Muslims, for example, marriage and inheritance law, and economic shariah law; and
  4. military courts whose jurisdiction covers military criminal cases and military administrative cases.

Any party bringing a dispute through these Indonesian courts (unless stipulated otherwise under certain laws) should do so in the following order: the district courts (first instance), the High Courts (appeal) then the Supreme Court (cassation).

Judgments rendered by district courts may be appealed to the relevant High Courts, whether on a ground of legal issues or factual issues.2 The disputing parties may also file a petition for cassation against High Court judgments; however, the grounds for such petition for cassation are limited to issues pertaining to the application of law.

Save for cassation judgments, all district court judgments and High Court judgments shall not be deemed as final and binding unless all available legal recourse has been exhausted. However, under the procedural laws, even a final and binding decision may also be appealed through an extraordinary legal recourse (a case review) at the Supreme Court. In this regard, the grounds for filing a case review are limitative and must be submitted within a specific time period in accordance with the prevailing laws and regulations.

iii Framework of arbitration and alternative dispute resolution

Alternative dispute resolution (ADR) in Indonesia is mainly regulated through the Arbitration Law.3 The Arbitration Law defines ADR as an institution for the resolution of disputes or differences of opinion through procedures agreed by the parties, namely resolutions outside the courts by:

  1. consultation;
  2. negotiation;
  3. mediation;
  4. conciliation; or
  5. expert assessment.

The Arbitration Law does not provide detailed rules and procedures for conducting ADR. The disputing parties are at liberty to choose the ADR rules and procedures.

Although the same principle applies to virtually every ADR, rules and procedures of court-annexed mediation are strictly regulated under the Supreme Court Regulation.4

In Indonesia, the Arbitration Law also serves as lex arbitri. As such, all arbitration proceedings conducted in Indonesia must not contradict the provisions of the Arbitration Law.

Even though Indonesia has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, international arbitral awards5 are enforced in accordance with the provisions of the Arbitration Law.6

Indonesia has also been a signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) since 1968. However, Indonesia excludes disputes arising from state administrative decisions issued by regencies from the types of dispute that may be settled by the ICSID.7

The year in review

i Decision of the Minister of Communications and Information, Attorney General and National Police on enforcement of electronic information and transaction law

On 24 June 2021, the Ministry of Communication and Information, Attorney General and National Police (relevant institutions) issued Decrees No. 229/2021, No. 154/2021 and No. KB/2/2021 (Joint Decree) on Guidelines for the Implementation of Certain Articles in Law No. 11 of 2008 on Electronic Information and Transaction as amended by Law No. 19 of 2016 (EIT Law). This Joint Decree is intended as a guideline for law enforcers (said relevant institutions) to carry out their duties and authorities.8

The Joint Decree was issued due to the multiple interpretations and controversial articles in the EIT Law: relevant institutions deem that it is necessary to establish a guideline to implement the EIT Law.9 The concerned provisions and articles of the EIT Law are Article 27 Paragraphs (1)–(4), Article 28 Paragraphs (1)–(2), Article 29 and Article 36. For example, Article 27 Paragraph (3) of the EIT Law prohibits any person from deliberately and unlawfully distributing, transmitting or causing to be accessed electronic information or electronic documents constituting defamation or slander of a good name.

In its implementation, this provision is often used by institutions, business enterprises or enactors as a legal basis to file a criminal complaint against a person alleged to have slandered or defamed their good name and reputation. However, the Joint Decree clearly provides that the complainant invoking this provision must be a natural person, not an institution or corporation. In addition, the Joint Decree specifies that the complainant must be the victim him or herself, meaning that the complainant must not be a proxy or an attorney of the victim, while in practice many criminal complaints are filed by the victim's attorney or proxy, especially in defamation cases related to well-known business enterprises.

ii Breach of contract v. fraud: a progressive legal perspective from the Supreme Court

Ideally, a failure to perform contractual obligations should be considered as a contractual dispute which resolution, among others, can be reached through civil litigation. However, people consider civil litigation to be costly, and there is no guarantee of a successful enforcement of judicial decisions. Therefore, people have been trying to find a more efficient and effective way to compel the defaulting party to perform its contractual obligations and indemnify any damage arising therefrom.

In Indonesia, one of the practices that is considered to meet the foregoing qualification is commencing criminal proceedings against the defaulting party. Although criminal proceedings would not lead to a compensatory judgment, they are often used to increase a party's leverage to extract a commercial concession from another party in resolving a dispute.

A problem with this kind of practice is that it often leads to criminalisation of a party's action, which, in some cases, may not contain any criminal elements, rather just a pure breach of contract issue. One of the criminal allegations frequently made against the defaulting party is fraud under Article 378 of the Indonesia Penal Code, namely an act of inducing someone to deliver an object, or to make a loan or to write off a receivable, by assuming a false name or in a false capacity, by dishonest artifices or by employing a web of fictions. In such case, the complainant usually argues that the defaulting party has induced him or her to perform a contractual obligation while knowing that the defaulting party would not do the same. In some cases, this is not always true because the defaulting party could just simply fail to perform his or her contractual obligations without having any illicit intention.

In December 2020, the Indonesian Supreme Court rendered cassation judgment No. 358 K/Pid/2020 of 30 April 2020 containing an important legal norm: namely, for Article 378 of the Indonesian Penal Code to be applied, there must be false or untrue conditions, thus if there are no such false or untrue conditions, and it has the purpose of the contractual relationship between the parties, then the condition where the defendant does not fulfil his or her contractual obligations is not a criminal act. This is also the case considering that there have been several contracts among the defendant and the victim that governed matters related to the project.

The panel of judges also considers that the existence of aggrieved parties due to unfinished projects is a risk arising out of a contract, and this qualifies as a breach of contract. Thus, the foregoing is not a criminal act.

Considering the above, we expect that Indonesian courts can continually render judgments, which may provide clearer guidelines in distinguishing fraud and breach of contract. This legal norm may become a positive step in legal practice and provide legal certainty in law enforcement process.

iii Restorative justice as part of criminal law enforcement in Indonesia

From late 2020 until early 2021, there were two legal products that echoed 'restorative justice' as part of criminal law enforcement in Indonesia, namely:

  1. Decree of Director General of General Judiciary of Supreme Court No. 1691/DJU/SK/PS.00/12/2020 of 2020 on Implementation of Guidelines on the Application of Restorative Justice (Decree of Dirjen Badilum); and
  2. Head of Indonesian National Police Circular Letter No. SE/2/II/2021 on Awareness of Ethical Culture to Create a Clean, Healthy, and Productive Indonesian Digital Space (Kapolri Circular Letter).

Although the two products are to be applied in two different stages of criminal legal proceedings – the Decree of Dirjen Badilum is to be applied by judges during court proceedings, while the Kapolri Circular Letter is to be applied by police during the investigation process – they have a similarity in which they make it clear that there are certain types of crime where the restorative justice approach should be taken.

In general, restorative justice is an approach focusing on the restoration and indemnification of damages incurred due to a crime, rather than strictly imposing a criminal sanction against the perpetrator. The Decree of Dirjen Badilum makes it clear that the restorative justice approach should be taken in examining and adjudicating the following crimes:

  1. misdemeanour crimes;
  2. juvenile delinquency;
  3. crimes committed by women; and
  4. narcotics crime (save for dealers).

On the other hand, the Kapolri Circular Letter emphasises that criminal law shall be treated as a last resort (ultimum remedium) and that restorative justice shall be prioritised in dealing with crime related to the use of digital space (i.e., crimes as provided under the EIT Law) save for those that are potentially divisive, racist, radical and separatist in nature.

Efforts to prioritise the restorative justice approach have had a positive impact on criminal legal enforcement. For instance, it helps control an increasing number of occupants being incarcerated in penitentiary facilities and also reduces the cost to be incurred for commencing investigations.10 More importantly, it prevents recurring criminalisation in cases that can be resolved amicably or through civil litigation. However, the implementation of the restorative justice approach in Indonesia is not without challenges. There are still disparities among law enforcers' views on implementing restorative justice, which lead to certain cases still being strictly imposed with criminal sanctions.11

iv Indonesian courts' perspective regarding covid-19

The outbreak of covid-19 began to gain global attention since late 2019. It has affected not only human health in general but also business activities. This eventually triggered business owners to employ covid-19 as a force majeure to justify or excuse their actions, such as failure in performing contractual obligations and employment termination. Here, court decisions are important to see whether covid-19 can qualify as a force majeure, and under what reasons and considerations.

In relation to the above, there has been a number of Indonesian court decisions that specifically classified the covid-19 phenomenon as a force majeure, among others Supreme Court decision No: 866 K/Pdt.Sus-PHI/2021 of 10 August 2021 and Tebo District Court decision No. 11/Pdt.G/2021/PN Mrt of 29 June 2021. Both judgments emphasise two matters in considering covid-19 as a force majeure: that the covid-19 pandemic is an unforeseeable event; and that covid-19 has been declared as a non-natural disaster under Presidential Decree No. 12 of 2020 on Determination of Non-Natural Disaster on the Spread of Corona Virus Disease 2019 (COVID-19) as a National Disaster.

Regardless of the above, it is worth noting that Indonesian judges are not bound to give the same judgment over similar cases (no stare decisis principle). Therefore, there may still be a possibility of other judges imposing different standards in deciding whether the covid-19 phenomenon can be considered as a force majeure. To that end, it is pivotal for the party seeking justification under the concept of force majeure (particularly in cases of breach of contract) to be able to convince the judges that (at least) in his or her case:

  1. the covid-19 phenomenon is an unexpected event;
  2. covid-19 falls outside his or her liability;
  3. covid-19 has been preventing him or her from performing his or her obligations;
  4. there is no bad faith on his or her side to somehow employ covid-19 as a reason to avoid his or her obligation (Articles 1244 and 1245 of the Indonesian Civil Code).

Court procedure

i Overview of court procedure

The official language to be used in the court proceedings is Indonesian. A civil court case is commenced by filing a lawsuit that is addressed to the chair of the relevant district court – in general, the district court whose jurisdiction encompasses the defendant's domicile. The lawsuit must comprise factual grounds and legal bases, and prayer for relief (where the plaintiff describes the remedies that he or she is seeking from the court).

After the filing of a lawsuit, the chair of the district court appoints the examining panel of judges. The panel of judges determines the first hearing date and summons the defendant to appear before the court.

In the first hearing, the panel of judges verifies the parties' credentials and orders the parties to enter into a court-annexed mediation process. If the mediation process fails, the court will proceed with the pronouncement of the lawsuit and allow the defendant to produce a statement of defence consisting of a demurrer and response to the case merits. The demurrer section may contain a challenge to the court's competence, the formality of the lawsuit, or both.

At the same time, the laws also provide the defendant with the right to file a counterclaim against the plaintiff.

Afterwards, the plaintiff may file a counter plea against the defendant's statement of defence and a statement of defence against the defendant's counterclaim (if any). Subsequently, the defendant is given the right to submit a rejoinder against the plaintiff's counter plea and a counter plea against the plaintiff's statement of defence in the counterclaim (if any). For final submissions, the court gives the opportunity for the plaintiff to lodge a rejoinder against the defendant's counter plea in a counterclaim.

Before proceeding to the evidentiary process, the court shall render an interlocutory judgment over the court competence demurrer. If the court grants the court competence demurrer, then the court shall declare the lawsuit to be inadmissible. Otherwise, the court shall proceed with the evidentiary hearing.

In the evidentiary hearing, the judges will provide the widest opportunity for the parties to submit any and all evidence that the parties deem to be relevant and in support of their argument.

Subsequent to the evidentiary process, the court shall provide the opportunity for the parties to submit a written statement of conclusion. After receiving the statement of conclusion, the panel of judges will adjourn the hearing in order for the judges to prepare the judgment, usually within two to four weeks.

The laws provide the litigants with the right to file an appeal to the district court. If the litigants are not satisfied with the judgment of the appeal court, the litigants may also file a cassation petition to the Supreme Court.

Due to the outbreak of covid-19, Indonesian courts tend to push the use of electronic proceedings, especially proceedings within the court of first instance, since electronic proceedings lessen the number of people attending court hearings, and thus will minimise the spread of covid-19.

ii Procedures and time frames

The Supreme Court has been encouraging the district courts to conclude their proceedings within five months and the High Courts to conclude appeal proceedings within three months.12 In practice, however, there are many cases where the district court proceedings take around six to 12 months.

For cassation and case review proceedings, the Supreme Court has determined that such proceedings shall be concluded within 250 days of when the case dossiers are received by the Supreme Court.13 Nonetheless, in practice, owing to its load of cases, it is very rare for the Supreme Court to finish case examination within that period.

iii Class actions

Class actions are permissible only if a claim satisfies the following requirements:

  1. there are so many group members that it would be ineffective and inefficient if the lawsuit was separately filed or jointly filed;
  2. there is a similarity of facts or events, legal bases and types of prayer for relief between the representative of the group and its group members; and
  3. the group representative has the honesty and determination to protect the interests of its group members.

The above requirements will first be assessed by a panel of judges to determine whether the class action may proceed. Subject to fulfilment of these requirements, the plaintiff will be required to provide a proposal for the notification to the group members. The remaining procedure shall follow the prevailing civil procedural laws.

iv Representation in proceedings

In general, it is a right of the litigants to be represented by lawyers.

All representation, except for a representative in class action proceedings, must be based on a power of attorney. If a power of attorney is executed outside the territory of Indonesia, then it must be consularised at the embassy of Indonesia and notarised in the country where the power of attorney is executed.

On 4 January 2021, Indonesia ratified the Convention Abolishing the Requirement of Legalization for Foreign Public Documents under Presidential Regulation No. 2 of 2021. However, it is still unclear whether any power of attorney made outside Indonesia is deemed as a foreign public document. It is necessary to see further implementing regulations on this issue.

v Service out of the jurisdiction

To date, there are no laws and regulations regulating the procedure of service out of the jurisdiction. The same applies to matters concerning assistance to foreign courts.

vi Enforcement of foreign judgments

A foreign court judgment cannot be enforced in Indonesia. If a party would like to enforce its right based on a foreign court judgment then it must file a new lawsuit at a relevant Indonesian district court (relitigate the case). During the court proceedings, the plaintiff may submit the foreign court judgment to the court as documentary evidence.

vii Assistance to foreign courts

Indonesia is not a member of any convention pertaining to judicial assistance, and, to date, Indonesia only has mutual judicial assistance with the Kingdom of Thailand. As such, in general, when Indonesian courts are in need of judicial assistance from foreign courts, or the other way around, the procedure will be conducted through a diplomatic channel.

viii Access to court files

Indonesian courts have adopted a case tracking system that allows the public to access information regarding ongoing or concluded cases at the relevant court. This includes:

  1. the date of case registration;
  2. classification of the case;
  3. names of the parties;
  4. prayer for relief;
  5. the hearing schedule; and
  6. the administrative cost of the case and its disbursement report by the court.

If a case has been concluded by the first instance court, the case tracking system may publish the names of the judges and the substitute registrar of the case.

Members of the public may obtain an unofficial copy of a court judgment or court decree, but court submissions or pleading documents or evidence are unavailable to the public in principle.

ix Litigation funding

Any practice of litigation funding is not recognised by Indonesian laws and regulations. Some law practitioners argue that litigation funding may raise issues of ethics and may violate decency or any other source of unwritten laws in Indonesia.

Legal practice

i Conflicts of interest and Chinese walls

The Advocates Law14 does not set forth a rule on conflicts of interest. However, the Indonesian Advocate Code of Ethics15 provides a basic rule that an advocate (lawyer) handling the joint interest of two parties is required to fully resign from handling such interest if, in the future, there is a conflict of interest between the relevant parties.

There is no specific provision for explaining this basic rule. Some law practitioners argue that the above rule may be broadly interpreted, and it may depend on the advocate.

Indonesian legal practice does not recognise the concept of Chinese walls, and as such no set of rules provide any definition of Chinese walls.

ii Money laundering, proceeds of crime and funds related to terrorism

For some matters outside litigation or arbitration proceedings, Indonesian advocates are obliged to provide a report on any transactions made by professionals for the interest and on behalf of their service users who should reasonably be suspected of using assets originating from proceeds of crime to the Indonesian Financial Transaction Reports and Analysis Center (PPATK)16 and apply the principle of know your service users.17

The matters outside litigation or arbitration proceedings are related to:

  1. the purchase and sale of a property;
  2. the management of money, stocks or other financial service products;
  3. the management of a checking account, savings account, deposit account and stocks account;
  4. the operation and management of a company; and
  5. the establishment, purchase and sale of legal entities.

Advocates are obliged to apply the principle of know your service user at the following

  1. there is a business or commercial relation with its service user;
  2. there is a financial transaction in Indonesian rupiahs or foreign currency involving a minimal amount of or equal to 100 million rupiahs;
  3. there is a suspicious financial transaction relating to money laundering and terrorism funding; or
  4. the advocate has doubts regarding the truth of the information from its service user.

iii Data protection

The legal framework for personal data protection comprises various laws and regulations.18 The following are considered as protected personal data under Indonesian laws and regulations:

  1. based on the Public Information Disclosure Law:
    • the history and condition of a family member;
    • the history, condition, treatment and medication of physical and psychological health;
    • finances, assets, income and condition of bank accounts;
    • the result of an evaluation in connection with a capability and intellectuality recommendation; and
    • records concerning an individual with regard to formal education and non-formal education; and
  2. pursuant to population administration laws and regulations:
    • records of physical or mental disability;
    • fingerprints;
    • iris recognition;
    • signatures;
    • other data elements regarding a person that are considered unacceptable;
    • citizen identification numbers;
    • place and date of birth;
    • parent names;
    • home addresses;
    • records on marriage, as well as the date and status of a marriage;
    • religion;
    • records on divorce as well as the date of a divorce;
    • blood type;
    • sex;
    • records concerning children born outside of marriage;
    • records on adoption;
    • type of work;
    • past education; and
    • ownership of deed of birth or marriage.

Pursuant to Minister of Communication and Informatics No. 5 of 2020 on Electronic System Provider in the Private Sector, specific private data is defined as data and information on health, biometric data, genetic data, sexual life and orientation, political views, children's data, personal financial data, and other data in accordance with the provisions of laws and regulations.

Government and private institutions are prohibited from making personal data public information. Specifically for personal data in electronic systems, the Indonesian Minister of Communication and Informatics has issued a regulation that specifies that the protection of personal data includes protection of the acquisition, collection, processing, analysis, storage, appearance, announcement, transmission, dissemination and destruction of personal data.

Documents and the protection of privilege

i Privilege

The Advocates Law provides that advocates have the right of confidentiality regarding their relationship with their clients, including protection of materials and documents against seizure or examination measures, and protection against recording or tapping of electronic communications.

The Indonesian Advocates Code of Ethics further provides that letters sent by advocates to other advocates in a case may be presented before the judges unless they are made without prejudice. In addition, advocate-to-advocate correspondence or contents of conversations in a failed attempt of amicable settlement shall not be presented as evidence before the court.

The Advocates Law and Indonesian Advocates Code of Ethics are silent on whether their provisions may also be applied to in-house lawyers.

ii Production of documents

In principle, a party asserting or rebutting a right or entitlement is obliged to prove it based on the available evidence. The law does not require the disputing parties to produce all documents or evidence relevant to a case; as such, it fully depends on the parties' strategy and possession of documents.

Indonesian civil procedure laws consider written evidence as primary evidence. To be accepted by the court, the parties must be able to present the original written evidence before the court because, under Indonesian civil procedure law, the power of written evidence lies within its originals.

Indonesian civil procedure law provides that a party may request judges to order the opponent to submit letters or documents belonging to the disputing parties concerning matters being disputed if such letters or documents are possessed by the opponent.19 Nonetheless, in practice, the foregoing provision has rarely, if ever, been invoked by Indonesian litigants. As such, in practice, the disputing parties rely on any evidence in their possession to prove their right or to rebut the opponent's arguments.

Alternatives to litigation

i Arbitration

In Indonesia, arbitration is commonly used to resolve commercial disputes involving particular expertise (e.g., construction, capital markets, insurance). Meanwhile, the major arbitral institution commonly used in Indonesia is the Indonesian National Board of Arbitration.

The Arbitration Law categorises arbitration awards according to the place where an arbitration award is rendered. If the arbitration award is rendered outside the jurisdiction of Indonesia, it shall be deemed an international arbitration award. If it is the other way around, the arbitration award shall be deemed a domestic arbitration award.

The Arbitration Law does not recognise the right of appeal against arbitration awards. However, the district court may refuse to enforce the domestic arbitration award for the following reasons: the arbitration agreement is absent; the dispute is not allowed to be resolved through arbitration; or the award violates morality and public policy.

Aside from the above, the Decree of the Directorate General of the General Judiciary No. 40/DJU/SK/HM.02.3./1/2019 of 2019 on the District Court Execution Guideline requires the court to verify whether an international arbitration award has been registered within 30 days of the pronouncement of the award. Unfortunately, the Decree did not come up with any explanation regarding the rationale behind this provision.

The grounds for refusal of recognition and enforcement of international arbitration awards under the Arbitration Law are more limited compared to the one provided by the New York Convention.

Moreover, in Indonesia, the disputing parties are entitled to request annulment of an arbitration award on the following grounds:

  1. letters or documents submitted in the hearing, after the award is rendered, are acknowledged to be false or declared to be forgeries;
  2. discovery of documents, after the award has been rendered, which are decisive in nature and were deliberately concealed by the opposing party; and
  3. the award is rendered as a result of fraud committed by one of the parties in the proceedings.

The Arbitration Law does not clearly state that the grounds for annulment are applicable for domestic and international arbitration awards. However, most decisions have declared that Indonesian courts have no jurisdiction to adjudicate matters regarding annulment of international arbitration awards.

ii Mediation

There are two types of mediation recognised under Indonesian law; namely, court-annexed mediation and voluntary mediation (non-court mediation). While court-annexed mediation has been used since the Dutch colonial era, non-court mediation was introduced in 1999 through the promulgation of the Arbitration Law.

With regard to court-annexed mediation, the Supreme Court has also issued a regulation pertaining to the Procedure of Court-Annexed Mediation.20

There are two major differences between court-annexed mediation and voluntary mediation, namely:

  1. court-annexed mediation is mandatory in nature, thus it must be conducted at the preliminary stage of civil court proceedings. On the other hand, voluntary mediation will only be conducted upon the disputing parties' agreement; and
  2. rules and procedures of court-annexed mediation shall comply with the prevailing laws and regulations, while rules and procedures of voluntary mediation fully depend on the agreement between the disputing parties.

Although mediation has long been recognised by law, it has yet to become as popular as arbitration in terms of alternatives to litigation. This might be for several reasons, including:

  1. disputing parties are pessimistic that mediation will result in a win-win solution, as their first attempt to negotiate has already failed;
  2. a settlement agreement remains vulnerable to any violation by the disputing parties that later ends up in court or arbitration proceedings; and
  3. court-annexed mediation still contains shortcomings, such as a relatively short time period for conducting mediation without considering the degree of complexity of a case (i.e., only 30 business days, with a chance to extend the period by up to another 30 business days with the parties' consent).

Outlook and conclusions

From a regulatory perspective, Indonesia tries to uphold the principle of ultimum remidium (criminal law should be a last resort in law enforcement) by promulgating regulations that provide guidelines for law enforcers to implement restorative justice in handling criminal cases. These legal guidelines include (among others):

  1. Joint Decree No. 229/2021, No. 154/2021 and No. KB/2/2021 on Guidelines for the Implementation of Certain Articles in Law No. 11 of 2008 on Electronic Information and Transaction as amended by Law No. 19 of 2016; and
  2. Decree of Director General of General Judiciary of Supreme Court No. 1691/DJU/SK/PS.00/12/2020 on Implementation of Guidelines on the Application of Restorative Justice.

In addition, the Indonesian Supreme Court has also improved criminal law enforcement by issuing a judgment/legal product relating to the non-fulfilment of obligations in a contractual relationship deemed as fraud, as seen in Supreme Court judgment No. 358 K/Pid/2020 of 30 April 2020.

Regardless of the above, however, it should be noted that the issuance of laws and regulations should be followed by the proper and consistent implementation of such laws and regulations. With that in mind, in 2022, the government and judiciary shall be expected to be able to bring about the consistent and proper implementation of the legal norms contained in laws and regulations that were issued in 2021, so that the objective of the issuance of those legal products can be achieved.


1 Ahmad Irfan Arifin is a partner at Arifin, Purba & Firmansyah. The author wishes to thank Kristian Takasdo Simorangkir and Edgar Christian Martua Raja, associates at the firm, for their help in the preparation process of this chapter.

2 In criminal cases, judgments stating that the defendant is acquitted or discharged from all legal charges may not be appealed to the High Courts. The available legal recourse for such judgment is by filing for cassation to the Supreme Court. Nevertheless, filing for cassation against a judgment that acquits a criminal defendant was once prohibited by Article 244 of Indonesian Code of Criminal Procedure until the provision was amended under the ruling of Constitutional Court judgment No. 114/PUU-X/2012 dated 28 March 2013.

3 Law No. 30 of 1999 on Arbitration and ADR.

4 Supreme Court Regulation No. 1 of 2016 on Procedure of Court-Annexed Mediation.

5 Under Article 1 Paragraph 9 of the Arbitration Law, international arbitration awards are awards rendered by an arbitration institution or ad hoc arbitration outside the legal jurisdiction of the Republic of Indonesia, or such awards are deemed as international arbitration awards under Indonesian laws and regulations.

6 Articles 65–69 of the Arbitration Law.

7 President Decree No. 31 of 2012 on Disputes Whose Settlement Shall Not Be Submitted to the Jurisdiction of the International Centre for Settlement of Investment Disputes.

8 Part Second, part of decision on Joint Decision.

9 Alphabet b, part of consideration on Joint Decision.

12 Circular Letter No. 2 of 2014 on Resolution of Case in The First Instance Court and Appeal at 4 (Four) Types of Judiciary dated 13 March 2014.

13 Decree of the Chairman of Supreme Court Number 214/KMA/SK/XII/2014 dated 31 December 2014.

14 Law No. 18 of 2003 on Advocates.

15 Indonesian Advocate Code of Ethics, ratified on 23 May 2002.

16 Article 8 of Government Regulation No. 43 of 2015 on Reporting Party in the Prevention and Eradication of Money Laundering (as last amended by Government Regulation No. 61 of 2021).

17 Article 1 Paragraph 3 of PPATK Regulation No. 10 of 2017 on the Application of the Principle of Know Your Service User for Advocates provides that the principle of know your service user is the principle applied by advocates to know the profile and transaction of its service user by implementing certain obligations under the Regulation.

18 Law No. 23 of 2006 on Population Administration, as amended; Law No. 14 of 2008 on Public Information Disclosure.

19 Article 1886 of the Indonesian Civil Code; Article 300 of Civil Procedure Law for Regions Outside Java and Madura.

20 Supreme Court Regulation No. 1 of 2016 on Procedure of Court-Annexed Mediation.

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