Indonesia: Legal Environment

In this page: Business Contract | Intellectual Property | Legal Framework of Business | International Dispute Resolution

Business Contract

General Observation: The principle of contractual freedom is preferred, but for a contract to be valid, the contracting parties must agree on the content of the contract, be able to draw up a contract and carry out the legal measures without the assistance of a third party; the object of the contract must be clearly determined and the content must conform to the applicable laws.
Law Applicable to the Contract: Contract law is governed by the Civil Code.
Language of Domestic Contract: Indonesian (and/or English)
Other Laws Which Can Be Used in Domestic Contracts: Indonesia has not ratified the Vienna Convention on contracts; the Indonesian Civil Code must be applied.

Intellectual Property

National Organisations: The organization responsible for the protection of trademarks and patents in Indonesia is the Directorate General of Intellectual Property Rights, Ministry of Law and Human Rights.
Regional Organisations: There are harmonization procedures within ASEAN and APEC.
International Membership: Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National Regulation and International Agreements

Type of property and law	Validity	International Agreements Signed
Patent Law No. 14 regarding Patents August 1, 2001	20 years	Patent Cooperation Treaty (PCT)
Trademark Law n°15 concerning trademarks 1 August 2001	10 years	Trademark Law Treaty
Design Law No. 31 regarding Industrial Designs December 20, 2000
Copyright Law n°19 regarding copyright 29 July 2002	50 years	Berne convention For the Protection of Literary and Artistic Works WIPO Copyright Treaty WIPO Performances and Phonograms Treaty
Industrial Models Law n°31 regarding industrial designs 20 December 2000

Legal Framework of Business

Equity of Judgments

The Language of Justice: The judicial language in the country is Bahasa Indonesia.
Recourse to an Interpreter: Having an interpreter is always possible.
Legal Similarities: The main source of the law is the constitution of 1945 which has gone through a series of amendments. The country’s legal system is based on Roman-Dutch law, again modified several times. The country does not accept compulsory ICJ jurisdiction.

The Different Legal Codes

Penal Code	Criminal law
Civil Code	Contract law
Commercial Code	Commercial law

Checking National Laws Online: Law Online of Indonesia
Other Useful Resources: Hukum on line, Information website on Indonesian law.
Country Guides: Lexmundi, Guide to doing business in Indonesia: legal system.

The Jurisdictions

Mahkamah Agung (Supreme Court)	The highest legal authority (above the Tribunal of Commerce, the Religious Tribunal, the Military Tribunal, the State Administrative Tribunal)
Pengadilan Tinggi (Court of Appeal)	District court of appeal (about 20)
Pengadilan Negeri (County court)	County court (about 250)
Pengadilan Niaga (Tribunal of commerce)	Bankruptcy, insolvency, commercial disputes
Pengadilan Tata usaha negara (State Administrative Tribunal)	Administrative disputes against the government
Mahkamah Konstitusi (Constitutional Court)	Constitutionality, elections, dissolving political parties

Court Officials

Notaris (notary): Semi-public appointee of the Ministry of Justice andHuman Rights, in charge of authenticating and registering deeds
Pengacara (lawyer): Informs his clients about their rights and obligations, and represents them in court with a speech for the defense.
Penghukum (judge): Decides if a crime has been committed, and if so the penalties which are applicable
Konsultan hukum (consultants): Most of them are lawyers; they offer counselling services to banks, companies, etc.

International Dispute Resolution

Arbitration: The parties to a commercial agreement or other transaction can resort to the Indonesian Arbitration Tribunal (BANI), to resolve a dispute on the basis of good will and non-confrontation.
Arbitration Law: Law n°30 of 1999 concerning arbitration and alternative solutions for conflict resolution governs questions of arbitration.
Conformity to International Commercial Arbitration Rules: Party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Party to the Geneva Protocol on Arbitration Clauses.
Party to the Geneva Convention of the Execution of Foreign Arbitral Awards.
Appointment of Arbitrators: The number of arbitrators is not fixed and it is the President who chooses in case of disagreement between the parties.
If there is only one, the plaintiff can suggest to the President of the Arbitration Tribunal one or several people who correspond to the necessary criteria to be arbitrators. If the respondent accepts the plaintiff's candidate, with the President's agreement this person will be designated sole arbitrator. If none of the candidates suggested by the plaintiff suits the respondent, either the parties agree to form a Tribunal of three arbitrators, or the President designates an individual.
If the Tribunal is made up of three arbitrators, one is appointed by each of the parties, and the President appoints an arbitrator (from the official list) to preside over the Tribunal, taking into account the preferences of the parties.
If there are more than two parties, the plaintiffs are considered to be a sole plaintiff, and the respondents considered to be a sole respondent. If the parties do not agree on the choice of their respective arbitrators, the choice is left to the President to designate more than three arbitrators if the complexity of the case requires it.
Arbitration Procedure: The request for arbitration made by the plaintiff, who specifies the name of the chosen arbitrator, is registered by the BANI secretariat, as well as the response of the respondent which must be formulated within thirty days.
The Tribunal encourages an amicable resolution of the dispute, and provides assistance if necessary. If an amicable agreement can be obtained, the Tribunal writes a memorandum which has the same force as an arbitration ruling.
If no agreement is reached, the procedure continues. If the plaintiff does not attend the first hearing without a legitimate reason, the Tribunal can cancel the request for arbitration. If the respondent does not attend or does not submit his written defense, after two reminders the Tribunal can give its decision on the basis of arguments and evidence provided by the plaintiff.

After the conclusions of the hearing have been given, the President of the Tribunal decides on a hearing to give his final decision, which must be delivered within thirty days of the hearing, unless a longer period of time is justified. The final decision is binding. The Tribunal can set a deadline for the loser to carry out the decision, and lay down penalties if it is not carried out.
Permanent Arbitration Bodies: Indonesian national bureau of arbitration (BANI) (Sectors Covered: Sectors of commerce, industry, finance, relating to companies, insurance, financial institutions, aviation, telecommunications, mines, air and sea transport, intellectual property rights, manufacturing, licenses, franchises, construction, the environment...)

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