Sources of Regulation
Court Procedure
Court Costs and Legal Fees
Burden of Proof
Court Delay

Sources of Regulation

The judicial system of the Republic of Indonesia is largely a legacy of the Dutch colonial period. For example, under Article 2 of the Indonesian Constitution, the Dutch Herziene Indonesisch Reglement (HIR) is valid in the courts of Java and Madura, and the Rechstreglement Buitengewesten (RBg) is valid in other islands. Efforts to replace this pluralistic court system with a single, unified system have been unsuccessful.

The following laws regulate court procedure in Indonesia:

  • Law No 35 of 1999 on Judicial Power;

  • Law No 14 of 1985 on the Supreme Court;

  • Law No 1 of 1986 on the General Courts;

  • Law No 5 of 1986 on the Administrative Court; and

  • Law No 7 of 1987 on the Syariah Court.

These laws have the effect of classifying the judiciary into four categories:

  • general courts (consisting of two levels, namely the State District Court and the High Court);

  • administrative courts (consisting of two levels, namely the Administrative Court and the Administrative High Court);

  • military courts (consisting of two levels, namely the Military Court and the Military High Court); and

  • religious courts (consisting of two levels, namely the Religious Court and the Religious High Court).

In addition, the Commercial Court was recently established as a specialized court with jurisdiction to hear insolvency cases. There is also the possibility of appeal to a new bankruptcy tribunal of the Supreme Court.

The Supreme Court is the highest judicial tribunal and the final court of appeal in Indonesia. It is independent from the executive and legislative arms of the government.

Court Procedure

The HIR and the RBg remain valid in the general courts since Law No 1 of 1986 on General Courts does not regulate procedure in the District Court or High Court. To commence a civil action in Indonesian courts, a plaintiff must submit his claim/pleading to the clerk of the court that has jurisdiction over the subject matter of the complaint (Article 118 of the HIR).

Once a claim/pleading has been submitted to and registered with the court, the claim will be submitted to the head of the court to be assigned to a panel of three judges, one of whom is elected chairperson of the panel.

Generally, the panel of judges proposes amicable settlement to the parties involved. If achieved, the amicable settlement is deemed to be final and may not be appealed. If an amicable settlement is not reached, the court will hear the case in accordance with usual court procedures. The time limit for making a decision varies depending on the nature of the case, but the maximum is six months for district court proceedings.

The appeal process is an important aspect of the judicial process in Indonesia. Both the defendant and the plaintiff have an automatic right to appeal the decision of the Court of First Instance to the High Court. The High Court may, in its sole discretion, conduct a hearing, request the Court of First Instance to conduct a hearing, or decide that no hearing is required.

Once the decision of the High Court is rendered, either party may appeal to the Supreme Court. Such appeal is called an 'application of cassation' and must be submitted to the Court of First Instance that initially decided the case within 14 days from formal notification of the High Court decision. The application of cassation must be followed by a memorandum of cassation, submitted to the Court of First Instance within 14 days after submission of the application of cassation. The memorandum must contain the reasons for rejecting the decision of the High Court, based on the following:

  • the judge exceeded his authority;

  • the judge wrongly applied the law; or

  • the judge neglected his duties.

The Court of First Instance then forwards the application and memorandum to the Supreme Court, which determines whether or not to consider the appeal. If the memorandum is rejected, the High Court decision is deemed final and binding. If accepted, the Supreme Court considers the appeal and renders its own judgment.

Court Costs and Legal Fees

The successful party in Indonesia may, at the discretion of the court, recover court fees. However, no other legal costs will be awarded unless the parties have agreed in writing to an award of costs. In addition to court fees, and in the absence of written agreement by the parties, the court may award interest at a mandatory rate of 6% from the date the action is first commenced in the Court of First Instance until the date of payment of the award. This low interest rate, coupled with the fact that interest accrues from the date of commencement of the action and not the date on which the cause of action arose, are strong incentives for the losing party to appeal and use any delay tactics available.

Burden of Proof

Under Indonesian law, the burden of proof rests with the party asserting a fact. Indonesian civil law procedure does not require the defendant to disclose information or documents. Therefore, this burden can be difficult for a plaintiff to satisfy in cases in which the essential facts are in the control of the defendant or third parties. Furthermore, the substantial discretion given to judges in the Court of First Instance and the absence of verbatim records makes it difficult to challenge factual determinations on appeal.

Court Delay

Although efforts are being made to curb the influence of unofficial financial incentives to judges and other court officials, this continues to be a problem, making time frames and decisions unpredictable. Time is frequently as important to the parties as the actual decision. The considerable discretion given to the court, the presiding judge, and the clerks of the court is frequently the cause of substantial delays in court proceedings. It is for this reason that arbitration is the most popular form of dispute resolution in Indonesia.

Indonesia has set up its own arbitration body called the Indonesian National Arbitration Board. This board maintains a set of arbitration rules that are similar to the arbitration rules of international bodies, such as the Arbitration Rules of the United Nations Conference on International Trade Law.

For further information on this topic please contact Timbul Thomas Lubis at Lubis Ganie Surowidjojo by telephone (+6221 831 5005) or by fax (+6221 831 5015) or by e-mail ([email protected]).
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