Presidential Regulation No. 63 of 2019 on the Use of Bahasa Indonesia (PR 63/2019) further affirms the understanding that Language Law permits the use of any foreign language in commercial contracts. PR 63/2019 Article 26(3) contains provisions regulating the use of Bahasa Indonesia that some lawyers have seen as requiring changing the common practice regarding translation. Our view is that one interpretation of Article 26(3) may not require any changes to the current practice.
On 30 September 2019, the President of the Republic of Indonesia issued PR 63/2019 which is the long awaited implementing regulation of Law No. 24 of 2009 on Flags, Language, Symbols of State, and the National Anthem (the Language Law).
The lack of clarity on the use of Bahasa Indonesia in the Language Law has created uncertainty in commercial practice. The common market practice has been to execute any agreements involving a foreign party in English and Bahasa Indonesia, and to include a prevailing language clause. Ideally, parties will execute an agreement in dual languages at the same time. However for a time-constrained transaction, it has been common practice that parties will sign an English version first and then require that a Bahasa Indonesia version be made available within a certain period.
PR 63/2019 Article 26(1) and Article 26(2) are verbatim reiterations of Article 31(1) and Article 31(2) of the Language Law respectively. This means that PR 63/2019 further affirms the understanding that the Language Law permits the use of English (or any foreign language) in private and commercial contracts. PR 63/2019 Article 26(3) contains provisions regulating the use of Bahasa Indonesia that some lawyers have seen as requiring changing the common practice regarding translation. Our view is that one interpretation of Article 26(3) may not require any changes to the current practice.
Interpretation of Article 26(3)
This alert focuses on PR 63/2019 Article 26(3) as the interpretation of this article has been controversial. We would like to offer our view.
For the benefit of Bahasa Indonesia readers, Article 26(3) reads as follows (underline has been added for emphasis): Bahasa nasional pihak asing dan/atau bahasa Inggris sebagaimana dimaksud pada ayat (2) digunakan sebagai padanan atau terjemahan Bahasa Indonesia untuk menyamakan pemahaman nota kesepahaman atau perjanjian dengan pihak asing.
Article 26(3) effectively stipulates that parties must use the English (or any foreign language) version of an agreement as an equivalent (padanan) or translation of the Bahasa Indonesia version to ensure consistent understanding between them. The main focus of previous interpretations has been the wording “equivalent or translation of the Bahasa Indonesia.” This wording has been loosely interpreted to mean that Article 26(3) requires simultaneous execution (typically in the form of dual-texts) of the foreign language version and the Bahasa Indonesia version.
We believe that there is a different interpretation of Article 26(3).The word “or” inserted between the term “padanan” (equivalent) and “terjemahan” (translation) is a conjunction of replacement. This means that each term is separate and distinct, and each term acts as an alternative (i.e. replacement) for the other.
When an English version of an agreement is a terjemahan (translation) of the Bahasa Indonesia version, logic dictates that the Bahasa Indonesia version of the agreement must first exist as a base for translation to another foreign language. However, this is not the case with respect to the padanan (equivalent) of the Bahasa Indonesia version of an agreement.
The Kamus Besar Bahasa Indonesia (Great Dictionary of Bahasa Indonesia) defines the term “padanan” as: (i) keadaan seimbang (sebanding, senilai, seharga, sederajat, sepadan, searti) or in English: equal state (comparable, of the same value, of the same price, equivalent, akin, equal); or (ii) a word or phrase in a language that has equivalent meaning with the word or phrase in another language.
Neither Article 26(3) nor the meaning of the term “padanan” (equivalent) specifies the timing of when the English equivalent of a Bahasa Indonesia must to be put in place, or any order of execution of the two versions. Therefore, whenever a Bahasa Indonesia version is available, the English version is a “padanan” (equivalent) of the Bahasa Indonesia version. This means that PR 63/2019 Article 26(3) may not require any changes to the current practice.
Other relevant points from PR 63/2019
- Article 26(4) states that in the case of different interpretations between a foreign language version and a Bahasa Indonesia version of an agreement, the prevailing language may be agreed in the agreement. This is consistent with the position that we have been taking to date.
- As in the case of the Language Law, PR 63/2019 is silent in respect of any sanction for failure to comply with the Bahasa Indonesia requirement.