by Setyawati Fitrianggraeni, Orima Melati Davey, Tiyana Sigi Pertiwi, Alicia Daphne Anugerah

Indonesia’s shipping industry lies at the crossroads of global trade and shifting legal frameworks. While the government often highlights maritime tourism and conservation, several initiatives directly impact shipping. Decarbonization frameworks, evolving trade routes, and rising dispute resolution needs are reshaping cargo transport and contractual practices. For an archipelagic nation reliant on maritime connectivity, adapting to these shifts is vital. Strengthening resilience and competitiveness requires coordinated efforts between law, policy, and industry practice to navigate these evolving challenges effectively

Introduction

Shipping remains the backbone of global trade, carrying most of the world’s goods and ensuring the uninterrupted flow of commerce across continents.[1] For Indonesia, an archipelagic state strategically located along vital sea lanes, the industry is not only critical to economic growth but also to national resilience. The transformation of global shipping through decarbonization, geopolitical shifts, and technological change makes this a decisive moment to chart Indonesia’s maritime future on the global stage.

These issues resonate across multiple levels. Globally, the International Maritime Organization has introduced ambitious targets and instruments such as the Carbon Intensity Indicator and the Energy Efficiency Existing Ship Index,[2] while regional measures like the European Union Emissions Trading System add layers of obligations. Regionally, shifting trade patterns influenced by sanctions, dark fleet practices, and supply chain realignments alter the stability of maritime commerce. Domestically, Indonesia faces the task of ensuring that its dispute resolution framework, institutional capacity, and maritime industry remain aligned with these global and regional currents.

From a legal perspective, international and regional regulatory frameworks are redefining contractual obligations, liability, and access to finance. From a non-legal perspective, industry adaptation, operational resilience, and policy choices will determine whether Indonesia can leverage its maritime advantage in a rapidly shifting landscape. The scope of this contribution is to evaluate how Indonesia can adapt its legal and industry frameworks to meet global standards while safeguarding competitiveness. The objective is to highlight both risks and opportunities, and to pose the central question: how can law, policy, and industry practice together ensure that Indonesia’s shipping sector remains resilient and forward-looking in an era of transformation.

This section addresses three core discussions: the legal implications of decarbonization for contracts and finance, the resilience of supply chains under geopolitical disruption, and the evolution of dispute resolution mechanisms in Indonesia.

Legal Analysis

1. The Green Wave: Legal Implications of Decarbonization

Decarbonization is transforming the legal framework of carriage and trade. As mentioned earlier, the International Maritime Organization has introduced measures such as the Carbon Intensity Indicator (CII), the Energy Efficiency Existing Ship Index (EEXI), and revised greenhouse gas reduction targets.[3] Regional initiatives, including the European Union Emissions Trading System, impose additional layers of cost and compliance. These instruments are not limited to regulating emissions. They are reshaping the contractual and financial architecture of international shipping.

This regulatory shift produces significant legal challenges. Charterparties and contracts of affreightment are being renegotiated to accommodate environmental obligations, as reflected in the introduction of the BIMCO CII Clause.[4] However, unresolved questions remain. Can a charterer demand higher speed if it risks breaching efficiency ratings? Should disputes over good weather performance now be assessed in relation to carbon intensity as well as fuel consumption? Furthermore, the transition to alternative fuels such as ammonia, methanol, and hydrogen introduces additional liabilities.[5] These technologies raise concerns regarding operational safety, adequacy of crew training, port state control, and the potential for pollution incidents. When failures occur, the allocation of responsibility between owners, charterers, insurers, and fuel suppliers becomes contested.

Financial institutions are also shaping compliance. Through the Poseidon Principles, lending and investment decisions are increasingly tied to climate alignment. This framework embeds decarbonization into financing structures, making access to capital dependent on emissions performance. Failure to comply may result not only in regulatory consequences but also in exclusion from financial markets. The legal environment that emerges is complex and evolving. Decarbonization is not only a technological or economic transition but also a legal reconfiguration of risk, responsibility, and reward. Navigating this shift requires foresight, adaptability, and an integrated approach to contractual, operational, and financial obligations

2. Supply Chain Resilience and Evolving Trade Patterns

Global trade is adjusting to a new geopolitical norm in which sanctions, trade wars, and regional conflicts significantly affect contractual performance. These disruptions test the scope of force majeure clauses, as parties grapple with whether unforeseen political developments relieve them from obligations or merely increase commercial risk.[6] Foreign courts and arbitral tribunals are being called upon to interpret whether such events constitute legal impossibility or only economic hardship, and as to whether delay or detainment of sanctioned vessels and her cargo or sanctioned owners are legitimate reasons for delay of obligations of a party under a contract, or if they constitute conditional terms or warranties leading to termination of a contract. The outcome influences the balance between risk allocation and contractual certainty in long-term supply arrangements.

Alongside geopolitical shocks, the rise of the so-called dark fleet has altered established trade flows. Vessels operating outside conventional tracking and regulatory oversight facilitate the movement of sanctioned oil and commodities, complicating enforcement of international sanctions and raising compliance challenges for legitimate actors in the supply chain. Insurers, financiers, and charterers face heightened due diligence obligations, as association with opaque shipping practices expose them to liability, reputational harm, and potential regulatory penalties.[7]

Supply chain resilience now requires more than logistical flexibility. It demands rigorous legal foresight, particularly in drafting contracts, assessing counterparties, and monitoring compliance. The evolving trade landscape demonstrates that resilience is not solely operational but fundamentally legal, anchored in the ability to anticipate and mitigate risks created by a shifting geopolitical and regulatory environment.

3. Indonesia’s Dispute Resolution Law for Shipping Industry

Indonesia’s strategic position as a maritime nation demands a dispute resolution framework that can match the pace of global shipping transformation. Traditional mechanisms have long provided stability for cargo and charter disputes, yet the rise of digital platforms, decarbonization technologies, and heightened ESG compliance is introducing new layers of complexity. The challenge lies in whether existing institutions can adapt, or whether new models are needed to ensure that Indonesia remains competitive and credible as a center for maritime dispute resolution.

The Limitations of The Current “Admiralty Court”

Although Indonesia’s “Mahkamah Pelayaran” roughly translates to as the “Admiralty Court”, it does not handle all legal disputes in relation to maritime and shipping matters, and in particular, does not oversee cases of maritime liens and claims, civil tort, and financial compensation arising out of and in connection with carriage contracts.[8] Additionally, the panel of judges in the “Admiralty Court” comprise of maritime tech experts rather than law experts. However, the growing complexity of the shipping industry now tests their capacity. Cases involving algorithm-driven chartering, performance monitoring systems, or compliance with clean technologies require knowledge that extends well beyond traditional maritime law. Without sufficient technical expertise, courts may struggle to deliver decisions that reflect both legal accuracy and technological realities, raising questions about the adequacy of existing structures for modern shipping disputes. (see DCL’s part to make it more coherent)

New Mechanisms: The potential for specialized arbitration panels with tech and ESG experts. (IAL)

Specialized arbitration offers a promising path forward. Panels composed of maritime lawyers alongside experts in technology, environmental regulation, and ESG standards could resolve disputes with greater precision and efficiency. The Indonesian Arbitration Law provides a framework that could be adapted to create such sector-specific panels, combining procedural flexibility with substantive expertise.[9] By institutionalizing this model, Indonesia could strengthen its position as a regional hub for maritime dispute resolution while offering the shipping industry a legal forum that aligns with twenty-first century challenges. In the evolving maritime landscape, legal certainty depends on the ability to bridge tradition with innovation. Indonesia’s dispute resolution system must adapt if it is to remain responsive to the demands of digitalization, decarbonization, and global trade. (See IAL’s part to make it more coherent)

4. Digitalization and Technological Advancements Efforts to Improve Efficiency

Traditional shipping liners are starting to step up their game, seeing as new giant e-commerce companies are attempting their own logistics operations with minimal shipping time. To stay competitive, carriers will need to engage with the digital world to improve real-time connectivity and operational efficiency.[10] After all, the issue of unreliability and uncertainty of storing, sharing and monitoring data whilst hundreds and thousands of cargos are being transported at sea plays a large part in this, given that the relayed data may be delayed or even inaccurate at times. In this regard, the development of AI and blockchain-driven apps for real-time data sharing by shipping companies for tracking cargo movement on board of vessels, se of electronic measures to improve logistics operations from the internet, including electronic initiatives in the area of transport documents such as bills of lading, trade finance and customs documents have been introduced to help improve this issue.

Modernization and digitalization have also been introduced as port and terminal solutions to streamline the flow of goods, reduce long queues and transport waiting times. For instance, the recent Terminal Booking System (TBS) launched by the Jakarta International Container Terminal (JICT) on August 17, 2025.[11]

Key Takeaways and Actions

Policymakers should strengthen alignment between national frameworks and global decarbonization rules, develop tools to address opaque shipping practices, and support the establishment of specialized arbitration mechanisms with technical and ESG expertise.
Industrial Actors, must revisit charterparty and supply contracts to reflect carbon obligations and geopolitical risks is essential, whilst conducting due diligence to avoid dark fleet exposure and investing in clean technology with clear liability management.
Legal practitioners must anticipate disputes linked to emissions compliance, fuel technology, and sanctions, while guiding clients toward arbitration or hybrid forums better suited to complex maritime claims.

Closing Reflections

The currents shaping global shipping is no longer determined solely by markets and technology but increasingly by law. Decarbonization, shifting trade patterns, and evolving dispute resolution models illustrate how legal frameworks now steer the course of maritime commerce. For Indonesia and the wider industry, the challenge is not merely compliance but anticipation, treating law as a navigational tool rather than a constraint. As the green transition, geopolitical shifts, and digital innovations accelerate, resilience will depend on charting these legal currents with foresight to ensure that trade flows remain both sustainable and secure.

Bibliography

BIMCO, ‘CII Clause for Voyage Charter Parties 2023’ (2023) <https://www.bimco.org/contractual-affairs/bimco-clauses/current-clauses/cii-clause-for-voyage-charter-parties-2023/>

Foretich A and others, ‘Challenges and Opportunities for Alternative Fuels in the Maritime Sector’ (2021) 2 Maritime Transport Research 1 <https://doi.org/10.1016/j.martra.2021.100033>

Heiland I and others, ‘Trade From Space : Shipping Networks And’ (2025)

International Maritime Organization, ‘EEXI and CII – Ship Carbon Intensity and Rating System’ (2023) <https://www.imo.org/en/mediacentre/hottopics/pages/eexi-cii-faq.aspx>

Jakarta International Container Terminal, ‘Efisiensi Logistik Nasional, JICT Terapkan Terminal Booking System’ (2023) <https://www.jict.co.id/article/90>

Kumar GP, Swamy PVS and Pavani G, ‘Sanctions , Tariffs , and Trade Wars : The Role of Geopolitical Tensions in Global Business Dynamics’ (2025) 7 Internasional Journal of Research in Management 831

Natalita F and Widianingsih W, ‘Efektivitas Arbitrase Dalam Penyelesaian Sengketa Bisnis Dan Implementasi Pasal 11 Ayat (2) UU No . 30 Tahun 1999 (The Effectiveness of Arbitration in Resolving Business Disputes and the Implementation of Article 11 Paragraph (2) of Law No. 30 of 1999)’ (2024) 3 Public Sphare: Jurnal Sosial Politik, Pemerintahan dan Hukum 23

PwC Global, ‘Case Study: Digital Transformation of the Global Shipping Industry’ (2023) <https://www.pwc.com/gx/en/services/legal-business-solutions/case-study-digital-transformation-global-shipping.html>

Rodriguez-diaz E, Alcaide JI and Endrina N, ‘Shadow Fleets : A Growing Challenge in Global Maritime Commerce’ (2025) 15 MDPI: Applied Sciences 1

Sengadji KG, ‘Rekonstruksi Regulasi Mahkamah Pelayaran Menjadi Pengadilan Maritim Indonesia Berbasis Keadilan (Reconstruction of the Admiralty Court Regulations into a Justice-Based Indonesian Admiralty Court)’ (Universitas Islam Sultan Agu 2022)

Zero-Emission Transition Center Planning Division ClassNK, ‘Recent Topics on GHG Emissions Reduction from International Shipping’ (2023) 8 ClassNK Technical Journal 3

[1] Inga Heiland and others, ‘Trade From Space : Shipping Networks And’ (2025) 2.

[2] International Maritime Organization, ‘EEXI and CII – Ship Carbon Intensity and Rating System’ (2023) <https://www.imo.org/en/mediacentre/hottopics/pages/eexi-cii-faq.aspx>.

[3] Zero-Emission Transition Center Planning Division ClassNK, ‘Recent Topics on GHG Emissions Reduction from International Shipping’ (2023) 8 ClassNK Technical Journal 3, 3.

[4] BIMCO, ‘CII Clause for Voyage Charter Parties 2023’ (2023) <https://www.bimco.org/contractual-affairs/bimco-clauses/current-clauses/cii-clause-for-voyage-charter-parties-2023/>.

[5] Anthony Foretich and others, ‘Challenges and Opportunities for Alternative Fuels in the Maritime Sector’ (2021) 2 Maritime Transport Research 1, 10 <https://doi.org/10.1016/j.martra.2021.100033>.

[6] G Prasanna Kumar, PVS Swamy and G Pavani, ‘Sanctions , Tariffs , and Trade Wars : The Role of Geopolitical Tensions in Global Business Dynamics’ (2025) 7 Internasional Journal of Research in Management 831, 831.

[7] Emilio Rodriguez-diaz, Juan Ignacio Alcaide and Nieves Endrina, ‘Shadow Fleets : A Growing Challenge in Global Maritime Commerce’ (2025) 15 MDPI: Applied Sciences 1, 2.

[8] Karolus Geleuk Sengadji, ‘Rekonstruksi Regulasi Mahkamah Pelayaran Menjadi Pengadilan Maritim Indonesia Berbasis Keadilan (Reconstruction of the Admiralty Court Regulations into a Justice-Based Indonesian Admiralty Court)’ (Universitas Islam Sultan Agu 2022) xix.

[9] Ferawati Natalita and Wiwin Widianingsih, ‘Efektivitas Arbitrase Dalam Penyelesaian Sengketa Bisnis Dan Implementasi Pasal 11 Ayat (2) UU No . 30 Tahun 1999 (The Effectiveness of Arbitration in Resolving Business Disputes and the Implementation of Article 11 Paragraph (2) of Law No. 30 of 1999)’ (2024) 3 Public Sphare: Jurnal Sosial Politik, Pemerintahan dan Hukum 23, 25.

[10] PwC Global, ‘Case Study: Digital Transformation of the Global Shipping Industry’ (2023) <https://www.pwc.com/gx/en/services/legal-business-solutions/case-study-digital-transformation-global-shipping.html>.

[11] Jakarta International Container Terminal, ‘Efisiensi Logistik Nasional, JICT Terapkan Terminal Booking System’ (2023) <https://www.jict.co.id/article/90>.

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