By Setyawati Fitrianggraeni, Eva F Fauziah and Deviana Bella Saputra
Keywords : Arbitration in Indonesia, Foreign Counsel, Advocate Law, Arbitration Law, Specific Power of Attorney, Badan Arbitrase Nasional Indonesia (BANI), Lembaga Alternatif Penyelesaian Sengketa Sektor Jasa Keuangan (LAPS SJK)
The involvement of foreign counsel in arbitration in Indonesia is inevitable as arbitration grows increasingly popular in the country. Indonesian Law No. 18 of 2009 on Advocate (“Advocate Law”) specifically deals with foreign counsel’s involvement in proceeding litigation and establishing legal service or representative office in Indonesia. But what about their involvement in arbitration? Does Law No. 30 of 1999 on Arbitration Law and Dispute Resolution (“Arbitration Law”) regulate the practice of foreign counsel in Indonesia? What do Indonesian arbitration institutions say about foreign counsel’s representation? Our brief note on the matter will hopefully shed some light on the law and practice of foreign counsels in Indonesian Arbitration.
Legal Vacuum in Arbitration Law
The Arbitration Law does not explicitly address whether foreign counsel is able to represent a party in arbitration in Indonesia. The most relevant provision in the Arbitration Law, Article 29 paragraph (2), merely stipulates that “the disputed parties may be represented by their legal counsel by means of a Specific Power of Attorney.” The elucidation of this provision also does not specify whether it only applies to Indonesian legal counsel or all counsels regardless of their nationality. Considering the wording alone, the relevant provisions in Arbitration Law do not restrict the involvement of foreign counsel. It also means that when they are engaged, they must act based on a Specific Power of Attorney. Therefore, in Indonesian-seated arbitration, disputing parties wishing to be represented by foreign counsel must issue a Specific Power of Attorney containing the names of and authorities provided to the foreign counsel.
Certain restrictions for the practice of foreign counsel in Indonesia
Advocate Law, however, stipulates several restrictions regarding the practice of foreign counsel within Indonesian jurisdiction. Article 23 paragraph (1) of Advocate Law states that “foreign counsel is prohibited to proceed before the [Indonesian] court hearing, practice, and/or establish a legal service office or their representative in Indonesia”. It can thus be inferred that representation by foreign counsel to practice law in Indonesia is limited as they are unable to be involved directly but may, in practice, provide consultation or advisory matters together with the local Indonesian counsel.
However, Article 23 paragraph (2) of Advocate Law stipulates that the foreign counsel may be employed by the Indonesian law firm as an ‘expert’ in “foreign law”. Therefore, when employed as a “foreign law” expert in an Indonesian law firm, foreign counsel must comply with the existing formalities, for instance, obtaining approval from the Minister of Law and Human Rights and a work permit from the Minister of Manpower. The elucidation of Article 23 paragraph (2) provides that the term “foreign law” includes (i) the law of the foreign counsel’s origin country, and (ii) international law in the business field and arbitration. Furthermore, Minister of Law and Human Rights Regulation Number 26 of 2017 on Requirements and Procedures to Employ Foreign Counsel and the Obligation to Provide Unpaid Legal Service for Law Education and Research (“MLHR Regulations”) provides that in addition to arbitration, foreign counsel may also be involved in other out-of-court settlement processes.
Arbitration Institution’s Approach
Indonesian arbitration institutions try to fill in this gap. In general, there are two types of approaches that arbitration institutions take: first, the arbitration rules are silent on the involvement of foreign counsel; second, arbitration rules explicitly allow a representation by foreign counsel with certain conditions.
For instance, Badan Arbitrase Syariah Nasional–Majelis Ulama Indonesia (The National Sharia Arbitration Board – Indonesian Ulema Council or “Basyarnas-MUI”), an arbitration institution specializing in Sharia economic sector, does not provide any rules. Basyarnas Rules 2021 are silent on the involvement of foreign counsel. Therefore, it places no requirement on the specific nationality of legal counsel in proceedings. It merely requires that the legal counsel who represents a party secure a Specific Power of Attorney from their client as the disputing party, the same as the requirement in Arbitration Law. Therefore, the involvement of foreign counsel seems feasible if they have a Specific Power of Attorney.
The examples of the second approach are adopted by Badan Arbitrase Nasional Indonesia (BANI Arbitration Center or “BANI”) and Lembaga Alternatif Penyelesaian Sengketa Sektor Jasa Keuangan (Alternative Dispute Resolution Institution for Financial Services Sector or “LAPS SJK”). Arbitration Rules issued by BANI and LAPS SJK explicitly allow representation by foreign counsel(s) subject to certain conditions.
Article 5 para (2) of BANI Rules 2022 stipulates that “… if a party is represented by foreign advisor(s) or foreign legal advisor(s) in an arbitration case relating to dispute subject to Indonesian law, the foreign advisor(s) or the foreign legal advisor(s) may attend the arbitration proceedings only if he [or she] is accompanied by Indonesian advisor(s) or legal advisor(s).”
This provision opens the possibility for foreign counsel to be involved in Indonesian law-governed disputes. Other than the requirement of counsels to obtain a Specific Power of Attorney, the Rules also requires foreign counsel to act together with Indonesian local counsel. Considering that most national/domestic arbitrations are held under BANI Rules, this practice reflects the common approach when involving foreign counsel as the party’s representative in domestic arbitration.
The same case applies to arbitration in LAPS SJK, an arbitration institution that began operating in 2021 an Arbitration tribunal that replaced 6 (six) other Alternative Dispute Resolution Institutions in the financial service sector (namely BAPMI, BMAI, BMDP, LAPSPI, BAMPPI, and BMPPVI) which adopts similar provision with BANI Rules. Article 21 paragraph (1) of LAPS SJK Regulation Number 02 states that “The parties may be represented by their authorized legal counsel pursuant to the Specific Power of Attorney if the party is represented by foreign legal counsel, therefore it shall be accompanied by Indonesian counsel.” Unlike BANI Rules that only require cooperation with Indonesian counsel when the disputes concern Indonesian law, LAPS SJK’s requirement applies to any governing law – although most (if not all) disputes referred to LAPS SJK concern Indonesian law.
Based on the above, it can be concluded that foreign counsels’ involvement in arbitration in Indonesia is allowed. However, their roles must be complemented with the presence/assistance of Indonesian counsel.
There is no regulation or rules that restrict foreign counsel from representing parties in arbitration in Indonesia. In general, the engagement of foreign counsel must fulfill several conditions. First, the said foreign counsel must have a Specific Power of Attorney from the client to represent it in the arbitral proceedings. Second, several arbitration rules specifically require foreign counsel to be accompanied by Indonesian counsel. Lastly, the foreign counsel must comply with the regulations and practices of Indonesian arbitration.
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Eva F Fauziah
Senior Associate at Anggraeni and Partners Practice Group of International Arbitration and Litigation
Head of Legal Lab
Deviana Bella Saputra
Junior Associate at Anggraeni and Partners Practice Group of International Arbitration and Litigation
 Setyawati Fitrianggraeni is Managing Partner at Anggraeni and Partners, Indonesia, Assistant Professor at the Faculty of Law University of Indonesia, and PhD Candidate at the World Maritime University, Malmo, Sweden. Eva F. Fauziah is Senior Associate at Anggraeni and Partners Practice Group of International Arbitration and Litigation. Deviana Bella Saputra is a Junior Associate at Anggraeni and Partners Practice Group of International Arbitration and Litigation.
 Art. 4 of MLHR Regulations
 Art. 23 para (2) of Advocate Law and its Elucidation
 Art. 2 paragraph (2) letter b of MLHR Regulations
 Art. 4 para (5) letter b of Basyarnas Regulation 2021 “Request of Arbitration shall be included with a Specific Power of Attorney if the Request for Arbitration is filed by the Claimant’s legal counsel” and Art. 10 para (2) letter a “Statement of Defense shall be included with a Specific Power of Attorney if the Statement of Defense and/or Counterclaim is filed by the Respondent’s legal counsel”
 Art. 29 para (2) of Arbitration Law