Investment Treaty Arbitration

Investment Treaty Arbitration: Indonesia

Overview of investment treaty programme

1. What are the key features of the investment treaties to which this country is a party?

Indonesia

BIT Contracting Party or MIT

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection
and security

Most-favoured-nation (MFN)

Umbrella clause

Cooling-off period

Local courts

Arbitration

Algeria (Not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Argentina (1 March 2001)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Australia (29 July 1993)

Yes

Yes

Yes

Yes

No

No

Yes

Yes

Bangladesh (22 April 1999)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

BLEU (Belgium-Luxembourg Economic Union) (17 June 1972)

Yes

Yes

Yes

Yes

No

No

No

Yes

Bulgaria (23 January 2005) (Terminated on 25 January 2015) 1

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Cambodia (Not in force) (Terminated on 7 January 2016) 2

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Chile (Not in force)

Yes

Yes

Yes

Yes

No

4 months

Yes

Yes

China (1 April 1995) (Terminated on 31 March 2015) 3

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Croatia (Not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Cuba (29 September 1999)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Czech Republic (21 June 1999)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Denmark (2 July 1968)

No

Yes

No

Yes

No

No

No

Yes

Denmark (Not in force)

Full text unavailable

             

Egypt (29 November 1994) 4

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Finland (2 August 2008) 5

Yes

Yes

Yes

Yes

No

6 months

Yes (only where arbitration is unsuccessful)

Yes

France (29 April 1975)

Full text unavailable in English

             

Germany (19 April 1971)(terminated)

Yes

Yes

Yes

Yes

Yes

No

No

No

Germany (2 June 2007)

Yes

Yes

Yes

Yes

Yes

No

Yes

Yes

Guyana (Not in force)

Full text unavailable

             

Hungary (13 February 1996) (Terminated on 12 February 2016) 6

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

India (22 Jan 2004)

Yes

Yes

No

Yes

No

6 months

Yes

Yes

Iran, Islamic Republic of (28 March 2009)

Full text unavailable

             

Italy (25 June 1995) (Terminated on 23 June 2015) 7

Yes

Yes

No

Yes

No

6 months

Yes

Yes

Jamaica (Not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Jordan (9 February 1999)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Korea, Dem. People’s Rep. of (Not in force)

Full text unavailable

             

Korea, Republic of (10 March 1994)

Yes

Yes

Yes

Yes

No

12 months

Yes

Yes

Kyrgyzstan (23 April 1997)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Lao People’s Democratic Republic (14 October 1995) (Terminated on 13 October 2015) 8

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Libya (Not in force)

Full text unavailable

             

Malaysia (27 October 1999) (Terminated on 20 June 2015) 9

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Mauritius (28 March 2000)

Full text unavailable

             

Mongolia (13 April 1999)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Morocco (21 March 2002)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Mozambique (25 July 2000)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Netherlands (17 July 1971)(Terminated)

Full text unavailable

             

Netherlands (1 July 1995) (Terminated on 30 June 2015) 10

Yes

Yes

Yes

Yes

Yes

3 months

Yes

Yes

Norway (Terminated)

Full text unavailable

             

Norway (1 October 1994)(Terminated 1 January 2001) 11

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Pakistan (3 December 1996)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Philippines (Not in force)

Full text unavailable

             

Poland (1 July 1993)

Full text unavailable

             

Qatar (Not in force)

Full text unavailable

             

Romania (21 August 1999) (Terminated on 7 January 2016) 12

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Russian Federation (15 October 2009)

Yes

Yes

No

Yes

No

6 months

Yes

Yes

Saudi Arabia (5 July 2004)

Full text unavailable

             

Serbia (Not in force)

Missing Articles 1 - 5

6 months

Yes

Yes

Singapore (28 August 1990)(Terminated)

Full text unavailable

             

Singapore (21 June 2006)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Slovakia (1 March 1995) (Terminated on 28 February 2015) 13

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Spain (18 December 1996)

Yes

Yes

No

Yes

No

12 months

Yes

Yes

Sri Lanka (21 July 1997)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Sudan (Not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Suriname (Not in force)

Full text unavailable

             

Sweden (18 February 1993)

Yes

Yes

No

Yes

No

6 months

Yes

Yes

Switzerland (9 April 1976)

Yes

Yes

No

Yes

No

No

No

No

Syrian Arab Republic (20 February 2000)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Tajikistan (Not in force) 14

No

No

No

Yes

No

No

No

No

Thailand (5 November 1998)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Tunisia (12 September 1992)

Full text unavailable

             

Turkey (28 September 1998) (Terminated on 7 January 2016) 15

No

Yes

No

Yes

No

6 months

Yes

Yes

Turkmenistan (Not in force)

Full text unavailable

             

Ukraine (22 June 1997)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

United Kingdom (24 March 1977)

Yes

Yes

Yes

Yes

Yes

No

No

Yes

Uzbekistan (27 April 1997)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Venezuela, Bolivarian Republic of (23 March 2003)

Full text unavailable

             

Vietnam (3 April 1994) (Terminated on 7 January 2016) 16

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Yemen (Not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Zimbabwe (Not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

FTAs/EPAs

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection and security

Most-favoured-
nation (MFN)

Umbrella clause

Cooling-off period

Local courts

Arbitration

Japan - SEA Nations (8 October 2003)

No

Yes

Yes

Yes

Yes

90 days

Yes

Yes

Korea-SEA Nations
(13 December 2005)

No

No

Yes

Yes

No

90 days

No

No

India-SEA Nations (8 October 2003)

No

No

Yes

Yes

No

Not stated

No

No

D-8 Member States (15 June 1997)

No

No

Yes

Yes

Yes

30 days

No

Yes

Australia-New Zealand
(1 January 2010)

Yes

Yes

Yes

Yes

No

Not stated

No

Yes

People’s Republic of China-SEA Nations
(4 November 2002)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Japan (8 October 2003)

Yes

Yes

Yes

Yes

Yes

5 months

Yes

Yes

Qualifying criteria - any unique or distinguishing features?

2. What are the distinguishing features of the definition of “investor” in this country’s investment treaties?

Indonesia

Issue

Distinguishing features in relation to the definition of ‘investor’

Nationals

Most of Indonesia’s BITs provide that investors are any natural person or company being a national of a Contracting Party in accordance with its law who invests in the territory of the other Contracting Party.

The majority of BITs concluded with Indonesia, provides ‘national’ shall comprise with regard to either Contracting Party: (i) natural person having the national of that Contracting Party; (ii) legal person constitute under the law of that Contracting Party.17

A number of Indonesian BITs define ‘national’ as ‘any physical person’ having one of the Contracting Party’s nationality.18

In the German BIT, the Constitution and the Law of Nationality of Indonesia are also mentioned to help identify the term of ‘nationals’.

Companies

Companies are defined as ‘any company with a limited liability incorporate in the territory of the Republic of Indonesia or any juridical person constituted in accordance with its laws.19 Enterprises and institutions can supplement the definition of company.

Furthermore, in the Indonesia-Italy BIT, ‘company’ and ‘legal person’ are used interchangeably and includes ‘every limited liability company.’

In addition, the Indonesia-Spain BIT require that companies be ‘properly organized under the law of that Party and is actually managed from the territory from of that Party.’

Seat of the investor/place of business

In a few of Indonesia’s BITs, legal person/entities are expected to have the permanent seat in the territory of that Contracting Party.20 Having ‘headquarters and economic activity in the territory of that Party’ are taken into account in the Indonesia-Turkey BIT.

3. What are the distinguishing features of the definition of "investment" in this country’s investment treaties?

Indonesia

Issue

Distinguishing features in relation to the concept of ‘investment’

Definition of investment and its eligible assets

The definition of investment roughly translates to any kind of asset invested by nationals of one Contracting Party in the territory of the other Contracting Party. Nearly all Indonesian BITs provide a non-exclusive list of potential investments, including for example: movable and immovable property and other property rights; shares in companies or other forms of interest in companies; claims to money or to any performance having an economic value; intellectual and industrial property rights including rights with respect to copyright, patents, trademarks, trade names, industrial designs, trade secrets, know-how and goodwill; and concessions or rights conferred by law, including concessions or rights to search for or explore natural resources. The Romanian BIT also includes ‘reinvested returns.’

Accordance with local laws

Nearly all BITs require that investments be made in accordance with national law. As a majority of the BIT were concluded before 2000, they refer to the Foreign Investment Law No.1 of 1967. The Egypt BIT states that investments should be approved by the competent authorities of the Contracting Party.

Indirect investments

The Belgium BIT is the only treaty which extends protection to indirect investments or contribution: ‘The term ‘investments’ shall comprise every direct or indirect contribution of capital…’

Exclusion

The Belgium BIT has limited protection to agriculture, industry, mining, forestry, communications and tourism.

Form of investment

Indonesia investment treaties provide that any alteration of the form in which assets are invested does not affect their character as an investment.21 The Moroccan BIT sets forth alteration of the ‘legal form’ in which assets are ‘invested or reinvested.’

Substantive protections - any unique or distinguishing features?

4. What are the distinguishing features of the fair and equitable treatment standard in this country’s investment treaties?

Indonesia

Issue

Distinguishing features of the fair and equitable treatment standard

Illustrations of the fair and equitable treatment standard

The majority of the Indonesia’s BITs provide that each Contracting Party shall accord fair and equitable treatment to investments. Investments of ‘investor,’ or ‘national’ are widely used throughout the BITs.22

In the India BIT, ‘returns’ are afforded FET protection.

Oddly, the Malaysian BIT only provided ‘equitable treatment’ instead of ‘fair and equitable treatment.’

Three BITs and an FTA include full protection and security as part of the FET standard.23

The Morocco BIT specifies that the FET standard includes investments of investors ‘subject to the strictly necessary measures to maintain the public order.’

The Sweden & UK BIT is more descriptive and requires that FET shall not impair ‘the management, maintenance, use, enjoyment or disposal’ by unreasonable measure.

No explicit reference to the FET standard

The Denmark and Turkey BITs, and several FTA does not refer explicitly to the fair and equitable standard.24

5. What are the distinguishing features of the protection against expropriation standard in this country’s investment treaties?

Indonesia

Issue

Distinguishing features of the ‘expropriation’ standard

‘Right to regulate for a public purpose’

All BITs provide for standard protection against expropriation (ie, the expropriation is for a public purpose; it is non-discriminatory, and is accompanied by payment of prompt, adequate and effective compensation.) There are variations of ‘public purpose,’ some of them being ‘public interest,’ as referred in the Belgium, Romania, Spain, Sweden, Switzerland BITs and the ‘public benefit’ as mentioned in Denmark and Germany BIT and ‘public use’ as used in the Argentina BIT.

Six BITs refer to the condition that the expropriation should be for a public purpose related to the internal needs of the Contracting Party.25

Indirect expropriation

Only a few of Indonesia’s investment treaties expressly protect against both direct and indirect expropriation.26

In accordance with the ‘due process of law’

A portion of Indonesia’s investment treaties require that an expropriation should be carried out in accordance with due process of the law, which is subject to certain deviations.27 For example, the Belgium and Finland BITs add that the above measures must be taken ‘in accordance with international law.’ Moreover, the Korea BIT requires the legality of any expropriation to be ‘in accordance with the existing laws and regulations of the expropriating Party.’

Compensation

In general, compensation shall be prompt, adequate and effective. Compensation shall be equivalent to the fair market value of the expropriated investment, paid without delay and freely transferable in freely convertible/usable currencies. However, Indonesia’s treaties use different formulations with respect to the calculation of compensation, including:

Market Value: Argentina, Australia, Chile, Cuba, Pakistan, Egypt, Finland, Hungary, Korea, Morocco, Netherlands, United Kingdom, Vietnam BITs.

Fair Market value: Bangladesh, Croatia, Czech Republic, India, Jordan, Syria, Kyrgyzstan, Laos, Malaysia, Mongolia, Romania, Singapore, Slovakia, Sri Lanka, Syria, Thailand, Turkey, Ukraine, Uzbekistan, Yemen, Zimbabwe BITs.

Actual value: Belgium BIT.

Commercial value: Denmark BIT.

The Australian BIT provides compensation shall be determined ‘in accordance with generally recognised principles of valuation and equitable principles taking into account the capital invested, depreciation, capital already repatriated, replacement value, currency exchange rate movements and other relevant factors. Similar with the Australian benchmarks, ‘current returns’ and ‘appreciation’ are also taken into account in the Romanian BIT.

Right to Review

Several Indonesian investment treaties provide investors, under the law of the Contracting Party in which the expropriation occurs, with the right to review of the legality of the measures by a ‘judicial authority or independent authority’ (Czech Republic, India, Singapore, Syria, Thailand) or ‘court of law’ (Mozambique). Courts, judicial authority or independent authority may review the conditions of the taking and the value for compensation.

6. What are the distinguishing features of the national treatment/most-favoured-nation treatment standard in this country’s investment treaties?

Indonesia

Issue

Distinguishing features of the ‘national treatment’ and/or ‘most favoured nation’ standard

Scope

All of Indonesia’s BITs contain a clause on national treatment and/or most-favored nation. Apart from these clauses, a majority of the BITs provide that each host state shall in its territory accord to investors of the other Contracting Party, as regards to management, maintenance, use, enjoyment or disposal of their investment, treatment which is fair and equitable. Several BITs extend the protection to ‘returns’ as well.28

Common limitations

Most Indonesia’s BITs do not extend to memberships establishing customs unions, free trade area, common market area, economic unions, monetary unions or similar institutions, or on the basis of interim, or future agreements leading to such unions or institutions. The China, Egypt, Hungary, Romania, Sweden BITs also encompass, ‘economic multilateral agreements.’ Furthermore, under several BITs the MFN treatment protection does not apply in relation to double taxation agreements or other agreements related with taxation.29

7. What are the distinguishing features of the obligation to provide protection and security to qualifying investments in this country’s investment treaties?

Indonesia

Issue

Distinguishing features of the ‘protection and security’ standard

Extent of obligation

The formulation of the obligation to provide ‘protection and security’ in Indonesia’s investment treaties is not uniform. Often Indonesia’s BITs offer ‘protection and security’ in conjunction with ‘fair and equitable treatment.’ BIT provides for ‘protection and security,’30 ‘adequate protection and security,’31 and ‘full protection and security.’32

While the Argentina BIT states ‘full legal protection and security’, the Bulgaria, Singapore and Netherlands BITs calls for ‘adequate physical security and protection.’ Next, ‘full protection’ is provided within the Belgium and German BITs. Furthermore, the Spain and Switzerland BITs states that each contracting party shall protect in its territory the investments made according to its laws and regulations in force, by the investors of the other contracting party.

8. What are the distinguishing features of the umbrella clauses contained within this country’s investment treaties?

Indonesia

Issue

Distinguishing features of any ‘umbrella clause’

Scope

Three bilateral investment treaties contain umbrella clauses (Netherlands, United Kingdom, and Germany).

Qualification of the obligation

The three BIT above similarly state that each/either Contracting Party ‘shall observe any other obligation it may have entered into with regard to investments of national of the other Contracting Party.’

9. What are the other most important substantive rights provided to qualifying investors in this country?

Indonesia

Issue

Other substantive protections

Armed conflict/civil unrest

All of Indonesian investment treaties generally provide for protection resulting from any measures by the Contracting State ‘owing to war or other armed conflict, revolution, a state of national emergency, revolt, insurrection, riot or other similar event in its territory.’

Non-impairment

A majority of Indonesia’s investment treaties prohibit the taking of unreasonable or discriminatory measures against the management, maintenance, use, enjoyment or disposal of investments in its territory.33

Next, it provides ‘the management, maintenance, use, enjoyment or disposal of investments’ shall not be impaired.34

Subrogation

All investment treaties concluded with Indonesia recognise (with variation in wordings) a subrogation clause. In general, if one Contracting Party or any of its designated agency has granted any guarantee against non-commercial risks in respect of an investment by its investor in the territory of the other Contracting Party and has made payment to such investor under that guarantee, the other Contracting Party shall recognize the transfer of the rights of such investor to former Contracting party or any of it designated agency. Furthermore, a number of BITs provide that the subrogation of the latter Contracting Party shall not exceed the original rights of such investor.35

The Russian BIT calls for rights or claims to be carried out ‘in accordance with the laws and regulations of the latter Contracting Party.’ While the Singapore BIT provides, in the event of exercising subrogated rights, that the Contracting Party exercising such rights shall disclose the coverage claims arrangement with its investor to other Contracting Party.

Free transfer of payments

Although not uniform in wording, all of Indonesia’s BITs contain a provision that requires the contracting parties to permit investors freely to transfer investments and investment returns without unreasonable delay. Most BITs set out a list of transfer to be made, for instance, capital, net operating profits, payment of royalties, compensation for losses and expropriations. In addition, several BITs provide currency transfer shall be permitted in the currency of the original investment or any other freely usable currency.36 With respect to current transaction in the currency to be transferred, such transfer shall be made at the prevailing rate of exchange on the date of transfer. German BIT calls for the rate of exchange shall be based on the par value agreed with the International Monetary Fund.

Procedural rights in this country’s investment treaties

10. Are there any relevant issues related to procedural rights in this country’s investment treaties?

Indonesia

Issue

Procedural rights

Fork in the road provision

Fork in the road clauses are in the following treaties with: Argentina, Bangladesh, Bulgaria, Czech Republic, Egypt, Germany, India, Jordan, Laos, Mongolia, Mozambique, Netherlands, Slovakia, Sri Lanka, Thailand, Turkey, Ukraine and Uzbekistan. Within these BITs, investors must choose between local court or international arbitration to pursue their claim.

ICSID, ICC, or ad hoc arbitration under UNCITRAL Rules

All Indonesia BITs offer arbitration for the settlement of disputes between investor and the host state. Often mentioned, any disputes arising between the investor of the host-state (vice-versa) are required to submit them through ICSID.37 Second, an ad hoc tribunal established under the UNICTRAL Arbitration Rules can be used.38 Only the Cuba BIT mentions the ICC to settle disputes. Singapore has included, ‘any regional center for arbitration in ASEAN.’

Arbitrator appointment

Nearly all BITs regulate the appointment procedure of arbitrators.39

Cooling-off period

A majority of Indonesia BITs provide for a cooling off period ranging from 3-6 months. The Korean and Spanish BITs however, indicates a 12 months cooling off period.

Exhaustion of local remedies

The Korea, Spain, Sweden BITs provide that before settling dispute through arbitration, the exhaustion of local remedies is required. The Turkish BIT provides that a dispute may be referred to international arbitration where a local court has not rendered a decision on the matter within 1 year.

11. What is the status of this country’s investment treaties?

Indonesia

The status of investor-state dispute settlement (ISDS) enshrined in a number of Indonesia’s’ bilateral investment treaty (BIT) has been particularly contentious. To date, Indonesia has terminated 16 of its BITs and is likely to terminate many more when they come up for renewal. While sunset clauses in many of these BITs mean that they will continue to remain in effect for many years to come (most BITs provide that they remain applicable to investments entered into prior to the termination for at least 10 years from the date of termination), Indonesia’s systematic termination of its BITs has unsurprisingly caused foreign investors some concern. However, other sources have reported that the Government of Indonesia will re-evaluate and modify all of the 67 BITs it has concluded with various states. Former Vice President of Indonesia, Professor Boediono, stated new bilateral investment agreements will be adjusted to recent developments.40 According to the Financial Times, the chairman of Indonesia’s investment co-ordination agency said that Indonesia was drafting a new template for its investment treaties.41 As of the date of this publication, no text of the new template BIT has been made publicly available. As a result of the above, uncertainty remains as to the scope of protection which Indonesia will afford investors in the future. Nonetheless, it should be noted that Indonesia’s obligations under multilateral treaties remain in force. In fact, Indonesia may be deliberately moving away from bilateral arrangements towards a multilateral model. Amongst other things, Indonesia has declared its intention to join the Trans-Pacific Partnership that was signed on 4 February 2016.

Practicalities of commencing an investment treaty claim against this country

12. To which governmental entity should notice of a dispute against this country under an investment treaty be sent? Is there a particular person or office to whom a dispute notice against this country should be addressed?

Indonesia

Government entity to which claim notices are sent

There is no particular governmental entity to whom the Notice of Dispute should be addressed. In the past, the Notice of Dispute has been addressed directly to the President of Indonesia.

13. Which government department or departments manage investment treaty arbitrations on behalf of this country?

Indonesia

Government department which manages investment treaty arbitrations

The Indonesian Government is unclear about this situation. After a notice has been sent, the Ministry of Law and Human Rights and Attorney General are usually picked by the Office of the President and VP to handle the situation at hand. It is the President’s prerogative to choose who will represent the Government of Indonesia in investment treaty arbitrations.

14. Are internal or external counsel used, or expected to be used, by the state in investment treaty arbitrations? If external counsel are used, does the state normally go through a formal public procurement process when hiring them?

Indonesia

Internal/external counsel

Both internal and external counsel have been used. In Rafat Ali Rizvi v Republic of Indonesia, local law firm KarimSyah represented Indonesia in its original proceedings, while Rajah & Tann Singapore act in the Annulment Proceeding. Curtis, Mallet-Prevost, Colt & Mosle has been engaged for the Churchill Mining and Planet Mining Pty Ltd v Republic of Indonesia case. Likewise, various Ministers and the Attorney General have represented Indonesia in international arbitration proceedings. As far as we are aware, there is no formal public procurement process through which external counsel is appointed.

Practicalities of enforcing an investment treaty claim against this country

15. Has the country signed and ratified the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965)? Please identify any legislation implementing the Washington Convention.

Indonesia

Washington Convention implementing legislation

Indonesia is a signatory to the Washington Convention and has ratified it with Law No. 5/1968 of their domestic legislation.

16. Has the country signed and ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention)? Please identify any legislation implementing the New York Convention.

Indonesia

New York Convention implementing legislation

Indonesia has signed the New York Convention and exercised the reciprocity and commerciality reservations with Presidential Decree No. 34/1981. Additionally, Regulation No. 1/1990 of the Supreme Court of Indonesia sets forth the applicable implementing regulation of the New York Convention.

17. Does the country have legislation governing non-ICSID investment arbitrations seated within its territory?

Indonesia

Legislation governing non-ICSID arbitrations

The Arbitration and Dispute Resolution Act Law No. 30 of 1999 governs arbitration in Indonesia. Three bodies are accountable for arbitration proceedings: the Indonesian National Board of Arbitration (BANI); the Indonesian Capital Market Arbitration Board (BAPMI); and the Shariah National Arbitration Body (BASYARNAS).

18. Does the state have a history of voluntary compliance with adverse investment treaty awards; or have additional proceedings been necessary to enforce these against the state?

Indonesia

Compliance with adverse awards

The enforcement of foreign arbitral awards particularly against Indonesian entitles has been said to be challenging. The Convention was enacted into law in 1990. By 1997, six applications for enforcement were successful but others have failed as well. In 1990, the Arbitration and Dispute Resolution Act Law No. 30 was passed. Some commentators however remain sceptical.42

19. Describe the national government’s attitude towards investment treaty arbitration

Indonesia

Attitude of government towards investment treaty arbitration

The Government of Indonesia appears to now be openly disapproving of investment treaty arbitration as evidenced by its progressive abrogation of the various BITs, allowing them to expire. However, it may be that Indonesia is preferring instead to move towards a more multilateral model in its trade relations. In addition the President of Indonesia issued Decree No. 31 of 2012 in September 2012 to exclude disputes arising from decisions issued by Regencies from disputes over which the ICSID Convention applies. This decision was likely spurred by the claim brought in Churchill Mining PLC and Planet Mining Pty Ltd v Indonesia.43

20. To what extent have local courts been supportive and respectful of investment treaty arbitration, including the enforcement of awards?

Indonesia

Attitude of local courts towards investment treaty arbitration

No known record

National legislation protecting inward investments

21. Is there any national legislation that protects inward foreign investment enacted in this country? Describe the content.

Indonesia

National legislation

Substantive protections

Procedural rights

FET

Expropriation

Other

Local courts

Arbitration

Law No. 25/2007 concerning Investments

No

Yes (article 7)

Yes (14.a protection certainty)

Yes (32.2)

Yes (article 32.2)

National legislation protecting outgoing foreign investment

22. Does the country have an investment guarantee scheme or offer political risk insurance that protects local investors when investing abroad? If so, what are the qualifying criteria, substantive protections provided and the means by which an investor can invoke the protections?

Indonesia

Relevant guarantee scheme

Qualifying criteria, substantive protections provided and practical considerations

MIGA

Multilateral Investment Guarantee Agency: this is a collective scheme under the World Bank Group that provides guarantees for qualifying investments, both incoming and outgoing.

Awards

23. Please provide a list of any available arbitration awards or cases initiated involving this country’s investment treaties.

Indonesia

Awards

Amco Asia Corporation, Pan American Development Limited, PT Amco Indonesia v Republic of Indonesia , ICSID Case No. ARB/81/1 (Final award dated 5 June 1990)

Cemex Asia Holdings Ltd v Republic of Indonesia , ICSID Case No. ARB/04/3 (Award embodying the parties’ settlement agreement rendered on February 23, 2007, pursuant to Arbitration Rule 43(2))

Government of the Province of East Kalimantan v. PT Kaltim Prima Coal, Rio Tinto plc, BP p.l.c., Pacific Resources Investments Limited, BP International Limited, Sangatta Holdings Limited, Kalimantan Coal Limited , ICSID Case No. ARB/07/3 (Award on Jurisdiction dated 28 December 2009)

Hesham T. M. Al Warraq v. Republic of Indonesia , UNCITRAL (Award dated 15 December 2014) 

Pending Proceedings

Rafat Ali Rizvi v Republic of Indonesia (ICSID Case No. ARB/11/13), BIT Indonesia - United Kingdom of Great Britain and Northern Ireland 1976

Churchill Mining and Planet Mining Pty Ltd v Republic of Indonesia (ICSID Case No. ARB/12/14 and 12/40), BIT Indonesia - United Kingdom of Great Britain and Northern Ireland 1976, BIT Australia - Indonesia 1992

Settled Proceedings

Nusa Tenggara Partnership B.V. and PT Newmont Nusa Tenggara v Republic of Indonesia (ICSID Case No. ARB/14/15), BIT Indonesia - Netherlands 1994

Reading List

24. Please provide a list of any articles or books that discuss this country’s investment treaties.

Indonesia

Richard Chernick, Daniel M. Kolkey, Barbara Reeves Neal, Practitioner’s Handbook on International Arbitration and Mediation (Third Edition), Juris Publishing, Inc., 1 April 2012

‘Boediono meets with Netherlands PM’. The Jakarta Post , 24 March 2014, available at www.thejakartapost.com/news/2014/03/24/boediono-meets-with-netherlands-pm.html

Ben Bland and Shawn Donnan, ‘Indonesia to terminate more than 60 bilateral investment treaties’, The Financial Times , 26 March 2014, available at www.ft.com/intl/cms/s/0/3755c1b2-b4e2-11e3-af92-00144feabdc0.html#axzz31WJaKxAI

Asket Law, ‘Indonesia Limits the Jurisdiction of the ICSID’, 31 December 2012, available at http://aksetlaw.com/news-event/newsflash/indonesia-limits-the-jurisdiction-of-the-icsid.

Notes

1 Provisions of the BIT remain effective for 10 years from date of termination for investments made prior to the date of termination.

2 Idem.

3 Idem.

4 Idem.

5 Indonesia had an earlier BIT with Finland that was in force from 7 June 1997 to 2 August 2008 before being replaced by the existing BIT.

6 Provisions of the BIT remain effective for 10 years from date of termination for investments made prior to the date of termination.

7 Idem.

8 Idem.

9 Idem.

10 Provisions of BIT remain effective for 15 years from date of termination for investments made prior to the date of termination.

11 Provisions of the Indonesia-Norway BIT remain effective for 10 years from date of termination for investments made prior to the date of termination.

12 Provisions of the BIT remain effective for 10 years from date of termination for investments made prior to the date of termination.

13 Idem.

14 This treaty is a trade agreement rather than a conventional BIT.

15 Provisions of the BIT remain effective for 10 years from date of termination for investments made prior to the date of termination.

16 Idem.

17 BIT with Mongolia, Bangladesh, Cuba, Kyrgyzstan, Laos, Netherlands, Pakistan, Sri Lanka, Syria, Ukraine, Uzbekistan

18 BITs with Finland, Egypt, and Morocco.

19 BITs with Romania, Sweden, Germany, Australia, China, and the United Kingdom

20 BITs with Czech Republic and Russia

21 Algeria, Cambodia, Croatia, Czech Republic, Finland, Germany, Jamaica, Malaysia, Russia, Singapore, Sweden, Thailand

22 BIT with Bangladesh, China, Cuba, Czech Republic, Egypt, Hungary, Korea, Mongolia, Mozambique, Syria, Thailand, Uzbekiztan, Vietnam, Jordan. BIT with Kyrgystan, Laos, Pakistan, Slovakia, Sri Lanka, Ukraine

23 BIT with Argentina, Finland, United Kingdom, Indonesia-Japan FTA

24 FTAs of Japan-SEA Nations, Korea-SEA Nations, India-SEA Nations, D-8 Member States

25 BITs with Australia, China, Hungary, Korea, Netherlands, United Kingdom

26 BIT with Belgium, Denmark, Egypt, Netherlands, Sweden, Switzerland, Turkey, Vietnam

27 BIT with Argentina, Australia, Belgium, Denmark, Finland, Malaysia, Mozambique, Netherlands, Romania, Singapore, Sweden, Turkey

28 BIT with Australia, China, Cuba, Czech Republic, Egypt, India, Malaysia, Mozambique, Romania, Singapore, Vietnam, United Kingdom

29 Double taxation: BIT with Australia, China, Egypt, Hungary, Italy, Korea, Spain, Romania. Taxation agreements: BIT with Czech Republic, India, Malaysia, Morocco, Mozambique, Spain, Sweden and Vietnam

30 Indonesia-Australia BIT

31 BIT with Bangladesh, China, Cuba, Czech Republic, Egypt, Hungary, Korea, Mongolia, Mozambique, Syria, Thailand, Uzbekiztan, Vietnam, Jordan, Kyrgystan, Laos, Pakistan, Slovakia, Sri Lanka, Ukraine, Malaysia, Morocco, Romania.

32 BIT with Finland and the United Kingdom

33 BIT with Bangladesh, Cuba, Italy, Jordan, Kyrgystan, Laos, Mongolia, Netherlands, Slovakia, Sri Lanka, Syria, Ukraine, United Kingdom, Uzbekistan

34 BIT with Australia, Bangladesh, Cambodia, Chile, Jamaica, Jordan, Kyrgystan, Laos, Mongolia, Mozambique, Netherlands, Slovakia, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Turkey, Ukraine, United Kingdom, Uzbekistan, Yemen, Zimbabwe.

35 BIT with China, Czech Republic, Egypt, Hungary, India, Italy, Korea, Malaysia, Romania, Spain.

36 BIT with Australia, China, Egypt, Hungary, Italy, Korea, Malaysia

37 BIT with Australia, Bangladesh, Czech Republic, Egypt, Finland, Hungary, India, Italy, Jordan, Korea, Kyrgyzstan, Laos, Malaysia, Mongolia, Morocco, Mozambique, Romania, Singapore, Slovakia, Spain, Sri Lanka, Sweden, Syria, Thailand, Ukraine, United Kingdom, Uzbekistan

38 Cuba, Czech Republic, India (subject to modification), Mozambique, Romania, Singapore, Spain, Syria, Thailand

39 Except BIT with Bangladesh, Egypt, Finland, Kyrgyzstan, Laos, Sri Lanka, Syria, Vietnam

40 ‘Boediono meets with Netherlands PM,’ The Jakarta Post , 24 March 2014, available at ‘www.thejakartapost.com/news/2014/03/24/boediono-meets-with-netherlands-pm.html’

41 Ben Bland and Shawn Donnan, ‘Indonesia to terminate more than 60 bilateral investment treaties’, The Financial Times , 26 March 2014, available at www.ft.com/intl/cms/s/0/3755c1b2-b4e2-11e3-af92-00144feabdc0.html#axzz31WJaKxAI. Indonesian courts still seem reluctant to honor the arbitration agreement and enforce foreign arbitral awards.

42 Richard Chernick, Daniel M. Kolkey, Barbara Reeves Neal, Practitioner’s Handbook on International Arbitration and Mediation (Third Edition), Juris Publishing, Inc., 1 April 2012, Pg. 350

43 Asket Law, ‘Indonesia Limits the Jurisdiction of the ICSID’, 31 December 2012, available at http://aksetlaw.com/news-event/newsflash/indonesia-limits-the-jurisdiction-of-the-icsid.

44 Richard Chernick, Daniel M. Kolkey, Barbara Reeves Neal, Practitioner’s Handbook on International Arbitration and Mediation (Third Edition), Juris Publishing, Inc., 1 April 2012, Pg. 350

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