bga
EnglishIndonesian

Litigation Proceedings in Indonesia

By MAKARIM & TAIRA S.

Introduction

This memorandum is intended to assist foreign investors and contracting parties in understanding the basic procedures of civil litigation in Indonesia.

Whilst civil litigation in Indonesia can be a complex and uncertain area for potential plaintiffs, it also has certain advantages over arbitration as a dispute resolution mechanism and should not be dismissed solely as a result of ignorance of how litigation is conducted in Indonesia. This memorandum, however, does not attempt to discuss any of the detailed procedural issues involved in undertaking litigation in Indonesia, nor does it refer to or give a critical appraisal of, any of the uncertainties, vagaries, costs or strategic issues which are often seen as being an inherent and important part of this method of dispute resolution.

This memorandum does not discuss bankruptcy proceedings in Indonesia. This is the subject of a separate Makarim & Taira S. memorandum

1.Commencement of Civil Proceedings.

The institution of a legal action or proceeding in Indonesia usually commences with the plaintiff submitting a complaint (“Surat Gugatan“) to the chairman of the District Court located in the defendant’s domicile. The plaintiff is then required to register the civil suit with the deputy registrar of such District Court and pay a filing fee.

Upon registration, the deputy registrar is required to issue a letter of summons to the defendant at least 3 days prior to the first court hearing. If the defendant fails to appear at the first court hearing he is 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 (“Putusan Verstek“) unless the plaintiff’s lawsuit is clearly without merits (i.e. is 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 judge will check relevant powers of attorney and then is obliged to encourage the parties to reach an amicable settlement or conciliation.

There is a Supreme Court regulation regarding mediation/conciliation procedures in court. At the first hearing where both parties appear, the judges will urge the parties to endeavour to settle the dispute amicably during a mediation period and the judges are obliged to adjourn the hearing until the mediation period ends. If the mediation is successful and reaches an agreement, 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 (Putusan Dading), which is not subject to appeal and is therefore final and binding. In the majority of instances, informal mediation/conciliation procedures are not successful.

If the mediation process has not been successful, the first court hearing is then devoted to receiving the statement of the defendant and to certain administrative matters. The judge is empowered to give 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.

When 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 his counter plea (the “Replik“). The defendant may also file a counter claim against the plaintiff’s claim simultaneously with his first response. The counter claim may be for an amount which is the same, higher or lower than the amount of the claim. The filing of the Replik triggers the commencement of a second period during which the defendant is required to file a rejoinder or response to the Replik (the “Duplik“).

When these written submissions have been duly filed at the court, another session is scheduled to examine such written exhibits. The originals of the exhibits are not produced initially. The purpose of this session is for the judge to verify the copies with the originals.

After the written exhibits have been properly examined by the judge, a subsequent court session is scheduled to hear the witnesses for the plaintiff and the defendant. Indonesian procedural law requires that the plaintiff produce at least two witnesses. The witnesses for the plaintiff are heard first and then the witnesses for the defendant.

Each witness is examined by the lawyer calling him, and may also be cross examined by the lawyer opposing and then re-examined by the first lawyer. The judge is also entitled to question the witness. A written record of the testimony is made by an officer of the court and given to the judge. It is usual for the lawyers representing each party to approach the court officer to review the record and seek correction of any errors. If the lawyers disagree with the record they are entitled to approach the judge for purposes of verifying the accuracy of the record and to seek the judge’s approval in order to correct any errors contained therein.

The next court session is scheduled for the purpose of accepting final written submissions from each party (“Kesimpulan“). Upon the receipt of these final submissions, the judge usually adjourns the court for two to three weeks in order to review the submissions carefully and to render his decision. At the final court session, the judge will issue his decision.

The time period from the commencement of legal proceedings at the District Court level until judgment is rendered is rarely less than 6 months and can be a year or more.

There is also a decision (“Putusan Serta Merta“), which can be executed notwithstanding the losing party filing an objection, appeal or cassation. The requirements to obtain a Putusan Serta Merta is :

  1. the evidence submitted to support the plaintiff’s claim cannot be denied;
  2. if the provisional decision is granted;
  3. if the object of dispute belonging to the plaintiff is in the possession of the defendant.

Putusan Serta Merta and the provisional decision may only be enforceable by an order or under the supervision of the Head of the District Court, and can only be executed after the head of the District Court obtains a permit from the head of the Appeal Court.

2. Appeal to the High Court (Pengadilan Tinggi).

The losing party at the District Court level is entitled to appeal to the High Court. Such appeal is required to be lodged with the High Court by the appellant within 14 days from the date of issuance of the decision if the appellant attended the final court session when the District Court rendered its decision and on condition that the appellant is domiciled within Java or Madura. However, if the appellant is domiciled outside Java or Madura, he has a period of 30 days during which to file an appeal.

If the appellant was not in attendance at the final session of the District Court, the time to lodge an appeal is calculated from the time the appellant received the notice of decision.

The appellant is required to file the appeal with the deputy registrar of the same District Court which rendered the initial decision. The appellant need only sign the deed of appeal (“Akta Banding“) and to pay the appeal fee in order to successfully file the appeal. No legal grounds justifying the appeal need be included in the Akta Banding, apart from being dissatisfied with the decision of the lower court. If a statement of appeal is lodged, the respondent to the appeal may file a counter statement if he wishes, but there is no requirement to do so. The appeal to the High Court may ask to review both matters of fact and law and is based on written submissions made on behalf of each party.

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

The decision of the High Court may take a year or more before a judgment is rendered.

3. Appeal to the Supreme Court.

From a decision of the High Court, the losing party may appeal by seeking an appeal to the Supreme Court. The application for appeal and an executed deed of appeal has to be filed with the original District Court. This appeal must be filed within 14 days calculated from the time the losing party received the notice of decision.

Within 14 days of the application for appeal being filed, the “Memori Kasasi”, which is the statement containing the reasons for the appeal, must be submitted to the court. The respondent, if he so desires, may also submit a counter statement, the “Kontra Memori Kasasi”, within 14 days calculated from the date that he received a copy of the Memori Kasasi.

The Supreme Court does not review the facts but only decides on matters of law, including the issue of whether the lower courts properly applied the law.

An appeal to the Supreme Court can take three years or more before a final decision is issued. Enforcement of the Supreme Court’s final judgment make take a further three to six months.

4. Execution of Judgments.

If the plaintiff prevails at the District Court, High Court or Supreme Court, an attachment order in respect of the defendant’s assets (“Conservatoir Beslag“) will be issued. If the court decision is final and binding, the conservatory attachment order is changed to an execution order.

Execution takes place by the judge notifying the defendant that there is an outstanding order. If the defendant does not satisfy its obligations thereunder, the judgment will be satisfied by the sale of the defendant’s assets at a public auction. Such a public auction is effected by a special administrative board (“Juru Lelang“) under the jurisdiction of the Ministry of Finance. A public auction should be preceded by a notification published in a local newspaper. Police assistance may be called upon if necessary to encourage a recalcitrant defendant to release property which is the subject of the auction.

As mentioned below, it is possible in some circumstances to obtain an execution order even though there is still an appeal pending. The approval of the High Court would need to be obtained by the District Court before issuing such an order.

5. Pre-Judgment Remedies

Indonesian procedural law does not recognize the concept of pre-judgment remedies and injunction prior to the registration of a claim. Accordingly, there is no legal remedy for the creditor before a claim is formally registered with the deputy registrar of the District Court. Upon registering a claim, the pre-judgment remedies which are available to the creditor consist of requesting an Attachment Order (“Conservatoir Beslag“) in respect of the debtor’s assets or goods, and/or seeking a Provisional Decision (“Putusan Provisi“) to prevent the sale of an asset.

  1. Attachment Order
    • An Attachment Order (akin to a common law attachment) can be granted by the court after a claim is formally registered, even though the day of the hearing is not determined yet and the defendant (debtor) has not been informed.
    • The assets of debtors which can be placed under the Attachment Order are all movable or immovable assets, including funds in a bank account. It is also common that bank guarantees are blocked (frozen) so that the bank cannot release the payment of such bank guarantee. A plaintiff may be required to post bond for any damage caused to the defendant as a result of the attachment.
    • The Attachment Order in respect of the debtor’s assets does not prevent the debtor from continuing to operate or to use them for its normal business, except that money cannot be withdrawn from a bank account. However, the debtor is prohibited from transferring the ownership of these assets or goods, leasing them or from using them as new collateral in favour of other creditor(s). The Attachment Order may also cover assets in the possession of third parties (akin to common law garnishment).
    • The Attachment Order can be lifted by the panel of judges at any time during the proceedings or simultaneously with the session at which the final decision by the panel of judges is delivered.
    • If the Attachment Order is lifted by the panel of judges prior to the issue of the decision in the main case, then the Attachment Order has no effect and is considered as having never existed, although the losing party may file an appeal against the final decision in the main case.
    • If the Attachment Order is lifted simultaneously with the main case and this is stipulated in the decision of the judges in the main case, the Attachment Order still has an effect if the losing party files an appeal against the final decision in the main case.
  2. Provisional Decision
    • A Provisional Decision is a kind of remedy which can be requested by the plaintiff (creditor) before the main case. However, the panel of judges will usually only issue a provisional decision after the defendant has been given time to file its defense. This differs from the Attachment Order, which can be granted by the panel of judges at any time, even though the defendant has not yet filed its defense.
    • The Provisional Decision is usually an order from the Court to the defendant to do or not to do something, like an injunction (e.g., to prohibit the defendant from leaving the country).

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.