Critical Assessment and Recommendations for Supreme Court Regulation (Part 3)

by Eva Fauziah & Sri Purnama. Originally published in the Indian Journal of Arbitration Law (IJAL), an open-access student journal. with title “The Issuance of the Supreme Court Regulation No. 3 of 2023: An Assessment of Its Impact on Promoting Arbitration in Indonesia.” Indian Journal of Arbitration Law, 12(2), pp. 100-126.

 

While SCR 3/2023 represents a significant step forward in Indonesian arbitration law, it is not without its shortcomings. A critical assessment reveals areas where the regulation could be further refined to enhance its effectiveness and alignment with international best practices.

One area of concern is the inconsistency between SCR 3/2023 and the AADR Law regarding the exequatur for international arbitral awards. The regulation introduces a new concept of exequatur as an order to enforce an arbitral award, which deviates from the existing provisions in the AADR Law. This discrepancy could lead to confusion and legal uncertainty for parties involved in international arbitration.

Another aspect that warrants attention is the revised grounds for annulment of arbitral awards. While SCR 3/2023 aims to tighten the criteria for annulment, it is essential to ensure that these criteria are applied consistently and do not unduly restrict the parties’ right to challenge an award. Striking a balance between finality and fairness is crucial in maintaining the integrity of the arbitration process.

Furthermore, the regulation’s exclusion of arbitral institutions from the annulment process raises questions about the role of these institutions in ensuring the quality and legitimacy of arbitral awards. It is worth considering whether involving arbitral institutions in the annulment process could provide an additional layer of scrutiny and expertise.

To address these issues and further strengthen SCR 3/2023, the following recommendations are proposed:

1. Harmonize the exequatur provisions: The drafters of SCR 3/2023 should revise the exequatur provisions to align with the AADR Law, ensuring consistency and clarity in the enforcement of international arbitral awards.
2. Clarify the grounds for annulment: The regulation should provide more detailed guidance on the application of the revised grounds for annulment, ensuring that they are interpreted and applied consistently by the courts.
3. Consider the role of arbitral institutions: The drafters should explore the possibility of involving arbitral institutions in the annulment process, potentially through an advisory or consultative role, to enhance the quality and legitimacy of arbitral awards.

By addressing these concerns and implementing the recommended changes, SCR 3/2023 can be further refined to become a robust and effective framework for arbitration in Indonesia. This will not only promote arbitration as a preferred dispute resolution mechanism but also strengthen Indonesia’s position as a hub for international arbitration.

 

 

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Sri Purnama

Junior Legal Research Analyst

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