How-to understand civil proceedings in Indonesia

At times, issues in a commercial setting would inevitably arise. In the case that this happens, businesses often resort to Indonesian dispute settlement forums for settlement. Settling disputes in Indonesia can be done either through litigation by court or alternative dispute settlement outside of court. In this article, a brief explanation on the settlement of civil disputes in Indonesia will be further elaborated.

Governing laws and regulations

• Het Herziene Inlandsch Reglement
• Supreme Court Regulation (PerMA) No. 1/2016 concerning Procedures for Mediation in Courts

Litigation

Civil suits are filed before the district court that are usually based on two legal grounds, which are either a breach of contract or an unlawful act (tort). There are several instruments that regulates the courts and litigation proceedings in Indonesia, mainly the Indonesian Civil Procedural Law (Het Herziene Inlandsch Reglement or HIR), other national laws for both the procedure of civil proceedings in Indonesia (such as laws concerning the general principles of the judiciary, the Appellate Court, and the Supreme Court), the material issues of the dispute such as in the Indonesian Civil Code, as well as the Supreme Court’s Circular Letters.

Court structure

The civil court system is comprised of three hierarchical levels, which are:

• District Courts as Courts of First Instance where civil suits are first filed in the respective district courts of a Company’s location; 
• High Courts as Courts of Appeal against an unfavorable District Court decision, and 
• Supreme Court (Mahkamah Agung) as the Court of Cassation and civil review, where any decision rendered by the Supreme Court is final and binding.

In addition, within the framework of the court of general judiciary, a number of specialized Courts have been established at certain District Courts to handle specific types of cases. These include four types in the District Courts, including: General Court for general civil suits; Religious Court for civil suits pertaining to the Islamic religion, such as divorce and inheritance; State Administrative Court for suits against a government-issued decision or document; and Military Court for suits against military personnel. 

The General Court for civil suits settled several issues which are further divided into several courts, including: 

• Commercial Court for commercial disputes; 
• Industrial Relations Court for employment disputes; and 
• Several courts handle criminal action such as Juvenile Court for crimes involving minors, Fisheries Court for maritime crimes, Corruption Court and Human Rights Court.

Judicial competence

To know about where the court the sue should be filed, there are two competences in civil proceeding, which are absolute competence and relative competence. Absolut competence is the authority to adjudicate between various judicial bodies whether district court, religious court, state administrative court, or military court. Meanwhile relative competence is the authority to adjudicate between courts of the same and similar level such as West Jakarta District Court, South Jakarta District Court, and so on. If a party wants to file a lawsuit against another party, the claim is submitted to the district court in the jurisdiction where the defendant resides. If the defendant’s place of residence is unidentified, the lawsuit can be submitted to the district court in the jurisdiction where the claimant resides or if the claim is about a fixed object, the claim can be submitted to the District Court where the property is located (Forum rei sitae).

E-Litigation

The Indonesian Supreme Court recently issued the Supreme Court Regulation (PerMA) No. 1/2019 on Administration of Case and Hearing in the Court through Electronic System. This system, introduced in early 2020, is an online platform to follow this regulation, e-Litigasi (or e-Litigation) accessible through the portal https://ecourt.mahkamahagung.go.id, responsible for holding the administrative duties of the court. 

This e-Court system will manage the online submission of documents and handle administration of court schedules, including the filing, receipt of summons, payment, and litigating online. Currently, civil, religious, military administrative and state administrative cases are being processed through this platform, and it is said that shorter civil proceedings (for select cases) will be held on this online platform. 

Court procedure timeline

1. A claimant generally sends a formal demand or warning letter/subpoena before it initiates court proceedings.
2. In general if the subpoena has been delivered for three times and is unanswered, a claimant can file a lawsuit (surat gugatan) to the chairman of the relevant District Court. A lawsuit can be delivered in a written form or verbal if the claimant is unable to write. A Lawsuit can also be represented by a proxy. It is worth to mention that not everyone who has an interest can file a claim to the court. A claim for rights must have sufficient legal relevance and legal importance to be accepted by the court for examination (point de interest point de action).
3. Once registered, a letter of summons to appear at a first court hearing is sent to the Defendant. If the defendant fails to appear after three summonses, the judge may grant a decision in their absence (putusan verstek). if the defendant objected to putusan verstek, the defendant could file a verzet legal remedy. Meanwhile if the claimant is absent on the first court hearing then the lawsuit is considered void (putusan gugur) and the claimant is charged with court fees.
4. In the first court hearing, the judge will order mandatory mediation based on Supreme Court Regulation (PerMA) No. 1/2016 on Mediation Procedure in Court that will be presided over by a different judge or an independent mediator. If mediation is successful, the court may incorporate the parties’ agreement into a final and binding decision (putusan dading). If efforts at mediation fail, the judge will give directions to continue the civil proceedings.
5. Civil proceedings continue with the response from the defendant to the claimant’s lawsuit (jawaban). The response contains eksepsi (indirect answer to the merit of case), bantahan (direct answer to the merit of case), requests for provisional decisions, and counterclaims. At the time of the response there may be a claim for intervention from the third parties.
6. After the response is done, there will be a response from the claimant strengthening the arguments in the lawsuit (replik). It will be continued again by the response from the defendant to the replik where the defendant will strengthen the arguments (duplik).
7. Then the trial continued with a proof session. Proof will start from the claimant in the form of evidence and witnesses then followed by the defendant. There will be an examination of evidence, including witness and expert testimonies through oral testimony in court. Evidence can be in the form of letters, witness evidence, allegations, confessions, oaths, local examinations, and information on electronic documents.
8. After examination of evidence, both claimant and defendant must provide the court final written submissions summarizing the case, their arguments and supporting evidence (kesimpulan). 
9. The judge or panel of judges will then deliberate and issue an oral ruling in open court. This will be followed by a written judgment which will be issued in due course. 

Civil cases are determined and generally ruled by a panel of three judges, who are the fact-finders and decision-makers on the law. These judges typically publish a joint judgment (putusan), but if there is a dissenting opinion of the member of the panel, the position of the relevant judge will be stated in the decision. 

In general, the legal framework requires most civil cases in commercial courts to be settled within five months, although there are certain instances where a dispute goes over that time frame.

Third parties intervention to dispute

There are two conditions to drag third parties to the dispute which are during the trial through intervention or vrijwaring and after the trial through derdenverzet. The intervention occurs when a third party of their own free will intervenes in the ongoing dispute between the claimant and the defendant. The Vrijwaring happens when one of the disputing parties drag a third party to the dispute. The derdenverzet is a third party’s resistance to a decision if the rights of the third party are detrimental.

Damages

The claimant may seek damages in two forms, including “material” loss that may be measured quantitatively and “immaterial” loss that are measured qualitatively (such as causing distress). Material losses may include actual losses incurred (such as expenses) or potential losses (such as any foreseeable loss of profits because of the Defendant’s actions).

The court in a civil procedure may only award damages which were expressly sought by a party in their lawsuit and may not surpass the amount requested, however, punitive damages may be awarded by the court if deemed necessary. 

Settlement

Parties may choose whether to have their dispute settled via a court decision or if they would prefer to simply withdraw proceedings. With the latter, settlement agreement, along with a settlement deed are required.

Alternative Dispute Resolution

Alternative Dispute Resolution are mediums to settle disputes outside the court system. There are several methods of alternative dispute resolution recognized in Indonesia Regulated under Indonesian Law No. 30/1999 on Arbitration and Alternative Dispute Resolution (Arbitration and ADR Law), which are:

Arbitration

• Arbitration may only be used in cases that are commercial in nature and if the parties have agreed in writing to resolve their disputes through arbitration. Agreement to go to arbitration usually comes in the form of an arbitration agreement or an arbitration clause in a commercial contract. 
• Disputing parties must also point out how the arbitration will be conducted in the agreement, including appointing an institution to assist in presiding over the arbitration. The Arbitration and ADR Law provides that disputing parties may conduct arbitration within Indonesian territory or outside of international territory. 
• In both cases, the arbitration decision must be registered through the Civil Courts to obtain court assistance in enforcing the decision. Arbitration decisions are final and binding, and parties with an agreement to go to arbitration may not access further dispute settlement through court proceedings.

Mediation

• While mediation is already stipulated as mandatory before any court proceedings (court-annexed mediation), the Arbitration and ADT Law also encourages the use of mediation as a voluntary means to resolve disputes before resorting to litigation or arbitration. 
• There is no requirement for a written agreement to mediate, and mediation may be done independently by disputing parties or may also refer to existing mediation institutions. The outcome of mediation is a mediation agreement that must be performed voluntarily by the disputing parties.