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Investment in Indonesia: Recent Updates in Indonesian Dispute Resolution for Investors in Indonesia

Nowadays, Indonesia as a developing country has become a potential country for investment among foreign investors. However, due to a fluctuated economic condition, the business risk for investment has also growing along with the chances of gaining benefit from the investment itself. In order to address this risk, the consideration to choose the dispute resolution forum in the agreement has become a critical issue as well.

Many large companies choose Indonesian National Board of Arbitration (Badan Arbitrase Nasional Indonesia – “BANI”) as one of the alternatives dispute resolutions under Law No. 30 of 1999 on the Arbitration and Alternative Dispute Resolution (“Arbitration Law”). The consideration for choosing BANI is the credibility and effectiveness in solving cases. To the best of the author’s experiences, BANI’s judgment mostly provides a win-win-solution judgment, instead the state court mostly decides who won and lose a case.

Since 1977 until September 2016, Indonesia has only one legitimate BANI where located in Wahana Graha Building, 1st and 2nd Floor, Jl. Mampang Prapatan No. 2, South Jakarta (“BANI Mampang”). However, since September 2016, this situation has changed because there is a new BANI entity where located in Sovereign Plaza, 8th Floor, Jl. TB Simatupang Kavling 36, Jakarta (“BANI Sovereign”). The issue arises when the Ministry of Laws and Human Rights approved BANI Sovereign’s legal entity status, yet BANI Mampang has not had any legal entity.

Historically, BANI Mampang was established under the Decree of the Chamber of Commerce (Surat Keputusan Kamar Dagang Indonesia) No. SKEP/152/DRH/1977 dated 30 November 1977. BANI Mampang has also successfully registered their rights over their trademarks i.e. “Badan Arbitrase Nasional Indonesia” on 2003 and “BANI Arbitration Centre” on 2012. Thus, even though BANI Sovereign has obtained their legal entity status, it does not mean that BANI Mampang lose their legal standing to work under the Arbitration Law.

One of the major questions from the investors for the above issues is who will have the prevailing legal standing for making the judgment or can BANI Mampang’s decision challengeable in the future.

In brief, BANI Mampang has successfully won the case against BANI Sovereign at the State Administrative Court (Pengadilan Tata Usaha Negara – “PTUN”). Consequently, PTUN has revoked the Decree of the Ministry of Laws and Human Rights regarding the establishment and legal entity status for BANI Sovereign.

However, BANI Sovereign has stated that they will file an appeal about this court decision and sue BANI Mampang for their assets issues and other intellectual property rights cases. Consequently, there are some outstanding issues to be considered by investors who will choose BANI Mampang as the choice of the dispute resolution forum. The above cases will most likely disrupt the court process at BANI Mampang or any future dispute until the case between BANI Mampang and BANI Sovereign solved.


Published by: Raymond Travis

Published on: 27 Nov 2018

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