Local Professional Services in Indonesia

A Hot Tip about Contracts in Indonesia

Posted on: 2 Mar 2010

Because Indonesia's legal system is currently being overhauled and modernized, American firms are strongly advised to retain a local attorney for most business matters. In the event of a commercial dispute, one should first attempt to reach consensus through negotiation, using a mediator acceptable to both parties if necessary. If deliberation fails to achieve consensus, then companies may enter into arbitration. To prepare for this eventuality, an arbitration clause should be included in any commercial contract with Indonesia chosen as the site of arbitration. This is recommended because foreign arbitration awards have proven difficult to enforce locally. Badan Arbitrase Nasional Indonesia (BANI) is the local arbitration board and companies may employ BANI or select their own arbitration vehicle and procedures (for example ICC or UNCITRAL). Only when negotiations, mediation and arbitration fail should companies consider litigation. The Indonesian court system has proven to be an ineffective means of recourse for American companies.


Although foreign legal firms cannot yet open offices in Indonesia, a number of American attorneys consult with Indonesian firms, some having consulted locally for more than ten years. These attorneys are well placed to assist American firms in working their way through the Indonesian legal maze.




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Posted: 02 March 2010