1. Marine Casualty

1.1 In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:

(i) Collision

With regard to liability in a collision, the Indonesian Commercial Code (“ICC”) provides that:

  1. If the collision is caused by force majeure, or if there are doubts as to the cause of the collision, the damages shall be borne by those who have suffered them.
  2. If the collision is caused by the fault of one of the colliding vessels, liability to remedy the damages shall be borne by the vessel entrepreneur (pengusaha kapal) whose vessel committed the fault. Wirjono Prodjodikoro, an Indonesian legal scholar, stated that a collision caused by a defect (unseaworthiness) of the vessel shall also be considered as the fault of the vessel.
  3. If the collision is caused by the fault of two or more vessels, the liability of each vessel entrepreneur (pengusaha kapal) is in proportion to the degree of their vessel's respective faults. Prodjodikoro stated that the test of fault is the impact of the fault on the damage suffered, irrespective of the intention (culpa) of the vessel.
  4. If a vessel being towed collides due to the fault of the towing vessel, the owners of both the towed and the towing vessel shall be jointly and severally responsible for the damage.

Upon declaring independence in 1945, Indonesia decided that the articles of the ICC would continue to be followed unless they were contrary to the Indonesian Constitution.

Under Law No. 17 of 2008 regarding Shipping, as amended by Law No. 11 of 2020 regarding Job Creation (“Shipping Law”), unless it can be proven otherwise, the master of the vessel shall be held liable in a vessel accident.

As to collisions, Indonesia has ratified the 1972 International Regulations for Preventing Collisions at Sea, by way of Presidential Decree No. 50 of 1979, but has not ratified the Convention for the Unification of Certain Rules of Law with respect to Collisions Between Vessels.

(ii) Pollution

Indonesia has ratified the following treaties:

  1. The United Nations Convention on the Law of the Sea of 1982 (“UNCLOS”), by way of Law No. 17 of 1985.
  2. The International Convention for the Prevention of Pollution from Ships of 1973, as modified by the Protocol of 1978 relating thereto and by the Protocol of 1997 (“MARPOL”), by way of Presidential Decree No. 46 of 1986 and Presidential Regulation No. 29 of 2012.
  3. The International Convention on Civil Liability for Oil Pollution Damage of 1969 and its amendment of 1992 (“CLC”), by way of Presidential Decree No. 52 of 1999.

Indonesia has not ratified the International Oil Pollution Compensation (“IOPC”) Fund Convention of 1992 and the Supplementary Fund Protocol of 2003.

Under the Shipping Law, all crew members in a vessel are obliged to prevent and mitigate environmental pollution from their vessel. In addition, vessel owners or operators are obliged to procure an insurance policy for their pollution liability. Failure to comply may result in imprisonment and/or fines for vessel owners or operators.

(iii) Salvage/general average

We are not aware of any salvage conventions that have been ratified by Indonesia.

The Shipping Law was further implemented by Minister of Transportation (“MOT”) Regulation No. PM 71 of 2013, as lastly amended by MOT Regulation No. PM 38 of 2018 regarding Salvage and Underwater Works (“MOT Reg 71/2013, as amended”). This regulation defines salvage as the provision of aid to a vessel and/or its cargo that has suffered a vessel accident or perils of the sea, including removing the shipwreck or underwater obstacle or other objects. MOT Reg 71/2013, as amended, Government Regulation No. 5 of 2021 regarding Administration of Risk-Based Business Licensing (“GR 5/2021”), and Government Regulation No. 31 of 2021 regarding Administration of the Shipping Sector (“GR 31/2021”) provides that a salvage operation may only be conducted by a business entity that is specifically engaging in the salvage business, fulfils the technical requirements under MOT Reg 71/2013, as amended and holds a Commercial and Operational Licence issued by the Online Single Submission (“OSS”) system under the name of Salvage and Underwater Works Business Approval (Persetujuan Perusahaan Salvage dan Pekerjaan Bawah Air).

(iv) Wreck removal

Indonesia has not ratified the Nairobi International Convention on the Removal of Wrecks of 2007.

The Shipping Law, as implemented by MOT Reg 71/2013, as amended, obliges a vessel owner to remove its shipwreck and/or cargo that are disturbing navigational safety and security within 180 days after such vessel and/or cargo sank.

MOT Reg 71/2013 as amended, also requires vessel owners to insure their vessels with wreck removal insurance or protection and indemnity insurance from an insurance company recognised by the Government of Indonesia. This requirement is waived for war vessels, state vessels used for governmental duty, and motor vessels with a gross tonnage of less than 35 tonnes.

(v) Limitation of liability

Indonesia has not ratified the International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships of 1957 or the International Convention on the Limitation of the Liability for Maritime Claims of 1976, including their Amendment Protocols.

Based on the original text of Article 474 of the ICC, the liability of a vessel owner due to vessel collision or cargo claims is limited to 50 gulden (the currency used by the Netherlands during the East Indies occupation) per cubic metre of the net tonnage of a vessel. A mechanically moved vessel shall have the tonnage of the machinery added to the gross tonnage to determine the net tonnage for vessel collision liability. However, the tonnage of such machinery shall be deducted from the gross tonnage to determine net tonnage for cargo claims liability. The ICC uses 50 gulden because the ICC was enacted during the Dutch occupation of Indonesia and it has not been amended since Indonesia's independence in 1945.

(vi) The limitation fund

Indonesian law does not specifically regulate the form or amount of a limitation fund. In practice, a shipper may request the vessel owner to provide a cash deposit to be used as a limitation fund.

1.2 Which authority investigates maritime casualties in your jurisdiction?

The Shipping Law provides that any preliminary investigation with respect to vessel accidents shall be conducted by the relevant port authority. The port authority may forward the result of its investigation to the Shipping Court (Mahkamah Pelayaran) to be examined further.

Presidential Regulation No. 2 of 2012 regarding the National Transportation Safety Committee (Komite Nasional Keselamatan Transportasi or “KNKT”) established the KNKT to conduct investigations related to vessel accidents for the purpose of preventing similar accidents in the future.

1.3 What are the authorities' powers of investigation / casualty response in the event of a collision, grounding or other major casualty?

According to Government Regulation No. 9 of 2019 regarding Vessel Accident Investigation (“GR 9/2019”), the following investigations shall be conducted in relation to vessel accidents:

  1. Preliminary investigation by the relevant port authority or a government official appointed by the MOT (i.e. vessel safety investigator, seaworthiness and marine security investigator, or civil investigator in the shipping sector) to gather preliminary evidence to confirm the occurrence of a vessel accident. The official conducting the preliminary investigation is authorised to obtain information from the ship captain, crew, ship owner/operator, ship pilot, seaport or special terminal operating and maintaining pilotage, or other related parties.
  2. Subsequent investigation by the Shipping Court. The Shipping Court will establish a five-member Expert Panel containing two nautical experts (one technical expert, one shipping engineering scholar) and one legal scholar. The Shipping Court may examine evidence (letters, written documents, or images) as well as testimony from the defendant/parties, witnesses, or experts. The Shipping Court is authorised to issue a decision and impose administrative sanctions in the form of written warning or revocation of seafarer expertise certificate.

2. Cargo Claims

2.1 What are the international conventions and national laws relevant to marine cargo claims?

There are no applicable international conventions relevant to marine cargo claims because Indonesia has not ratified the Hague/Hague-Visby/Hamburg/Rotterdam Rules.

Marine cargo claims are regulated by the ICC, which provides that a carrier is liable to provide compensation for any damages arising from its failure to deliver cargo, whether partially or entirely, or any damages to the cargo, unless such damage or failure to deliver was caused by force majeure.

2.2 What are the key principles applicable to cargo claims brought against the carrier?

In practice, either the shipper, the consigner, the lawful holder of the bill of lading, the cargo owner or the cargo insurer (by subrogation) is entitled to bring cargo claims against the carrier for loss or damages arising from the carrier's alleged default.

Article 513 of the ICC provides that if the bill of lading states that the “content/nature/amount/weight/size is unknown”, or a similar clause to this effect, the carrier will not be responsible for any cargo claim, unless the carrier should have known the condition and type of the cargo or the cargo was quantified before the carrier.

Unless otherwise agreed by the parties, the ICC provides a one-year limit to bring legal claims related to: (i) the payment to be made by the consignee; (ii) the carriage of passengers and luggage against the carrier; and (iii) compensation for cargo damages.

Aside from the ICC, an injured party is also entitled to submit a civil claim on the basis of an unlawful act (similar to tort) under the Indonesian Civil Code. Like the ICC, the Indonesian Civil Code was promulgated in the 19th century and has not been amended since Indonesia's independence.

2.3 In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?

The carrier shall be entitled to receive compensation for damages caused by incorrect or incomplete information related to the nature of the cargo unless the carrier knew or should have known the nature prior to the voyage.

2.4 How do time limits operate in relation to maritime cargo claims in your jurisdiction?

Article 741 of the ICC provides a time limit of one year for the submission of maritime cargo claims. The one-year limit is calculated after either (i) the completion of the voyage, or (ii) if the vessel failed to arrive at the place where the cargo was supposed to be delivered one year after the commencement of the voyage.

3. Passenger Claims

3.1 What are the key provisions applicable to the resolution of maritime passenger claims?

Indonesia has not ratified the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea of 1974.

Article 522 of the ICC regulates that the carrier is responsible for passenger safety starting from when the passenger embarks on the vessel until when they disembark. The carrier is obliged to compensate for losses caused by injuries suffered by passengers related to the voyage unless the injury was caused by the passengers themselves. Should the injury result in death, the carrier is responsible for compensating the spouse, children, and parents of the deceased for the loss. If the passenger is carried based on a third-party agreement, the carrier is responsible for both the passenger and the third party.

3.2 What are the international conventions and national laws relevant to passenger claims?

Please see our response above in question 3.1.

3.3 How do time limits operate in relation to passenger claims in your jurisdiction?

Article 741 of the ICC provides a time limit of one year for the submission of passenger claims. The one-year limit is calculated after either (i) the completion of the voyage, or (ii) if the vessel failed to arrive at the place where the passenger was supposed to disembark one year after the commencement of the voyage.

4. Arrest and Security

4.1 What are the options available to a party seeking to obtain security for a maritime claim against a vessel owner and the applicable procedure?

The Shipping Law provides that a vessel may be arrested by the harbourmaster at the relevant port where the vessel is currently located (berthing or otherwise), based on a written court order that is issued if the vessel is involved in a criminal or civil case. The Shipping Law further provides that a court order for a vessel arrest in a civil case relating to maritime claims may be issued without initiating civil court proceedings. Further provisions on the procedures for vessel arrest at Indonesian ports are supposed to be provided by an MOT regulation. However, as of the date that this was written, such regulation has not been issued.

4.2 Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel?

Yes. The elucidation of Article 223 of the Shipping Law provides that costs related to bunkering activities are one of the legitimate bases for a maritime claim.

4.3 Is it possible to arrest a vessel for claims arising from contracts for the sale and purchase of a ship?

As discussed above, the Shipping Law provides that a vessel may be arrested by the harbourmaster at the relevant port, based on a written court order that is issued if the vessel is involved in a criminal or civil case. Claims arising from the sale and purchase of a ship constitute a civil case. Thus, the plaintiff in such a case may ask the court to issue an arrest warrant to the harbourmaster.

4.4 Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what options are available?

Article 316 of the ICC provides that several receivables over a vessel are given priority right, namely (in order of priority):

  1. Cost of seizure and auction.
  2. Receivables of the vessel master and the crew arising from an employment agreement during their tenure in that vessel.
  3. Salvage reward, pilotage cost, signal cost and port cost, and other shipping costs.
  4. Collision claims.

Further, Article 316 of the ICC provides that the general priority rights provided under Article 1139 of the Indonesian Civil Code (including but not limited to court fees, rent and reparation fees of a rented object, and salvage costs) do not apply to vessels.

Under the Shipping Law, a party may exercise a maritime lien (referred to as “prioritised maritime receivables”) upon claims to receivables for which a vessel acts as a security. Upon such claim against receivables secured by the vessel, the payment of maritime receivables must be prioritised.

The Shipping Law provides that maritime receivables include:

  1. Payment of wages, costs, and other payments to the master and crew of the vessel.
  2. Payment for death or medical expenses for bodily injuries related to the operation of the vessel.
  3. Payment for the salvage of the vessel.
  4. Payment of port fees or other shipping routes and pilotage costs.
  5. Losses arising out of physical loss or damage caused by the operation of the vessel aside from loss or damage to the cargo, container, and baggage.

Article 66 of the Shipping Law provides that payment of maritime receivables shall be prioritised over payment of pledges, mortgage, and registered receivables. This is consistent with Article 1134 of the Indonesian Civil Code, which provides that certain rights may be prioritised over pledge or mortgage if it is expressly regulated by law. If there are no prioritised receivables or maritime liens, then a party may file a civil claim with the relevant district court.

Indonesia has also ratified the International Convention on Maritime Liens of 1993, by way of Presidential Regulation No. 44 of 2005.

4.5 In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.

There is no mandatory type of security under Indonesian law. However, in practice, a bank guarantee or corporate guarantee is more commonly used than a P&I letter of undertaking.

4.6 Is it standard procedure for the court to order the provision of counter security where an arrest is granted?

Indonesia does not recognise counter security (i.e., the act of putting up a certain sum of money as security in exchange for vessel arrest). If a ship arrest is granted, the only way to revoke the arrest is by a court order, which will only be granted if the underlying claim is resolved.

4.7 How are maritime assets preserved during a period of arrest?

Indonesian law does not have a specific regulation on vessel arrest and as such there are no detailed guidelines regarding the preservation of maritime assets during a period of arrest. As such, the current way to preserve the value of a maritime asset is to resolve the maritime claim so that the arrest can be revoked.

4.8 What is the test for wrongful arrest of a vessel? What remedies are available to a vessel owner who suffers financial or other loss as a result of a wrongful arrest of his vessel?

As discussed above in question 4.7, Indonesia does not have an implementing regulation on vessel arrest. Thus, there is no express regulation to test a wrongful vessel arrest or to provide remedies in the event for such vessel arrest. The Shipping Law only provides that a vessel may be arrested by the harbourmaster at the relevant port based on a written court order that is issued if the vessel is involved in a criminal or civil case (including but not limited to maritime claims). As such, we may conclude that a vessel arrest is wrongful if it does not fulfil the above criteria. For completeness, the Shipping Law provides that maritime claims may arise from:

  1. Loss or damage due to the operation of a ship.
  2. Loss of life or fatal injury that occurs on land or in the water or sea due to the operation of a ship.
  3. Damage to the environment, ship, or cargo due to salvage operation activities or an agreement on salvage.
  4. Damage or threat of damage to the environment, coastline, or other interests caused by a ship, including costs needed to take measures to prevent damage to the environment, ship, or cargo, as well as for the recovery of the environment as a result of the damage caused.
  5. Costs or expenses relating to lifting, removal, or repair, or relating to the ship, including costs of rescue of the ship and ship's crew.
  6. Costs for the use or operation or rental of a ship as set forth in a charter party or otherwise.
  7. Transportation costs for cargo or passengers on board a ship, as set forth in a charter party or otherwise.
  8. Loss or damage to cargo including trunks/suitcases transported on board a ship.
  9. Loss and damage to a ship and cargo due to an accident at sea (general average).
  10. Towage costs.
  11. Pilotage costs.
  12. Costs of goods, equipment, ship supplies, fuel oil or bunker, ship tools including containers provided for service purposes and ship supplies for the operation, upkeep, rescue or maintenance of the ship.
  13. Costs of construction, reconstruction or reconditioning, repair, alteration or completing ship supplies.
  14. Fees for port, canal, dock, harbour, shipping lane, and/or other levies.
  15. Salaries and other payables for a ship's captain, officers, crew members and others employed on board a ship, including repatriation and social insurance costs for their interests.
  16. Financing or disbursements incurred for the interest of the ship on behalf of the ship's owner.
  17. Insurance premium (including “mutual insurance call”) for the ship payable by the ship's owner or charterer without the ship's crew or bare boat (demise charterer).
  18. Commission, fees, broke or agency fees payable relating to the ship on behalf of the ship's owner without the ship's crew (demise charterer).
  19. Costs of a dispute related to the ownership status of the ship.
  20. Costs of a dispute between co-owners of a ship related to the operation and revenue or mining products of the ship.
  21. Mortgage fee on a ship or other encumbrance of a similar nature on the ship.
  22. Costs of a dispute caused by a ship sale agreement.

5. Evidence

5.1 What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime claims including any available procedures for the preservation of physical evidence, examination of witnesses or pre-action disclosure?

Indonesian law does not specifically regulate procedures for investigations and evidence-gathering for maritime claims.

5.2 What are the general disclosure obligations in court proceedings? What are the disclosure obligations of parties to maritime disputes in court proceedings?

Indonesia does not recognise general disclosure obligations (i.e. the discovery rule) in a court proceeding as a means to obtain evidence. Each party to a dispute has the burden to produce evidence to support their claims.

5.3 How is the electronic discovery and preservation of evidence dealt with?

Article 5(1) of Law No. 11 of 2008, as amended by Law No. 19 of 2016 regarding Electronic Information and Transactions (“EIT Law”), provides that electronic information and/or documents and/or a printed copy thereof are valid legal evidence. However, the EIT Law and its implementing regulation do not provide a specific method on how to preserve or deal with such evidence.

6. Procedure

6.1 Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.

6.1.1 Which national courts deal with maritime claims?

Maritime claims are already regulated in Indonesia under the Shipping Law. However, under the elucidation of Article 223 of the Shipping Law, maritime claims are conducted in accordance with the provisions on vessel arrest. According to Article 222 of the Shipping Law, requests for vessel arrests are submitted to the local district court (Pengadilan Negeri). As discussed above in question 4, Indonesia has not enacted an implementing regulation on the procedure for vessel arrest in Indonesia. Thus, there is no typical procedure or timescale applicable to maritime claims.

6.1.2 Which specialist arbitral bodies deal with maritime disputes in your jurisdiction?

Indonesia does not have a specialist arbitral body dealing with maritime disputes. As such, maritime disputes may be referred to the Indonesian National Arbitration Center (Badan Arbitrase Nasional Indonesia or “BANI”), which was established under Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolution.

6.1.3 Which specialist alternative dispute resolution bodies deal with maritime mediation in your jurisdiction?

Indonesia does not have a specialist alternative dispute resolution body dealing with maritime mediation. As such, maritime mediation is conducted according to the procedure agreed by the parties. In Indonesia, there is also a National Mediation Center (Pusat Mediasi National) that may be used by disputing parties to conduct mediation. Lastly, an Indonesian court will require disputing parties to conduct a court-facilitated mediation as part of the court proceeding, in accordance with the provisions of Supreme Court Regulation No. 1 of 2008 regarding Mediation Procedure in Court.

6.2 What are the principal advantages of using the national courts, arbitral institutions and other ADR bodies in your jurisdiction?

National courts are “advantageous” because they do not require a pre-existing arbitration agreement, which means national courts can always be referred to for solving maritime disputes. Under the Shipping Law, the Shipping Court has jurisdiction to examine cases related to vessel accidents and to enforce the professional, ethical and competence codes of a shipmaster or crew. Other maritime disputes shall fall within the jurisdiction of district courts. Please be advised that court proceedings in Indonesia may take some time to conclude (including appeals and cassations). 

Arbitral institutions have been gaining popularity among business actors as an alternative to dispute resolution because the parties can ensure the expertise of the arbitral tribunal examining the case. Further, due to the relative efficiency of arbitral institutions in resolving disputes, arbitration usually takes less time to complete.

Alternative dispute resolution in the form of mediation, while not binding, provides a means to resolve disputes in a manner that does not put parties in a hostile/adversarial situation. As such, this method is preferable if the parties intend to continue their business activity together after the resolution of the dispute. Please be advised that aside from mediation, which involves a third-party mediator, the parties can also negotiate bilaterally between themselves to reach an amicable settlement. If mediation fails, the parties will have to settle their dispute in accordance with the provisions of the dispute settlement clause in the relevant agreement.

6.3 Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.

With regard to ship arrest, as we stated above, currently there are no specific guidelines for ship arrest under Indonesian law. Indonesia is a signatory to the International Convention on the Arrest of Ships of 1999 (“Ship Arrest Convention”), although Indonesia has not ratified the Ship Arrest Convention. Under Law No. 24 of 1999 regarding International Treaties (“Treaties Law”), ratification of an international convention must be done through the issuance of a law (undang-undang) or presidential decree (keputusan presiden), as the case may be, in order to be enforceable in Indonesia. Pursuant to Articles 10 and 11 of the Treaties Law, the Ship Arrest Convention should have been ratified by way of a presidential decree. Although the Ship Arrest Convention has been signed by the Government of Indonesia, it is still not applicable in Indonesia absent the ratification of the same into law. We note that in 2005, the President of Indonesia enacted Presidential Instruction No. 5 of 2005 regarding the Empowerment of the National Shipping Industry, in which the President instructed the legislature to accelerate the process of ratifying the Ship Arrest Convention. In conclusion, Indonesia has recognised the basic principles of ship arrest, but has yet to implement those principles.

7. Foreign Judgments and Awards

7.1 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.

Indonesian law does not recognise foreign court judgments as enforceable in Indonesia. The parties must submit a new claim in an Indonesian court to enforce a judgment awarded by a foreign court. The foreign court judgment may be submitted as evidence in the new claim in the Indonesian court.

7.2 Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.

Indonesia has ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (“New York Convention”), by way of Presidential Decree No. 34 of 1981.

Pursuant to Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolution (“Arbitration Law”), a foreign arbitral award is recognised and enforceable in Indonesia if:

  1. The award is given by an arbitrator or tribunal in a state that is, along with Indonesia, a party to a bilateral or multilateral treaty that recognises foreign arbitral awards.
  2. The award is limited to what is considered to fall within the scope of commercial law in Indonesia.
  3. The award does not contravene public order.
  4. The award has received an execution order from the Central Jakarta District Court.
  5. The award involves the Republic of Indonesia as one of the parties in dispute, the award may only be enforced after receiving an execution order from the Indonesian Supreme Court.

8. Updates and Developments

8.1 Describe any other issues not considered above that may be worthy of note, together with any current trends or likely future developments that may be of interest.

(i) Electronically integrated business licence

To engage in the sea transportation business, a company must obtain a Sea Transportation Company Business Licence (Surat Izin Usaha Perusahaan Angkutan Laut or “SIUPAL”). Under GR 5/2021 and GR 31/2021, a SIUPAL is considered as a Business Licence, and will be issued by the OSS system on behalf of the MOT.

The MOT has issued MOT Regulation No. 89 of 2018 regarding the Norms, Standards, Procedures, and Criteria of the Electronically Integrated Business Licensing System in the Sea Transportation Sector (“MOT Reg 89/2018”) to align sea transportation licensing procedures with the OSS system. Under the OSS, any new licence application made through the OSS system will be followed by the issuance of a “temporary” licence. This means that a Business Licence will automatically be generated by the OSS system and delivered to the applicant once an application is completed by filling in the requisite information. The Business Licence will clearly state that it will only become effective once the required commitments are met by the applicant. Therefore, a business may only begin its operations once the commitments under its Business Licence are fulfilled.

(ii) Vessel registration

The Shipping Law states that an Indonesian vessel's legal status can only be valid if the vessel has already been registered in a jurisdiction. To implement the provisions of the ICC and the Shipping Law, the government enacted MOT Regulation No. PM 39 of 2017 regarding the Registration and Nationality of Vessels (“MOT Reg 39/2017”). MOT Reg 39/2017 states that vessel registration includes the registration of: (i) ownership right; (ii) granting of mortgage; and (iii) other proprietary rights, such as by way of bareboat charter and leasing. Vessel registration can be done with a vessel registrar, a government official appointed by the Director General of Sea Transportation.

It should be noted that according to the ICC, as further regulated in the Shipping Law and MOT Reg 39/2017, a vessel may only be registered if it has a gross tonnage of at least seven tonnes, is owned by an Indonesian citizen or a legal entity established under Indonesian law, or is owned by an Indonesian joint-venture company in which at least 51% of the shares are owned by an Indonesian citizen.

(iii) General vessel certification

Pursuant to the Shipping Law, a company owning a vessel must fulfil certain standard requirements, evidenced by the issuance of the following certificates:

  1. Vessel Nationality Certificate (Surat Tanda Kebangsaan Kapal).
  2. Tonnage Certificate (Surat Ukur).
  3. Safety Certificate (Sertifikat Keselamatan).
  4. Load Line Certificate (Sertifikat Garis Muat).
  5. Safe Manning Certificate (Sertifikat Pengawakan Kapal), only for manned vessels.
  6. Document of Compliance (Dokumen Penyesuaian Manajemen Keselamatan), only for manned cargo vessels with a gross tonnage equal to or larger than 500 tonnes.
  7. Safety Management Certificate (Sertifikat Manajemen Keselamatan), only for manned cargo vessels with a gross tonnage equal to or larger than 500 tonnes.

The above certificates are issued by the MOT based on the provisions of MOT Regulation No. PM 45 of 2012 regarding Vessel Safety Management, MOT Regulation No. PM 8 of 2013 regarding Vessel Measurement, MOT Regulation No. PM 70 of 2013, as amended by MOT Regulation No. 140 of 2016 regarding the Education, Training, Certification, and Duties of Seafarers, MOT Regulation No. 39 of 2016 regarding Vessel Load Line and Loading, and MOT Reg 39/2017. Initially, these certificates were issued separately by the MOT (or agencies/directorates under the auspice of the MOT). However, under the Annex of MOT Reg 89/2018, the issuance of the above certificates/documents has been integrated into the OSS system. Currently, these certificates/documents are considered Commercial/Operational Licences issued by the OSS system.

(iv) Pollution Prevention Certificate

Pursuant to the Shipping Law, any vessel operating in Indonesian waters must meet certain pollution prevention and control standards, evidenced by a National Pollution Prevention Certificate (Sertifikat Nasional Pencegahan Pencemaran), which will be issued based on the provisions of MOT Regulation No. PM 29 of 2014 regarding the Prevention of Maritime Environmental Pollution. Vessels that operate in international waters from time to time will be required to obtain additional certifications, namely:

  1. International Oil Pollution Prevention Certificate (Sertifikat Internasional Pencegahan Pencemaran Oleh Minyak).
  2. International Air Pollution Prevention Certificate (Sertifikat Internasional Pencegahan Pencemaran Oleh Udara).
  3. International Sewage Pollution Prevention Certificate (Sertifikat Internasional Pencegahan Pencemaran Oleh Kotoran).

Under the Annex of MOT Reg 89/2018, the above certificates/documents are considered Commercial/Operational Licences issued by the OSS system.

(v) Vessel classification

Indonesian-flagged vessels must also undergo classification pursuant to MOT Regulation No. PM 7 of 2013, as amended by MOT Regulation No. PM 61 of 2014 regarding Classification Obligation for Indonesian-Flagged Vessels (“MOT Reg 7/2013, as amended”). This classification is done either by PT Biro Klasifikasi Indonesia (Persero), a state-owned enterprise, or another foreign classification agency recognised by the Government of Indonesia under MOT Reg 7/2013, as amended. The classification agency will issue a Classification Certificate (Sertifikat Klasifikasi) for the vessel. As stated above, foreignclassification is acceptable provided that the classification agency: (i) is recognised in Indonesia; (ii) is a member of the International Association of Classification Societies (“IACS”); (iii) has a branch office in Indonesia that is registered with the relevant Indonesian authority; and (iv) has an Indonesian national as a surveyor in each branch office in Indonesia.

(vi) Ship Radio Station Certificate

Under Law No. 36 of 1999 regarding Telecommunications, as amended by Law No. 11 of 2020 regarding Job Creation and Minister of Communication and Informatics Regulation No. 9 of 2018 regarding Provisions and Procedures on the Operation and Licensing of the Radio Frequency Spectrum, a vessel utilising the radio frequency spectrum must obtain a Ship Radio Station Certificate.

(vii) Cabotage principle

The Shipping Law requires that domestic sea transportation be carried out by an Indonesian shipping company using an Indonesian-flagged vessel and Indonesian crew. These provisions are broadly interpreted to cover most vessels, including different types of vessels operating in Indonesian waters that are not engaged in domestic sea transportation. However, pursuant to MOT Regulation No. PM 2 of 2021 regarding Procedures and Requirements for the Granting of Foreign Vessel Utilization Approval for Activities Other than Domestic Carriage of Passengers and/or Goods (“MOT Reg 2/2021”), specific types of foreign-flagged vessels operating in Indonesian waters for specific types of activities may be exempted from cabotage rules. Such foreign-flagged vessels may be operated in Indonesia by the holder of a SIUPAL after meeting the requirements provided in MOT Reg 2/2021. The cabotage exemption is granted in the form of an MOT decree containing the Foreign Vessel Utilization Approval (Persetujuan Penggunaan Kapal Asing or “PPKA”), which can only be issued to SIUPAL holders. Under the Annex of MOT Reg 89/2018, a PPKA is considered a Commercial/Operational Licence issued by the OSS system.

Annex I of MOT Reg 2/2021 provides a list of activities that foreign-flagged vessels can conduct in Indonesian waters. These activities include:

  1. oil and gas survey;
  2. drilling;
  3. offshore construction;
  4. offshore operational support;
  5. dredging;
  6. salvage and underwater work;
  7. floating power plant; and
  8. port construction.

Originally Published by ICLG Shipping Laws and Regulations 2021.

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.