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Ada Pertanyaan? Hubungi Kami Marcell Sihombing, Fitri N. Heriani
The Indonesian Government is continuing with recent efforts to streamline investment in the country in a bid to bolster economic growth. After recently revoking some 3,000 inefficient regional regulations, the government is currently attempting to smooth the path of investment disputes which may arise in the future between the government and domestic or foreign investors, or indeed between different investors. This represents a significant element in government efforts to provide sufficient protection for business activities across the country, including legal protection, and a government regulation is currently being deliberated which will regulate procedures for the settlement of any investment disputes which may arise between the government and investors.
Darmin Nasution, Indonesia's Coordinating Minister for Economic Affairs, recently asserted that the Draft Government Regulation (Draft Regulation) represented an attempt to implement Law No. 25 of 2007on Investment (Investment Law). The Draft Regulation was deliberated at a coordination meeting which was held at the office of the Coordinating Ministry for Economic Affairs on Monday, 20 June 2016.
“We need this regulation in order to guarantee legal certainty, which is basically a matter of fairness for both the government and for investors,” asserted Minister Nasution.
Essentially, the mechanism involved in the settlement of investment disputes was already stipulated in the Investment Law. Article 32 of the Investment Law states that any investment disputes which arise between the government and investors must first be settled through a process of negotiation in order that an amicable solution be reached (the so-called “musyawarah untuk mufakat” principle). If this approach fails, then the disputing parties may either bring the dispute in question before a court or attempt to settle it via a process of alternative dispute resolution (ADR), such as arbitration. Note that Indonesia already has a legal framework which regulates arbitration, specifically Law No. 30 of 1999on Arbitration and Alternative Dispute Resolution (Arbitration Law).
The Investment Law further stipulates that the government and domestic investors should first attempt to settle any disputes which arise between them through a process of arbitration, if the disputing parties agree to do so, and then continue to trial proceedings, should the attempt at arbitration fail. Meanwhile, disputes between the government and foreign investors can be settled through the international arbitration mechanism of the disputing parties’ choice.
The International Center for the Settlement of Disputes (ICSID) has become the main choice for investment disputes that occur between the government and foreign investors in Indonesia. Furthermore, Indonesia has already ratified the ICSID convention through the issuance of Law No. 5 of 1968on the Settlement of Investment Disputes Between the Government and Foreign Citizens.
It is important to note that Article 25 (3) of the ICSID Convention stipulates that any attempts made to settle disputes through the ICSID arbitration mechanism must first be approved by the disputing government. This is in line with the provision stipulated under Supreme Court Regulation No. 1 of 1990on Procedures for the Execution of Foreign Arbitral Awards. According to this Supreme Court Regulation, any foreign arbitral awards can only be executed in Indonesia after execution approval (exequatur) has first been secured from the Supreme Court.
The Draft Regulation also emphasizes that attempts should be made to achieve an amicable solution through negotiations and mediations, which should take place within a definitive timeframe.
“It it important to set up a definite timeframe in order to provide legal certainty for investors,” Minister Nasution asserted.
Should any disputing parties fail to achieve an amicable solution, then they can then initiate a process of arbitration, whether it be a domestic arbitration forum for domestic investors or an international arbitration forum for foreign investors. However, any settlement arrived at through a process of arbitration must first gain the consent of the government (as a party to the dispute in question). This way, the government can be selective and prepare accordingly to face the international arbitration processes. And finally, investment disputes can also be settled via other ADR means (e.g. reconciliation) or via trial proceedings.
Minister Nasution also asserted that government deliberations of the Draft Regulation would emphasize procedural provisions such as scheduled timeframes for each dispute-settlement stage, while the substantial provisions would encompass matters such as choice of forum for disputing parties.
Darmin Nasution, Indonesia's Coordinating Minister for Economic Affairs, recently asserted that the Draft Government Regulation (Draft Regulation) represented an attempt to implement Law No. 25 of 2007on Investment (Investment Law). The Draft Regulation was deliberated at a coordination meeting which was held at the office of the Coordinating Ministry for Economic Affairs on Monday, 20 June 2016.
“We need this regulation in order to guarantee legal certainty, which is basically a matter of fairness for both the government and for investors,” asserted Minister Nasution.
Essentially, the mechanism involved in the settlement of investment disputes was already stipulated in the Investment Law. Article 32 of the Investment Law states that any investment disputes which arise between the government and investors must first be settled through a process of negotiation in order that an amicable solution be reached (the so-called “musyawarah untuk mufakat” principle). If this approach fails, then the disputing parties may either bring the dispute in question before a court or attempt to settle it via a process of alternative dispute resolution (ADR), such as arbitration. Note that Indonesia already has a legal framework which regulates arbitration, specifically Law No. 30 of 1999on Arbitration and Alternative Dispute Resolution (Arbitration Law).
The Investment Law further stipulates that the government and domestic investors should first attempt to settle any disputes which arise between them through a process of arbitration, if the disputing parties agree to do so, and then continue to trial proceedings, should the attempt at arbitration fail. Meanwhile, disputes between the government and foreign investors can be settled through the international arbitration mechanism of the disputing parties’ choice.
The International Center for the Settlement of Disputes (ICSID) has become the main choice for investment disputes that occur between the government and foreign investors in Indonesia. Furthermore, Indonesia has already ratified the ICSID convention through the issuance of Law No. 5 of 1968on the Settlement of Investment Disputes Between the Government and Foreign Citizens.
It is important to note that Article 25 (3) of the ICSID Convention stipulates that any attempts made to settle disputes through the ICSID arbitration mechanism must first be approved by the disputing government. This is in line with the provision stipulated under Supreme Court Regulation No. 1 of 1990on Procedures for the Execution of Foreign Arbitral Awards. According to this Supreme Court Regulation, any foreign arbitral awards can only be executed in Indonesia after execution approval (exequatur) has first been secured from the Supreme Court.
The Draft Regulation also emphasizes that attempts should be made to achieve an amicable solution through negotiations and mediations, which should take place within a definitive timeframe.
“It it important to set up a definite timeframe in order to provide legal certainty for investors,” Minister Nasution asserted.
Should any disputing parties fail to achieve an amicable solution, then they can then initiate a process of arbitration, whether it be a domestic arbitration forum for domestic investors or an international arbitration forum for foreign investors. However, any settlement arrived at through a process of arbitration must first gain the consent of the government (as a party to the dispute in question). This way, the government can be selective and prepare accordingly to face the international arbitration processes. And finally, investment disputes can also be settled via other ADR means (e.g. reconciliation) or via trial proceedings.
Minister Nasution also asserted that government deliberations of the Draft Regulation would emphasize procedural provisions such as scheduled timeframes for each dispute-settlement stage, while the substantial provisions would encompass matters such as choice of forum for disputing parties.
(hs/sp)
Marcell Sihombing, Fitri N. Heriani
The Indonesian Government is continuing with recent efforts to streamline investment in the country in a bid to bolster economic growth. After recently revoking some 3,000 inefficient regional regulations, the government is currently attempting to smooth the path of investment disputes which may arise in the future between the government and domestic or foreign investors, or indeed between different investors. This represents a significant element in government efforts to provide sufficient protection for business activities across the country, including legal protection, and a government regulation is currently being deliberated which will regulate procedures for the settlement of any investment disputes which may arise between the government and investors.
Darmin Nasution, Indonesia's Coordinating Minister for Economic Affairs, recently asserted that the Draft Government Regulation (Draft Regulation) represented an attempt to implement Law No. 25 of 2007on Investment (Investment Law). The Draft Regulation was deliberated at a coordination meeting which was held at the office of the Coordinating Ministry for Economic Affairs on Monday, 20 June 2016.
“We need this regulation in order to guarantee legal certainty, which is basically a matter of fairness for both the government and for investors,” asserted Minister Nasution.
Essentially, the mechanism involved in the settlement of investment disputes was already stipulated in the Investment Law. Article 32 of the Investment Law states that any investment disputes which arise between the government and investors must first be settled through a process of negotiation in order that an amicable solution be reached (the so-called “musyawarah untuk mufakat” principle). If this approach fails, then the disputing parties may either bring the dispute in question before a court or attempt to settle it via a process of alternative dispute resolution (ADR), such as arbitration. Note that Indonesia already has a legal framework which regulates arbitration, specifically Law No. 30 of 1999on Arbitration and Alternative Dispute Resolution (Arbitration Law).
The Investment Law further stipulates that the government and domestic investors should first attempt to settle any disputes which arise between them through a process of arbitration, if the disputing parties agree to do so, and then continue to trial proceedings, should the attempt at arbitration fail. Meanwhile, disputes between the government and foreign investors can be settled through the international arbitration mechanism of the disputing parties’ choice.
The International Center for the Settlement of Disputes (ICSID) has become the main choice for investment disputes that occur between the government and foreign investors in Indonesia. Furthermore, Indonesia has already ratified the ICSID convention through the issuance of Law No. 5 of 1968on the Settlement of Investment Disputes Between the Government and Foreign Citizens.
It is important to note that Article 25 (3) of the ICSID Convention stipulates that any attempts made to settle disputes through the ICSID arbitration mechanism must first be approved by the disputing government. This is in line with the provision stipulated under Supreme Court Regulation No. 1 of 1990on Procedures for the Execution of Foreign Arbitral Awards. According to this Supreme Court Regulation, any foreign arbitral awards can only be executed in Indonesia after execution approval (exequatur) has first been secured from the Supreme Court.
The Draft Regulation also emphasizes that attempts should be made to achieve an amicable solution through negotiations and mediations, which should take place within a definitive timeframe.
“It it important to set up a definite timeframe in order to provide legal certainty for investors,” Minister Nasution asserted.
Should any disputing parties fail to achieve an amicable solution, then they can then initiate a process of arbitration, whether it be a domestic arbitration forum for domestic investors or an international arbitration forum for foreign investors. However, any settlement arrived at through a process of arbitration must first gain the consent of the government (as a party to the dispute in question). This way, the government can be selective and prepare accordingly to face the international arbitration processes. And finally, investment disputes can also be settled via other ADR means (e.g. reconciliation) or via trial proceedings.
Minister Nasution also asserted that government deliberations of the Draft Regulation would emphasize procedural provisions such as scheduled timeframes for each dispute-settlement stage, while the substantial provisions would encompass matters such as choice of forum for disputing parties.
Darmin Nasution, Indonesia's Coordinating Minister for Economic Affairs, recently asserted that the Draft Government Regulation (Draft Regulation) represented an attempt to implement Law No. 25 of 2007on Investment (Investment Law). The Draft Regulation was deliberated at a coordination meeting which was held at the office of the Coordinating Ministry for Economic Affairs on Monday, 20 June 2016.
“We need this regulation in order to guarantee legal certainty, which is basically a matter of fairness for both the government and for investors,” asserted Minister Nasution.
Essentially, the mechanism involved in the settlement of investment disputes was already stipulated in the Investment Law. Article 32 of the Investment Law states that any investment disputes which arise between the government and investors must first be settled through a process of negotiation in order that an amicable solution be reached (the so-called “musyawarah untuk mufakat” principle). If this approach fails, then the disputing parties may either bring the dispute in question before a court or attempt to settle it via a process of alternative dispute resolution (ADR), such as arbitration. Note that Indonesia already has a legal framework which regulates arbitration, specifically Law No. 30 of 1999on Arbitration and Alternative Dispute Resolution (Arbitration Law).
The Investment Law further stipulates that the government and domestic investors should first attempt to settle any disputes which arise between them through a process of arbitration, if the disputing parties agree to do so, and then continue to trial proceedings, should the attempt at arbitration fail. Meanwhile, disputes between the government and foreign investors can be settled through the international arbitration mechanism of the disputing parties’ choice.
The International Center for the Settlement of Disputes (ICSID) has become the main choice for investment disputes that occur between the government and foreign investors in Indonesia. Furthermore, Indonesia has already ratified the ICSID convention through the issuance of Law No. 5 of 1968on the Settlement of Investment Disputes Between the Government and Foreign Citizens.
It is important to note that Article 25 (3) of the ICSID Convention stipulates that any attempts made to settle disputes through the ICSID arbitration mechanism must first be approved by the disputing government. This is in line with the provision stipulated under Supreme Court Regulation No. 1 of 1990on Procedures for the Execution of Foreign Arbitral Awards. According to this Supreme Court Regulation, any foreign arbitral awards can only be executed in Indonesia after execution approval (exequatur) has first been secured from the Supreme Court.
The Draft Regulation also emphasizes that attempts should be made to achieve an amicable solution through negotiations and mediations, which should take place within a definitive timeframe.
“It it important to set up a definite timeframe in order to provide legal certainty for investors,” Minister Nasution asserted.
Should any disputing parties fail to achieve an amicable solution, then they can then initiate a process of arbitration, whether it be a domestic arbitration forum for domestic investors or an international arbitration forum for foreign investors. However, any settlement arrived at through a process of arbitration must first gain the consent of the government (as a party to the dispute in question). This way, the government can be selective and prepare accordingly to face the international arbitration processes. And finally, investment disputes can also be settled via other ADR means (e.g. reconciliation) or via trial proceedings.
Minister Nasution also asserted that government deliberations of the Draft Regulation would emphasize procedural provisions such as scheduled timeframes for each dispute-settlement stage, while the substantial provisions would encompass matters such as choice of forum for disputing parties.
(hs/sp)