In arbitration practice, the annulment of arbitral awards often raises complex questions, particularly when an appeal is filed without an accompanying memorandum. This article offers a strategic jurisprudential analysis of such cases, focusing on the legal framework and Supreme Court jurisprudence in Indonesia.
Regulatory Framework on Arbitral Award Annulment
Article 72 of Law Number 30 of 1999 on Arbitration and Alternative Dispute Resolution (“Arbitration and ADR Law”) stipulates that annulment petition for an arbitral award shall be filed to the Chief of District Court, the Chief of District Court subsequently determine further the consequences of an entire or partial annulment of the arbitral award. Regarding the district court decision may be filed for appeal to the Supreme Court which will judge on the first and final level.
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Further, the Elucidation of Article 72 of the Arbitration and ADR Law stated, “appeal” refers only to the annulment of arbitral award over the 3 (three) grounds as referred to under Article 70, namely the existence of a false documents, after the award was rendered, it is found that there is a decisive document which was buried by the opposing party and the award is rendered based on fraud (tipu muslihat) of one of the parties.
“An appeal shall only be filed if the petition for annulment of an arbitral award at the first level is granted.”
Appeal against the Annulment of an Arbitral Award
Before discussing further, it should be emphasized that referring to the existing provisions, an appeal petition in regards to this matter shall only be filed if the petition for annulment of an arbitral award at the first level is granted. On the other hand, if the annulment petition is rejected, hence no legal remedy can be taken, including an appeal. As this was emphasized through the Supreme Court Circular Letter Number 4 of 2016:
“In accordance with the provisions of Article 72 paragraph (4) of Law Number 30 of 1999 on Arbitration and its elucidation, against a district court decision that rejects an application for annulment of an arbitral award, no legal remedy is available, either appeal or a judicial reconsideration (peninjauan kembali).
In the event that a district court decision annuls an arbitral award, a legal remedy of appeal to the Supreme Court is available, and with respect to such appellate decision the Supreme Court shall decide as a first and final instance so that no legal remedy of a judicial reconsideration is available.”
In addition, under Article 27 paragraph (3) of the Supreme Court Regulation Number 3 of 2023 on the Appointment of Arbitrator by Court Repudiation Rights, Examination on the Enforcement and Annulment Petition of Arbitral Awards (“Supreme Court Reg. on Arbitration”), it is also stated that no legal remedy can be taken against a court decision that rejects the petition for annulment of an arbitral award.
As for an appeal procedure in the dispute over a petition for annulment of an arbitral award is essentially identical to the appeal procedure in general, despite certain differences in its implementation. One fundamental difference lies in the level of court that has jurisdiction to hear the case. An appeal over a court decision annulling an arbitral award is submitted directly to the Supreme Court, which acts as the court of first and final instance. Unlike the general appeal mechanism which is first adjudicated by the High Court, where against the appeal decision a further legal remedy can still be filed, namely cassation and a judicial reconsideration.
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In addition, with regard to a petition of appeal filed before the High Court, the party filing such petition usually includes an appeal memorandum that essentially contains objections to the decision of the first instance previously. Nonetheless, the existence of an appeal memorandum is in fact not an obligation that must be submitted when filing an appeal.
When referring to the provisions of criminal and civil procedural law, whether under the Indonesian Criminal Procedure Code (Kitab Undang-Undang Hukum Acara Pidana/KUHAP) or under the Law Number 20 of 1947 on Regulation of the Appellate Court in Java and Madura, there are indeed no specific provisions that obliges the appellant to submit an appeal memorandum. Accordingly, a petition of appeal remains valid despite being filed without an appeal memorandum, considering that an appeal memorandum is merely a right, and not an obligation.
However, what about an appeal petition in dispute over a petition for annulment of an arbitral award before the Supreme Court? When only referring to the Arbitration and ADR Law, there are indeed no provisions that specifically regulates the obligation to submit an appeal memorandum. Therefore, can a district court decision that cancels an arbitral award be appealed without submitting an appeal memorandum? In order to address such question, it will be discussed further through the following jurisprudence.
“An appeal that is not followed by an appeal memorandum must be declared inadmissible.”
Pekanbaru City Government Cq. PDAM Tirta Siak Pekanbaru v. PT. Karsa Tirta Dharma Pangada, Jurisprudence Number 862 K/Pdt.Sus/2012 jo. 174/ARB-BANI/2011/PN.PBR
In this case, the Claimant filed a petition for annulment over the Indonesian National Board of Arbitration (“Badan Arbitrase Nasional Indonesia/BANI”) Number 09/2011/BANI BANDUNG before the Pekanbaru District Court. The Claimant essentially bases the petition on Article 70 letter c of the Arbitration and ADR Law, stating that the BANI Arbitral Award was rendered through fraud (tipu muslihat) conducted by the Respondent during the dispute examination.
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The first level of court decision states that the annulment petition is premature and is therefore inadmissible. Nevertheless, upon the first instance decision, the Claimant subsequently filed an appeal to the Supreme Court. However, it was later discovered that the appeal petition filed by the Claimant was not accompanied by the appeal memorandum.
Decision Number 862 K/Pdt.Sus/2012 shows a situation where an appeal is filed but not followed by an appeal memorandum. Judex Juris argues:
“… because the appeal from the appellant is not followed by an appeal memorandum, the appeal from the Appellant must be declared inadmissible.”
“Appeal memorandum in a arbitral award annulment cases is a requirement for filing an appeal, which may be equated with the cassation memorandum filed at the cassation level.”
Obligation to Submit an Appeal Memorandum
In regards to this decision, it should be understood that the Arbitration and ADR Law did not clearly stipulate that an appeal memorandum must be submitted when an appeal petition against the annulment of an arbitral award is filed. Nevertheless, through the Article 27 paragraph (5) of the Supreme Court Reg. on Arbitration, it has been explicitly stated that a petition of appeal, “must be submitted all together with the appeal memorandum.”
Although at the time this decision was rendered, the referred Supreme Court Reg. on Arbitration was not yet in effect and therefore was not relevant in its application to such decision, this provision is however in line with the consideration of the Judex Juris in the a quo case. As the Judex Juris in the jurisprudence stated that the appeal is inadmissible. This shows that the appeal memorandum in a arbitral award annulment cases is a requirement for filing an appeal, which may be equated with the cassation memorandum filed at the cassation level, which is mandatory as regulated in the Law Number 14 of 1985 on Supreme Court as amended by Law Number 5 of 2004 and its second amendment by Law Number 3 of 2009 on Supreme Court (“Supreme Court Law”).
Whereas under Article 47 paragraph (1) of the Supreme Court Law itself, has specifically stated that the petition for cassation shall be furnished with a cassation memorandum containing the reasons.
Author
Dr Eddy Marek Leks, FCIArb, FSIArb, is the founder and managing partner of Leks&Co. He has obtained his doctorate degree in philosophy (Jurisprudence) and has been practising law for more than 20 years and is a registered arbitrator of BANI Arbitration Centre, Singapore Institute of Arbitrators, and APIAC. Aside to his practice, the author and editor of several legal books. He led the contribution on the ICLG Construction and Engineering Law 2023 and ICLG International Arbitration 2024 as well as Construction Arbitration by Global Arbitration Review. He was requested as a legal expert on contract/commercial law and real estate law before the court.
Co-authored
Miskah Banafsaj is an associate at Leks&Co. She holds a law degree from Universitas Indonesia. Throughout her studies, she was actively involved in student organizations and participated in various law competitions. She has also previously worked as an intern at several reputable law firms. At this firm, she is involved in doing legal research, case preparation, and assists with ongoing matters.
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Sources:
- Indonesian Criminal Procedure Code.
- Law Number 20 of 1947 on Regulation of the Appellate Court in Java and Madura.
- Law Number 14 of 1985 on Supreme Court.
- Law Number 30 of 1999 on Arbitration and Alternative Dispute Resolution.
- Supreme Court Regulation Number 3 of 2023 on the Appointment of Arbitrator by Court, Repudiation Rights, Examination on the Enforcement and Annulment Petition of Arbitral Awards.
- Supreme Court Circular Letter Number 4 of 2016 on the Implementation of the Supreme Court Chamber’s 2016 Pleno
- Meeting Result as a Guidance of Court Work.
- Supreme Court Decision Number 862 K/Pdt.Sus/2012.
- Pekanbaru District Court Decision Number 174/ARB-BANI/2011/PN.PBR.
