Advancing arbitration in Indonesia: Key changes under Supreme Court Regulation No 3 of 2023 (SCR 3/2023)

Appointment of arbitrators

SCR 3/2023 brings clarity to the process of appointing arbitrators. Under the Arbitration Law (Law No. 30 of 1999), a party may request the District Court to appoint an arbitrator or arbitral tribunal if the parties have been unable to reach an agreement. Until now, however, the law did not clearly set out the process to be followed in such a case.

SCR 3/2023 rectifies this by specifying the process and procedures the court will follow in making an appointment. In this regard, the Chairman of the District Court must appoint an arbitrator or an arbitral tribunal, in the form of a determination, no later than 14 calendar days from the day the request is submitted by the requesting party.

During this period, the parties are allowed to submit a challenge to the appointment if there are sufficient reasons or credible evidence that raise doubts that the arbitrator will not perform their duties objectively and will not be independent and impartial.

Enforcement of awards

Under the Arbitration Law, the enforcement process lacked specific guidelines. Parties often encountered delays and procedural hurdles. The provisions of SCR 3/2023 address this gap, promoting efficiency and predictability. SCR 3/2023 also streamlines the examination of enforcement requests for arbitral awards.

The Chairman of the District Court is to review these requests promptly, ensuring timely enforcement of arbitral decisions. The writ of execution (exequatur) for Foreign Arbitral Awards must be issued within 14 calendar days upon submission of exequatur application. SCR 3/2023 also allows these submissions to be done electronically. In addition, partial enforcement of arbitral awards is now allowed.

Annulment of awards

SCR 3/2023 provides clarity on the process for the annulment of arbitral awards. The Chairman of the District Court will establish a panel of judges to review the annulment request in a hearing, with a decision to be made no later than 30 calendar days after the petition for annulment. Parties seeking annulment now have a roadmap to follow knowing the legal framework governing annulment.

Conclusion

SCR 3/2023 represents a significant step forward for arbitration in Indonesia. Its provisions enhance transparency, effectiveness, efficiency, and legal certainty. Just how SCR 2/2023 will be implemented in practice however remains to be seen.

Authored by Chalid Heyder, Julia Nugroho, Muhammad Raihan Faiqy, and Nigel Sharman.