Indonesia: Litigation Dispute Resolution Comparative Guide

1 Legal framework

1.1 What system of jurisprudence applies in your jurisdiction? What implications does this have for litigation?

Indonesia has a civil law system. Therefore, each case before the Indonesian courts is determined based on its particular facts and merits, rather than on precedent. However, in practice, judges often consider legal precedent when handing down their verdicts, although they are not bound by precedent.

1.2 What rules govern litigation in your jurisdiction?

Civil procedural law is governed by several regulations, some of which are direct legacies from the Dutch colonial era. These regulations include:

• the amended Native/Indonesian Regulations, which apply in Java and the Madura Islands;
• the Legal Regulations of Outer Regions, which apply to the rest of Indonesia;
• the Code of Civil Procedure; and
• the Civil Code, which relates to evidence and the expiration of legal claims.

For criminal matters, the main criminal procedural law is governed by Law 8/1981 on Criminal Law Procedure.

1.3 Do any special regimes apply to specific claims?

Specific claims, such as bankruptcy petitions, are governed by specific regulations – for example, Law 37/2004 on Bankruptcy and Suspension of Debt Payment Cases.

1.4 Which bilateral and multilateral instruments have relevance to litigation in your jurisdiction?

At present, Indonesia has not entered into any international conventions for the recognition and enforcement of foreign court judgments.

Indonesia and Thailand have signed an Agreement on Judicial Cooperation, modelled on the 1965 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.

Indonesia is also a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards.

2 Judicial structure

2.1 What courts exist in your jurisdiction and how are they structured?

In principle, the Indonesian general courts hear civil lawsuits and criminal claims, which are divided into three stages:

• The district court is the first-instance court in each regional area.
• The high court is the court of appeal in each province.
• The Supreme Court adjudicates as the final court of appeal against decisions of all lower courts.

2.2 What specialist courts or tribunals exist in your jurisdiction?

Certain courts of specialised jurisdiction have been established to address specific areas of law. These include:

• the Commercial Court, which handles bankruptcy and IP cases; and
• the State Administrative Court, which handles claims relating to state administrative products.

Indonesia also has several bodies to handle disputes concerning consumer rights and business affairs, such as:

• the Business Competition Supervisory Commission; and
• the Consumer Dispute Settlement Body.

3 Pre-litigation

3.1 What formalities apply before litigation can be commenced in your jurisdiction?

In practice, up to three warning letters may have to be served on a debtor or counterparty explaining the chronology of the case and asking it to comply with the sender's request or usually to pay compensation for losses.

3.2 Do any pre-action protocols or similar rules apply prior to the commencement of litigation? What are the consequences of non-compliance?

Please see question 3.1. If a complainant does not serve a demand letter on the respondent, the respondent or even the court (if the case goes to court) may argue that the case is premature because no reminder was served on the respondent to comply with the demand.

3.3 What other factors should a party consider before commencing litigation in your jurisdiction?

Generally, all court proceedings in Indonesia are open to the public. Therefore, if the parties desire a confidential proceeding, they might consider a form of alternative dispute resolution such as arbitration.

4 Commencing litigation

4.1 What rules on limitations periods apply in your jurisdiction?

Under Indonesian law, the statute of limitations for a claim civil action is 30 years. However, for certain matters, including criminal matters, the time limit is shorter depending on the alleged action.

4.2 What rules on jurisdiction and how this is determined apply in your jurisdiction?

The parties may regulate an exclusive jurisdiction clause (choice of forum) in their agreement. In the absence of an agreement, the court with jurisdiction over a case is that within the domicile of the defendant.

4.3 Are class actions permitted in your jurisdiction?

Yes, class actions are regulated by Supreme Court Regulation 1/2002 on Class Action Procedures. In general, a claim must meet the following criteria in order to qualify as a class action:

• The claim involves a large number of class members, making it impractical or inefficient to bring the claim individually or in a single proceeding;
• The claims of the class representative and members are based on equivalent facts and comparable legal grounds;
• The representative is trustworthy and tenacious in order to effectively represent the class; and
• The class representative's attorney sufficiently protects the interest of the class members – if this is not the case, the court may ask the class representative to change its attorney.

4.4 What are the formal requirements for commencing litigation?

Litigation commences when the plaintiff:

• registers its claim with the chairperson of the district court with jurisdiction; and
• pays the court fee.

Indonesian law does not differentiate between formal, procedural and substantive requirements for commencing litigation. In theory, a claim can be submitted orally or in writing. However, in practice, the claim should be submitted in writing.

4.5 What are the procedural and substantive requirements for commencing litigation?

Please see question 4.4.

4.6 Are interim remedies available in your jurisdiction? If so, how are they obtained?

Indonesian procedural law does not recognise the concept of interim relief or injunctions or pre-judgment remedies prior to registration of a claim. Therefore, there is no legal remedy for the plaintiff before a claim is formally registered with the deputy registrar of the district court. However, Indonesian procedural law has a similar concept to interim relief, such as an attachment order or provisional decision to protect the plaintiff's interests (eg, to immediately order a tenant to vacate a property if it is continuing to enjoy the property without paying rent or service charges).

4.7 Under what circumstances must security for costs be provided?

Indonesia does not recognise any security for costs for filing a legal claim.

5 Disclosure

5.1 What rules apply to disclosure in your jurisdiction? Do any exceptions apply to certain types of documents?

Indonesian procedural law does not recognise disclosure procedures. The disputing parties are not obliged to disclose their evidence or information related to the case in advance of the proceedings. A court session is held in which the parties have an opportunity to submit their evidence and examine that submitted by the opposing parties. However, for arbitration proceedings in the Indonesian National Arbitration Body, the parties must submit their evidence and the evidence will also be provided to the counterparty.

5.2 What rules on third-party disclosure apply in your jurisdiction?

Please see question 5.1.

5.3 What rules on privilege apply in your jurisdiction? Does attorney-client privilege extend to in-house counsel?

Under the Advocates Law, attorneys must maintain the confidentiality of any information that they obtain from their clients in the course of providing their professional services, including any briefs, documents, agreements, written submissions, trade secrets and correspondence given to or obtained by them, unless stated otherwise or required by law. For example, under the Anti-corruption Law, all citizens – including professionals who must keep certain information confidential (eg, lawyers) – must waive their attorney-client privilege when giving testimony in a corruption case. Under the Law on the Corruption Eradication Commission, the commission also has the authority to wiretap and record conversations for the purposes of an investigation and prosecution.

As for in-house counsel, as long as the individual is appointed by a valid power of attorney, attorney-client privilege still applies. Otherwise, a confidentiality requirement can be included in the in-house counsel's employment agreement (or in the company regulations/collective labour agreement).

5.4 How have technological advances affected the disclosure process in your jurisdiction?

Please see question 5.1.

5.5 What specific considerations should be borne in mind during the disclosure process, for both plaintiff and defendant?

Please see question 5.1.

6 Evidence

6.1 What types of evidence are permissible in your jurisdiction?

The Civil Code recognises five types of legal evidence:

• documents;
• witness statements;
• inference;
• confessions; and
• oaths.

6.2 What rules apply to expert evidence in your jurisdiction? What specific considerations should be borne in mind when preparing and presenting expert evidence?

The parties may request an expert to testify in the court. The expert must provide testimony under oath before the court. The parties should bear in mind that the cost of expert witness varies according to the field of expertise and will be borne by the party that initiates the presentation of the expert witness.

6.3 What other factors should be borne in mind when preparing and presenting evidence in your jurisdiction?

In general, stamp duty is payable on documents presented to the court. For submission to the court, documents that are not in Indonesian must be translated by a sworn translator. The courts now accept electronic transmissions and documents as evidence (except for those that need to be in hard copy written or notarised form).

7 Court proceedings

7.1 What case management powers do the courts have in your jurisdiction?

The court fully determines the schedule of its hearings. However, the Supreme Court has issued guidelines for proceedings to be completed within five months at the district court level. If necessary, the proceedings can be extended beyond five months.

7.2 Are court proceedings in your jurisdiction public or private? If the former, are any options available to the parties to keep the proceedings or related information confidential?

All civil court proceedings are open to the public, except for divorce proceedings.

7.3 How is the applicable law determined? What happens in the event of a conflict of laws?

The parties can determine the applicable law by agreement. However, all proceedings in Indonesian courts will be governed by Indonesian law. Since Indonesia has a civil law system, judges will make their considerations and rulings on a case-by-case basis in the event of a conflict of laws.

7.4 What rules apply to the joinder of third parties?

A third party may join an ongoing proceeding by filing an application to the chief judge and demonstrating its interest in the matter. The judge will then issue an interlocutory ruling on whether to permit the third party's involvement.

7.5 How do the court proceedings unfold in your jurisdiction? What specific considerations should be borne in mind at each stage of the process, for both plaintiff and defendant?

Court proceedings in Indonesia commence with the plaintiff submitting a claim to the chairperson of the district court in the defendant's domicile. The plaintiff must then:

• register the civil suit with the deputy registrar of the district court; and
• pay a filing fee.

Upon registration, the deputy registrar must issue a letter of summons to the defendant at least three days prior to the first court hearing. If the defendant fails to appear at the first court hearing, it will be summoned to a second hearing and, if necessary, to a third hearing. If the defendant has not made an appearance by the third hearing, it is within the discretion of the court to issue a default judgment, unless the plaintiff's lawsuit is clearly groundless. Such a default judgment is subject to appeal and is therefore not binding or conclusive.

At the first hearing, where both parties appear, the judges will check relevant powers of attorney and must then encourage the parties to reach an amicable settlement or conciliation. The judges will urge the parties to endeavour to settle the dispute amicably during a mediation period and must adjourn the hearing until the mediation period ends. If the mediation is successful and an agreement is reached, the agreement must contain a clause regarding the withdrawal of the lawsuit or a statement stating that the dispute is settled. The judges may affirm the agreement and incorporate it into a decision, which is not subject to appeal and is therefore final and binding. In most instances, informal mediation/conciliation procedures are unsuccessful.

If the mediation process is unsuccessful, the first court hearing is then devoted to receiving the statement of the defendant and to certain administrative matters. The judges are empowered to issue directives to the parties regarding the evidence and legal alternatives available to each side. The main arguments during the course of the trial are in the form of written submissions.

Once the defendant's response to the original summons has been filed with the court, the court adjourns for a period, during which time the plaintiff is permitted to file its counterplea. The defendant may also file a counterclaim against the plaintiff's claim simultaneously with its first response. The counterclaim may be for an amount that is equal to, higher or lower than the claim. The filing of the counterplea triggers the commencement of a second period, during which the defendant is required to file a rejoinder or response to the counterplea.

Once these written submissions have been duly filed at the court, another session is scheduled to examine the written exhibits. The originals of the exhibits are not produced initially. The purpose of this session is for the judges to verify the copies against the originals. After the written exhibits have been properly examined by the judges, a subsequent court session is scheduled to hear the witnesses for the plaintiff and the defendant.

The next court session is scheduled for the purpose of accepting final written submissions from each party. Upon receipt of these final submissions, the judges usually adjourn the court for two to three weeks in order to review the submissions carefully and to render their decision. At the final court session, the judges will issue their decision.

The Supreme Court recently introduced the e-court system and thus some of the above proceedings may now be carried out through the e-court system.

7.6 What is the typical timeframe for the court proceedings?

Civil case proceedings in the district court usually take five to seven months.

8 Judgment and remedies

8.1 What types of judgments, orders and other remedies are available in your jurisdiction?

• A provisional or interim judgment may be issued by the court before a final ruling in situations where prompt action is necessary to protect the plaintiff's rights.
• A default judgment is made when the defendant does not appear before the court despite having been summoned.
• An immediate judgment is a decision that can be executed even if the losing party files an objection or appeal to the high court or to the Supreme Court.
• A final judgment is the court's ultimate finding on the merits after considering all of the disputed issues, in the form of a declaratory decision, a constitutive decision and/or a condemnatory decision.

As for remedies, damages are compensatory in both contractual and tort claims. Compensation covers costs, losses and interest. The court can also order specific performance of an obligation.

9 Appeals

9.1 On what grounds may a judgment be appealed in your jurisdiction?

The losing party at the district court level is entitled to appeal to the high court if unsatisfied with a judgment.

9.2 What is the appeals process? Is the judgment stayed while the appeal is pending?

The appeal must be submitted to the high court by the appellant within 14 days of the date of issuance of the decision, if the appellant attended the final court session at which the district court rendered its decision.

The enforcement of any judgment given at the district court is generally stayed until a final decision has been made with regard to the appeal(s).

The losing party may appeal the high court decision to the Supreme Court. The application for appeal and the executed deed of appeal must be filed with the original district court. This must be filed within 14 days of the date on which the losing party received the notice of decision. Following the appeal, the appellant is also required to file a written memorandum of appeal.

9.3 What specific considerations should be borne in mind during the appeals process, for both plaintiff and defendant?

At the high court, it may take a year or more before a judgment is rendered. Meanwhile, an appeal to the Supreme Court can take three years or more before a final decision is issued.

10 Enforcement

10.1 How are domestic judgments enforced in your jurisdiction?

If the court ruling in the plaintiff's favour is final and binding, and the defendant does not voluntarily comply with the ruling, the plaintiff can ask the court to warn the defendant to comply with the ruling and can subsequently enforce the ruling through the original district court by:

• filing an application; and
• paying the court fees for its execution.

An execution order will be issued against the defendant's assets. If an attachment order has previously been granted, it is changed to an execution order.

10.2 How are foreign judgments enforced in your jurisdiction?

Foreign judgments are not enforceable in Indonesia and the parties must submit a separate lawsuit at the relevant district court. The foreign court judgment can only be used as evidence in Indonesia.

10.3 What specific considerations should be borne in mind during the enforcement process, for both plaintiff and defendant?

The process for enforcing a final and binding court ruling is not straightforward and there is no statutory time limit to enforce judgments against the losing party. In practice, the process (for the entire enforcement proceedings up to the issuance of the executorial attachment order) can take months or even years.

11 Costs, fees and funding

11.1 What costs and fees are incurred when litigating in your jurisdiction?

Court costs consist of the following.

The cost of the proceedings: These include operating costs such as:

• the cost of serving one or more summonses;
• notification costs;
• the cost of the execution of an attachment order;
• the cost of a site inspection
• the cost of oath-taking;
• any translation costs; and
• the cost of execution.

Registrar's fees: These consist of:

• stamp duty (to certify legal documents);
• editorial costs for the publication or printing of legal notices issued by the government;
• the costs of registering an appeal to the high court and/or Supreme Court; and
• the costs of registering a reconsideration with the Supreme Court.

In practice, the court costs that the plaintiff must pay when registering a lawsuit are set by the chairperson of the relevant court. Therefore, the costs vary from court to court. For a case with a single defendant, the fees for filing a civil lawsuit in the district court range from IDR 1 million to IDR 2 million.

In a lawsuit, the plaintiff will usually ask the court to order the defendant to pay the court costs. Similarly, in its response, the defendant will ask that the court costs be borne by the plaintiff. In its ruling, the panel of judges will usually decide that the court costs should be paid by the losing party.

11.2 Are contingency fees and similar arrangements permitted in your jurisdiction?

There are no specific restrictions in regard to contingency fees and we understand that some lawyers apply these fee arrangements.

11.3 Is third-party funding permitted in your jurisdiction?

There are no specific restrictions on third-party funding.

11.4 What other strategies should parties consider to mitigate the costs of litigation?

The parties might determine the attorney fee arrangement prior to the proceedings in order to mitigate the cost of litigation. They may agree on:

• a fixed lump sum;
• hourly rates; or
• another type of arrangement, including retainers and contingency fees.

As an alternative, legal aid associations in Indonesia can provide free assistance with certain requirements. In general, under court precedent, attorneys' fees cannot be claimed by the opposing party.

12 Trends and predictions

12.1 How would you describe the current litigation landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Litigation in Indonesia can be costly and protracted, and is invariably unpredictable.

Legislative reforms to thd Civil Procedural Law have been proposed, as the current regime still follows Dutch colonial law. The Supreme Court has also established and promoted the use of the e-court system to expedite and simplify court hearings.

13 Tips and traps

13.1 What would be your recommendations to parties facing litigation in your jurisdiction and what potential pitfalls would you highlight?

A plaintiff should first assess whether the Indonesian courts have jurisdiction over the dispute. The plaintiff should also consider the best litigation strategy, including:

• determining the forum for dispute settlement (eg, whether the defendant has assets in Indonesia; the location of the defendant's assets); and
• the parties involved in the dispute (to avoid the claim being rejected due to the absence of a necessary party).

Also, in general, the Indonesian courts may not immediately reject a party from filing a claim by arguing that there is no legal basis. Therefore, any claim filed by the plaintiff will be examined by the court and both parties will be summonsed to present their arguments, before the court renders a ruling. Sometimes, this may lead to arguments of vexatious litigation.

It should also be borne in mind that it can take some time to obtain a final and binding ruling. In some cases, it may take three to four years before a final ruling is issued. The enforcement process itself may also take some time. This potentially lengthy timeframe should be taken into account before initiating litigation in Indonesia.

While it is not mandatory to have an attorney represent a party in litigation, in practice, it is common for litigating parties to appoint an attorney. It is therefore recommended that the disputing parties appoint attorneys equipped with the requisite knowledge and expertise to best represent them in Indonesia.

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.