Indonesia's legal system is primarily based on the civil law tradition, with influences from Dutch colonial law. It features a codified set of statutes that serve as the primary source of legal authority, consistent with civil law jurisdictions. The judicial process follows an inquisitorial model.
The court system in Indonesia operates under a hierarchical structure, with courts designated for specific areas of law. The core structure of Indonesia's judiciary encompasses general courts (Pengadilan Umum), the Constitutional Court, religious courts, administrative courts, military courts and specialised courts, including the commercial court and corruption court. There are also specialised bodies that oversee antitrust matters (KPPU) and consumer protection (BPSK).
Arbitration is a common method for resolving commercial disputes, with several arbitration institutions, including the: (1) Indonesian National Arbitration Board (Badan Arbitrase Nasional Indonesia, or BANI), the most prominent arbitration body; (2) National Sharia Arbitration Board (Badan Arbitrase Syariah Nasional); (3) Indonesian Capital Market Arbitration Board (Badan Arbitrase Pasar Modal Indonesia); and (4) the Alternative Institution for Dispute Resolution in the Financial Services Sector (Lembaga Alternatif Penyelesaian Sengketa Sektor Jasa Keuangan).
Mediation or amicable settlement is also common, with a mandatory mediation process that is embedded within the court process. A mandatory court-supervised mediation process lasts 30 days and may be extended for another 30 days. Parties may also settle disputes through private mediation.
Legal proceedings in Indonesia are mostly document-based and considered form-heavy. Cases require comprehensive written documentation, including the statement of claim, statement of defence, documentary evidence and written conclusions.
Documentation and evidence
Indonesian laws require documents to be executed in the Indonesian language. There have been cases where Indonesian courts have annulled agreements not signed in Indonesian. Given the mandatory local language requirement, parties sign agreements or documents in Indonesian alongside any foreign language. If a foreign party is involved, the agreement may specify a prevailing language.
Documents not in Indonesian require translation by a sworn translator before submission to the court.
In civil cases, documentary evidence often suffices to substantiate facts. Once submitted, original documents must be presented at trial for examination by the opposing party, although copies cannot be retained. It is important to retain the original physical documents in the party's possession for submission to the court in any litigation.
The documents as evidence are copies stamped, with a stamp fee. The original documents must also be shown to the judges for verification.
Electronic evidence is recognised by law. However, court practices vary. Some courts may reject electronic evidence if it cannot be authenticated.
Initiating a legal action
There are customary practices and procedural considerations that parties implement as evidence of a good faith attempt to resolve the matter without litigation, which may be favourably considered by the court. These practices include:
(1)Demand letters. It is common practice to issue a demand or warning letter as a formal notice to the other party, detailing the claims and demands. The initiating party serves up to three demand letters before pursuing legal action; and
(2)Pre-action mediation or negotiation. Parties are generally expected to negotiate in good faith to resolve disputes before litigation. This involves genuine attempts to discuss and amicably settle issues, especially if required by contract.
Legal representation
Legal representatives must meet specific requirements to appear and conduct cases in court. These requirements ensure that only qualified professionals represent clients in judicial proceedings.
Lawyers must hold a law degree from a recognised university and complete a professional advocate training programme. They must pass the bar examination administered by the Indonesian Bar Association and be sworn in by the High Court. Only those officially registered with the Indonesian bar are authorised to practise law and represent clients in court. Licensed lawyers have the right of audience in all courts nationwide and may represent clients in both civil and criminal cases.
Foreign legal consultants may practise in Indonesia, particularly in international or cross-border matters, but they cannot conduct court cases or engage in direct advocacy. They must work in co-operation with local law firms and are subject to regulations imposed by the Ministry of Law and the Indonesian Bar Association.
Proceedings
Litigation begins when the plaintiff files a lawsuit in the appropriate jurisdiction. The lawsuit must detail the facts, the legal basis for the claim and the specific relief sought.
Once filed, the court issues a summons to the defendant, notifying them of the claims and the date set for the preliminary hearing. It is critical that the summons is served correctly to ensure the defendant is fully informed.
Oral arguments are uncommon, as parties primarily present their arguments in writing.
An appeal to a higher court must be filed within a standard period of 14 days from the date of the judgment. The appellate court reviews and may affirm, reverse or amend the lower court's decision.
Once the judgment is final and enforceable, the prevailing party may initiate enforcement actions, such as asset seizure, to ensure compliance.
Case management hearings
In Indonesia, legal proceedings are predominantly conducted through written submissions. Hearings on interim motions, such as provisional measures or interlocutory injunctions, are typically integrated into the main proceedings, rather than held separately. While oral arguments may be presented, the focus remains on the written documentation submitted to the court.
Regarding case management hearings, Indonesia does not have a formal system akin to pre-trial or case management hearings found in some other jurisdictions. However, the panel of judges holds the authority to manage and direct the proceedings to ensure efficiency and adherence to procedural rules.
In complex cases, the court may set timeframes and manage evidence presentation. These are addressed within the trial framework rather than through separate case management hearings.
Timeframes for proceedings
The duration required for a district court to conclude a case varies widely, depending on factors such as case complexity, the number of parties involved, and potential delaying tactics, particularly by foreign counterparties.
While courts generally schedule disputes promptly, procedural delays are inevitable. To mitigate such delays, the Supreme Court issued circular letter No. 2 of 2014, regarding the completion of cases in the Court of First Instance and Court of Appeal at four judicial institutions. It directs district courts to conclude cases within five months and mandates high courts to resolve appeals within three months. District court judges may request deadline extensions, subject to approval by the chief of the relevant district court.
Cases involving technical and expert evidence, or foreign parties, can exceed these timeframes, frequently lasting a year or more.
For cases involving foreign defendants or co-defendants, serving summonses alone may take at least four months before the court can proceed in their absence. Some panels of judges issue up to three summonses before continuing with hearings.
At the appellate level, the timeframe for the high court and the Supreme Court to review appeals and cassations, respectively, varies depending on the existing case backlog. The high court typically takes at least six months to render a decision, while the Supreme Court may take an additional 12 months.
Simple claims involving disputes of less than IDR500 million (USD30,000) follow an expedited procedure, which must be concluded within 25 days of the first hearing.
Like any jurisdiction, Indonesia follows a unique legal process. Clients are advised to consult Indonesian counsel to be guided throughout the process and avoid potentially serious pitfalls.
Originally published by Asia Business LAW JOURNAL.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
