Regulation Update: Unlocking the Future - Navigating Arbitral Awards with Supreme Court Reg. 3/2023 in Indonesia

In recent developments, the Supreme Court has promulgated a new regulation, specifically Supreme Court Regulation Number 3 of 2023 on Procedures for the Appointment of Arbitrators by the Court, the Right of Objection, Examinations of Request for Execution, and the Annulment of Arbitral Awards ("Supreme Court Reg. 2/2023"). This regulatory framework introduces the provision for online application processes pertaining to the execution and annulment of arbitral awards. It is imperative to underscore that, fundamentally, Supreme Court Reg. 2/2023 addresses procedural aspects of the execution and annulment processes, rather than delving into substantive content.

With the issuance of Supreme Court Reg. 2/2023, the submission of applications for the execution and/or annulment of arbitral awards has transitioned to an electronic format facilitated through the Court Information System (E-Court).

For the national arbitral awards, the arbitrator, the appointing arbitration institution, or their duly authorized representatives are mandated to register the award promptly. Simultaneously, evidence of the delivery of the award to all disputing parties must be provided via the E-Court system within a stipulated period of 30 calendar days from the pronouncement of the award. In instances where voluntary execution is not realized, either party to the dispute retains the option to apply for the execution of the award through the E-Court System to the chairman of the relevant court.

Should the Chairman grant the enforcement application, an execution order will be issued, with subsequent processing in accordance with the civil procedural law. Conversely, should the execution application face rejection, the Chairman of the court will issue a court ruling to that effect.

Foreign arbitral awards are also subjected to this procedural paradigm via the E-Court system. The Arbiter or their authorized representative is obliged to submit the original or authentic copy of the award, along with the arbitration agreement, in Indonesian language translation, and a confirmation statement from the relevant Indonesian diplomatic representative validating the bilateral agreements with Indonesia concerning the recognition and enforcement of International Arbitral Awards.

Beyond enforcement, the avenue for seeking annulment of an arbitral award is accessible through the E-court system within a 30-day timeframe from the registration date. A party intending to initiate annulment proceedings must substantiate their request with one of the enumerated grounds, including the presence of false documents during arbitration, suppression of decisive documents by the opposing party, or the rendering of the National Arbitration Award based on deceit by either disputing party.

Upon the submission of an annulment request, disputing parties will receive prompt notification within three days and be apprised of the presiding judge and the hearing schedule. The ensuing proceedings will encompass the reading of the annulment request, conducted either in a physical hearing or via the E-Court system. Over the subsequent 30 days, the hearing will progress to encompass responses from the opposing party, interim decisions, if any, evidence submissions, and ultimately, the pronouncement of the decision by the presiding judge. In the event of a decision favoring annulment, the affected party retains the right to file an appeal to the Supreme Court through the E-Court system within a 14-day window. Importantly, the Supreme Court's decision on such appeals is considered final, leaving no further legal avenues for objection. Conversely, if the annulment request faces rejection, parties are precluded from pursuing any form of appeal.

Notably, as delineated in Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolution, the prerogative of annulment is exclusively applicable to the National Arbitration Awards. It is imperative to highlight that in the context of Foreign Arbitral Awards, the possibility of annulment hinges upon the legal framework of the jurisdiction where the seat of arbitration is located.

By: Emir Pohan, Gevin Garcia and Justin Huang

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This material is prepared for general information purposes only. It is not intended to give legal or any other professional advice, opinion or recommendation and, accordingly, it should not be relied upon. Specific legal advice should be sought before taking any action based on the contents in this material. Please contact us if you need any assistance regarding this matter.