REPUBLIC OF INDONESIA LAW DIGEST REVISER Andrew I. Sriro, Esq., in affiliation with Dyah Ersita & Partners Graha Aktiva, 3rd Floor Jalan H.R. Rasuna Said, Blok X-1, Kav. 3 Jakarta 12950 Republic of Indonesia Telephone: (62-21) 520-3171 Facsimile: (62-21) 520-3279 Email: [email protected] Website: www.sriro.com

Reviser Profile

Introduction: Andrew I. Sriro’s practice encompasses nearly every major legal concentration, including commercial, corporate, investment, banking, finance, securities, bankruptcy, trade, manufacturing, distribution, insurance, telecommunications, energy, natural resources, envi- ronment, maritime, aviation, tourism, real estate, construction, infrastructure, labor relations, government affairs, taxation, arbitration and litigation. Practice: Andrew I. Sriro and his Indonesian affiliates (the “Practice”) are committed to the diligent application of legal expertise, diplomacy, and strategic planning toward the realization of each Client’s interests. Counsel is provided to a wide range of Clients throughout Indonesia and abroad including governmental, business and financial institutions, companies, individuals and entrepreneurs. Practice Consulting services are provided to domestic and international Clients through efficient management of transactions, risks and dispute resolutions. The Practice is dedicated to the provision of prompt, effective, and pragmatic legal, business planning and risk management advisory services to Clients seeking insightful solutions to sophisticated business development, operations and dispute resolution concerns. The Practice is committed to providing responsive attorneys, efficiently managed cases and transactions, and alternative billing options that succinctly meet the needs of our Clients. Business: The Practice offers an integrated approach toward the realization of Clients’ multinational and domestic interests. Legal and business requirements are joined with insight into government, diplomacy and culture to formulate practical strategies for all business undertakings. Over the years, the Practice has developed and maintained excellent top level relationships with government and business groups. Through these relationships, the Practice provides a bridge over many bureaucratic encumbrances including successful acquisitions of difficult to obtain licenses and permits. Often, the Practice is able to identify investment opportunities matching the goals of our Clients. The Practice structures and forms Indonesian and offshore legal entities. Services encompass all aspects of public and private offerings, mutual funds, derivatives, options and other capital market transactions, mergers, amalgamations, sales and acquisitions. The Practice advises Clients with respect to regulatory compliance, shareholders agreements and employment related issues. The Practice documents corporate resolutions, maintains corporate books, provides tax planning, provides due-diligence investigative services and assists executives in the legal implications of day-to-day operational issues. The Practice serves international and domestic bankers, investors and developers with the negotiation, drafting and management of financial obligations. The Practice offers services in the areas of loan and factoring agreements, bank syndications, issuance of commercial paper, cross-border lending and leasing, securities offerings, risk and due diligence analysis, assistance with export credit agencies and regulatory compliance. Through experience and relationships with numerous banks and investment funds, the Practice is capable of taking an active role in approaching capital markets on behalf of Clients. The Practice assists Clients in the development of their businesses through the expansion of their networks of business relationships. The Practice counsels, drafts and negotiates all types of agreements, tailoring the results to the Client’s objectives. The Practice’s expert legal staff regularly serves Clients with respect to joint venture, joint operations and franchise agreements, build-operate and transfer or lease agreements, technology and intellectual property transfer, assistance and licensing agreements, trade, supply and requirements contracts, construction and management contracts, production sharing contracts, and all manners of real estate, sales, leasing, manufacturing, agency, distribution and shipping transactions. Dispute Resolution: The Practice assists Clients in the management of their relationships in order to avoid potential conflicts. Through the implementation of pre-emptive strategies constructed to form solid defensive and offensive positions, the Practice has successfully protected the assets and interests of hundreds of Clients. As the Indonesian economy continues along its current course toward assimilation into the international economy, disputes are submitted to third party arbiters with increasing frequency. The Practice’s singular purpose is to achieve the Client’s goals, whether that be through a resolution of disputes in a manner which permits the continuation of a mutually beneficial relationship or a dissolution due to irreconcilable differences. The Practice recognizes the importance of assisting Clients in achieving economical resolutions to disputes, short of litigation or arbitration. The Practice concentrates on creative problem solving through an understanding of both the legal, economic, political and personal charac- teristics of disputes. The Practice’s negotiators and litigators work with Clients behind the scenes, or at the forefront of disputes taking aggressive positions when appropriate to the Client’s position and interests. The Practice is principally concerned with international and domestic business, banking, finance, investment, construction and real estate matters. The Practice is experienced with international and domestic arbitration, as well as complex litigation matters involving multiple court proceedings in international and domestic tribunals in various nations. Through our close affiliations, the Practice is capable of handling disputes arising anywhere in the world. INDONESIA LAW DIGEST

(The following is a list of all Categories and Topics, including cross-references, covered in this Digest.)

Category/Topic Page Category/Topic Page INTRODUCTION ESTATES AND TRUSTS CURRENCY ...... 1 DEATH (PRESUMPTIONS OF AND ACTIONS FOR) ...... 31 GOVERNMENT AND LEGAL SYSTEM ...... 1 DESCENT AND DISTRIBUTION ...... 31 HOLIDAYS ...... 2 EXECUTORS AND ADMINISTRATORS ...... 31 OFFICE HOURS AND TIME ZONE ...... 2 TRUSTS ...... 31 BUSINESS ORGANIZATIONS WILLS ...... 31 AGENCY ...... 2 FAMILY COMPANIES ...... 3 ADOPTIONS ...... 31 PARTNERSHIP ...... 3 DIVORCE ...... 32 BUSINESS REGULATION AND COMMERCE HUSBAND AND WIFE ...... 32 BANKS AND BANKING ...... 4 INFANTS ...... 32 BILLS AND NOTES ...... 6 MARRIAGE ...... 32 COMMERCIAL REGISTRATION ...... 6 FOREIGN TRADE AND COMMERCE CONTRACTS ...... 7 CUSTOMS ...... 33 FRAUDS, STATUTE OF ...... 7 EXCHANGE CONTROL ...... 33 INTEREST ...... 7 FOREIGN EXCHANGE ...... 33 MONOPOLIES, RESTRAINT OF TRADE AND COMPETITION ...... 8 FOREIGN INVESTMENT ...... 33 SALES ...... 10 IMMIGRATION SECURITIES ...... 10 ALIENS ...... 34 CITIZENSHIP IMMIGRATION ...... 34 ALIENS ...... 11 INTELLECTUAL PROPERTY CITIZENSHIP ...... 11 COPYRIGHT ...... 34 IMMIGRATION ...... 11 INDUSTRIAL DESIGNS ...... 36 NATURALIZATION ...... 11 INTEGRATED CIRCUITS ...... 36 CIVIL ACTIONS AND PROCEDURE INTERNATIONAL INTELLECTUAL PROPERTY CONVENTIONS ..... 37 ACTIONS ...... 12 PATENTS ...... 37 DEPOSITIONS AND DISCOVERY ...... 15 PROTECTION OF PLANT VARIETIES ...... 38 EVIDENCE ...... 15 TRADEMARKS ...... 39 JUDGMENTS ...... 15 TRADE SECRETS ...... 40 VENUE ...... 15 LEGAL PROFESSION COURTS AND LEGISLATURE LEGAL PROFESSION ...... 41 COURTS ...... 16 MORTGAGES DEBTOR AND CREDITOR CHATTEL MORTGAGES ...... 41 ASSIGNMENT ...... 16 MORTGAGES ...... 41 ATTACHMENT ...... 16 PROPERTY BANKRUPTCY ...... 16 ABSENTEES ...... 42 EXECUTIONS ...... 18 DOWER AND CURTESY ...... 42 GARNISHMENT ...... 18 HOMESTEADS ...... 18 LANDLORD AND TENANT ...... 42 LIENS ...... 18 POWER OF ATTORNEY ...... 42 PLEDGES ...... 20 REAL PROPERTY ...... 42 DISPUTE RESOLUTION TAXATION ALTERNATIVE DISPUTE RESOLUTION ...... 20 CONSUMPTION TAXES ...... 43 ARBITRATION AND AWARD ...... 20 EMPLOYMENT TAXES ...... 43 DOCUMENTS AND RECORDS GIFT TAX ...... 43 ACKNOWLEDGMENTS ...... 24 INCOME TAX ...... 43 IDENTIFICATION ...... 24 INHERITANCE TAX ...... 44 NOTARIES ...... 24 VALUE ADDED TAX ...... 44 RECORDS ...... 27 TRANSPORTATION EMPLOYMENT MOTOR VEHICLES ...... 44 LABOR RELATIONS ...... 28 SHIPPING ...... 44 ENVIRONMENT TREATIES AND CONVENTIONS ENVIRONMENTAL REGULATION ...... 30 TREATIES ...... 44

INDONESIA LAW DIGEST

Revised for 2007 edition by ANDREW I. SRIRO, ESQ., in affiliation with Dyah Ersita & Partners, of Jakarta.

Note: This revision incorporates legislation through August 1, 2006.

Consultative Assembly, House of People’s Representatives, Regional House of Repre- INTRODUCTION sentatives and Regional House of People’s Representatives. Provincial House of People’s CURRENCY: Representatives consists of members of political parties participating in general elections based on results of general elections (Art. 52 of Law No. 22 of 2003) with total not less Governing Law. —Currency is governed by Law No. 23 of 1999 dated 17 May 1999 than 35 and not more than 100 members. (Id. at Art. 53[1]). DPRD Provinsi’s principal concerning Bank Indonesia as amended by Law No. 3 of 2004 dated 15 Jan. 2004 purposes are to: (i) Stipulate regional regulations through discussions with and mutual concerning Amendment to Law No. 23 of 1999 concerning Bank Indonesia. consent of governor (Id. at Art. 62[1][a]); (ii) formulate regional budgets with governor Monetary Unit is Rupiah (Rp). —(Art. 2[1] of Law 23 of 1999 dated 17 May 1999 (Id. at Art. 62[1][b]); (iii) conduct supervision concerning enforcement of regional regu- concerning Bank Indonesia). Bank Indonesia, central bank, is only institution authorized lations and other regulations of law, gubernatorial decrees, regional budgets and regional to issue, revoke and withdraw bank notes and coins which are legal tender. (Id. at Art. Government policies (Id. at Art. 62[1][c]); (iv) propose appointment of and dismissal of 20). Any act pertaining to money or having objective of payment or any obligation which governor or deputy governor to President (Id. at Art. 62[1][d]); (v) convey opinions and has to be fulfilled through use of money, if performed in Indonesia, shall be carried out considerations to provincial Government concerning execution of international agree- in Indonesian Rupiah unless otherwise expressly provided by law. (Id. at Art. 2[3]). ments related to regional interests (Id. at Art. 62[1][e]); and (vi) request governor accountability information reports relating to implementation of decentralization duty (Id. GOVERNMENT AND LEGAL SYSTEM: at Art. 62[1][f]). Constitution.—Indonesia is constitutional republic. Republic is based on five prin- DPRD Provinsi annual sessions start on 1 Jan. and end on 31 Dec. of each year. (Art. ciples of Pancasila: Belief in one supreme G-D, just and civilized humanity, united 55[1] of Government Regulation No. 25 of 2004 concerning Guidelines for Composition nation, democracy guided by inner wisdom derived by unanimous agreement through of Procedural Regulations of Provincial House of People’s Representatives). Annual consensus of People’s representatives, and social justice throughout Republic. (Preamble sessions are divided into meeting periods and recess periods. (Id. at Art. 55[2]). Recesses of Constitution of 1945). may be conducted three times during one year for at most six working days for one Constitution guarantees right to live and to preserve life (Art. 28A of Constitution of recess. (Id. at Art. 55[3]). Meetings are conducted from time to time at least six times 1945); equality among citizens (Id. at Art. 27[1]); right to work, earn decent living and in year. (Id. at Art. 56[1]). receive just, fair and decent treatment in work relationship (Id. at Art. 28D[2]); freedom of religious practice (Id. at Art. 29[2]); right to education and self-enhancement (Id. at Judiciary.— Art. 28C[1]); right to establish family and propagate through legal marriage (Id. at Art. Governing Law.—Judiciary is governed by Law No. 4 of 2004 dated 15 Jan. 2004 28B[1]); children’s rights to live, to grow, to enhance and to be protected from violence concerning Judiciary. Judiciary is vested with power to adjudicate cases. Constitutional and discrimination (Id. at Art. 28B[2]); right to be acknowledged by, to be protected by principles expressly declare independence of judiciary. and to be fairly and justly treated by law (Id. at Art. 28D[1]); right of citizenship status Hierarchy of courts is as follows: (i) District Court is civil and criminal court of first (Id. at Art. 28D[4]); right to communicate and obtain information (Id. at Art. 28F); right instance; (ii) High Court is civil and criminal court of first appeal (Law No. 2 of 1986 to protect one’s self, family, honor, dignity and property under his/her power (Id. at Art. dated 8 Mar. 1986 concerning General Judicial System as amended by Law No. 8 of 2004 28G[1]); right to be free from treatment in manner degrading to human dignity (Id. at dated 29 Mar. 2004 concerning Amendment to Law No. 2 of 1986); and (iii) Supreme Art. 28G[2]); right to obtain political asylum from another country (Id. at Art. 28G[2]); Court is highest judicial tribunal for all matters decided by adjudicative process except right to live and to prosper mentally and physically (Id. at Art. 28H[1]); right to have for matters decided by Constitutional Court concerning constitutional review of laws, residence (Id. at Art. 28H[1]); right to good and healthy living environment (Id. at Art. disputes over authority of State institutions, dissolution of political parties and disputes 28H[1]); right to health care services (Id. at Art. 28H[1]); and right to defend Republic over results of general elections (Law No. 14 of 1985 dated 30 Dec. 1985 concerning (Id. at Art. 27[3]). Supreme Court as am’d by Law No. 5 of 2004 dated 15 Jan. 2004 concerning Amend- Constitution of 1945 divides Government power into legislative, judicial and executive ment to Law No. 14 of 1985). branches. Court system also includes: (i) Constitutional Court governed by Law No. 24 of 2003 dated 13 Aug. 2003 concerning Constitutional Court; (ii) Administrative Courts governed Legislature.— by Law No. 5 of 1986 dated 29 Dec. 1986 concerning State Administration Courts as Governing Law.—Legislature is governed by Law No. 22 of 2003 dated 31 July 2003 amended by Law No. 9 of 2004 dated 29 Mar. 2004 concerning Amendment to Law No. concerning Structures and Positions of People’s Consultative Assembly (MPR), House 5 of 1986; (iii) Commercial Courts governed by Law No. 37 of 2004 dated 18 Oct. 2004 of People’s Representatives (DPR), Regional House of Representatives (DPD) and Pro- concerning Bankruptcy and Debt Payment Obligation Suspension; (iv) Tax Courts gov- vincial House of People’s Representatives (DPRD Provinsi). erned by Law No. 14 of 2002 dated 12 Apr. 2002 concerning Tax Court; (v) Religious People’s Consultative Assembly (MPR) is required to meet at least once every five Courts governed by Law No. 7 of 1989 dated 29 Oct. 1989 concerning Religious Court years. (Id. at Art. 14[1]). MPR’s principal purposes are to: (i) Amend Constitution (Id. as amended by Law No. 3 of 2006 dated 20 Mar. 2006 concerning Amendment to Law at Art. 11[a]); (ii) inaugurate President and Vice President based on results of general No. 7 of 1989; (vi) Children’s Courts governed by Law No. 3 of 1997 dated 3 Jan. 1997 elections (Id. at Art. 11[b]); (iii) remove President and Vice President based on proposals concerning Children’s Court; (vii) Military Courts governed by Law No. 31 of 1997 from House of People’s Representatives (DPR) (see catchline House of People’s Rep- dated 15 Oct. 1997 concerning Military Court; (viii) Industrial Relations Courts governed resentatives [DPR], infra) based on decisions of Constitutional Court (Id. at Art. 11[c]); by Law No. 2 of 2004 dated 14 Jan. 2004 concerning Industrial Relation Settlement; (ix) and (iv) stipulate procedural rules and code of ethics for MPR (Id. at Art. 11[g]). MPR Courts of Fisheries Affairs governed by Law No. 31 of 2004 dated 6 Oct. 2004 con- has power to amend Constitution. (Id. at Art. 11[a]). MPR is composed of 682 members cerning Fisheries; (x) Criminal Corruption Court governed by Law No. 30 of 2002 dated including 550 members of DPR, and maximum of 183 members of Regional House of 27 Dec. 2002 concerning Commission on Eradication of Corruption; (xi) Human Rights Representatives (four members from each province with total not exceeding one-third of Court governed by Law No. 26 of 2000 dated 23 Nov. 2000 concerning Human Rights total members of DPR), all elected by general election. (Id. at Arts. 2, 17 and 33[2]). Court; and (xii) Islamic Syari’ah Court in Nanggroe Aceh Darussalam Province governed House of People’s Representatives (DPR) is required to meet annually. (Art. 19[3] of by Law No. 18 of 2001 dated 9 Aug. 2001 concerning Special Autonomy for Special Constitution of 1945). DPR’s principal purposes are to: (i) Formulate legislation (Art. Region of Aceh as Nanggroe Aceh Darussalam Province as last amended by Law. No. 26[1][a] and [b] of Law No. 22 of 2003); (ii) adopt State Budget (Id. at Art. 26[1][e]); 11 of 2006 dated 1 Aug. 2006 concerning Aceh Government. Each of foregoing court (iii) withhold or grant consent to Presidential declarations of war or peace (Id. at Art. sub-systems possess authority over separate and exclusive jurisdictional domains. 26[1][n]); and (iv) supervise Government (Id. at Art. 26[1][f]). DPR is composed of 550 members elected through general elections. (Id. at Arts. 16 and 17[1]). Promulgation of Executive.—President: (i) Holds governmental authority (Art. 4[1] of Constitution of all laws requires approval of DPR and President. (Id. at Art. 26[1][a]). 1945); (ii) holds authority as Commander of Army, Navy and Air Force (Id. at Art. 10); DPR annual sessions start on 16 Aug. and end on 15 Aug. of each year. (Art. 73[1] (iii) is empowered, with agreement from House of People’s Representatives, to declare of Procedural Regulations of House of People’s Representatives). Annual sessions are war, make peace and enter into agreements with other countries (Id. at Art. 11[1]); (iv) divided into four assembly terms. (Id. at Art. 73[2]). Each assembly term includes may declare state of danger/peril (Id. at Art. 12); (v) appoints ambassadors and counsel meeting periods and recess periods. (Id. at Art. 73[3]). (Id. at Art. 13[1]) (in appointing ambassadors, President must take into account con- Regional House of Representatives (DPD) consists of maximum of 183 members siderations of House of People’s Representatives (Id. at Art. 13[2]); (vi) receives am- elected by general election (four members from each province with total not exceeding bassadors from other countries (Id. at Art. 13[2]) (in receiving placement of ambassadors one-third of total members of DPR (see catchline House of People’s Representatives from other countries, President must take into account considerations of House of Peo- [DPR], supra). (Id. at Art. 33[1] and [2]). DPD’s principal purposes are to: (i) Supervise ple’s Representatives (Id. at Art. 13[3]); (vii) grants clemency, amnesty, abolition and enforcement of certain laws; (ii) submit bills to DPR on regional autonomy, central and rehabilitation (Id. at Art. 14); and (viii) grants titles, decorations and other marks of honor regional Government relationships; (iii) manage natural and other economic resources; (Id. at Art. 15). President holds five year term, with term limit of two terms. (Id. at Art. (iv) manage matters related to central and regional government financial equilibrium; and 7). (v) submit opinions to DPR concerning bills on State Budget, taxes, education and President is assisted by Ministers of State who serve at pleasure of President. (Id. at religion. (Art. 22D of Constitution of 1945). Art. 17[1] and [2]). Every Minister must be expert in particular division of governmental DPD annual sessions start on 15 Aug. and end on 14 Aug. of each year. (Art. 64[1] administration. (Id. at Art. 17[3]). Ministers of State assist President in creating policy of Decision of DPD No. 2/DPD/2004 concerning Procedural Regulations of Regional and conducting coordination functions in specific administrative matters. (Art. 89 of House of Representatives of Republic of Indonesia as amended by Decision of DPD No. Presidential Decree No. 9 of 2005 dated 31 Jan. 2005 concerning Positions, Duties, 4/DPD/2004). Functions, Organizational Structures and Work Procedures of State Ministers). Coordi- Provincial House of People’s Representatives (DPRD Provinsi) is governed by Law nating Ministers assist President in coordination and synchronization of preparation, No. 22 of 2003 dated 31 July 2003 concerning Structure and Position of People’s creation and implementation of specific administrative matters. (Id. at Art. 3).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. INDO – 1 INTRODUCTION MARTINDALE-HUBBELL LAW DIGEST - 2007

GOVERNMENT AND LEGAL SYSTEM . . . continued is created in relation to matters of public interest and for social needs, in which case President and Vice President are elected to five year terms with limit of two terms (Art. European law may also be applied. (Id. at Art. 131[6]). 7 of Constitution of 1945) by direct, general, free, confidential, honest and fair elections These distinctions are technically valid to date though applied in extremely limited by registered voters who must be Indonesian citizens (Id. at Arts. 1[10] and 2 of Law circumstances. However, Government has taken steps to progressively reduce importance No. 23 of 2003 dated 31 July 2003 concerning President and Vice President Elections). and frequency of these distinctions. Modern Legislation.—Indonesian legislation is based on following hierarchy: (i) Con- Government Levels.—Government is divided into following: (i) Central Government stitution; (ii) Laws and Government Regulations in lieu of Laws; (iii) Government headed by President (Art. 1[1] of Law No. 32 of 2004 dated 15 Oct. 2004 concerning Regulations; (iv) Presidential Regulations; and (v) Regional Regulations. (Art. 7[1] of Regional Government); (ii) Provinces headed by Governors (Id. at Art. 24[1] and [2]); Law No. 10 of 2004 dated 22 June 2004 concerning Legislation). (iii) Regencies headed by Regents (Id.); (iv) Municipalities headed by Mayors (Id.); (v) Other kinds of legislation issued by People’s Consultative Assembly (MPR), House of Districts headed by District Heads (Id. at Art. 126[1] and [2]); and (vi) Sub-Districts/ People’s Representatives (DPR), Regional House of Representatives (DPD). Supreme Villages headed by Sub-District Heads/Village Chiefs (Id. at Art. 202[1]; Art. 3[2] of Court, Constitutional Court, Finance Auditor Body (BPK), Bank Indonesia, Ministers, Government Regulation No. 73 of 2005 dated 30 Dec. 2005 concerning Sub-Districts; heads of bodies, institutions or commissions at same level formed by laws or by Gov- Art. 14[2][a] of Law No. 72 of 2005 dated 30 Dec. 2005 concerning Villages). ernment based on instruction of laws, Provincial House of People’s Representatives, Provincial Government.—There are 33 Provinces including four special administrative Governors, Regency/Municipal House of People’s Representatives, Regents/Mayors, Vil- districts including national capital, Jakarta. Provinces are represented by members of lage Chiefs or others at same level are acknowledged and shall have legally binding DPD who also represent provinces in MPR. (Art. 32 of Law No. 22 of 2003). power to extent they are instructed by other regulations of law of superior hierarchy. (Id. Departments.—Administration is conducted through departments headed by Ministers. at Art. 7[4] and Elucidation of Art. 7[4]). (Art. 25[2] of Presidential Decree No. 9 of 2005 dated 31 Jan. 2005 concerning Positions, Duties, Functions, Organizational Structures and Work Procedures of State Ministers). HOLIDAYS: Departments are subdivided into: (i) Secretariate Generals headed by Secretary Generals; Governing Law.—Holidays are governed by Presidential Decree No. 251 of 1967 (ii) Directorates headed by Director Generals; (iii) Inspectorates headed by Inspector dated 16 Dec. 1967 concerning National Holidays as last amended by Presidential Decree Generals; (iv) Boards and/or Centers; and (v) Expert staff. (Id. at Arts. 69, 70, 74, 78, No. 3 of 1983 dated 19 Jan. 1983 concerning Amendment to Presidential Decree No. 251 82, and 85[1]). Departments are assisted by non-departmental governmental institutions of 1967 concerning Holidays as last amended by Presidential Decree No. 10 of 1971; formed to assist President in certain specific fields of administration. (Art. 1[1] of Joint Decree of Minister of Religious Affairs No. 481 of 2006, Minister of Manpower Presidential Decree No. 103 of 2001 dated 13 Sept. 2001 concerning Status, Tasks, and Transmigration No. KEP. 281/MEN/VII/2006 and Minister for Enhancement of Functions, Organizational Structures and Operational Procedures of State Non-Depart- Efficiency of State Apparatus No. SKB/03/M.PAN/7/2006 dated 24 July 2006 concerning ments as last am’d by Presidential Decree No. 64 of 2005 dated 13 Oct. 2005 concerning National Holidays and Collective Leave in 2007. Sixth Amendment to Presidential Decree No. 103 of 2001). Public holidays include: 1 Jan. (New Year’s Day); Id’ul Adha 1426 Hijriyah; Chinese Legal Pluralism.—Three major categories of law govern different aspects of Indone- Lunar Year (Presidential Decree No. 19 of 2002 dated 9 Apr. 2002 concerning Chinese sian society. Lunar Year); New Year of Hijriyah 1427 Hijriyah; Day before Hindu New Year; Good Adat law is unwritten customary law which is still applicable to Indonesian citizens. Friday; Birthday of Prophet Muhammad SAW (Rabi’ul 12); Ascension Day; Anniversary As nation composed of numerous cultural, religious, social and ethnic groups with their of Buddha’s Birth, Enlightenment and Death; National Independence Day; Ascension own customs and lifestyles, Adat law varies throughout archipelago. While its applica- Day of Prophet Muhammad SAW (Rajab 27); Id’ul Fitri (1427 Hijriyah); 25 Dec. bility has been reduced through increasing dominance of modern legislation, Adat law (Christmas Day); Id’ul Adha (1427 Hijriyah). (Joint Decree of Minister of Religious may have effects on commercial transactions involving property rights and upon inter- Affairs No. 481 of 2006, Minister of Manpower and Transmigration No. KEP. 281/ pretation of national laws. MEN/VII/2006 and Minister for Enhancement of Efficiency of State Apparatus No. SKB/03/M.PAN/7/2006 dated 24 July 2006 concerning National Holidays and Collective Dutch Law.—Dutch laws became applicable in Indonesia during 352 year period of Leave in 2007). Dutch colonization and colonial codes still serve as current Commercial Code (Wetboek van Koophandel voor Indonesië) (Kitab Undang-undang Hukum Dagang, KUHD), Civil OFFICE HOURS AND TIME ZONE: Code (Burgerlijk Wetboek voor Indonesië) (Kitab Undang-undang Hukum Perdata, KUHPer) and Criminal Code (Wetboek van Strafrecht) (Kitab Undang-undang Hukum Indonesia spans GMT +07:00 to +09:00 time zones. Office hours are generally from Pidana, KUHP). 8:00 a.m. to 4:00 p.m. Mon. through Fri. To avoid legal vacuum, Art. I of Transitional Provisions of Constitution of 1945 proclaimed that all laws in force at time of declaration of independence would remain valid until replaced by new laws in accordance with Constitution of 1945. (Art. I of BUSINESS ORGANIZATIONS Transitional Provisions of Constitution of 1945). Art. 163 of Indische Staatsregeling (Constitution for Netherlands East Indies) divided AGENCY: Indonesian community into three basic population groups: (i) Europeans (which also Governing Law.—Agency, or mandates, is governed by Indonesian Civil Code (Arts. includes Japanese and all persons who are neither European, Japanese, indigenous In- 1792 through 1819 of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] donesian or East Asian who are subject to family laws which share main principles of [KUHPer] [Burgerlijk Wetboek voor Indonesië] [Staatsblad 1847:23]). Dutch family law and descendants of Non-Dutch Europeans, Japanese and all persons Mandates are agreements whereby one person, principal, empowers another, agent, to who are neither European, Japanese, indigenous Indonesian or East Asian who are subject act for and on behalf of principal. (Id. at Art. 1792). To be effective, agent must accept to family laws which share main principles of Dutch family law; (ii) indigenous Indo- mandate. (Id. at Arts. 1792 and 1793). nesians who have not moved to another population group and other persons who pre- Mandates may be created by: (i) Notarial deed; (ii) private document; (iii) letter; or viously belonged to another population group and then merged themselves into indig- (iv) verbally. (Id. at Art. 1793). Acceptance may be tacit and evidenced by performance. enous Indonesian population group; and (iii) East Asian (which includes all persons who (Id. at Art. 1793). are not included in European and indigenous Indonesian population groups). (Art. 163 Mandates may relate either to general or specific matters. (Id. at Art. 1795). Mandates of Indische Staatsregeling [Constitution for Netherlands East Indies]). worded in general terms are deemed only to relate to management acts. (Id. at Art. 1976). Concordance Principle.—In field of civil and commercial law: (i) Members of Eu- In order to alienate or encumber property, to undertake compromise or to undertake any ropean population group are subject to same laws as are in effect in The Netherlands, other act regarding interests in property, specific authority must be granted. (Id. at Art. provided however, that if special circumstances in Dutch East Indies require or if 1796). legislators deem it necessary to create regulations which will be in effect for more than Women and minors may serve as agents subject to extensive restrictions. (Id. at Art. one population group or parts of population groups, exception may be imposed con- 1798). cerning application of laws of The Netherlands to members of European population Agents must report and account to their principals for all of their activities and all that group in civil and commercial matters (Id. at Art. 131[2][a]); and (ii) members of they receive with regards to mandate. (Id. at Art. 1802). indigenous Indonesian, East Asian and parts of aforementioned population groups are Agents are obligated to perform their duties until they are relieved of them. (Id. at Art. subject to regulations of law based on their religions and customs, provided however, that 1800). Agents are liable for costs, damages and interest which might arise upon non- exceptions may be created in relation to aforementioned law in matters of public interest performance of their mandates. (Id. at Art. 1800). Agents are responsible for both and for their social needs, in which case European law may also be applied. (Id. at Art. intentional and negligent acts and omissions in carrying out their mandates. (Id. at Art. 131[2][b]). 1801). However, gratuitous agent will be held less accountable for negligence than agent In creation of legislation which produces criminal law, law of civil procedure and law who receives compensation. (Id. at Art. 1801). of criminal procedure which is in effect exclusively for European population group, Where principal appoints more than one agent, each agent is not responsible for acts legislators shall heed requirement that law should be same as law which is included in and omissions of others unless expressly provided. (Id. at Art. 1804). In event agent is regulations in effect in The Netherlands, provided however, that if special circumstances appointed by more than one principal for representation of principals’ mutual business in Dutch East Indies requires exceptions, then from that need law should be created. (Id. interests, principals will be jointly and severally liable to mandate for all good faith at Art. 131[3]). In event regulations are intended to be in effect also for other population advances, losses, expenses, interest and compensation to which agent is entitled. (Id. at groups or for parts of those groups based on joint regulations, then that legislation shall Arts. 1808, 1809, 1810 and 1811). only be implemented in accordance with aforementioned matters. (Id. at Art. 131[3]). Agent is not liable to third parties with whom he contracts provided that third party In event law in effect for indigenous Indonesian population group and for East Asian is informed of agency relationship and provided that agent has not bound himself population group is not same as law in effect for European population group, then personally to obligation. (Id. at Art. 1806). members of indigenous Indonesian and East Asian population groups have authority to Principal is bound by agreements entered into by agent within course and scope of voluntarily subject themselves to regulations of European civil and commercial law mandate. (Id. at Art. 1807). Principal will also be bound by agreements made outside which is not otherwise in effect for them, for all legal acts or for only certain legal acts. scope of agent’s mandate if principal expressly or tacitly conforms. (Id. at Art. 1807). (Id. at Art. 131[4]). Mandates terminate by: (i) Revocation by principal following notice to agent (Id. at Civil and commercial law which is now in effect for indigenous Indonesian population Art. 1813); (ii) termination by agent following notice to principal (Id. at Art. 1817); (iii) group and for East Asian population group (law based on their religions and customs) death, subjection to guardianship, bankruptcy or other obvious incompetence of either continues to be in effect so long as that law has not yet been changed by legislation which principal or agent (Id. at Art. 1813); (iv) marriage of female principal or agent (Id. at

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. INDO – 2 INDONESIA LAW DIGEST BUSINESS ORGANIZATIONS

AGENCY . . . continued Purpose of PERUM is to provide benefit to public in form of provision of high quality Art. 1813); or (v) appointment of new agent for performance of same subject matter as goods and/or services while at same time pursuing profit based on principle of healthy referred to in previous mandate (Id. at Art. 1816). company management. (Art. 1[4] of Law No. 19 of 2003). Principal may revoke mandate at his discretion and, if principal deems it appropriate, Entire capital of PERUM is owned by State and is not divided into shares. (Art. 1[4] he may demand return of any documents evidencing mandate. (Id. at Art. 1814). Re- of Law No. 19 of 2003; Art. 1[4] of Government Regulation No. 45 of 2005 dated 25 vocation of mandate does not reduce rights of third persons dealing with agent in good Oct. 2005 concerning Establishment, Management, Supervision and Liquidation of State faith and without notice of revocation. (Id. at Art. 1815). However, agent will be Owned Enterprises). responsible for any damages incurred by principal due to agent’s unauthorized acts. (Id. Minister of State Owned Enterprises is responsible for acting on behalf of Government at Arts. 1801, 1807 and 1815). Agent is further responsible for damages to principal in matters related to capital of PERUM. (Art. 1 and 2[b] of Government Regulation No. arising out of termination of mandate by agent if notice of termination is delivered to 41 of 2003 dated 14 July 2004 concerning Assignment of Status, Duties and Authority principal in untimely manner or if injury to principal is due to other causes owing to fault of Minister of Finance in State owned Limited Liability Companies, Public Companies, of agent. (Id. at Art. 1817). and PERJANs to Minister of State Owned Enterprises). Minister acts as representative of Government as capital owner of PERUM vested with authority to stipulate policy for COMPANIES: development of PERUM with aim to stipulate direction in achievement of purposes of company from perspectives of investment policies, enterprise finance, funding sources, Limited liability companies are governed by Law No. 1 of 1995 dated 7 Mar. 1995 utilization of profits from company activities and other developmental policies. (Id. at concerning Limited Liability Companies. Art. 2[b]; Art. 3[2] of Government Regulation No. 45 of 2005). Limited liability companies are legal entities conducting business activities with au- PERUM is managed by board of directors responsible for management interests and thorized capital divided into shares. (Id. at Art. 1[1]). purposes of PERUM and represents PERUM in and out of court. (Art. 1[9] of Law No. Shareholders are not personally liable for agreements entered into in name of company 19 of 2003; Art. 26[1] Government Regulation No. 45 of 2005). Supervisory board is and are not liable for losses exceeding nominal value of shares subscribed. (Id. at Art. responsible for supervision of and provision of advice to board of directors in performing 3[1]). Limited liability is lost if: (i) Legal entity is not properly formed; (ii) shareholder PERUM management activities of board of directors. (Art. 1[8] of Law No. 19 of 2003; uses company for personal purposes in bad faith; (iii) shareholder is involved in unlawful Art. 60[1] of Government Regulation No. 45 of 2005). PERUM also includes internal acts committed by company; or (iv) shareholder unlawfully uses company assets causing supervisory unit headed by chairman responsible to President Director and charged with insolvency of company. (Id. at Art. 3[2]). Limited liability companies may be established assisting President Director with internal examinations of operations, finance, manage- for limited or unlimited duration. (Id. at Art. 6 and Elucidation of Art. 6). ment, implementation of PERUM and provision of advice to improve foregoing matters. Minister of State Owned Enterprises is vested with authority to act as shareholder on (Art. 67 of Law No. 19 of 2003; Arts. 66 and 67 of Government Regulation No. 45 of behalf of State for all limited liability companies wherein State holds equity interest 2005). except that Minister of Finance is vested with authority to act as shareholder on behalf Minister of State Owned Enterprises is not responsible for every legal action conducted of State for those limited liability companies conducting certain infrastructure related by PERUM and is not responsible for losses of PERUM which are in excess of value activities and/or activities providing services to broad spectrum of society. (Art. 1[1] of of State wealth allocated to PERUM unless Minister: (i) Directly or indirectly and in bad Government Regulation No. 50 of 1998 dated 13 Apr. 1998 concerning Assignment of faith benefits from PERUM exclusively for personal interests; (ii) is involved in unlawful Duty and Authority of Minister of Finance as Shareholders or General Meeting of acts undertaken by PERUM; or (iii) directly or indirectly makes use of assets of PERUM Shareholders in State Owned Enterprises to State Minister of State Owned Enterprises; in unlawful manner. (Art. 39 of Law No. 19 of 2003; see Arts. 1 and 2[b] of Government Arts. 1 and 2 of Presidential Decree No. 38 of 1999 dated 17 May 1999 concerning Regulation No. 41 of 2003 dated 14 of July 2004 concerning Assignment of Status, Assignment of Position, Duties and Authority of Minister of Finance as Shareholders or Duties and Authority of Minister of Finance in State Owned Limited Liability Compa- General Meeting of Shareholders to State Minister of State Owned Enterprises). nies, Public Companies and PERJANs to Minister of State Owned Enterprises [desig- nating authority of Minister]). Cooperatives are governed by Law No. 25 of 1992 dated 21 Oct. 1992 concerning PERUM is established by Government Regulations, must be domiciled in Indonesian Cooperatives. territory and exists for period of time as stipulated in articles of associations. (Art. 35[2] Cooperatives are defined as business entities which have natural persons or cooperative of Law No. 19 of 2003; Arts. 5, 6 and 7 of Government Regulation No. 45 of 2005). legal entities as members with core of their activities based upon principal of coopera- State Owned Limited Liability Companies (PERSERO).—PERSERO is governed by tives as well as community economic power based upon family values. (Id. at Art. 1[1]). Law No. 19 of 2003 dated 19 June 2003 concerning State Owned Enterprises, Law No. Primary cooperatives are composed of at least 20 individuals. (Id. at Art. 6[1]). 1 of 1995 dated 7 Mar. 1995 concerning Limited Liability Companies and Government Secondary cooperatives are composed of at least three cooperatives. (Id. at Art. 6[2]). Regulation No. 45 of 2005 dated 25 of Oct. 2005 concerning Establishment, Manage- Function and role of cooperatives are to: (i) Develop economic potential and capabilities ment, Supervision and Liquidation of State Owned Enterprises. of members in particular and community in general to promote economic and social Purposes and aims of establishment of PERSERO are: (i) Provision of high quality and welfare (Id. at Art. 4[a]); (ii) take active role in efforts to improve quality of human and strongly competitive goods and/or services; and (ii) pursuit of profit in order to increase social existence (Id. at Art. 4[b]); (iii) strengthen/solidify community economy as basis value of company. (Art. 12 of Law No. 19 of 2003). for strengthening and securing national economy with cooperatives as central pillar (Id. At least 51% of capital of PERSERO is owned by State and is divided into shares. at Art. 4[c]); and (iv) endeavor to form and develop national economy through coop- (Art. 1[2] of Law No. 19 of 2003; Art. 1[2] of Government Regulation No. 45 of 2005). erative efforts based on family values and democratic economics (Id. at Art. 4[d]). Minister of State Owned Enterprises is vested with authority to act as shareholder on Membership is voluntary and open, management is democratic and distribution of behalf of State for limited liability companies wherein State holds equity interest; while profit is in proportion to services rendered by each member. (Id. at Art. 5[1][a], [b] and for PERSERO engaged in activities vital to State interests, Minister of Finance is vested [c]). Membership in cooperatives is restricted to Indonesian citizens. (Id. at Art. 18[1]). with authority to act as shareholder on behalf of State. (Art. 1 of Presidential Decree No. Cooperatives are established in accordance with deed of establishment which sets forth 38 of 1999 dated 17 May 1999 concerning Types and Criteria of Certain PERSERO articles of association. (Id. at Art. 7[1]). Articles of association stipulate list of founders, which May Be Excluded from Assignment of Status, Duties and Authority of Minister name and domicile of cooperative, objective and business purpose, rules of membership, of Finance as Shareholders or General Meeting of Shareholders to Minister of State meetings and management, capitalization, period of establishment, methodology for Owned Enterprises). distribution of profits and sanctions for violations of rules. (Id. at Art. 8). PERSERO is managed by board of directors responsible for management interests and Organizational structure of cooperatives consist of: (i) Meetings of members; (ii) board purposes of PERSERO and representing PERSERO in and out of court. (Art. 1[9] of Law of management; and (iii) board of supervisors. (Id. at Art. 21). Resolutions adopted at No. 9 of 2003; Art. 26[1] of Government Regulation No. 45 of 2005). Board of com- meetings of members constitute highest level of authority. (Id. at Art. 22[1]). missioners is organ of PERSERO based on provisions and principles in effect for limited Cooperatives may act as savings and loan institutions for their members and for other liability companies with duty to conduct supervision and provide advice to board of cooperatives. (Id. at Art. 44[1]). directors in performance of activities of management of PERSERO. (Art. 1[7] of Law No. 19 of 2003; Art. 48[1] and [2] of Government Regulation No. 45 of 2005). Ap- Permanent Establishments are defined in Law No. 7 of 1983 dated 31 Dec. 1983 pointment and discharge of directors and commissioners is carried out by general meeting concerning Income Tax as already amended by Law No. 7 of 1991 dated 30 Dec. 1991, of shareholders. (Arts. 15[1] and 27[1] of Law No. 19 of 2003; Arts. 14[1] and 49[1] Law No. 10 of 1994 dated 9 Nov. 1994 and Law No. 17 of 2000 dated 2 Aug. 2000. of Government Regulation No. 45 of 2005). PERSERO also includes internal supervisory Permanent establishment is form of enterprise used to carry out business or activities unit headed by chairman responsible to President Director and charged with assisting in Indonesia by individuals not residing in Indonesia or individuals present in Indonesia President Director with internal examinations of operations, finance, management, imple- for not more than 183 days in 12 month period or entities not set up or domiciled in mentation of PERSERO and provision of advice to improve foregoing matters. (Art. Indonesia, in any form similar to following: (i) Management domicile; (ii) branch office; 67[1] of Law No. 19 of 2003; Arts. 66 and 67[a] of Government Regulation No. 45 of (iii) representative office; (iv) office building; (v) factory; (vi) workshop; (vii) mine or 2005). quarry of natural resources or area of drilling operations used for mining exploration; Public PERSERO is PERSERO with capital and number of shareholders fulfilling (viii) fishing area, livestock breeding area, agricultural area, plantation or forest area; (ix) certain criteria or PERSERO that conducts public offering in accordance with regulations construction project, installation or assembly project; (x) provision of services by em- of law in capital market sector. (Art. 1[3] of Law No. 19 of 2003; Art. 1[3] of Gov- ployee or other person for more than 60 days in 12 month period; (xi) individual or ernment Regulation No. 45 of 2005). organization acting as agent with dependent position; or (xii) agent or employee of insurance company neither formed nor domiciled in Indonesia which receives insurance Individual Company-Sole Proprietorship.—Individuals may form business enter- premiums or insures risks in Indonesia. (Art. I[1] of Law No. 17 of 2000 amending Art. prises on their own behalf without incorporation. 2[5]). PARTNERSHIP: State Owned Enterprises.—Two forms of State owned enterprises include: (i) Public Companies (PERUM); and (ii) State Limited Liability Companies (PERSERO). (Art. 9 Civil General Partnership (Maatschap).—Civil general partnership is governed by of Law No. 19 of 2003 dated 19 June 2003 concerning State Owned Enterprises). provisions of Arts. 1618 through 1652 of Indonesian Civil Code (Kitab Undang-undang Public Companies (PERUM).—PERUM is governed by Law No. 19 of 2003 dated 19 Hukum Perdata) (KUHPer) (Burgerlijk Wetboek voor Indonesië) (Staatsblad 1847:23). June 2003 concerning State Owned Enterprises and Government Regulation No. 45 of Partnership is agreement between two or more persons who promise to contribute 2005 dated 25 Oct. 2005 concerning Establishment, Management, Supervision and Liq- something to that partnership with intention that benefits obtained by partnership will be uidation of State Owned Enterprises. shared among them. (Id. at Art. 1618).

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PARTNERSHIP . . . continued manage system of payments and regulate and supervise banks (Art. 8[a], [b] and [c] of It is impermissible to provide that one partner shall be entitled to all benefits of Law No. 23 of 1999). partnership. (Id. at Art. 1635). However, one partner may assume all liability of part- Bank Indonesia is responsible for development and management of national banking nership. (Id. at Art. 1635). system and sets conditions on solvency and liquidity of banks. (Art. 1 Point 20 of Law One partner may be granted authority to manage partnership’s affairs and must carry No. 10 of 1998 dated 10 Nov. 1998 concerning Amendment to Law No. 7 of 1992 out management functions in good faith. (Id. at Art. 1636). If more than one partner is concerning Banking amending Art. 29). Bank Indonesia is empowered to set policy granted management authority without specifying their individual scopes of authority, concerning rates and structure of interest, determine qualitative and quantitative limita- each will have equal power to undertake management actions. (Id. at Art. 1637). In tions to extension of credits by banks, grant liquidity credits to banks secured by absence of express stipulation concerning method of partnership management: (i) Each repledges, negotiable instruments and promissory notes on basis of emergency situations partner is deemed to have granted authority to other partners to undertake management (which include banks experiencing financial difficulties which may cause systemic impact actions and to bind others by those actions (Id. at Art. 1639[1]); (ii) each partner is and potentially result in crisis endangering financial system). (Art. I Points 4 and 5 of entitled to utilize assets of partnership in manner in which those assets are ordinarily Law No. 3 of 2004 amending Arts. 10 and 11). Bank Indonesia is empowered to grant intended provided that assets are not used in manner contrary to interests of partnership and revoke bank business licenses (Art. 26[a] of Law No. 23 of 1999), approve own- or to exclusion of other partners’ rights of use thereof (Id. at Art. 1639[2]); (iii) each ership and management of banks (Id. at Art. 26[c]), grant permit for bank to conduct partner is empowered to obligate other partners to contribute to costs necessary to certain activities (Id. at Art. 26[d]), require reports and information and conduct audits preserve assets belonging to partnership (Id. at Art. 1639[3]); and (iv) no partner may of banks (Id. at Art. 29), order temporary cessation of operations (Id. at Art. 31) and renew rights in immovable assets of partnership based on reason that such renewal will develop and manage inter-bank information systems (Id. at Art. 32). benefit partnership without consent of other partners (Id. at Art. 1639[4]). Each partner Bank Indonesia conducts foreign exchange policy in accordance with foreign exchange is liable to partnership for all damages which partner causes due to own fault. (Id. at Art. management plans (Id. at Art. 12), acts as Government treasury holder (Art. I Point 13 1630). of Law No. 3 of 2004 amending Art. 52[1]), accepts loans from foreign States, and Partners are not severally responsible for whole of partnership’s debt. (Id. at Art. coordinates and settles Government financial claims and obligations with foreign parties 1642). One partner cannot obligate others without having received authorization. (Id. at (Art. 53 of Law No. 23 of 1999). Bank Indonesia is prohibited from extending loans to Art. 1642). Creditor may bring claim against partners with whom creditor contracted, Government. (Id. at Art. 56[1]). claiming against each partner in equal proportion of debt unless partner’s individual President as head of Government administration is empowered to manage State fi- liability is expressly stipulated in undertaking to be based on each partner’s proportionate nances through delegation of authority to Minister of Finance who acts as State General partnership interest. (Id. at Art. 1643). Any obligation undertaken for account of part- Treasurer. (Art. 7[1] of Law No. 1 of 2004 dated 14 Jan. 2004 concerning State Treasury; nership shall only commit partner who made it unless other partners have given con- Art. 6[2] of Law No. 17 of 2003 dated 5 Apr. 2003 concerning State Finance). tracting partner authority to bind them or if undertaking renders profit to partnership. (Id. Bank Indonesia is managed by Board of Governors consisting of at least one governor, at Art. 1644). Partnership is entitled to claim implementation of agreements undertaken at least one senior deputy governor and not less than four nor more than seven deputy by one partner on behalf of partnership. (Id. at Art. 1645). governors. (Art. 37[1] of Law No. 23 of 1999). Governors must be Indonesian citizens Partnerships end upon expiration of their intended terms, upon destruction of goods of high moral character possessing expertise and experience in fields of economics, or accomplishment of actions constituting primary purposes of partnership, upon desire finance, banking or law. (Art. I Point 9 of Law No. 3 of 2004 amending Art. 40). Bank of one or more of partners or upon death, placement under guardianship or bankruptcy Indonesia is independent State institution free from intervention by Government or other of one of partners. (Id. at Art. 1646). Partnerships formed with express stipulations of parties except as provided by law. (Id. at Art. I Point 1 amending Art. 4[2]). Board of duration of their existence cannot be terminated earlier by one of partners without Governors represents Bank Indonesia in and out of court. (Art. 39[1] of Law No. 23 of consent of others unless for valid reason such as failure of another partner to fulfill its 1999). responsibilities due to continuous disability or other reason. (Id. at Art. 1647). In order National banking system is governed by Law No. 7 of 1992 dated 25 Mar. 1992 to prematurely terminate partnership, application must be made to court. (Id. at Art. concerning Banking System as amended by Law No. 10 of 1998 dated 10 Nov. 1998 1647). For partnerships formed without express stipulations of duration of their existence, concerning Amendment to Law No. 7 of 1992. partner may not terminate partnership in bad faith for purpose of appropriating that which Indonesian banking system is composed of commercial banks and peoples’ credit would otherwise constitute partnership profits. (Id. at Arts. 1649 and 1650). banks. (Art. 5[1] of Law No. 7 of 1992). General Partnership (Firma) (Fa).—Firma is governed specifically by Arts. 15 Commercial banks may engage in: (i) Mobilization of funds from society in form of through 18 and Arts. 22 through 35 of Indonesian Commercial Code (Kitab Undang- deposits (Id. at Art. 6[a]); (ii) provision of credits (Id. at Art. 6[b]); (iii) issuing prom- undang Hukum Dagang) (KUHD) (Wetboek van Koophandel voor Indonesië). Provisions issory notes (Id. at Art. 6[c]); (iv) buying, selling or underwriting bills of exchange, of Indonesian Civil Code (Kitab Undang-undang Hukum Perdata) (KUHPer) (Burgerlijk letters of credit and commercial paper, State Treasury paper and Government guarantee Wetboek voor Indonesië) regarding Civil Partnership apply to Firma unless provisions certificates, Bank Indonesia Certificates, bonds and securities with validity periods of up relating to Civil Partnership are in direct contradiction to provisions specifically relating to one year (Id. at Art. 6[d]); (v) transferring funds (Id. at Art. 6[e]); (vi) placing funds to Firma. See subhead Civil General Partnership (Maatschap). (Art. 15 of Indonesian at, borrowing funds from or lending funds to other banks through letters, telecommu- Commercial Code [Kitab Undang-undang Hukum Dagang] [KUHD] [Wetboek van nications facilities, bills, checks and other means (Id. at Art. 6[f]); (vii) receiving pay- Koophandel voor Indonesië]). ments from claims on securities (Id. at Art. 6[g]); (viii) storing goods and securities (Id. Firma is partnership which operates under one name (Art. 16 of Indonesian Com- at Art. 6[h]); (ix) acting as custodians (Id. at Art. 6[i]); (x) placing customer funds with mercial Code [Kitab Undang-undang Hukum Dagang] [KUHD] [Wetboek van Koophan- others in form of securities not listed on stock exchange (Id. at Art. 6[j]); (xi) providing del voor Indonesië]), formed by notarial deed which is published in State Gazette and factoring, credit cards and trust agency services (Id. at Art. 6[l]); (xii) providing financing registered in Company Registry. (Id. at Arts. 22 and 23; Arts. 7, 8 and 14 of Law No. and other activities based on Syari’ah principles (Art. 1 Point 3 of Law No. 10 of 1998 3 of 1982 dated 1 Feb. 1982 concerning Company Registry). Each partner is jointly and amending Art. 6[m]); (xiii) engaging in foreign currency transactions (Art. 7[a] of Law severally liable for all obligations of Firma. (Id. at Art. 18). Each partner has authority No. 7 of 1992); (xiv) engaging in participation in capital of other banks and finance to contract on behalf of and otherwise bind Firma. (Id. at Art. 17). companies including leasing, venture capital, securities underwriters, securities trading brokers, investment managers, insurance, and clearing/settlement and depository agencies Limited Partnership (Commanditaire Vennootschap) (CV).—CV is governed by in accordance with Bank Indonesia regulations (Id. at Art. 7[b]); (xv) engaging in capital Indonesian Commercial Code (Kitab Undang-undang Hukum Dagang) (KUHD) (Wet- participation for limited periods of time for purposes of overcoming credit failures if boek van Koophandel voor Indonesië) and Indonesian Civil Code (Kitab Undang-undang acquired in connection with enforcement of credit defaults including Syari’ah based Hukum Perdata) (KUHPer) (Burgerlijk Wetboek voor Indonesië). financing defaults provided that capital participation is withdrawn in accordance with CV is partnership consisting of one or more active partners and one or more silent fulfillment of provisions which are stipulated by Bank Indonesia (Art. 1 Point 4 of Law partners. (Art. 19 of Indonesian Commercial Code [Kitab Undang-undang Hukum Da- No. 10 of 1998 amending Art. 7[c]); and (xvi) founding and managing pension funds or gang] [KUHD] [Wetboek van Koophandel voor Indonesië]). Active partners act as man- pension fund management agencies (Art. 7[d] of Law No. 7 of 1992). aging partners with joint and several personal liability between them. (Id. at Art. 19). Commercial banks are prohibited from engaging in insurance business activities. (Id. Silent partners contribute capital to partnership but do not participate in loss beyond at Art. 10[b]). Special license from Bank Indonesia is required in order to permit foreign amount they contribute or are bound to contribute. (Id. at Art. 20). Third parties dealing exchange operations. (Arts. 5, 17[1] and 18[1] of Regulation of Bank Indonesia No. with CVs may sue active partners. (Id. at Arts. 19 and 20). Silent partners may only be 6/1/PBI/2004 dated 6 Jan. 2004 concerning Foreign Exchange Trader). Capital adequacy sued if they engage in managerial acts and/or in some circumstances if their name is requirements based upon prevailing regulations apply. (Id. at Art. 20). included in name of partnership. (Id. at Arts. 21 and 23). Bank Indonesia sets legal lending and Syari’ah based financing limits for commercial banks. (Art. 1 Point 6 of Law No. 10 of 1998 amending Art. 11[1] of Law No. 7 of 1992; Art. 43 of Regulation of Bank Indonesia No. 7/3/PBI/2005). Maximum limit with respect BUSINESS REGULATION AND to parties unrelated to ownership or control of commercial banks is 30% of capital of commercial banks. (Art. 11[2] of Law No. 7 of 1992). Maximum limit with respect to COMMERCE parties related to ownership or control of commercial banks is 10% of capital of com- BANKS AND BANKING: mercial banks. (Art. 1 Point 6 of Law No. 10 of 1998 amending Art. 11[3]). Commercial banks are obligated to maintain minimum statutory reserves in accounts Central Bank.—Law No. 23 of 1999 dated 17 May 1999 concerning Bank Indonesia with Bank Indonesia. (Regulation of Bank Indonesia 6/15/PBI/2004 dated 28 June 2004 as amended by Law No. 3 of 2004 dated 15 Jan. 2004 concerning Amendment to Law concerning Minimum Statutory Reserves in Accounts with Bank Indonesia in Rupiah and No. 23 of 1999 concerning Bank Indonesia governs Central Bank. Other Currency as lastly am’d by Regulation of Bank Indonesia 7/49/PBI/2005 dated 29 Bank Indonesia is central bank (Art. I Point 1 of Law No. 3 of 2004 amending Art. Nov. 2005 concerning Second Amendment to Regulation of Bank Indonesia 6/15/PBI/ 4[1]), independent institution constituted as corporate body (Id. at Art. I Point 1 amending 2004; Circular of Bank Indonesia No. 7/54/DPNP dated 29 Nov. 2005 concerning Mini- Art. 4[3]). Bank Indonesia has head office in Jakarta, is permitted to have satellite offices mum Statutory Reserves in Accounts with Bank Indonesia in Rupiah and Other Cur- throughout Indonesia and may have representatives and correspondents abroad. (Art. 5[2] rency). of Law No. 23 of 1999). Bank Indonesia is capitalized with minimum of Rp Peoples’ credit banks may: (i) Mobilize funds through deposits (Art. 13[a] of Law No. 2,000,000,000,000. (Art. I Point 2 of Law No. 3 of 2004 amending Art. 6[1]). 7 of 1992); (ii) provide credits (Id. at Art. 13[b]); (iii) engage in Syari’ah based financing Mandate of Bank Indonesia is to maintain stability of value of Rupiah (Id. at Art. 1 arrangements (Art. 1 Point 9 of Law No. 10 of 1998 amending Art. 13[c] of Law No. Point 3 amending Art. 7[1]), stipulate and implement monetary policy, regulate and 7 of 1992); and (iv) place funds in Bank Indonesia certificates, time deposits, deposit

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BANKS AND BANKING . . . continued instrumentalities; (xi) conduct investigations and examinations to obtain all necessary certificates and other forms of savings at other banks (Art. 13[d] of Law No. 7 of 1992). information relating to bank in restructuring program, and relating to any other parties Peoples’ credit banks may not: (i) Receive deposits in form of checks, payment orders involved or reasonably alleged to be involved or known to have activities which caused or book transfers (Id. at Art. 14[a]); (ii) engage in foreign currency transactions (Id. at loss to banks in restructuring programs; (xii) calculate and stipulate losses sustained by Art. 14[b]); (iii) engage in capital participation (Id. at Art. 14[c]); (iv) engage in insurance banks in restructuring programs and impose those losses on bank’s capital, and if those business activities (Id. at Art. 14[d]); or (v) undertake other business activities except losses are due to fault or negligence of members of board of directors and/or commis- those specifically stipulated (Id. at Art. 14[e]). sioners and/or shareholders, then impose losses on related party; (xiii) stipulate amount Licenses.—Persons engaged in banking activities must obtain licenses from Bank of additional capital obligated to be paid by shareholders; and (xiv) conduct other Indonesia. (Art. 1 Point 10 of Law No. 10 of 1998 amending Art. 16[1] of Law No. 7 activities which may be necessary to support implementation of foregoing authority. (Id. of 1992). Qualifications are set regarding organizational structure, capital, ownership, at Art. 1 Point 26 adding Art. 37A[3]). expertise, feasibility of plans and other matters. (Id. at Art. 1 Point 10 amending Art. Upon temporary special body’s request, banks under restructuring programs are ob- 16[2] of Law No. 7 of 1992). Domestic and overseas branch offices of Indonesian ligated to furnish all information and explanations relating to their businesses including commercial banks may be opened after obtaining permit from Bank Indonesia. (Id. at Art. provision of opportunity to inspect related books and documents. (Id. at Art. I Point 26 1 Point 12 amending Art. 18[1] and [2] of Law No. 7 of 1992). Foreign banks opening adding Art. 37A[5]). Other parties are obligated to furnish information relating to banks branches in Indonesia must obtain permits from Bank Indonesia. (Id. at Art. 1 Point 14 involved in restructuring programs to temporary special body. (Id. at Art. I Point 26 amending Art. 20[1] of Law No. 7 of 1992). adding Art. 37A[6]). Temporary special body is required to provide reports of its ac- Legal status of commercial banks and peoples’ credit banks may be limited liability tivities to Minister of Finance. (Id. at Art. 1 Point 26 adding Art. 37A[7]). If according companies, cooperatives and regional administration owned companies. (Id. at Art. 1 to Government’s assessment temporary special body has completed its task, Government Point 15 amending Art. 21[1] of Law No. 7 of 1992). shall dissolve temporary special body. (Id. at Art. 1 Point 26 adding Art. 37A[8]). Ownership.—With exception of publicly listed banks, commercial banks shall only be Government Guarantee Bank Obligations.—Pursuant to Law No. 24 of 2004 dated established by: (i) Indonesian citizens and/or Indonesian statutory bodies; or (ii) Indo- 22 Sept. 2004 concerning Deposit Guarantee Institution, Presidential Decree No. 26 of nesian citizens and/or Indonesian statutory bodies in partnership with foreign citizens 1998 dated 26 Jan. 1998 concerning Guarantee over Repayment Obligations of Com- and/or foreign statutory bodies. (Art. 1 Point 16 of Law No. 10 of 1998 amending Art. mercial Banks as last amended by Presidential Decree No. 95 of 2004 dated 18 Oct. 2004 22[1] of Law No. 7 of 1992). Foreign banks may hold up to 99% of nonpublicly listed concerning Amendment to President Decree No. 26 of 1998 and Regulation of Minister commercial banks. (Art. 3 of Government Regulation No. 29 of 1999 dated 7 May 1999 of Finance No. 17/KMK.05/2005 dated 3 Mar. 2005 concerning Requirements, Proce- concerning Purchase of Shares of Commercial Bank). Peoples’ credit banks shall only dures and Implementing Provisions on Government Guarantee over Repayment Obli- be established by Indonesian citizens and/or Indonesian statutory bodies wholly owned gations of Commercial Banks, Government guarantees repayment obligations of Indo- by Indonesian citizens, regional administrations or combination of three. (Art. 23 of Law nesian commercial banks owed to depositors for deposits denominated in Rupiah and/or No. 7 of 1992). foreign currencies. (Art. 1 of Presidential Decree No. 26 of 1998). Commercial banks may issue up to 99% of their shares through Indonesian stock Deposits with commercial banks do not qualify for Government guarantee if interest exchange and foreign citizens and/or statutory bodies may purchase up to 100% of listed obligation undertaken is in excess of maximum interest rate stipulated by Bank Indo- stock. (Art. 4[1] and [2] of Government Regulation No. 29 of 1999). Unlisted 1% nesia. (Circular of Bank of Indonesia No. 6/20/DPM of 2004 as last am’d by Circular minimum shares must be held by Indonesian citizens and/or Indonesian statutory bodies. of Bank Indonesia No. 7/2/DPM of 2005). Government guarantee over repayment ob- (Id. at Art. 4[3]). ligations of Indonesian commercial banks is gradually reduced and will come to end on Domestic Branch Offıces.—Opening domestic branch offices of commercial banks 22 Sept. 2005 (Art. I of Presidential Decree No. 95 of 2004 adding Art. 5A[1][b]) as requires license from Bank Indonesia. (Art. 1 Point 12 of Law No. 10 of 1998 amending follows: (i) From period of 18 Apr. 2005 until 21 Sept. 2005, guarantee of repayment Art. 18 of Law No. 7 of 1992). of obligations of commercial banks is limited to deposits and inter-bank loans conducted Inter-bank mergers, consolidations and acquisition require license from Bank Indo- through inter-bank money market (Id. at Art. I adding Art. 5A[1][a]); and (ii) from 22 nesia. (Id. at Art. 1 Point 19 amending Art. 28 of Law No. 7 of 1992). Sept. 2005 onward, guarantee of obligations of Indonesian commercial banks will be Investigations and Audits.—Bank Indonesia, in its supervisory capacity, has broad carried out by Deposit Guarantee Institution (Art. 4[1] and 103 of Law No. 24 of 2004). powers to conduct investigations into and audits of activities of banks. (Arts. 8[c], 24, (See subhead Deposit Guarantee Institution, infra.) 29, 30, 31 and 35 of Law No. 23 of 1999 dated 17 May 1999 concerning Bank Indonesia From period of 22 Sept. 2005 until 21 Mar. 2006, entire amount of deposits in banks as am’d by Law No. 3 of 2004 dated 15 Jan. 2004 concerning Amendment to Law No. must be guaranteed; from period of 22 Mar. 2006 until 21 Sept. 2006, maximum amount 23 of 1999). Information obtained in investigations and audits is deemed confidential. guaranteed per customer per bank is Rp 5,000,000,000; from period of 22 Sept. 2006 (Art. 1 Points 21-24 of Law No. 10 of 1998 amending Art. 31, adding Art. 31A, deleting until 21 Mar. 2007, maximum amount guaranteed per customer per bank is Rp Art. 32 and amending Art. 33 of Law No. 7 of 1992). 1,000,000,000; from period of 22 Mar. 2007 onward, maximum amount guaranteed per Banks Experiencing Diffıculty.—If based on Bank Indonesia’s evaluation bank is con- customer per bank is Rp 100,000,000. (Id. at Arts. 1[1], 11[1] and 100[2]). sidered to be in difficulties constituting endangerment of continuity of its business, Bank Foreign currency obligations may be paid in Rupiah at rate of exchange quoted by Indonesia can insist that bank take measures such as: (i) Increasing shareholder capi- Bank Indonesia on guarantee payment date. (Art. 2[3] of Presidential Decree No. 26 of talization; (ii) shareholder replacement of members of boards of directors and/or com- 1998). missioners; (iii) writing off bad credits including defaulted Syari’ah financings as losses against stockholders’ equity; (iv) mergers or consolidations with other banks; (v) sale of Deposit Guarantee Institution (LPS).—Pursuant to Law No. 24 of 2004, indepen- shares to buyers prepared to take over all liabilities; (vi) transferring management of part dent institution was established with function of implementing guarantee of bank re- or all of business activities of bank to other parties; and (vii) selling part of assets and payment obligations and taking active part in maintaining stability of national banking liabilities of bank to other banks or other parties. (Id. at Art. 1 Point 25 amending Art. system. (Arts. 2 and 4 of Law No. 24 of 2004). All banks operating in Indonesia except 37[1] of Law No. 7 of 1992). for village credit agencies are obligated to joint guarantee program managed by LPS. (Id. If condition of bank endangers banking system or previously described measures are at Art. 8). LPS is capitalized with minimum capital of Rp 4,000,000,000,000 and maxi- insufficient to rescue bank from its difficulties, Bank Indonesia may revoke bank’s mum of Rp 8,000,000,000,000. (Id. at Art. 81[1]). LPS capital comes from separated business license and order board of directors to hold general meeting of shareholders to State assets. (Id. at Art. 81[2]). liquidate bank. (Id. of Art. 1 Point 25 amending Art. 37[2] of Law No. 7 of 1992). If LPS has duty to: (i) Create and stipulate policy for implementation of guarantee over bank’s board of directors fails to implement general meeting of shareholders to liquidate deposits in banks; (ii) implement guarantee over deposits in banks; (iii) create and bank, Bank Indonesia may request court to issue order dissolving bank’s status as legal stipulate policy in framework of taking active part in maintaining stability of national entity, appointing liquidation team and ordering implementation of liquidation in accor- banking system; (iv) create, stipulate and implement resolutions for failing banks (defined dance with prevailing law. (Id. at Art. 1 Point 25 amending Art. 37[3] of Law No. 7 of as banks having financial difficulties jeopardizing their own business and declared un- 1992). sound by LPS) which do not cause systemic impact to national banking system; and (v) If based on Bank Indonesia’s evaluation banking system is experiencing difficulties implement management of failing banks that cause systemic impact to national banking constituting endangerment to Indonesian national economy, based upon Bank Indonesia’s system. (Id. at Art. 5). request and after consultation with House of People’s Representatives (see category LPS is vested with authority to: (i) Stipulate and collect guarantee premiums from Introduction, topic Government and Legal System, subhead Legislature, catchline House participating banks; (ii) stipulate and collect contributions for banks joining mandatory of People’s Representatives [DPR]), Government may form temporary special body, for guarantee program for first time; (iii) manage assets and liabilities of LPS; (iv) obtain purpose of improving health of banking system and specifically designated banks, vested bank customer information, bank financial reports and reports of bank investigations as with authority to: (i) Take over and conduct all rights and authorities of bank’s share- long as not in violation of bank confidentiality obligations; (v) conduct reconciliations, holders including rights and authorities exercisable in general meetings of shareholders; verifications and/or confirmations over bank customer information, bank financial reports (ii) take over and conduct all rights and authorities of bank’s board of directors and board and reports of bank investigations; (vi) stipulate requirements, procedures and regulations of commissioners; (iii) take over, manage and conduct ownership activities over bank’s relating to payment of claims; (vii) appoint, empower and/or assign other parties to act assets or rights, including assets of bank’s existing with any party, both within and for and on behalf of LPS to conduct certain activities; (viii) explain and inform banks outside of territory of Indonesia; (iv) review, revoke, terminate and/or amend contracts and public regarding guarantee over deposits in banks; (ix) issue administrative sanc- binding bank with third parties which according to opinion of temporary special body tions; (x) take over and implement all rights and authorities of shareholders of failing cause losses to bank; (v) sell or transfer assets of bank, assets of members of bank’s board banks including rights and authorities of general meetings of shareholders; (xi) control of directors and commissioners and assets of certain shareholders, both within and and manage assets and liabilities of saved failing banks; (xii) review, revoke, terminate outside territory of Indonesia, directly or indirectly through public offering; (vi) sell or and/or amend contracts binding saved failing banks with third parties which cause losses transfer bank’s claims and/or transfer management of claims to other parties without to failing banks; (xiii) sell and/or transfer assets of banks without approval from debtors necessity of obtaining consent from bank’s debtor customer; (vii) transfer management and/or liabilities of banks without approval from creditors. (Id. at Art. 6). of bank’s assets and/or management of bank to other party; (viii) conduct temporary Indonesian Bank Restructuring Agency (IBRA).—Pursuant to Presidential Decree capital participation in banks through direct participation or through conversion of tem- No. 27 of 1998 dated 26 Jan. 1998 concerning Establishment of Indonesian Bank porary special body’s claims into capital participation in banks; (ix) issue letters of Restructuring Agency and Government Regulation No. 17 of 1999 dated 27 Feb. 1999 enforcement for definite claims of banks; (x) conduct eviction over land and/or buildings concerning Indonesian Bank Restructuring Agency as lastly amended by Government owned by or subject to rights of banks which are under authority of other parties, both Regulation No. 47 of 2001 dated 8 June 2001 concerning Fourth Amendment to Gov- by temporary special body itself or with assistance of authorized state law enforcement ernment Regulation No. 17 of 1999, IBRA was established on 26 Jan. 1998 to administer

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. INDO – 5 BUSINESS REGULATION AND COMMERCE MARTINDALE-HUBBELL LAW DIGEST - 2007

BANKS AND BANKING . . . continued noted on bill and acceptor should sign it. (Id. at Art. 124). By acceptance, drawee guarantees granted by Government to commercial banks. (See subhead Government commits to make payment at maturity. (Id. at Art. 127). Presentment for payment of bill Guarantee Bank Obligations, supra.) payable on certain day, after fixed period or after sight shall occur either on day it IBRA was empowered to control, settle and improve solvency and restructure banks becomes payable or within two subsequent work days. (Id. at Art. 137). declared unsound by Bank Indonesia. (Art. 3[1] of Government Regulation No. 17 of Exchange Rate.—Bill of exchange payable in currency different from currency of 1999). IBRA was authorized to take over management and assets of troubled banks, country of place of payment may be paid in currency of country of place of payment execute mergers, consolidations and/or acquisitions and demand compensation from at exchange rate fixed according to custom of place of payment, unless payment in shareholders who were directly or indirectly involved in causing losses. (Id. at Art. 12; another currency is specified. (Id. at Art. 140). Art. 1 Point 26 of Law No. 10 of 1998 adding Art. 37A). Protest for Nonacceptance or Nonpayment.—Refusals of acceptance or payment must IBRA’s authorities were terminated on 27 Feb. 2004 and IBRA was dissolved on 30 be stated in authentic deed. (Id. at Art. 143). (See category Documents and Records, topic Apr. 2004 by Presidential Decree No. 15 of 2004 dated 27 Feb. 2004 concerning Notaries.) Termination of Duty and Dissolution of IBRA. (Arts. 1[1] and [3], 2 and 4[2] of Liability.—Drawer, acceptor, endorser and guarantor of bill of exchange are jointly and Presidential Decree No. 15 of 2004). State assets previously under IBRA management severally liable to holder. (Id. at Art. 146). were transferred to management of Minister of Finance with following basic arrange- Guarantee of Payment.—Third party may guarantee payment by writing “good for ment: (i) State assets which are not in dispute and not directly utilized by Government aval” or other similar expression on bill and signing. (Id. at Arts. 129 and 130). in conducting executive function are managed by State limited liability company orga- nized to engage in activities in field of asset management, PT. Perusahaan Pengelolaan Promissory notes must contain: (i) Term “Promissory Note” (Id. at Art. 174[1°]); (ii) Aset (Persero) (Id. at Art. 6[1] and [2][a]; Government Regulation No. 10 of 2004 dated unconditional promise to pay sum certain (Id. at Art. 174[2°]); (iii) date of maturity (Id. 27 Feb. 2004 concerning Establishment of State Limited Liabilities Company in Field at Art. 174[3°]); (iv) name and place for payment (Id. at Art. 174[4°]); (v) name of person of Asset Management); (ii) State assets which are still being disputed in court are to whom or to whose order payment must be made (Id. at Art. 174[5°]); (vi) date and managed by IBRA Settlement Team (Id. at Art. 6[2][b][1]; Presidential Decree No. 16 place of issue (Id. at Art. 174[6°]); and (vii) signature of issuer (Id. at Art. 174[7°]). of 2004 dated 27 Feb. 2004 concerning Establishment of Settlement Team of BPPN); and Commercial Paper Traded through Commercial Banks.—Short term, unsecured prom- (iii) State assets in dispute relating to executions of mortgages and other executions are issory notes, transacted at discount, issued by non-banks and traded through banks or managed by State Receivables Management Team (Id. at Art. 6[2][b][2]). security companies are referred to as commercial paper. (Art. 1[2] of Board of Executive IBRA Settlement Team was terminated and dissolved as of 27 Dec. 2005. (Art. 1 of Directors of Bank Indonesia Decision No. 28/52/KEP/DIR of 1995 dated 31 Aug. 1995 Presidential Regulation No. 9 of 2006 dated 23 June 2006 concerning Termination of concerning Requirement for Issuing and Trading Commercial Paper through Commercial Duty and Dissolution of IBRA Settlement Team). Unresolved settlement matters of IBRA Bank in Indonesia). Commercial paper which may be issued and traded through com- Settlement Team were transferred to responsibility of Minister of Finance. (Id. at Art. mercial banks must include: (i) Words “dapat diperdagangkan” (negotiable) (Id. at Art. 3[1][a]). State assets related to mortgage attachments and other executorial attachments 2[e][2]), “surat berharga komersial” (commercial paper), “surat sanggup” (promissory were transferred to State Receivables Management Team. (Id. at Art. 3[1][b]). Following note) (Id. at Art. 2[e][1]), “tanpa protes” (without protest) and “tanpa biaya” (without fee) additional duties of IBRA Settlement Team were also transferred to Minister of Finance in Indonesian language (Id. at Art. 2[e][3]); (ii) unconditional promise to pay sum certain in coordination with Coordinating Minister in Economic Sector, Attorney General and (Id. at Art. 2[a][2]); (iii) date of payment (Id. at Art. 2[a][3]); (iv) place of payment (Id. Chief of Police of State of Republic of Indonesia: (i) Handling and completion of at Art. 2[a][4]); (v) name of payee (Id. at Art. 2[a][5]); (vi) date and place of issue (Id. obligations of bank shareholders who have signed settlement agreements and acknowl- at Art. 2[a][6]); (vii) signature of issuer (penerbit) (Id. at Art. 2[a][7]); (viii) name and edgments of indebtedness and/or agreements for temporary settlement of obligations and address of issuing agent (agen penerbit) (Id. at Art. 2[e][4]); (ix) name and address of acknowledgments of indebtedness where those shareholders have: (a) Made partial pay- paying agent (agen pembayar) (Id. at Art. 2[e][5]); (x) serial number (Id. at Art. 2[e][6]); ment of obligations to IBRA before IBRA was dissolved; or (b) conveyed plans of (xi) credit risk rating obtained through Capital Market Supervisory Board (BAPEPAM) settlement of obligations to IBRA Settlement Team; and (ii) transaction of settlement of (Id. at Arts. 1[9] and 2[d]); (xii) method of calculating cash value (Id. at Art. 2[f][2]); bank shareholder obligations for shareholders who have conveyed plans of settlement of (xiii) statement regarding blank endorsements without right of regression with clause obligations to Minister of Finance after 27 Dec. 2005. (Id. at Arts. 3[2], [b], [c] and [3]). “untuk saya kepada pembawa tanpa hak regress” (Id. at Art. 2[f][1]); and (xiv) infor- mation on method to convert commercial paper to cash (Id. at Art. 2[e][7]). Presentment Multi-Finance Companies are financing institutions operating in one or more fields to paying agents must be made within six months from date of maturity and presentment of leasing, venture capital, securities trading, factoring, credit cards and consumer fi- thereafter must be made directly to issuer. (Id. at Art. 4). nancing. (Art. 2[1] of Presidential Decree No. 61 of 1988 dated 20 Dec. 1988 concerning Multi-Finance). Foreign entities may own up to 85% of paid-in capital of multi-finance Checks must contain (i) Name “check” (Art. 178[1°] of Indonesian Commercial Code companies. (Id. at Art. 3[4]). [Kitab Undang-undang Hukum Dagang] [KUHD] [Wetboek van Koophandel voor In- Financing companies are prohibited from drawing funds directly from public in form donesië]); (ii) unconditional order to pay sum certain (Id. at Art. 178[2°]); (iii) name of of checks, payment orders, book transfers, deposits, savings or promissory notes except drawee or to bearer (Id. at Arts. 178[3°] and 183); (iv) signature of drawer (Id. at Art. that multi-finance companies may issue promissory notes as guarantees of indebtedness 178[6°]); (v) date and place of drawing (Id. at Art. 178[5°]); and (vi) place for payment to their creditor banks. (Id. at Art. 5; Decree of Minister of Finance No. 448/KMK.017/ (Id. at Art. 178[4°]). Checks must be drawn on banker managing funds for drawer with 2000 dated 27 Oct. 2000 concerning Multi-Finance Company as am’d by KMK No. check writing privileges. (Id. at Art. 180). Checks may be transferred by endorsement. 172/KMK.06/2002 dated 23 Apr. 2002 concerning Amendment to Decree of Minister of (Id. at Art. 191). Finance No. 448/KMK.017/2000). Pursuant to Decree of Minister of Finance No. 185/ KMK.06/2002, as of 24 Apr. 2002, Government discontinued issuance of new licenses COMMERCIAL REGISTRATION: for multi-finance companies. Commercial Registration is governed by Law No. 3 of 1982 dated 1 Feb. 1982 Interest Rate Regulation.—Bank Indonesia sets policy concerning rate and structure concerning Company Registration Obligations. of interest. (Art. 1[10] of Law No. 23 of 1999). Every business organization, limited liability company, partnership, individual com- pany (employing more than one person) and other business organization including every BILLS AND NOTES: branch office, holding company as well as every agent and representative thereof do- miciled and operated in Indonesia must register with Company Registry. (Arts. 5[1] and Bills of exchange are governed by Indonesian Commercial Code (Kitab Undang- 7 of Law No. 3 of 1982). Records of Company Registry are public. (Id. at Art. 3). Every undang Hukum Dagang) (KUHD) (Wetboek van Koophandel voor Indonesië). Bills of interested party who has paid administration fee stipulated by Minister of Trade, has right exchange must contain: (i) Name “Bill of Exchange” in text of bill itself (Id. at Art. to obtain information which may be required by obtaining official copy or quotation from 100[1]); (ii) unconditional order to pay certain sum of money (Id. at Art. 100[2]); (iii) information in Company Registry which is legalized by authorized official of office of name of drawee (Id. at Art. 100[3]); (iv) date for payment (Id. at Art. 100[4]); (v) place Company Registry. (Id. at Art. 4). of payment (Id. at Art. 100[5]); (vi) name of person to whom or to whose order payment must be made (Id. at Art. 100[6]); (vii) date and place of issue (Id. at Art. 100[7]); and Procedure for registration includes filing form as stipulated by Minister of Trade with (viii) signature of drawer (Id. at Art. 100[8]). If any of above are lacking, document will Company Registry within three months following commencement of business. (Art. 10 not be bill of exchange except that: (i) If date for payment is not mentioned, payment of Law No. 3 of 1982; Arts. 1[21] and 19 of Decision of Ministry of Trade and Industry is due on presentment; (ii) if specific place is not mentioned, payment shall be deemed No. 596/MPP/Kep/9/2004 dated 23 Sept. 2004 concerning Company Registration Ob- to be required at address of drawee as mentioned in bill and that address shall be deemed ligation Implementation Standards; see Art. 43 of Presidential Regulation No. 9 of 2005 drawee’s domicile; and (iii) if bill does not mention place of its making, place of making dated 31 Jan. 2005 concerning Status, Tasks, Functions, Organizational Structures and shall be deemed to be address of drawer as mentioned in bill. (Id. at Art. 101). Operational Procedures of State Departments [providing that all duties relating to trade Bill of exchange may stipulate maturity at sight, on certain date after sight, after certain formerly within purview of authority of Department of Trade and Industry have been date, during certain period or on certain date after issuance. (Id. at Art. 132). Bill transferred to Department of Trade]). Following information and amendments thereto maturing at sight or on certain date after sight may bear interest. (Id. at Art. 104). Bills must be registered within three months of occurrence: (i) Existence of business entity, fixing payments in other manner or in installments does not constitute bill of exchange. business trademark, establishment date, maximum duration of existence, business pur- (Id. at Art. 132). poses, business permits in effect, principal and branch office addresses; (ii) full name, Drawer guarantees bill of exchange will be accepted and paid. (Id. at Art. 108). Drawer identity number, address, date and place of birth, nationality, date of commencement of must provide that drawee will have funds for payment at maturity. (Id. at Art. 109b). occupancy of position and signatures of managers, directors, commissioners, members Transfer.—Bills of exchange are transferable by endorsement and delivery except if bill and partners of business; (iii) authorized, issued and paid-in capital, nominal value of is issued “not to order” in which case bill is transferable by ordinary principles of shares, in-kind contributions; and (iv) copies of articles of association if applicable. (Id. assignment (cessie). (Id. at Art. 110). Endorsements must be unconditional. (Id. at Art. at Arts. 11 through 16 and 25[1]). 111). Holders of bills are considered lawful holders if rights are evidenced by uninter- Limited Liability Companies.—Board of directors must register complete articles of rupted chain of endorsement unless last endorsement is in blank (in which case unin- incorporation and amendments thereto, together with approval of articles from Minister terrupted chain need not be established) and unless holder acquired bill in bad faith. (Id. of Law and Human Rights, with Company Registry. (Id. at Art. 21[1] of Law No. 1 of at Art. 115). Unless otherwise provided, endorser bears responsibility for acceptance and 1995 dated 7 Mar. 1995 concerning Limited Liability Company). payment of bill. (Id. at Art. 114). Presentment for Acceptance.—Holders may present bill for payment during designated Penalties for failure to register include maximum of three months in jail or penalties period, on or prior to maturity. (Id. at Arts. 120 and 132). Word “accepted” should be up to Rp 3,000,000. (Art. 32[1] of Law No. 3 of 1982).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. INDO – 6 INDONESIA LAW DIGEST BUSINESS REGULATION AND COMMERCE

CONTRACTS: movables and bearer instruments directly and immediately transferred between parties) Applicable Law.—Indonesian contract law is governed by two separate systems, (Id. at Arts. 1682 and 1687); (ix) agreement between husband and wife to restore marital modern legislation inclusive of Indonesian Civil Code (Kitab Undang-undang Hukum property (Id. at Art. 196); (x) renunciation of wife’s rights over marital property (Id. at Perdata) (KUHPer) (Burgerlijk Wetboek voor Indonesië) (Staatsblad 1847:23) and Adat Art. 133); (xi) notarial will (Id. at Art. 938); (xii) revocation of partial or entire testament law (see category Introduction, topic Government and Legal System, subhead Legal in event revocation is not conducted by subsequent testament (Id. at Art. 992); (xiii) Pluralism, catchline Adat Law). Conflicts of law issues arise in domestic transactions due hypothecation over immovable goods (Id. at Art. 1167); (xiv) all provisions regulating to application of different laws to persons of different social groups. Contracting parties marital separation governing husband and wife including but not limited to implemen- are generally free to expressly designate governing law, foreign or domestic. All agree- tation of parental authority and management of their children’s welfare and education (Id. ments made in accordance with law in effect constitute law between parties. (Art. 1338 at Art. 237); (xv) agreement to conduct division and separation of property obtained of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata (KUHPer)] [Burgerlijk through descent distribution (Id. at Art. 1121); (xvi) transfer by sale, delivery and Wetboek voor Indonesië] [Staatsblad 1847:23]). donation of part of debt subject to hypothecation (Id. at Art. 1172); (xvii) power of attorney to expunge recordation of hypothecation (Id. at Art. 1196); (xviii) refusal of Adat Law.—Largely customary and unwritten, Adat law is applicable to transactions acceptance or payment of promissory notes (Art. 143 of Indonesian Commercial Code between indigenous Indonesians where written law does not otherwise address relevant [Kitab Undang-undang Hukum Dagang] [KUHD]); (xix) agreement to arbitrate post issues. Adat law differs from region to region, with approximately 17 primary areas occurrence of dispute in event parties are unable to sign written agreement (Art. 9[1] and identified. Adat law differs from modern legislation and Civil Code in many respects, [2] of Law No. 30 of 1999 dated 12 Aug. 1999 concerning Arbitration and Dispute including contract formation, risk of loss prior to delivery and remedies for breach. Resolution Alternatives); (xx) mortgages and grants of authority to mortgage immovable Differences arise based upon cultural variations in perspectives of community relation- property (Arts. 10[2] and 15 of Law No. 4 of 1996 dated 9 Apr. 1996 concerning ships, property rights and religious principles. Mortgage on Land and Land Related Objects); (xxi) release of mortgage rights by Understanding of Adat law provides insight into interpretation of rights, responsibili- creditor (Id. at Art. 18[2]); (xxii) transfer of trade secrets (Elucidation of Art. 5[1] of Law ties and performances in commercial transactions governed by modern legislation and No. 30 of 2000 dated 20 Dec. 2000 concerning Trade Secret); (xxiii) establishment of codes. General distinguishing principles of Adat law include lack of distinction between: limited liability companies (Art. 7[1] of Law No. 1 of 1995 dated 7 Mar. 1995 concerning (i) Real and personal rights; (ii) privity of contract; (iii) movable and immovable property Limited Liability Company); (xxiv) amendment of articles association of limited liability (except land itself which is deemed immovable); (iv) public and private law; and (v) civil companies (Id. at Art. 16[1]); (xxv) establishment of general partnerships (firma) (Art. and criminal offenses. 22 of Indonesian Commercial Code [Kitab Undang-undang Hukum Dagang] [KUHD]); Specific and important distinction prevailing in Adat law is that enforceable obligations (xxvi) encumbrance by fiduciary guarantees over movable and intangible property (Art. do not arise on executory basis. Rather, contracts are formed only upon delivery of 5[1] of Law No. 42 of 1999 dated 30 Sept. 1999 concerning Fidusia Guarantee); (xxvii) subject matter, either party remaining free to withdraw without obligation prior to de- transfer of copyrights (Elucidation of Art. 3[2] of Law No. 19 of 2002 dated 29 July 2002 livery. Disputes are generally resolved by equitable considerations seeking maintenance concerning Copyright); (xxviii) transfer of protection of plant varieties (Art. 40[1][d] of of and return to state of equilibrium and harmony. Law No. 29 of 2000 dated 20 Dec. 2000 concerning Plant Variety Protection); (xxix) Adat law is generally viewed as inappropriate for modern commercial transactions. For transfer of rights to cultivate (HGU) through sale and purchase except sale and purchase modern transactions between indigenous Indonesians, courts generally apply modern through auction, exchange, capital participation and donation (Art. 16[4] of Government legislation and code law. Where foreigners are involved, Adat law will not be applied, Regulation No. 40 of 1996 dated 17 June 1996 concerning Right to Cultivate, Right to however, Adat law principles may have some interpretative effect over Indonesian ad- Build and Right to Use Land); (xxx) bestowal of rights to build (HGB) over ownership judications. rights (Id. at Art. 24[1]); (xxxi) transfer of rights to build (HGB) through sale and Civil Code.—Book III of Indonesian Civil Code (Kitab Undang-undang Hukum Per- purchase except sale and purchase through auction, exchange, capital participation and data) (KUHPer) (Burgerlijk Wetboek voor Indonesië) covers most aspects of obligations. donation (Id. at Art. 34[4]); (xxxii) bestowal of rights to use over rights of ownership Formation.—Obligations arises upon agreement between parties or by operation of (Id. at Art. 44[1]); (xxxiii) transfer of rights to use through sale and purchase except sale law. (Id. at Art. 1233 of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] and purchase through auction, exchange, capital participation and donation (Id. at Art. [KUHPer] [Burgerlijk Wetboek voor Indonesië] [Staatsblad 1847:23]). 54[5]); and, among others, (xxxiv) transfer of housing rights (Art. 16[2] of Law No. 4 Contract formation requires consent (Id. at Art. 1320[1°]), legal capacity (Id. at Art. of 1992 dated 10 Mar. 1992 concerning Housing and Residential Areas). 1320[2°]), certainty of subject (Id. at Art. 1320[3°]) and lawful purpose (Id. at Art. Following documents and actions must be evidenced by writing: (i) Holographic will 1320[4°]). No consideration is required for creation of obligations. (Id. at Arts. 1313, which authorizes executors to make funeral arrangements and to distribute personal 1314 and 1320). Gratuitous and conditional promises are enforceable. (Id. at Arts. 1253 belongings (Arts. 931 and 935 of Indonesian Civil Code [Kitab Undang-undang Hukum and 1314). Perdata] [KUHPer]); (ii) revocation of holographic wills which authorizes executor to Consent must be given without fraud (Id. at Arts. 1321 and 1328), mistake (Id. at Arts. make funeral arrangements and to distribute personal belongings (Id. at Arts. 931 and 1321 and 1322) or duress (Id. at Arts. 1321, 1323 and 1327). 935); (iii) delivery of indebtedness and other intangibles in favor of particular persons According to Art. 108 of Indonesian Civil Code (Kitab Undang-undang Hukum Per- (Id. at Art. 613); (iv) marital agreements (Art. 29 of Law No. 1 of 1974 dated 2 Jan. 1974 data) (KUHPer) (Burgerlijk Wetboek voor Indonesië) (Staatsblad 1847:23), married concerning Marriage); (v) agreements to arbitrate prior to dispute (Arts. 4[2] and 7 of woman does not have capacity to contract unless her husband is present or has provided Law 30 of 1999); (vi) agreements to arbitrate post occurrence of dispute (where parties written approval. (Id. at Arts. 108 and 1330). Supreme Court has issued circular letter are able to sign) (Id. at Art. 9); (vii) appointment of arbiters (Id. at Art. 17[1]); agreements stating that this rule is no longer in force. (Paragraph 11 Point 1 of Supreme Court on procedures of arbitration (Id. at Art. 31[1]); (viii) settlement agreements resulting from Circular No. 1115/P/3292/M/1963 dated 5 Sept. 1963). direct settlement meetings between parties in alternative dispute resolution mechanisms Obligation can arise for purposes of provision of something, for performing particular (Id. at Art. 6[2]); (ix) settlement agreements resulting from mediation in alternative act or for obtaining in performance of particular act. (Id. at Art. 1234). Object of contract dispute resolution mechanism (Id. at Art. 6[6]); (x) appointment of executors and ad- must be certain or contract is voidable. (Id. at Arts. 1332 and 1333). Object of perfor- ministrators (Art. 1005 of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] mance and performance itself must be stipulated. (Id. at Art. 1333). Quantity and exact [KUHPer]); (xi) novations (Id. at Arts. 1413 and 1415); (xii) license agreements con- object of performance need not be specified if reasonably determinable. (Id. at Art. 1333). cerning plant variety protection rights (Art. 42[1] of Law No. 29 of 2000 dated 20 Dec. Object of contract need not be in existence at time of contracting. (Id. at Art. 1334). 2000 concerning Protection of Plant Varieties); (xiii) license agreements concerning trade Contract is void if performance is impossible. (Id. at Art. 1254). secrets (Art. 6 of Law No. 30 of 2000 dated 20 Dec. 2000 concerning Trade Secret); (xiv) Contracts which are for unlawful or for immoral purposes or against public policy are transfers of industrial design rights (Art. 31[1][d] of Law No. 31 of 2000 dated 20 Dec. void. (Id. at Arts. 1320, 1335 and 1337). 2000 concerning Industrial Design); (xv) license agreements concerning industrial design Avoidance.—Consent is invalid and contract becomes voidable if induced by fraud, rights (Id. at Art. 33); (xvi) transfers of integrated circuit layout design rights (Art. mistake or duress without legal sanction. (Id. at Art. 1449). Suit to avoid contract on 23[1][d] of Law No. 32 of 2000 dated 20 Dec. 2000 concerning Integrated Circuit Layout grounds of duress, mistake or fraud must be brought within five years of discovery of Designs); (xvii) license agreements concerning integrated circuit layout design rights (Id. fraud or mistake or within five years of discontinuance of duress. (Id. at Art. 1454). at Art. 25); (xviii) transfers of patents (Art. 66 of Law No. 14 of 2001 dated 1 Aug. 2001 Default.—Failure to perform permits claim for payment of those costs, losses, and concerning Patent); (xix) patent license agreements (Id. at Art. 69); (xx) transfers of expenses foreseeable at time of contracting (unless breach involved fraud) (Id. at Art. marks (Art. 42 of Law No. 15 of 2001 dated 1 Aug. 2001 concerning Mark); (xxi) mark 1247) and directly consequential to breach plus interest (Id. at Art. 1248). Specific license agreements (Id. at Art. 43); (xxii) copyright license agreements (Art. 45[1] of Law performance is also available remedy. (Id. at Arts. 1239, 1240 and 1267). Nonperfor- No. 19 of 2002 dated 29 July 2002 concerning Copyrights); (xxiii) apprenticeship mance due to unforeseen cause in absence of bad faith exculpates defaulting party from agreements (Art. 22[1] of Law No. 13 of 2003 dated 25 Mar. 2003 concerning Labor); obligation to provide compensation. (Id. at Art. 1244). (xxiv) cooperation agreements (Id. at Art. 116[3]); (xxv) settlement agreements in civil Right to rescission upon default is implied in all reciprocal contracts. (Id. at Art. 1266). litigation case (Art. 130[2] of Renewed Indonesian Code [Reglemen Indonesia yang Rescission only arises by court decision even if contract expressly states non-perfor- Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 11[1] and mance shall constitute grounds for rescission of contract. (Id. at Art. 1266). Contractual [5] of Supreme Court Regulation No. 2 of 2003 dated 11 Sept. 2003 concerning In-Court stipulations of penalties in event of nonperformance are enforceable. (Id. at Arts. 1304 Mediation Procedures); (xxvi) transfers of rights to build over rights of management (Art. and 1305). 34[7] of Government Regulation No. 40 of 1996); (xxvii) transfers of rights to build over ownership rights (Id. at Art. 34[8]); (xxviii) transfers of rights to use over rights of FRAUDS, STATUTE OF: management (Id. at Art. 54[8]); (xxix) transfers of rights to use over ownership rights There is no statute of frauds in Indonesia. However, following documents and actions (Id. at Art. 54[10]); (xxx) house occupancy agreements (Art. 12[3] of Law No. 4 of must be evidenced by notarial deed: (i) Pre-marital agreements (Art. 147 of Indonesian 1992); and, among others, (xxxi) insurance agreements (Art. 16[1] of Government Regu- Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer]); (ii) gifts by third parties lation No. 73 of 1992). to prospective husbands and/or wives in connection with premarital agreements (Id. at Art. 176); (iii) acknowledgment of child born out of wedlock (if not acknowledged in INTEREST: civil birth registry) (Id. at Art. 281); (iv) sale, donation, division, encumbrance or transfer of immovable goods (Id. at Art. 617); (v) testamentary dispositions of interests in other Interest rates charged by nonbank and nonfinancial institutions are not subject to than personal effects (Id. at Art. 931); (vi) agreements for division of inherited property regulatory restrictions except that contractual undertakings regarding interest rates must (Id. at Art. 1074); (vii) minutes of refusal by Estate Property Bureau to agree to division be set forth in writing. (Arts. 1765 and 1767 of Indonesian Civil Code [Kitab Undang- of inherited property (Id. at Art. 1075); (viii) gifts and donations of property (other than undang Hukum Perdata] [KUHPer] [Burgerlijk Wetboek voor Indonesië]). For interest

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INTEREST . . . continued Predatory Pricing.—Business actors are prohibited from entering into agreements with rate regulations regarding banks, see topic Banks and Banking, subhead Interest Rate their business competitors to set prices below market price if that pricing may result in Regulation. occurrence of unfair business competition. (Id. at Art. 7). Control over Re-sale Pricing and Supply.—Business actors are prohibited from en- MONOPOLIES, RESTRAINT OF TRADE AND COMPETITION: tering into agreements with other business actors which contain conditions that recipient Prohibitions against monopolistic practices and unfair business competition are gov- of goods and/or services may not re-sell or re-supply goods and/or services which are erned by Law No. 5 of 1999 dated 5 Mar. 1999 concerning Prohibition against Mo- received with price which is lower than pre-agreed price if that condition may result in nopolistic Practices and Unfair Business Competition. unfair business competition. (Id. at Art. 8). Market Segmentation and Carving.—Business actors are prohibited from entering into Definitions.— agreements with business competitors with intention of dividing marketing territory or Monopoly means command over production and/or marketing of specific goods and/or allocating market relating to goods and/or services if that division or allocation may use of specific services by one business actor or one group of business actors. (Art. 1[1] result in unfair business competition. (Id. at Art. 9). of Law No. 5 of 1999 dated 5 Mar. 1999 concerning Prohibition against Monopolistic Boycott.—Business actors are prohibited from entering into agreements with business Practices and Unfair Business Competition). competitors which may hinder other business actors from engaging in same business, Monopolistic practices means concentration of economic power by one or more busi- both for purposes of marketing domestically as well as internationally. (Id. at Art. 10[1]). ness actors which has result of controlling production and/or marketing of specific goods Business actors are prohibited from entering into agreements with competitors to reject and/or specific services resulting in unfair competition which may damage public in- sale of any good and/or service of any other business actor if aforementioned may: (i) terests. (Id. at Art. 1[2]). Cause loss or may be alleged to cause loss to another business actor; or (ii) limit another Concentration of economic power means actual control over relevant market by one business actor in sale or purchase of any good and/or service in relevant market. (Id. at or more business actors resulting in ability to stipulate price of goods and/or services. Art. 10[2]). (Id. at Art. 1[3]). Dominant position means circumstance where business actor does not have any mean- Cartel.—Business actors are prohibited from entering into agreements with business ingful competitors in relevant market in relation to market share controlled, or business competitor with intention of influencing prices by regulating production and/or marketing actor has highest position among its competitors in relevant market in relation to financial of good and/or service if aforementioned may result in occurrence of monopolistic capacity, capacity to access supplies or sales as well as capacity to adjust supplies of or practices and/or unfair business competition. (Id. at Art. 11). demand for specific goods or services. (Id. at Art. 1[4]). Trust.—Business actors are prohibited from entering into agreements with other busi- Business actor means every individual person or business entity, both in form of legal ness actors to engage in cooperative work in formation of larger federation of businesses entity or non-legal entity which is established and resides or conducts activities within or companies while at same time protecting and securing continuing existence of each legal territory of Republic of Indonesia, whether individually or in cooperation through business or company member with goal of controlling production and/or marketing of agreement, implementing various business activities in economic sector. (Id. at Art. 1[5]). good and/or service if aforementioned may result in occurrence of monopolistic practices Unfair business competition means competition between business actors in conduct of and/or unfair business competition. (Id. at Art. 12). activities of production and/or marketing of goods and/or services in manner that is Oligopsony.—Business actors are prohibited from entering into agreements with other dishonest or unlawful or obstructs business competition. (Id. at Art. 1[6]). business actors with goal of controlling purchases or receipts of supplies in order to Agreement means act of one or more business actors to bind themselves to one or more manage price of goods and/or services in relevant market if aforementioned may result other business actors under whatever name, whether in writing or not in writing. (Id. at in occurrence of monopolistic practices and/or unfair business competition. (Id. at Art. Art. 1[7]). 13[1]). Business actors should be alleged or deemed to jointly control purchases and/or Business intrigue or business conspiracy means form of cooperation which is con- receipts of supplies if two or three business actors or group of business actors control ducted by business actor with another business actor with intention to control relevant more than 75% market share of one specific kind of good and/or service. (Id. at Art. market for interests of conspiring business actors. (Id. at Art. 1[8]). 13[2]). Market means economic institution where all buyers and sellers both directly and Vertical Integration.—Business actors are prohibited from entering into agreements indirectly are able to conduct transactions for trade of goods and/or services. (Id. at Art. with other business actors with goal of controlling production of number of products 1[9]). which are included in production series of specific goods and/or services where each Relevant market means market which is related to specific marketing scope or area of production series constitutes product of continuing manufacturing or processing, whether business actor over goods and/or services which are same or of one kind or substitution in direct or indirect series if aforementioned may result in occurrence of monopolistic for said goods and/or services. (Id. at Art. 1[10]). practices and/or unfair business competition. (Id. at Art. 14). Market structure means condition of market which provides indications/guidelines Tying Obligations.—Business actors are prohibited from entering into agreements with concerning aspects which possess important influence in relation to behavior of business other business actors which include condition that party who receives goods and/or actors and market performance, including but not limited to number of sellers and buyers, services will only supply or not re-supply goods and/or services to particular party and/or barriers to market entry and exit, variety of products, distribution system and control over to particular place. (Id. at Art. 15[1]). Business actors are prohibited from entering into market share. (Id. at Art. 1[11]). agreements with other parties which contain conditions that party who receives certain Market behavior means activities which are conducted by business actors in their goods and/or services must be prepared to buy other goods and/or services from supplier. capacity as suppliers or buyers of goods and/or services for achievement of business (Id. at Art. 15[2]). Business actors are prohibited from entering into agreements regarding purposes, among others achievement of profit, growth of assets, sales targets and methods particular pricing or discount pricing on goods and/or services which include conditions of competition utilized. (Id. at Art. 1[12]). that business actor who receives goods and/or services from supplier: (i) Must be Market share means percentage of value of sales or purchases of specific goods or prepared to buy other goods and/or services from supplier; or (ii) will not buy same or services which are controlled by business actor in relevant market in specific calendar similar goods and/or services from other business actors who compete with supplier. (Id. year. (Id. at Art. 1[13]). at Art. 15[3]). Market price means price to be paid in transaction for goods and/or services in Foreign Parties.—Business actors are prohibited from entering into agreements with accordance with agreement between all parties in relevant market. (Id. at Art. 1[14]). foreign parties which contain provisions which may result in occurrence of monopolistic Consumer means every wearer and/or user of goods and/or services both for needs of practices and/or unfair business competition. (Id. at Art. 16). itself as well as for needs of other parties. (Id. at Art. 1[15]). Goods means every thing, both tangible as well as intangible, both movable as well Prohibited Activities.— as immovable, which may be traded by, worn by, used by or which may benefit consumer Monopolistic Practices.—Business actors are prohibited from exercising control over or business actor. (Id. at Art. 1[16]). production and/or marketing of goods and/or services which may result in occurrence of Services means every service which takes form of work or performance which may be monopolistic practices and/or unfair business competition. (Id. at Art. 17[1]). Business traded with community for benefit of consumer or business actor. (Id. at Art. 1[17]). actors may be alleged or deemed to exercise control over production and/or marketing Business Competition Supervisory Commission means commission which is formed to of goods and/or services if: (i) There are no substitutions for relevant goods and/or supervise business actors in performance of their business activities in order that mo- services; (ii) other business actors are unable to enter into business competition in nopolistic practices and/or unfair business competition are not conducted. (Id. at Art. relation to same goods and/or services; or (iii) one business actor or one group of 1[18]). business actors controls more than 50% market share for one specific kind of good or District Court means court, as meant in regulations of law in effect, with jurisdiction service. (Id. at Art. 17[2]). over legal domicile and business of business actor. (Id. at Art. 1[19]). Monopsony.—Business actors are prohibited from controlling receipt of supplies or Prohibited Agreements.—Persons and entities are prohibited from entering into becoming exclusive purchaser of goods and/or services in relevant market which may agreements tending to establish following types of market conditions: result in occurrence of monopolistic practices and/or unfair business competition. (Id. at Oligopolies.—Business actors are prohibited from entering into agreements with other Art. 18[1]). Business actors may be alleged or deemed to control receipt of supplies or business actors for purposes of cooperatively exercising control over production and/or to be exclusive purchaser if one business actor or one group of business actors control marketing of goods and/or services which may give rise to occurrence of monopolistic more than 50% of market share of one specific kind of good or service. (Id. at Art. 18[2]). practices or unfair competition. (Id. at Art. 4[1]). Business actors should be alleged or Market Control.—Business actors are prohibited from conducting one or more activi- deemed to cooperatively exercise control over production and/or marketing of goods ties, whether individually or together with other business actors which may result in and/or services if two or three business actors or group of business actors control more occurrence of monopolistic practices and/or unfair business competition in form of: (i) than 75% of market share of one specific kind of good or service. (Id. at Art. 4[2]). Rejecting and/or obstructing specific business actor from conducting business activities Price Fixing.—Business actors are prohibited from entering into agreements with their which are same in relevant market; (ii) hindering consumers or subscribers of business business actor competitors to stipulate prices which must be paid by consumers or competitor from engaging in business relationships with business competitor; (iii) lim- subscribers for goods and/or services in same relevant market. (Id. at Art. 5[1]). Fore- iting circulation and/or sale of goods and/or service in relevant market; or (iv) conducting going prohibition does not apply to agreement made within business joint venture or discriminatory practices in relation to specific business actors. (Id. at Art. 19). agreement based on laws in effect. (Id. at Art. 5[2]). Business actors are prohibited from supplying goods and/or services in manner of Price Discrimination.—Business actors are prohibited from entering into agreements selling at loss or setting prices which are with intention of eliminating or extinguishing which result in requiring one purchaser paying price which is different from price which business competition in relevant market which may result in occurrence of monopolistic must be paid by another purchaser for same goods and/or services. (Id. at Art. 6). practices and/or unfair business competition. (Id. at Art. 20).

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MONOPOLIES, RESTRAINT OF TRADE AND COMPETITION . . . continued practices and/or unfair business competition; (v) summoning business actors who are Business actors are prohibited from committing deceit in setting costs of production alleged to have conducted violations of provisions of Law No. 5 of 1999; (vi) summoning and other costs which become part of price of component goods and/or services which and causing presence of witnesses, expert witnesses and any persons deemed to have may result in occurrence of unfair business competition. (Id. at Art. 21). knowledge of violations relating to provisions of Law No. 5 of 1999; (vii) requesting Conspiracy.—Business actors are prohibited from conspiring with other parties to: (i) assistance of investigator to cause presence of business actor, witness, expert witness or Regulate and/or determine winner of tender which may result in occurrence of unfair any person deemed to have knowledge of violations relating to provisions of Law No. business competition (Id. at Art. 22); (ii) obtain information on business activities of 5 of 1999 where such persons are not willing to comply with summons of Commission; competitors which are classified as company secrets which may result in occurrence of (viii) requesting information from government agencies related to investigations and/or unfair business competition (Id. at Art. 23); or (iii) impede production and/or marketing examinations in connection with business actors who violate provisions of Law No. 5 of goods and/or services of business competitors with intent that goods and/or services of 1999; (ix) obtaining, examining and/or evaluating letters, documents and other items to be offered or supplied to relevant market are of lower quality as well as to determine of evidence used in investigation and/or examination; (x) deciding and determining time goods and/or services are required (Id. at Art. 24). existence or non-existence of loss of another business participant or community; (xi) Dominant Position.—Business actors are prohibited from utilizing dominant position informing business actor who has been alleged to have conducted monopolistic practice whether directly or indirectly to: (i) Set conditions of trade with goal to restrain/prevent and/or unfair business competition of decision of Commission; and (xii) declaring im- and/or obstruct consumers from obtaining competing goods and/or services both from position of administrative sanctions on business actors who violate provisions of Law No. perspective of price and/or quality; (ii) limit markets and development of technology; or 5 of 1999. (Id. at Art. 36). (iii) obstruct other business actors with potential to be competitors to enter relevant Costs for implementation of duties of Commission are imposed upon State Budget market. (Id. at Art. 25[1]). Business actors possess dominant positions if: (i) One business and/or other sources obtained in accordance with regulations of law in effect. (Id. at Art. actor or one group of business actors controls 50% or more market share of one particular 37). kind of good or service; or (ii) two or three business actors or group of business actors control 75% or more market share of one particular kind of good or service. (Id. at Art. Case Management Procedures.— 25[2]). Reports.—Any person with knowledge that violation of Law No. 5 of 1999 occurred Dual Position.—Person who holds position as director or commissioner of one com- or is reasonably alleged to have occurred may report it to Commission in writing with pany is prohibited from holding position as director or commissioner of another company clear information concerning occurrence of violation and identity of reporting party. (Id. at same time if companies: (i) Exist in same relevant market; (ii) possess close rela- at Art. 38[1]). Parties who suffer loss as result of occurrence of violation relating to Law tionship in sector and/or kind of business; or (iii) jointly are able to control market share No. 5 of 1999 may submit written reports to Commission with complete and clear in specific goods and/or services which may result in occurrence of monopolistic prac- information concerning occurrence of violation along with loss arising and identity of tices and/or unfair business competition. (Id. at Art. 26). reporting party. (Id. at Art. 38[2]). Identity of reporting party must be kept confidential Share Ownership.—Business actors are prohibited from owning majority of shares in by Commission. (Id. at Art. 38[3]). Commission establishes procedures for submission several companies of same kind which conduct business activities in same sector of same of reports. (Id. at Art. 38[4]). relevant market or establish several companies with same business activities in same Investigation.—On basis of report, Commission is obligated to conduct preliminary relevant market if ownership could result in: (i) One business actor or one group of investigation and within no longer than 30 days after receipt of report, Commission is business actors controlling more than 50% market share of one particular kind of good obligated to determine need or lack of need to continue investigation. (Id. at Art. 39[1]). or service; or (ii) two or three business actors or group of business actors controlling However, Commission may conduct investigation against business actor without need for more than 75% market share in one particular kind of good or service. (Id. at Art. 27). prerequisite report in event there is assumption that there is violation of Law No. 5 of Merger, Consolidation and Acquisition.—Business actors are prohibited from con- 1999. (Id. at Art. 40[1]). In continuation of investigation, Commission is obligated to ducting mergers, consolidations or acquisitions of business entities which may result in conduct investigation relating to business actor reported. (Id. at Art. 39[2]). Commission occurrence of monopolistic practices and/or unfair business competition. (Id. at Art. 28[1] is obligated to guard secrecy of information obtained from business actor which may be and [2]). Mergers or consolidations of business entities or acquisitions of shares which categorized as company secret. (Id. at Art. 39[3]). If deemed necessary by Commission, effect value of assets and/or value of sales exceeding amount stipulated by government Commission may hear information from witnesses, expert witness and/or other parties. regulation must be reported to Business Competition Supervisory Commission within 30 (Id. at Art. 39[4]). In conduct of investigative activities, Commission members are to be days from date of merger, consolidation or acquisition. (Id. at Art. 29[1]). provided with official letter of duty. (Id. at Art. 39[5]). Business Competition Supervisory Commission formed as independent agency free Business actors and/or other parties who are investigated are obligated to provide items from management and control of government or other party and responsible to President of evidence required in examination and investigation. (Id. at Art. 41[1]). Business actors for supervision of implementation of Law No. 5 of 1999. (Id. at Art. 30). may not reject examination, reject provision of information needed in investigation Membership.—Commission consists of chairman, vice chairman and at least seven and/or examination or delay/obstruct investigation and/or examination process. (Id. at members. (Id. at Art. 31[1]). Members of Commission are appointed and terminated by Art. 41[2]). Violations of obligation to cooperate with investigation and/or examination President with consent of DPR. (Id. at Art. 31[2]). Term of members of Commission is process are subject to report to investigator in accordance with regulations in effect. (Id. five years and may be renewed for one additional term. (Id. at Art. 31[3]). If as result at Art. 41[3]). of end of term vacancy arises in membership of Commission, term of member may be Evidence.—Items of evidence for examination by Commission take following forms: extended until new member is appointed. (Id. at Art. 31[4]). (i) Witness information; (ii) expert information; (iii) letters and/or documents; (iv) clues; Qualifications for membership on Commission include: (i) Indonesian citizen of at and (v) business actor information. (Id. at Art. 42). least 30 years of age and at most 60 years of age at time of appointment; (ii) committed Proceedings.—Commission is obligated to complete examination in at most 60 days to Pancasila and Constitution of 1945; (iii) belief in Almighty GD; (iv) honest, fair and from date of conduct of continuing examination. (Id. at Arts. 39[1] and 43[1]). If of good behavior; (v) domiciled in territory of Republic of Indonesia; (vi) experienced necessary, period of time for continuing examination may be extended for at most 30 in business sector or having knowledge and expertise in field of law and/or economics; days. (Id. at Art. 43[2]). Commission is required to determine whether violation of Law (vii) never convicted of crime; (viii) never declared bankrupt by court; and (ix) not No. 5 of 1999 occurred or did not occur within at most 30 days from date of completion affiliated with business entity. (Id. at Art. 32). of continuing examination. (Id. at Art. 43[3]). Termination.—Membership on Commission terminates due to: (i) Death; (ii) resigna- Decision of Commission must be read in hearing open to public and immediately tion at member’s own request; (iii) domicile outside territory of Republic of Indonesia; notified to business actor. (Id. at Art. 43[4]). Within 30 days of date business actor (iv) continuous mental or physical illness; (v) end of term as member of Commission; receives notice of decision of Commission, business actor is required to implement or (vi) having been terminated. (Id. at Art. 33). decision and deliver report of implementation to Commission. (Id. at Art. 44[1]). In event Framework of Commission, organizational structure, duties and functions are stipu- business actor fails to implement decision and deliver report of implementation to lated by Presidential Decree. (Id. at Art. 34[1]). For facilitation of duties, Commission Commission, Commission may provide decision to investigator for implementation of may be assisted by secretariat. (Id. at Art. 34[2]). Commission may form working groups. investigation in accordance with regulations of law in effect. (Id. at Art. 44[4]). Decision (Id. at Art. 34[3]). Provisions concerning organizational structure, duties and functions of Commission constitutes sufficient evidence for investigator to conduct investigation. of secretariat and working groups is regulated by decrees of Commission. (Id. at Art. (Id. at Art. 44[5]). 34[4]). Objections.—Business actor may submit objection to District Court at latest 14 days Duties of Commission include: (i) Conducting evaluation of agreements which may after receipt of decision of Commission. (Id. at Art. 44[2]). Business actor is deemed to result in occurrence of monopolistic practices and/or unfair business competition; (ii) accept decision of Commission if business actor does not submit objection within time conducting evaluation of business activities and/or actions of business actors which may limit. (Id. at Art. 44[3]). result in occurrence of monopolistic practices and/or unfair business competition; (iii) District Court must examine objection of business actor within 14 days from receipt conducting evaluation in relation to existence or non-existence of improper use of of objection. (Id. at Art. 45[1]). District Court must give decision within 30 days from dominant position which may result in occurrence of monopolistic practices and/or unfair date of commencement of examination of objection. (Id. at Art. 45[2]). business competition; (iv) taking action in accordance with Commission’s authorities (see Supreme Court Appeal.—Party who objects to decision of District Court may submit catchline Authorities, infra); (v) providing suggestions and considerations concerning appeal to Supreme Court within 14 days. (Id. at Art. 45[3]). Supreme Court must give government policy related to monopolistic practices and/or unfair business competition; decision within 30 days of receipt of petition for appeal. (Id. at Art. 45[4]). (vi) compiling directives and/or publications related to Law No. 5 of 1999; and (vii) Execution.—If there is no objection, decision of Commission obtains final and binding providing periodic reports regarding working results of Commission to President and force. (Id. at Art. 46[1]). Final and binding decision of Commission may be basis of DPR. (Id. at Art. 35). request for execution order from District Court. (Id. at Art. 46[2]). Authorities of Commission include: (i) Receiving reports from community and/or from business actors regarding allegations of occurrence of monopolistic practices and/or Administrative Action.—Commission is authorized to issue sanctions in form of unfair business competition; (ii) conducting examinations into allegations of existence of administrative actions in relation to business actor who violates provisions of Law No. business activities and/or actions of business actors which may result in occurrence of 5 of 1999. (Id. at Art. 47[1]). Administrative actions may take form of: (i) Stipulation monopolistic practices and/or unfair business competition; (iii) conducting investigations to cancel prohibited agreements; (ii) order to business actor to discontinue vertical and/or examinations in relation to cases alleging monopolistic practices and/or unfair integration; (iii) order to business actor to discontinue activities proven to result in business competition which is reported by community or by business actors or which is monopolistic practices and/or unfair business competition and/or loss to community; (iv) discovered by Commission as result of its examinations; (iv) summarizing results of order to business actor to discontinue misuse of dominant position; (v) cancellation investigations and/or examinations regarding existence or non-existence of monopolistic decision relating to merger or consolidation of business entity and acquisition of shares;

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MONOPOLIES, RESTRAINT OF TRADE AND COMPETITION . . . continued purchase had knowledge or assumed risk of possible eviction. (Id. at Arts. 1495 and (vi) stipulation to pay compensation of loss; and/or (vii) imposition of fines of at least 1496). Partial evictions permit cancellation of entire purchase if material to buyer or Rp 1,000,000,000 and at most Rp 25,000,000,000. (Id. at Art. 47[2]). claim for compensation equals value of goods subject to eviction based on evaluation at Criminal Provisions.—Violations concerning prohibited agreements concerning oli- time of eviction. (Id. at Arts. 1500 and 1501). Rules for partial eviction and undisclosed gopolies, market segmentation and carving, boycotts, cartels, trusts, oligopsonies, vertical servitudes are treated similarly. (Id. at Arts. 1504, 1507 and 1508). Buyer has right to integrations and foreign parties and prohibited activities concerning monopolistic prac- defer payment of purchase price until seller eliminates disturbance to quiet enjoyment or tices, monopsonies, market control relating to obstruction of business actor from con- reasonable threat of disturbance. (Id. at Art. 1516). Defense to action against seller for ducting business activities in relevant market or hindering consumers or subscribers of eviction arises where buyer accepts court sentence for eviction without calling seller and business competitor from engaging in business relationships with business competitor, seller thereafter proves enough grounds to deny eviction claim. (Id. at Art. 1503). dominant positions, share ownership and mergers, consolidations and acquisitions, are Defects.—Warranty for concealed defects includes warranty that defect will not render punishable with criminal sanctions of at least Rp 25,000,000,000 and at most Rp goods unfit for particular purpose intended or reduce usefulness for intended purpose to 100,000,000,000 or criminal imprisonment up to maximum of six months in substitution degree that buyer would not have purchased goods for purchase price if buyer had for monetary penalty. (Id. at Art. 48[1]). knowledge of defect at time of sale. (Id. at Art. 1504). No liability for defects detectable Violations concerning prohibited agreements concerning price fixing, price discrimi- by buyer. (Id. at Art. 1505). Seller is liable for defects even if seller had no knowledge nation, predatory pricing, control over resale pricing and supply and tying obligations and of defect at time of sale. (Id. at Art. 1506). Seller’s liability for defects unknown to seller prohibited activities concerning market control relating to supplying goods and/or ser- includes return of purchase price plus costs of purchase and delivery in exchange for vices in manner of selling at loss or setting prices with intention of eliminating business return of goods or reimbursement of part of purchase price determined by judge after competition or committing deceit in setting costs of production and other costs which expert testimony. (Id. at Arts. 1507 and 1509). If seller knew of defects, seller is liable may become part of price of component goods and/or services, conspiracies with other for reimbursement of purchase price plus all costs, damages and interest. (Id. at Art. parties to: (i) Regulate and/or determine winner of tender which may result in occurrence 1508). of unfair business competition; (ii) obtain information on business activities of com- Repurchase.—Right of seller to repurchase goods may be provided by contract to petitors which are classified as company secrets which may result in occurrence of unfair maximum of five years. (Id. at Art. 1520). Time is of essence of stipulated period for business competition; or (iii) impede production and/or marketing of goods and/or ser- repurchase. (Id. at Art. 1521). Seller’s right to repurchase burdens second buyer even vices of business competitor with intent that goods and/or services to be offered or without notice in second sales agreement. (Id. at Art. 1523). Buyer purchasing with supplied to relevant market are of lower quality as well as to impeded business com- seller’s right to repurchase obtains all rights of seller including right to use any lapse of petitor in meeting product and/or service delivery time requirements; or (iv) hold dual time against true owner or other person claiming right or interest in goods sold. (Id. at positions are punishable with criminal sanctions of at least Rp 5,000,000,000 and at most Art. 1524). Repurchasing seller must refund entire original purchase price plus cost of Rp 25,000,000,000 or criminal imprisonment up to maximum of five months in sub- repairs, renovations and other causes resulting in appreciation plus all legitimate purchase stitution for monetary penalty. (Id. at Art. 48[2]). and delivery expenses. (Id. at Art. 1532). Until appropriate compensation is paid, re- Violations concerning obligation to cooperate with investigation and/or examination selling buyer has no obligation to tender possession of goods. (Id. at Art. 1532). Returned process are punishable with criminal sanctions of at least Rp 1,000,000,000 and at most goods must be free of encumbrances undertaken by reselling buyer. (Id. at Art. 1532). Rp 5,000,000,000 or criminal imprisonment up to maximum of three months in sub- stitution for monetary penalty. (Id. at Art. 48[3]). Indebtedness and Other Intangibles.—Sales of indebtedness include transfer of all Additional criminal sanctions may include: (i) Cancellation of business license; (ii) securities, privileges and mortgages related to indebtedness. (Id. at Art. 1533). Seller prohibition to business actor who has already been proven to have conducted violation implicitly warrants existence of indebtedness at time of delivery. (Id. at Art. 1534). of Law No. 5 of 1999 for taking position of director or commissioner for at least two However, seller does not guarantee that debtor has sufficient resources to satisfy debt years and at most five years; or (iii) termination of specific activities or actions which unless expressly undertaken and then only to extent of consideration for transfer of give rise to loss to other parties. (Id. at Art. 49). indebtedness. (Id. at Art. 1535). If debtor has discharged obligations prior to transfer of indebtedness, debtor shall be deemed discharged as against buyer. (Id. at Art. 1540). (See Exceptions to provisions of Law No. 5 of 1999 include: (i) Acts and/or agreements category Estates and Trusts, topic Descent and Distribution regarding transfers of rights for purposes of enforcing prevailing laws; (ii) agreements related to intellectual property to inheritance.) rights such as licenses, patents, trade marks, copyrights, industrial product designs, integrated circuits, trade secrets and agreements relating to franchising; (iii) agreements Barter involves reciprocal exchange of goods. (Id. at Art. 1541). All things which can regarding stipulations of technical standards for goods and/or services which do not be sold may be subject of barter transaction. (Id. at Art. 1542). Proof by one barterer that restrain and/or impede competition; (iv) agreements in framework of agencies with other barterer did not own goods exchanged confers right to refuse to deliver goods contents which do not include provisions for re-supply of goods and/or re-supply of promised along with obligation to return goods received. (Id. at Art. 1543). Loss of goods services with prices which are lower than price which has already been agreed; (v) obtained by barter through eviction confers right to elect to either demand compensation research and development cooperation agreements designed to raise or improve com- of costs, damages and interest or return of goods delivered. (Id. at Art. 1544). Loss of munity-wide living standards; (vi) international agreements ratified by Government; (vii) good through no fault of owner prior to barter transfer shall cause nullification of barter agreements and/or activities targeting export markets without disturbance to needs and/or agreement, conferring on performing barterer right to return of goods delivered. (Id. at supplies of domestic markets; (viii) business actors classified as small scale businesses; Art. 1545). General provisions of Indonesian Civil Code (Kitab Undang-undang Hukum (ix) activities of business cooperatives specifically concentrating on services to members; Perdata) (KUHPer) (Burgerlijk Wetboek voor Indonesië) governing sales apply to barter and (x) monopolies and/or centralization of activities related to production and/or mar- transactions. (Id. at Art. 1546). keting of goods and services which control basic needs of many people as well as Delivery of movables, excluding intangibles, occurs by actual transfer by or on behalf production sectors deemed important to State regulated by law and implemented by State of owner, or by handing over keys to building in which goods are located. (Id. at Art. owned enterprises and/or entities or institutions formed or appointed by government. (Id. 612). Delivery is not required if intended receiver possesses superior right in subject of at Arts. 50 and 51). transfer. (Id. at Art. 612). Delivery of indebtedness in favor of particular persons and other intangibles is made by means of either authenticated deed or signed agreement of SALES: transfer. (Id. at Art. 613). Transfer is not binding on debtor until debtor has received Governing Law.—Sales are governed by Indonesian Civil Code (Kitab Undang- notice thereof or has accepted or acknowledged transfer in writing. (Id. at Art. 613). undang Hukum Perdata) (KUHPer) (Burgerlijk Wetboek voor Indonesië). Delivery of indebtedness in favor of bearer is made by delivery of document of in- Sales involve agreement to deliver good for payment of price. (Id. at Art. 1457). debtedness. (Id. at Art. 613). Delivery of indebtedness payable to order is made by Ownership is transferred upon delivery of good. (Id. at Art. 1459). endorsement and delivery of document of indebtedness. (Id. at Art. 613). Delivery or assignment of immovable goods takes place with public notice of deed. (Id. at Arts. 616 Obligations of Seller.—Seller obligated to safeguard and deliver goods. (Id. at Arts. and 620). 1474 and 1475). No obligation for delivery arises without payment of sales price and seller does not give permission for deferment. (Id. at Art. 1478). Failure to deliver SECURITIES: through seller’s negligence permits cancellation of contract by buyer by application to court. (Id. at Art. 1480). Goods must be delivered in same condition as of time of sale Governing Law.—Law No. 8 of 1995 dated 10 Nov. 1995 concerning Capital Market with all products deriving from goods belonging to buyer from time of sale. (Id. at Art. and Government Regulation No. 45 of 1995 dated 30 Dec. 1995 concerning Implemen- 1481). tation Activities in Field of Capital Market as amended by Government Regulation No. 12 of 2004 dated 2 Mar. 2004 concerning Amendment to Government Regulation No. Obligations of Buyer.—Buyer must pay purchase price at agreed time and place (Id. 45 of 1995 govern capital markets. at Art. 1513) or if no agreement, at time and place of delivery (Id. at Art. 1514). Buyer Securities are broadly defined to include promissory notes, commercial paper, shares, must pay interest on purchase price if goods produce or yield other income. (Id. at Art. bonds, debentures, collective investment agreements, participation units and, among 1515). If buyer fails to pay purchase price, seller may seek court action for cancellation others, derivatives thereof. (Art. 1[5] of Law No. 8 of 1985 dated 10 Nov. 1995 con- of agreement (Id. at Art. 1517) unless sale involved movable goods or furniture in which cerning Capital Market). case cancellation occurs without notice following expiration of agreed time for collection of goods (Id. at Art. 1518). BAPEPAM.—Minister of Finance is empowered to stipulate capital market imple- menting policy and regulations. (Id. at Arts. 1[12] and 2). Capital Market Supervisory Immovable Goods.—If sale mentions extent and contents of immovable goods along Agency (BAPEPAM) acts under authority of Minister of Finance to regulate and govern with certain price, seller must deliver quantity expressed or seller must accept propor- day-to-day supervision of activities of Capital Market. (Id. at Art. 3). BAPEPAM focuses tionally reduced price. (Id. at Art. 1484). If seller delivers more than 105% of quantity on maintenance of orderly, fair and efficient capital market activities and protection of expressed in sales agreement, buyer has right to either forego sale or pay proportionally investor and community interests. (Id. at Art. 4). increased price. (Id. at Art. 1485). Permits and Registrations.—Stock exchanges, clearing and guarantee institutions, Warranties.—Sellers warrant quiet and peaceful possession of goods sold and absence depository and settlement institutions and securities companies must be formed as limited of concealed defects or grounds for annulment of agreement. (Id. at Art. 1491). War- liability companies holding permits from BAPEPAM. (Id. at Arts. 5[1], 6[1], 13[1] and ranties may be waived in whole or in part except for waiver of liability for injury caused 30[1]). Securities companies may engage in activities of underwriters, broker-dealers by acts of seller itself. (Id. at Arts. 1493 and 1494). and/or investment managers. (Id. at Art. 30[2]). Persons or entities engaged in under- Eviction (Loss of Possession).—Seller is required to reimburse price, costs, damages, writing, broker-dealer and/or investment management activities involving debt with ma- interest and products of goods to buyer in case of eviction unless buyer at time of turity of not more than one year, deposit certificates, insurance policies, securities issued

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. INDO – 10 INDONESIA LAW DIGEST CITIZENSHIP

SECURITIES . . . continued is State citizen of Indonesia and mother who is foreign State citizen; (iv) children who or guaranteed by Indonesian Government or other securities designated by BAPEPAM are born from legal marriage between father who is foreign State citizen and mother who shall not be required to obtain business license as securities company. (Id. at Art. 30[3]). is State citizen of Indonesia; (v) children who are born from legal marriage between Otherwise, securities underwriters, broker-dealers and investment managers must obtain mother who is State citizen of Indonesia and father who is stateless or whose State of business licenses from BAPEPAM. (Id. at Art. 30[2]). Individual representatives of origin does not grant citizenship to aforementioned child; (vi) children born from legal securities companies and investment advisors must obtain permit from BAPEPAM. (Id. marriage within time limitation of 300 days after father dies and mother is State citizen at Arts. 32[1] and 34[1]). Capital market supporting professionals include accountants, of Indonesia; (vii) children who are born outside of legal marriage from mother who is legal consultants, appraisers, and notaries, and other professionals stipulated by Gov- State citizen of Indonesia; (viii) children who are born outside of legal marriage from ernment Regulation. (Id. at Art. 64[1]). Supporting professionals must be registered with foreign State citizen mother who are acknowledged by father who is Indonesian State BAPEPAM and must be qualified in accordance with relevant government regulations. citizen as his children and that acknowledgment is made prior to children reaching 18 (Id. at Art. 64[2] and [3]). years of age or prior to marriage; (ix) children who are born in territory of State of Registration Statements.—Issuers of securities through public offerings must file Republic of Indonesia where citizenship status of mother and father at time of birth is registration statement with BAPEPAM. (Id. at Art. 70[1]). Companies with shares owned unclear; (x) newborn children who are found in territory of State of Republic of Indonesia by not less than 300 persons and with not less than Rp 3,000,000,000 paid-up capital so long as identity of mother and father is not known; (xi) children who are born in (“Public Companies”) must also file registration statement. (Id. at Arts. 1[22] and [73]). territory of State of Republic of Indonesia when mother and father are stateless or Registration statements are not required for public offerings involving debt with maturity whereabouts of parents is not known; (xii) children who are born outside of territory of of not more than one year, deposit certificates, insurance policies, securities issued or State of Republic of Indonesia from mother and father who are State citizens of Indonesia guaranteed by Indonesian Government or other securities designated by BAPEPAM. (Id. who, because of provisions of State of place of birth of child, grant citizenship to at Art. 70[2]). aforementioned child; or (xiii) children from mother or father whose citizenship appli- Joint and several liability runs to all parties signing registration statement containing cation has been granted, though subsequently father or mother dies prior to declaration false material information or omitting relevant material facts (Id. at Art. 80[1]) provided of oath or pledge of allegiance. (Id. at Art. 4). however that accountants, legal consultants, appraisers, notaries, and other professionals Indonesian State citizen children who are born outside of legal marriage, who have not designated by Government Regulation are only liable for opinions or information they yet reached age of 18 years, who have not yet married and who are legally acknowledged provide (Id. at Arts. 64[1] and 80[2]). Joint and several liability also runs to directors and by father who has foreign citizenship continue to be acknowledged as Indonesian State commissioners of issuer, underwriters, capital market supporting professionals and other citizens. (Id. at Art. 5[1]). parties who have provided opinions or information and who have consented to publi- Indonesian citizen children who have not yet reached age of five years who are cation of their opinions and information in registration statement. (Id. at Art. 80[2]). lawfully adopted by foreign State citizens based upon court decision continue to be Material facts and information are defined as important relevant facts concerning acknowledged as Indonesian State citizens. (Id. at Art. 5[2]). events, incidents and facts with potential to influence prices of securities and/or decisions In event status of citizenship of Republic of Indonesia results in dual citizenship in of investors, potential investors or other parties with interest in such facts and infor- relation to following categories of children, after age of 18 years or after aforementioned mation. (Id. at Art. 1[7]). child has married, child must declare choice of one citizenship: (i) Children who are born from legal marriage between father who is State citizen of Indonesia and mother who Prospectus.—Sellers of publicly offered securities must obtain written statement from is foreign State citizen; (ii) children who are born from legal marriage between father purchasers that purchasers have received or had opportunity to read prospectus related who is foreign State citizen and mother who is State citizen of Indonesia; (iii) children to securities concerned prior to placing of purchase orders. (Id. at Art. 71). who are born outside of legal marriage from foreign State citizen mother where child is Prospectus is defined as any written information relating to public offer with intent of acknowledged by father who is Indonesian State citizen as his child and that acknowl- encouraging purchase of securities. (Id. at Art. 1[26]). It is unlawful for prospectus to edgment is made prior to child reaching 18 years of age or prior to marriage; (iv) children contain false information concerning material fact, or to omit truthful information con- who are born outside of territory of State of Republic of Indonesia from mother and cerning material fact, publication of which is necessary in order to ensure that prospectus father who are State citizens of Indonesia where, because of provisions of State of place is not misleading. (Id. at Art. 78[1]). Each party offering securities for sale through use of birth of child, grant citizenship to aforementioned child; and (v) Indonesian State of false material facts or information or material omissions, whether oral or written, and citizen children who have not yet reached age of five years who are lawfully adopted for which party is or should be aware, is liable for losses incurred in related transaction. by foreign State citizens based upon court decision. (Id. at Arts. 4[c], [d], [h] and [l], 5 (Id. at Art. 80[1]). and 6[1]). Reports.—Stock exchanges, clearing, guarantee, depository and settlement institu- Declaration of choice of citizenship is to be made in writing and delivered to official tions, public investment funds, securities companies, investment advisors, security ad- with attachment of documents which are stipulated by regulations of law. (Id. at Art. ministration agencies, custodian banks, trustees and other parties holding licenses, ap- 6[2]). Declaration of choice of citizenship must be delivered within three years after child provals or registrations from BAPEPAM are required to submit periodic and incidental reaches age of 18 years or has already married. (Id. at Art. 6[3]). reports to BAPEPAM. (Id. at Art. 85 and Elucidation of Art. 85). Directors and com- Every person who is not Indonesian State citizen is to be treated as foreign person. missioners of issuers and public companies must report their share ownership to BAP- (Id. at Art. 7). EPAM. (Id. at Art. 87[1]). Parties with 5% or greater share ownership in issuer or public Residential identity cards, family identity cards, birth certificates or official reports company must report their holdings to BAPEPAM. (Id. at Art. 87[2]). All information regarding taking of oath of allegiance to Indonesia are sufficient evidence to prove reported to BAPEPAM is available to public, except as otherwise stipulated by BAP- Indonesian citizenship. (Art. 4[1] of Presidential Decree No. 56 of 1996 dated 9 July EPAM. (Id. at Art. 89[1]). 1996 concerning Evidence of Citizenship of Republic of Indonesia). Insiders.—Parties possessing inside information relating to issuer or public company are prohibited from purchasing or selling securities in issuer of public company con- IMMIGRATION: cerned as well as to other companies engaging in transactions with issuer or public See category Immigration, topic Immigration. company concerned. (Id. at Art. 95). Insiders are further prohibited from influencing other parties to purchase or sell securities concerned or providing information to other parties NATURALIZATION: in position to use such information to purchase or sell securities concerned. (Id. at Art. 96). Securities companies with inside information relating to issuer may sell securities Governing Law.—Naturalization is governed by Law No. 12 of 2006 dated 1 Aug. of issuer to clients provided securities company does not convey insider information or 2006 concerning Citizenship of Republic of Indonesia, Presidential Decree No. 57 of recommendations concerning issuer to client. (Id. at Art. 98[2]). 1995 dated 14 Aug. 1995 concerning Procedures for Indonesian Naturalization and Penalties.—Parties involved in violation of capital markets laws or regulations are Presidential Decree No. 56 of 1996 concerning Evidence of Citizenship of Republic of subject to administrative sanctions (Id. at Art. 102) and criminal liability (Id. at Arts. 103 Indonesia dated 9 July 1996. through 110). Naturalization application may be submitted by applicant if applicant fulfills following conditions: (i) Has already reached age of 18 years or has already married; (ii) has at time of submission of application already resided in territory of Republic of Indonesia for at least five years on continuous basis or at least ten years on non-continuous basis; CITIZENSHIP (iii) is of sound mind and body; (iv) is able to speak Indonesian language and acknowl- Governing Law.—Citizenship and immigration are governed by Constitution of Re- edges that Pancasila and Constitution of State of Republic of Indonesia of 1945 are basis public of Indonesia, Law No. 12 of 2006 dated 1 Aug. 2006 concerning Citizenship of of State; (v) has never been convicted of criminal act with sanctions of criminal im- Republic of Indonesia, Law No. 9 of 1992 dated 31 Mar. 1992 concerning Immigration prisonment for one or more years; (vi) dual citizenship does not occur by virtue of Affairs and Indonesian Civil Code (Kitab Undang-undang Hukum Perdata) (KUHPer) obtaining citizenship of Republic of Indonesia; (vii) has occupation and/or consistent (Burgerlijk Wetboek voor Indonesië). income; and (viii) has paid naturalization fee to National Treasury. (Art. 9 of Law No. 12 of 2006 dated 1 Aug. of 2006 concerning Citizenship of Republic of Indonesia). ALIENS: Foreign State citizens who enter into lawful marriages with Indonesian State citizens See category Immigration, topic Aliens. may obtain citizenship of Republic of Indonesia by delivering declaration to become State citizen before official. (Id. at Art. 19[1]). Declaration to become State citizen may CITIZENSHIP: be conducted if related person has already resided in territory of State of Republic of Citizens are persons who are native born Indonesians and persons of other nationalities Indonesia for at least five continuous years or at least ten years on non-continuous basis, who became Indonesian citizens through statutory naturalization process. (Art. 26[1] of except if obtaining Indonesian citizenship will result in dual citizenship. (Id. at Art. Constitution of 1945; Art. 2 of Law No. 12 of 2006 dated 1 Aug. of 2006 concerning 19[2]). Citizenship of Republic of Indonesia). All citizens are deemed equal under law. (Id. at Aliens who have already served State of Republic of Indonesia or for reasons of State Art. 27[1]). interest may be granted citizenship of Republic of Indonesia by President after obtaining State citizens of Indonesia include: (i) Persons who have already become Indonesian considerations of House of People’s Representatives of Republic of Indonesia except State citizens based on regulations and law and/or by agreement between Government when grant of Indonesian citizenship will result in related person obtaining dual citi- of Republic of Indonesia with other States prior to effective date of Law No. 12 of 2006; zenship. (Id. at Art. 20). (ii) children who are born from legal marriage between mother and father who are State Work Permits.—Foreigners working in Indonesia are subject to Law No. 13 of 2003 citizens of Indonesia; (iii) children who are born from legal marriage between father who dated 25 Mar. of 2003 concerning Labor Affairs.

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NATURALIZATION . . . continued intention to remain (Id. at Art. 18) proven by declaration to government or from facts Employers utilizing foreign workers must obtain permission of Minister of Manpower of situation (Id. at Art. 19). Married women are deemed to reside with their husbands. prior to undertaking employment within Indonesia. (Id. at Art. 42[1]). Work permits are (Id. at Art. 21). Minor children are deemed to reside with parent exercising primary issued for purposes of enhancing utilization of Indonesian manpower as well as for authority over them or residence of their custodians. (Id. at Art. 21). Adults who are transfer of technology. (Id. at Elucidation of Art. 42[1]). Employer must submit plan for subject to custodial care are deemed to reside at residence of their custodians. (Id. at Art. utilization of foreign workers containing: (i) Reason for utilization of foreign worker (Id. 21). Employees (other than married women) living in homes of their employers are at Art. 43[2][a]); (ii) intended position of foreign worker within employer’s organiza- deemed to reside in their employer’s home. (Id. at Art. 22). To extent and on terms tional structure (Id. at Art. 43[2][b]); (iii) projected duration of utilization (Id. at Art. desired by written agreement between disputing parties, domicile other than actual 43[2][c]); and (iv) appointment of Indonesian citizens as assistants to foreign worker (Id. residence may be freely and validly elected for purposes of civil case proceedings. (Id. at Arts. 43[2][d] and 45[1][a]). Employers are obligated to implement job training and at Art. 24). technology transfer programs. (Id. at Art. 45[1][b]). Jurisprudence.—Supreme Court decision states that jurisprudence is source of pro- Immigration Permits.—Foreigners entering Indonesia are required to obtain visa cedural law. However, no written law to that effect is found in constitution or other (Art. 6[1] of Law No. 9 of 1992 dated 31 Mar. 1992 concerning Immigration Affairs), legislation. Indonesia follows civil law system where substantive precedent of higher valid entry permit (Id. at Art. 4[2]) and immigration permit (Id. at Arts. 5[1] and [8]). courts are not binding on lower courts. (Id. at Art. 1917). Permanent resident permits may be granted to foreigners submitting application to Director General of Immigration on behalf of Minister of Law and Human Rights. (Art. Equity.—Courts possess broad jurisdictional powers and obligation to use discretion 39[1] of Government Regulation No. 32 of 1994 dated 14 Oct. 1994 concerning Visa, to decide cases unsupported by specific controlling law on point. (Art. 16[1] of Law No. Entry Permit and Immigration Permit as last am’d by Government Regulation No. 38 of 4 of 2004 dated 15 Jan. 2004 concerning Judiciary). 2005 dated 12 Oct. 2005 concerning Second Amendment to Government Regulation No. 32 of 1994; Art. 63 of Decree of Minister of Justice No. M.02-IZ.01.10 of 1995 dated Foreign laws are proven by expert testimony and other evidence of laws of foreign 14 Mar. 1995 concerning Transit Visa, Visiting Visa, Limited Stay Visa, Entry Permit and country. Immigration Permit as am’d by Decree of Minister of Justice and Human Rights No. Summons and Notice.—Bailiff of District Court is viewed as official responsible for M.01-IZ.01.10 of 2003 dated 23 May 2003 concerning Amendment to Decree of Minister providing notice to defendant of date, time, place and subject of hearing based upon of Justice No. M.02-IZ.01.10 of 1995). lawsuit filed by plaintiff. (Id. at Arts. 388 and 390 of Renewed Indonesian Code [Regle- Foreigners already obtaining limited residence permits who reside in Indonesia for two men Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad or more years may apply for permanent resident permits. (Art. I, Point 1 of Government 1941:44]; Arts. 1 and 8 of Code of Civil Procedure [Reglemen Acara Perdata] [Regle- Regulation No. 38 of 2005 dated 12 Oct. 2005 concerning Second Amendment to ment op de Rechtsvordering, Staatsblad 1847:52]). Notice includes copy of complaint Government Regulation No. 32 of 1994 amending Art. 49[2]; Art. 72 of Decree of filed by plaintiff and summons to appear at prescribed date, time and place. (Art. 121 Minister of Justice No. M.02-IZ.01.10 of 1995 as am’d by Decree of Minister of Justice of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene and Human Rights No. M.01-IZ.01.10 of 2003). Indonesisch Reglement, Staatsblad 1941:44]; Art. 145 of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, CIVIL ACTIONS AND PROCEDURE Staatsblad 1927:227]). Indonesian civil actions and procedure are governed by Renewed Indonesian Code Time between date of hearing and date notice is provided to party may not be less than (Reglemen Indonesia yang Diperbaharui) (Het Herziene Indonesisch Reglement, Staats- three working days unless urgent matters are involved. (Art. 122 of Renewed Indonesian blad 1941:44), Code of Procedure for Areas Outside Java and Madura (Reglemen Acara Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, untuk Daerah Luar Jawa dan Madura) (Reglement Tot Regeling Van Het Rechtswezen Staatsblad 1941:44]; Art. 146 of Code of Procedure for Areas Outside Java and Madura in de Gewesten Buiten Java en Madura, Staatsblad 1927:227), Indonesian Civil Code [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van (Kitab Undang-undang Hukum Perdata) (KUHPer) (Burgerlijk Wetboek voor Indonesië), Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). Indonesian Code (Reglemen Indonesia [E.R.]), Code of Civil Procedure (Reglemen Foreign defendants should be provided with minimum of two months notice prior to Acara Perdata) (Reglement op de Rechtsvordering, Staatsblad 1847:52), Law No. 4 of date of hearing. (Point 2 of Circular Letter of Director General of Development of 2004 dated 15 Jan. 2004 concerning Judiciary, Law No. 14 of 1985 dated 30 Dec. 1985 Judicial Bodies of Department of Justice No. D-AT.02.01-21-88 dated 17 Mar. 1988 concerning Supreme Court as amended by Law No. 5 of 2004 dated 15 Jan. 2004 concerning Date of Hearing; see Arts. I Point 3 and 38 of Law No. 8 of 2004 dated 29 concerning Amendment to Law No. 14 of 1985 and Law No. 2 of 1986 dated 8 Mar. Mar. 2004 concerning Amendment to Law No. 2 of 1986 amending Art. 5[1] and adding 1986 concerning General Judicial System as amended by Law No. 8 of 2004 dated 29 Art. 69A; Arts. 42[1] and 43 of Law No. 4 of 2004 dated 15 Jan. 2004 concerning Mar. 2004 concerning Amendment to Law No. 2 of 1986. Judiciary; Art. I of Presidential Decree No. 21 of 2004 dated 23 Mar. 2004 concerning Transfer of Organization, Administration and Financial at General Court, State Admin- ACTIONS: istrative Court and Islamic Religious Court to Supreme Court; transferring authority and responsibility of Director General of Development of Judicial Bodies, subsequently Commencement of Actions.—Civil actions commence by filing of letter of claim known as Director General of General Judicial Bodies and State Administrative Court of which is signed by plaintiff or proxy with national civil court of general jurisdiction Department of Justice and Human Rights to Supreme Court). known as District Court. (Arts. 118 and 123 of Renewed Indonesian Code [Reglemen District Court serves notice through submission of request for service of process Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad through Indonesian Department of Foreign Affairs. (Point 1 of Circular Letter of Director 1941:44]; Art. 142 of Code of Procedure for Areas Outside Java and Madura [Reglemen General of Development of Judicial Bodies of Department of Justice No. D-AT. 02. Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Re- 01-21-88). Department of Foreign Affairs then forwards summons and complaint to chtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). In practice, Indonesian embassy or consulate with jurisdictional territory covering country of do- District Court asserts personal jurisdiction over party plaintiffs regardless of nationality, micile of each defendant. Indonesian embassy or consulate delivers documents to de- race, creed, color, religion, age or sex provided subject matter over claim and personal fendant located in jurisdictional territory of respective Indonesian diplomatic mission. jurisdiction over defendant is available. Claims may be submitted either orally (for (Id. at Point 1). illiterate) or in writing. (Art. 120 of Renewed Indonesian Code [Reglemen Indonesia Where domicile of defendant is unknown, Indonesian customary practice permits yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. notice through announcement in newspaper of general distribution. (See Art. 390[3] of 144[1] of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene In- Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de donesisch Reglement, Staatsblad 1941:44] providing that notice must be given through Gewesten Buiten Java en Madura, Staatsblad 1927:227]). regent of regency of plaintiff’s domicile where domicile of defendant is unknown and that Jurisdiction.—Indonesium law generally protects elections of jurisdiction of and regent must then announce notice at court having jurisdiction over case). However, for venue in foreign courts and choice of foreign law made by contractual parties pursuant foreign defendants, it is unclear whether publication must be distributed in country of to provisions of Arts. 24 and 1338 of Indonesian Civil Code (Kitab Undang-undang defendant’s citizenship or in Indonesia. Hukum Perdata) (KUHPer) (Burgerlijk Wetboek voor Indonesië). Parties may elect First Session.—If plaintiff or plaintiff’s attorney fails to appear at first properly noticed domiciles other than their actual domiciles with elected location deemed location for court session, and if defendant or defendant’s attorney appears at first session, then prosecution of claims either specifically or generally described. (Art. 24 of Indonesian plaintiff’s lawsuit is discharged without prejudice to right of plaintiff to refile and re- Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk Wetboek voor commence suit. (Id. at Art. 124; Art. 148 of Code of Procedure for Areas Outside Java Indonesië]). Agreements made in accordance with law constitute law between contracting and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot parties. (Id. at Art. 1338; Art. 118[4] of Renewed Indonesian Code [Reglemen Indonesia Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 1927:227]). 142[4] of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk If defendant or defendant’s attorney fails to appear at first properly noticed court Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de session, then lawsuit may be examined without appearance of defendant. (Id. at Arts. Gewesten Buiten Java en Madura, Staatsblad 1927:227]). 125[1] and 126 of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] Even where valid election of foreign jurisdiction, venue, and choice of law have been [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Arts. 149[1] and 150 of Code made by contracting parties, plaintiffs who oppose application and performance of such of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar elections often file suits in Indonesian courts casting claims as torts or criminal acts rather Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten than contractual breaches. Indonesian courts often, though not uniformly, view tort claims Buiten Java en Madura, Staatsblad 1927:227]). This may lead to default judgment unless as falling outside of parameters of provisions of foreign jurisdiction, venue and choice lawsuit is without prima facie merit. (Id. at Art. 125[1]; Art. 149[1] of Code of Procedure of law elections on basis of restrictive contractual interpretation, social policy, sover- for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan eignty principles and view that parties do not contemplate commission of torts in per- Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en formance of contractual undertakings. Madura, Staatsblad 1927:227]). However, normally, District Court will attempt to serve Domicile.—Residence is location of person’s current place of dwelling. (Id. at Art. 17 defendant three times prior to rendering default decision. of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk If there are two or more defendants and one of defendants fails to appear at first court Wetboek voor Indonesië]). Domicile is determined by place of residence combined with session, District Court may adjourn first session. (Art. 127 of Renewed Indonesian Code

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ACTIONS . . . continued may appeal result through High Court and then Supreme Court. (Arts. 21[1] and 22 of [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staats- Law No. 4 of 2004 dated 15 Jan. 2004 concerning Judiciary). If defendant loses ex- blad 1941:44]; Art. 151 of Code of Procedure for Areas Outside Java and Madura ception, defendant may file appeal to High Court (Id. at Art. 21[1]) and, failing victory [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van in High Court, defendant may appeal to Supreme Court (Id. at Art. 22). Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). If one During pendency of defendant’s appeals, District Court usually commences consid- of defendants fails to appear at next session, District Court may decide to further examine eration of substantive aspects of lawsuit. case without appearance of absent defendant. (Art. 127 of Renewed Indonesian Code Relative Competence Exceptions.—Defendant has right to contest personal juris- [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staats- diction at time of submission of answer regarding substantive defenses on merits of case. blad 1941:44]; Art. 151 of Code of Procedure for Areas Outside Java and Madura (Arts. 118 and 133 of Renewed Indonesian Code [Reglemen Indonesia yang Diperba- [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van harui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Arts. 142 and 159 of Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Defendants subject to default judgments are free to submit objections to District Court Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten and, in event of adverse judgment on objection, appeal to High Court and thereafter to Buiten Java en Madura, Staatsblad 1927:227]). Failure to submit personal jurisdiction Supreme Court. (Art. 129 of Renewed Indonesian Code [Reglemen Indonesia yang objections with answer shall constitute waiver of personal jurisdiction objections. (Art. Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Arts. 153 and 133 of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Her- 200 of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk ziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 159 of Code of Procedure for Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] Gewesten Buiten Java en Madura, Staatsblad 1927:227]; Art. 8 of Law No. 20 of 1947 [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, dated 24 June 1947 concerning Appeal Court Regulation of Appeal Court in Java and Staatsblad 1927:227]). Madura). Other Procedural Exceptions.—In addition to disputes relating to jurisdiction, other Defendant’s Responses.—Defendants may respond in one of four basic ways by: (i) grounds for procedural exceptions categorized as relative competence exceptions include: Attacking competence of court based upon lack of subject matter jurisdiction (known as (i) Claims that case concerned has already been decided by court and that decision has absolute competence exceptions) (Art. 134 of Renewed Indonesian Code [Reglemen obtained permanent legal effect (ne bis in idem); (ii) claims that case concerned is Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad currently being examined by District Court, High Court or Supreme Court; (iii) claims 1941:44]; Art. 160 of Code of Procedure for Areas Outside Java and Madura [Reglemen that plaintiff has no capacity/power to act; (iv) claims that plaintiff has failed to join Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Re- necessary parties to action; (v) claims that plaintiff’s complaint is obscure; (vi) claims chtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]); (ii) attacking that plaintiff’s claims are not yet ripe and thus relief cannot be granted; and, among others competence of court based upon lack of personal jurisdiction (known as relative com- (vii) claims that court is prevented from granting requested relief. petence exceptions) (Arts. 118 and 133 of Renewed Indonesian Code [Reglemen Indo- Exceptions other than those relating to jurisdictional competence must be submitted nesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; in answer of defendant or they are waived. (Art. 136 of Renewed Indonesian Code Arts. 142 and 159 of Code of Procedure for Areas Outside Java and Madura [Reglemen [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staats- Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Re- blad 1941:44]; Art. 162 of Code of Procedure for Areas Outside Java and Madura chtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]); (iii) certain [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van other procedural exceptions (also known as relative competence exceptions) (Art. 136 of Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). De- Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene In- cision on relative competence exceptions is decided with substantive merits of case. (Art. donesisch Reglement, Staatsblad 1941:44]; Art. 162 of Code of Procedure for Areas 136 of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Her- Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] ziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 162 of Code of Procedure for [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] Staatsblad 1927:227]); and/or (iv) attacking substance of plaintiff’s case through answers [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, (Arts. 135 and 136 of Renewed Indonesian Code [Reglemen Indonesia yang Diperba- Staatsblad 1927:227]). harui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; 161 and 162 of Code Defenses and Counter-Claims.—In event District Court rules against defendant in of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar relation to exceptions on absolute competence, defendant must submit its relative com- Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten petence exceptions, if any, along with its answer to substantive merits of plaintiff’s causes Buiten Java en Madura, Staatsblad 1927:227]) and counter-claims (Art. 132a of Renewed of action. (Art. 135 of Renewed Indonesian Code [Reglemen Indonesia yang Diperba- Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch harui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 161 of Code of Reglement, Staatsblad 1941:44]; Art. 157 of Code of Procedure for Areas Outside Java Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad en Madura, Staatsblad 1927:227]). 1927:227]). Defendant is also entitled to raise counter-claims against plaintiff at time of submission Absolute Competence Exceptions.—Defendant has right to object to and obtain of defendant’s answer. (Id. at Arts. 132[a] and 132[b]; Arts. 157 and 158 of Code of decision concerning subject matter jurisdiction of District Court prior to entering sub- Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa stantive defenses. (Arts. 125[2], 134 and 136 of Renewed Indonesian Code [Reglemen dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad en Madura, Staatsblad 1927:227]). 1941:44]; Arts. 149[2], 160 and 162 of Code of Procedure for Areas Outside Java and Plaintiff’s Reply.—Plaintiff is provided opportunity to file response to defendant’s Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot relative competence exceptions, substantive answer and counter-claims. (Art. 115 of Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad Code of Civil Procedure [Reglemen Acara Perdata] [Reglement op de Rechtsvordering, 1927:227]). Defendant may also submit absolute competence objections at any time Staatsblad 1847:52]). during proceedings or on appeal and court is required to dismiss action even without submission of arguments concerning lack of absolute competence where court lacks Defendant’s Rejoinder.—District Court may provide defendant with opportunity to jurisdiction. (Art. 134 of Renewed Indonesian Code [Reglemen Indonesia yang Diper- file rejoinder to plaintiff’s reply. (Id.). baharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 160 of Code Proof.—Following conclusion of above referenced filings of written arguments, Dis- of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar trict Court will engage in process of examining evidence through stage known as formal Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten proof. District Court will not rely upon arguments of litigants alone, but will decide Buiten Java en Madura, Staatsblad 1927:227]). matters before bar based upon evidence submitted during court session. (Art. 163 of Absolute competence exceptions are filed in writing by defendant. (Arts. 121[2] and Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene In- 131 of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herz- donesisch Reglement, Staatsblad 1941:44]; Art. 283 of Code of Procedure for Areas iene Indonesisch Reglement, Staatsblad 1941:44]; Arts. 145[2] and 155 of Code of Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java Staatsblad 1927:227]); Art. 1865 of Indonesian Civil Code [Kitab Undang-undang Hu- en Madura, Staatsblad 1927:227]; Art. 113 of Code of Civil Procedure [Reglemen Acara kum Perdata] [KUHPer] [Burgerlijk Wetboek voor Indonesië]). Perdata] [Reglement op de Rechtsvordering, Staatsblad 1847:52]). Plaintiff has oppor- Burden of proof is generally placed on litigant making claim to right or fact. (Art. 163 tunity to submit written reply and defendant is afforded one additional opportunity to of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene respond to plaintiff’s reply. (Art. 115 of Code of Civil Procedure [Reglemen Acara Indonesisch Reglement, Staatsblad 1941:44]; Art. 283 of Code of Procedure for Areas Perdata] [Reglement op de Rechtsvordering, Staatsblad 1847:52]). Hearing is then held Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] whereat District Court announces its decision on jurisdictional objections raised by [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, defendant. (Art. 135 of Renewed Indonesian Code [Reglemen Indonesia yang Diperba- Staatsblad 1927:227]; Art. 1865 of Indonesian Civil Code [Kitab Undang-undang Hukum harui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 161 of Code of Perdata] [KUHPer] [Burgerlijk Wetboek voor Indonesië]). However court does exercise Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa discretion resulting in shifting of burdens of proof on many occasions. dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java There are five types of admissible evidence: (i) Documents; (ii) witnesses; (iii) sus- en Madura, Staatsblad 1927:227]). Oral argument is significantly limited and is often not picions; (iv) acknowledgments/confessions; and (v) statements made under oath. (Art. part of this phase of litigation. 164 of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herz- Exceptions relating to absolute competence are generally considered prior to consid- iene Indonesisch Reglement, Staatsblad 1941:44]; Art. 284 of Code of Procedure for eration of substantive aspects of case. In event defendant wins exception, case is dis- Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] missed based upon lack of court authority. (Art. 134 of Renewed Indonesian Code [Rechtsreglement Buitengewesten, Staatsblad 1927:227]); Art. 1866 of Indonesian Civil [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staats- Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk Wetboek voor In- blad 1941:44]; Art. 160 of Code of Procedure for Areas Outside Java and Madura donesië]). Judicial notice is also sometimes applied in practice. (Art. 178[1] of Renewed [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). Plaintiff Reglement, Staatsblad 1941:44]; Art. 189[1] of Code of Procedure for Areas Outside Java

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ACTIONS . . . continued High Court will then examine and decide case based on documents delivered by and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Rechtsreglement District Court. (Art. 14 of Law No. 20 of 1947 dated 24 June 1947 concerning Appeal Buitengewesten, Staatsblad 1927:227]). Court Regulation of Appeal Court in Java and Madura; Art. 204 of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Closing Arguments, Conclusion.—Conclusion is court session where plaintiff and Madura] [Rechtsreglement Buitengewesten, Staatsblad 1927:227]). High Court will not defendant make closing arguments on facts and arguments raised in court during previous ask parties to appear in High Court, unless High Court deems such appearances necessary sessions. Those arguments are generally delivered in writing and read out in open court. to request further documents or information from parties, for example, evidence. (Art. (Art. 28 of Code of Procedure [Reglement Acara Perdata] [Reglement op de Rechts- 15[1] of Law No. 20 of 1947 dated 24 June 1947 concerning Appeal Court Regulation vordering, Staatsblad 1847:52]). of Appeal Court in Java and Madura; Art. I[2] of Law No. 11 of 1955 dated 6 June 1955 Decision.—After plaintiff and defendant have closed their arguments, District Court concerning Amendment to Law No. 1 of 1951 concerning Provisional Actions to Imple- will render decision over case. There are three types of decisions: (i) Declaratory de- ment Integration of Formation, Power and Procedures of Civil Courts). cisions (decision describing and/or confirming legal condition); (ii) constitutive decisions After examining case concerned, High Court will issue its decision, which will be (decision nullifying or creating legal condition); and (iii) condemnatory decisions (de- delivered to parties through District Court. (Art. 15[3] of Law No. 20 of 1947 dated 24 cision mandating punishment). June 1947 concerning Appeal Court Regulation of Appeal Court in Java and Madura; Art. Decision of District Court must contain, at minimum, following: (i) Brief description 205 of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk of lawsuit and claims and defenses of litigants; (ii) legal grounds forming basis of panel Daerah Luar Jawa dan Madura] [Rechtsreglement Buitengewesten, Staatsblad of judge’s decision; (iii) decision of District Court concerning substantive case; (iv) 1927:227]). decision of District Court concerning cost of case; (v) attendance of plaintiff and de- Supreme Court Appeals.—Parties objecting to decision of High Court are entitled, fendant; (vi) if decision is rendered on basis of definitive laws and regulations, those laws as matter of right, to submit further appeal to Supreme Court. (Art. 22 of Law No. 4 of and regulations should be mentioned; and (vii) signature of chairman of panel of judges 2004). Filing of appeal is made through District Court in two steps: (i) 14 days after and clerk. (Art. 184 of Renewed Indonesian Code [Reglemen Indonesian yang Diper- receiving decision of High Court, appellant must submit application for appeal (Art. 46 baharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 195 of Code of Law No. 14 of 1985 concerning Supreme Court as am’d by Law No. 5 of 2004 dated of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar 15 Jan. 2004 concerning Amendment to Law No. 5 of 1986); and (ii) 14 days following Jawa dan Madura] [Rechtsreglement Buitengewesten, Staatsblad 1927:227]). date of submission of application for appeal, appellant must submit memorandum of Preliminary Injunctions.—District Court may grant preliminary injunctions upon appeal. (Id. at Art. 47[1]). request of party to litigation. Preliminary injunctions must be based upon evidence in District Court is responsible for notification of other parties concerning filing of form of authentic notarial deeds (Art. 180[1] of Renewed Indonesian Code [Reglemen appeal. (Id. at Art. 46[4]). Other parties have option to submit answer to memoranda of Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad appeal within 14 days as of date of notification. (Id. at Art. 47[3]). 1941:44]; Art. 191[1] of Code of Procedure for Areas Outside Java and Madura [Regle- District Court must deliver complete document set to Supreme Court within 30 days men Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het of receipt. (Id. at Art. 48[1]). Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]); Arts. 54 and Decision of Supreme Court is intended to be final and binding upon parties and thus 55 of Code of Civil Procedure [Reglemen Acara Perdata] [Reglement op de Rechts- allows for execution of judgment. vordering, Staatsblad 1847:52]), writings signed by parties but not notarized which are Judicial Review.—Indonesian Civil Procedure permits one further review of final and admitted by party bearing burden of injunction (Art. 180[1] of Renewed Indonesian Code binding court decisions for following reasons: (i) If decision is founded upon misrep- [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staats- resentations or fraud of opposing party which become known following decision of blad 1941:44]; Art. 191[1] of Code of Procedure for Areas Outside Java and Madura District Court or if evidence is determined by criminal court to be fraudulent; (ii) if new [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van and decisive written evidence is found after case has been examined which evidence was Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]; Arts. 54 previously unavailable; (iii) if court grants decision exceeding extent of claim; (iv) if one and 55 of Code of Civil Procedure [Reglemen Acara Perdata] [Reglement op de Re- part of claim has not yet been decided for no reason; (v) if same court or court at same chtsvordering, Staatsblad 1847:52]) or final and binding decisions of Indonesian court level has granted decision which is contrary to decision in question, provided that case that have become non-appealable. (Art. 180[1] of Renewed Indonesian Code [Reglemen involves same parties, same matters and same grounds; or (vi) if in decision, there exists Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad negligence or manifest error of judge. (Art. 67 of Law No. 14 of 1985). 1941:44]; Art. 191[1] of Code of Procedure for Areas Outside Java and Madura [Regle- men Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Enforcement of Court Decisions.—Decisions can be enforced after they attain per- Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]; Arts. 54 and manent legal status. There are four types of enforcement: (i) Money damages (Art. 225 55 of Code of Civil Procedure [Reglemen Acara Perdata] [Reglement op de Rechts- of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene vordering, Staatsblad 1847:52]). Indonesisch Reglement, Staatsblad 1941:44]; Art. 259 of Code of Procedure for Areas Preliminary injunctions are technically not enforceable without first obtaining review Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] by and permit from High Court. (Circular Letter of Supreme Court of Republic of [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Indonesia No. 3 of 2000, dated 21 July 1969; Circular Letter of Supreme Court of Staatsblad 1927:227]); (ii) injunctions (Art. 227 of Renewed Indonesian Code [Reglemen Republic of Indonesia No. 4 of 2001 dated 20 Aug. 2001). Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 261 of Code of Procedure for Areas Outside Java and Madura [Reglemen High Court Appeals.—Decision of District Court may be challenged as matter of Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Re- right to High Court. (Art. 21[1] of Law No. 4 of 2004 dated 15 Jan. 2004 concerning chtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]); (iii) forced Judiciary). High Court is first court of appeal. (Art. 6[1] of Law No. 2 of 1986 dated sales of assets (Art. 197 of Renewed Indonesian Code [Reglemen Indonesia yang Diper- 8 Mar. 1986 concerning General Judicial System as am’d by Law No. 8 of 2004 dated baharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 208 of Code 29 Mar. 2004 concerning Amendment to Law No. 2 of 1986). Petitions to appeal may of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar be submitted by any party to High Court through District Court. (Art. 7[1] of Law No. Jawa dan Madura] [Rechtsreglement Buitengewesten, Staatsblad 1927:227]); and (iv) 20 of 1947 dated 24 June 1947 concerning Appeal Court Regulation of Appeal Court in imprisonment for civil debts (Supreme Court Regulation No. 1 of 2000 dated 30 June Java and Madura). 2000 concerning Imprisonment for Civil Debt). Application for Appeal must be submitted within 14 days from issuance of District Enforcement is made through application to District Courts with geographical juris- Court’s decision or in event applicant does not appear at time of issuance of decision, diction over party bearing burden of court decision. (Arts. 195 and 196 of Renewed 14 days from date applicant received District Court’s decision. (Id. at Art. 7[1]; Art. 199 Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Reglement, Staatsblad 1941:44]; Arts. 206 and 207 of Code of Procedure for Areas Luar Jawa dan Madura] [Rechtsreglement Buitengewesten, Staatsblad 1927:227]). Ap- Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] pellant may also submit memorandum of appeal containing legal argumentation although [Rechtsreglement Buitengewesten, Staatsblad 1927:227]). law does not stipulate this as requirement. (Arts. 7[1] and 11 of Law No. 20 of 1947 Enforcement of Foreign Judgments. dated 24 June 1947 concerning Appeal Court Regulation of Appeal Court in Java and —Indonesian judicial system does not recognize Madura; Art. 199 of Code of Procedure for Areas Outside Java and Madura [Reglemen foreign judgments as having binding effect on Indonesian courts. (Art. 436 of Code Civil Acara untuk Daerah Luar Jawa dan Madura] [Rechtsreglement Buitengewesten, Staats- Procedure [Reglemen Acara Perdata] [Reglement op de Rechtsvordering, Staatsblad blad 1927:227]). 1847:52]). Rather, Indonesian court is free to give foreign judgment evidentiary weight Court clerk will then provide notice of appeal to other parties. (Art. 10[2] of Law No. Indonesian court deems appropriate in its sole discretion. 20 of 1947 dated 24 June 1947 concerning Appeal Court Regulation of Appeal Court in Thus, in any jurisdiction outside of Republic of Indonesia with policy regarding Java and Madura; Art. 202[2] of Code of Procedure for Areas Outside Java and Madura enforcement of foreign judgments based upon principles of reciprocity, such other ju- [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van risdiction would not generally enforce Indonesian court decision. Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). Other Class Actions.—Class action claims are governed by Regulation of Supreme Court parties have option of submitting counter memoranda to High Court through District No. 1 of 2002 dated 26 Apr. 2002 concerning Class Action. Court. (Art. 11 of Law No. 20 of 1947 dated 24 June 1947 concerning Appeal Court Class action claims may be submitted by representative of class of large number of Regulation of Appeal Court in Java and Madura; Art. 199 of Code of Procedure for Areas persons provided there are substantial common questions of facts or circumstances and Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] law, and common kinds of claims between representative of class and members of class. [Rechtsreglement Buitengewesten, Staatsblad 1927:227]). (Art. 1[a] of Regulation of Supreme Court No. 1 of 2001 dated 26 Apr. 2002 concerning After receiving complete documents from both parties, District Court will provide Class Action). notice to parties that documents are available for review for 14 days. (Art. 11[1]) of Law Representative of class must possess honesty and sincerity required to ensure pro- No. 20 of 1947 dated 24 June 1947 concerning Appeal Court Regulation of Appeal Court tection of interests of members of class. (Id. at Art. 2[c]). in Java and Madura). District Court must send dossier to High Court within one month Court first considers whether complaint meets legal requirements of class action claim after receipt of request for appeal. (Id. at Arts. 11 and 13; Art. 203 of Code of Procedure (Id. at Art. 5[1], [3] and [4]) and, if complaint fails to meet legal requirements, judges for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan are obligated to immediately dismiss complaint (Id. at Art. 5[5]). Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiden Java en Class action claim must contain: (i) Complete and clear information concerning class Madura, Staatsblad 1927:227]). representative (Id. at Art. 3[1][a]); (ii) specific and detailed definition of class without

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ACTIONS . . . continued of money (Art. 225 of Renewed Indonesian Code [Reglemen Indonesia yang Diperba- naming each member of class (Id. at Art. 3[1][b]); (iii) information concerning class harui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]); (ii) injunctions (Art. members required in relation to obligation to provide notice (Id. at Art. 3[1][c]); (iv) clear 227; Art. 261 of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara and detailed statement of basis of claim from both class representative and class members untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen (Id. at Art. 3[1][d]); (v) classification of class into sub-classes if claims differ in nature in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]); (iii) forced sale of asset and damages sustained (Id. at Art. 3[1][e]); and (vi) clear and detailed plea for damages (Art. 197 of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het incorporating proposal regarding mechanism or procedures for distribution of compen- Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 208 of Code of Procedure for sation to all members of class including proposal to establish team or panel to assist Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] distribution of compensation (Id. at Art. 3[1][f]). [Rechtsreglement Buitengewesten, Staatsblad 1927:227]); and (iv) imprisonment for civil If judge determines complaint states valid class action claim, judge shall order rep- debts (Supreme Court Regulation No. 1 of 2000 dated 30 June 2000 concerning Im- resentative to propose notification model for approval. (Id. at Art. 5[4]). Notification may prisonment for Civil Debt). be conducted through mass media, sub-district or village offices, court or directly to class Seizure.—District Court has power to order executorial seizure of judgment debtor’s members provided class members can be identified. (Id. at Art. 7[1]). Notification must property in event judgment debtor fails to pay judgment. (Art. 197[1] of Renewed contain: (i) Registration number of complaint, identity of class representative and de- Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch fendants (Id. at Art. 7[4][a]); (ii) brief explanation of case (Id. at Art. 7[4][b]); (iii) Reglement, Staatsblad 1941:44]; Art. 208[1] of Code of Procedure for Areas Outside Java explanation of class definition (Id. at Art. 7[4][c]); (iv) explanation of implications of and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot joining as class members (Id. at Art. 7[4][d]); (v) explanation of possibility of members Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad of class who are included in definition of class to elect not to be included in class (Id. 1927:227]). Law does not limit right of seizure merely to assets held in possession of at Art. 7[4][e]); (vi) explanation concerning month, date and hour for submission of debtor and thus may be interpreted to include garnishment from third party holders of notice of election to be excluded from class (Id. at Art. 7[4][f]); (vii) explanation of debtor’s assets. (Art. 197[8] of Renewed Indonesian Code [Reglemen Indonesia yang address for submission of exclusion notification (Id. at Art. 7[4][g]); (viii) place and Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 211 of contact details to obtain additional information (Id. at Art. 7[4][h]); (ix) form of exclusion Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah notification (Id. at Art. 7[4][i]); and (x) explanation concerning amount of compensation Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten demanded (Id. at Art. 7[4][j]). Buiten Java en Madura, Staatsblad 1927:227]). Judge is obligated to prioritize by first seizing and selling at government sponsored auction movable goods and if movable DEPOSITIONS AND DISCOVERY: goods are insufficient to pay judgment debt, then immovable goods. (Arts. 197[1] and No discovery of right. 200[1] of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Arts. 208[1] and 215[1] of Code EVIDENCE: of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Governing Law.—Substantive evidence law is governed by Renewed Indonesian Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Code (Reglemen Indonesia yang Diperbaharui) (Het Herziene Indonesisch Reglement, Buiten Java en Madura, Staatsblad 1927:227]). Staatsblad 1941:44), Code of Procedure for Areas Outside Java and Madura (Reglemen Seizure is performed by clerk of District Court or other willing and capable person Acara untuk Daerah Luar Jawa dan Madura) (Reglement Tot Regeling Van Het appointed by judge and recommended by local Regent. (Art. 197[2] and [3] of Renewed Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227), Book IV of Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Indonesian Civil Code (Kitab Undang-undang Hukum Perdata) (KUHPer) (Burgerlijk Reglement, Staatsblad 1941:44]; Art. 209[1] and [2] of Code of Procedure for Areas Wetboek voor Indonesië). Procedure evidence law is governed by principles found in Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] Renewed Indonesian Code (Reglemen Indonesia yang Diperbaharui) (Het Herziene In- [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, donesisch Reglement, Staatsblad 1941:44), Code of Procedure for Areas Outside Java Staatsblad 1927:227]). Seizure procedure is applicable to cash and commercial papers but and Madura (Reglemen Acara untuk Daerah Luar Jawa dan Madura) (Reglement Tot cannot be applied to animals and tools of necessity to livelihood of judgment debtor. (Art. Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 197[8] of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het 1927:227) and Code of Civil Procedure (Reglemen Acara Perdata) (Reglement op de Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 211 of Code of Procedure for Rechtsvordering, Staatsblad 1847:52). Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] Parties bear burden of proving facts. (Art. 163 of Renewed Indonesian Code [Regle- [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, men Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad Staatsblad 1927:227]). (See category Debtor and Creditor, topic Homesteads.) 1941:44]; Art. 283 of Code of Procedure for Areas Outside Java and Madura [Reglemen Clerk of District Court or local Regent is obligated to evaluate situation and use Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het discretion to either permit possessor of goods which are subject of seizure to continue Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]; Art. 1865 his possession of goods subject to obligation to preserve goods for benefit of judgment of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk creditor or to move goods to appropriate place. (Art. 197[9] of Renewed Indonesian Code Wetboek voor Indonesië]). [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staats- There are five kinds of evidence: (i) Written evidence; (ii) witness testimony; (iii) blad 1941:44]; Art. 212 of Code of Procedure for Areas Outside Java and Madura inference; (iv) admissions; and (v) oath. (Art. 164 of Renewed Indonesian Code [Regle- [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van men Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). 1941:44]; Art. 284 of Code of Procedure for Areas Outside Java and Madura [Reglemen Buildings not attached to land cannot be moved to other locations. (Art. 197[9] of Acara untuk Daerah Luar Jawa dan Madura] [Rechtsreglement Buitengewesten, Staats- Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene In- blad 1927:227]; Art. 1866 of Indonesian Civil Code [Kitab Undang-undang Hukum donesisch Reglement, Staatsblad 1941:44]; Art. 212 of Code of Procedure for Areas Perdata] [KUHPer] [Burgerlijk Wetboek voor Indonesië]). Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] Judiciary bears burden of applying correct law. [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). JUDGMENTS: Mandatory Injunctions.—District Courts are empowered to enjoin actions. (Art. 225 of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Default Judgments.—Failure to appear in person or by proxy following proper sum- Indonesisch Reglement, Staatsblad 1941:44]). Failure of party to comply with injunction mons results in issuance of warning of impending default judgment unless claim is of court entitles party benefiting from injunction to apply to court for order compelling clearly without merit. (Art. 125[1] of Renewed Indonesian Code [Reglemen Indonesia party burdened to pay cost of performance. (Id. at Art. 225[1]). yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 149[1] of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk VENUE: Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). Defendant may respond to Civil claims in first instance are filed by submission of letter of claim signed by warning of default by written application directed to discretion of District Court. (Art. plaintiff or his agent to chief of District Court in jurisdiction of defendant’s domicile, or 125[2] of Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het if domicile is unknown, in defendant’s residence. (Art. 118[1] of Renewed Indonesian Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 149[2] Code of Procedure for Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] Staatsblad 1941:44]; Art. 142[1] of Code of Procedure for Areas Outside Java and [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Staatsblad 1927:227]). Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad Defaults take effect eight days following delivery by registered mail of notice of 1927:227]). If there are multiple defendants who are not domicilliaries of same juris- warning of impending decision of default or 14 days following oral pronouncement of diction, then venue is proper in jurisdiction of at least one of defendant’s domicile which warning of impending decision by judge to defendant. (Art. 129[2] of Renewed Indo- may be chosen by plaintiff. (Art. 118[2] of Renewed Indonesian Code [Reglemen In- nesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Regle- donesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; ment, Staatsblad 1941:44]; Art. 153 of Code of Procedure for Areas Outside Java and Art. 142[2] of Code of Procedure for Areas Outside Java and Madura [Reglemen Acara Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). 1927:227]). Where some defendants are primary obligors joined with defendants with obligations derivative of those of primary obligors, plaintiff must choose venue from among resi- Foreign judgments are not binding upon Indonesian courts who exercise sovereign dences of primary obligor defendants except in limited circumstances. (Art. 118[2] of jurisdiction. Foreign judgments are viewed as some evidence in trial on merits of claims. Renewed Indonesian Code [Reglemen Indonesia yang Diperbaharui] [Het Herziene In- Execution of judgments are governed by Arts. 195-224, 225 and 227 of Renewed donesisch Reglement, Staatsblad 1941:44]; Art. 142[2] of Code of Procedure for Areas Indonesian Code (Reglemen Indonesia yang Diperbaharui) (Het Herziene Indonesisch Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] Reglement, Staatsblad 1941:44) and Arts. 206-258, 259 and 261 of Code of Procedure [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, for Areas Outside Java and Madura (Reglemen Acara untuk Daerah Luar Jawa dan Staatsblad 1927:227]). Madura) (Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en If residence and domicile of defendant is unknown or if identity of defendant is Madura, Staatsblad 1927:227). There are four kinds of executions: (i) Forced payment unknown, venue is proper in jurisdiction where plaintiff is domiciled or where subject

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VENUE . . . continued General Jurisdiction, with certain exceptions. (Arts. 49 and 50 of Law No. 3 of 2006 matter of dispute involves contraband goods, in jurisdiction where contraband goods are dated 20 Mar. 2006 concerning Amendment to Law No. 7 of 1989). Appeals from High located. (Art. 118[3] of Renewed Indonesian Code [Reglemen Indonesia yang Diper- Religious Court are reviewed by Supreme Court. (Art. 63 of Law No. 7 of 1989 as am’d baharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 142[3] of Code by Law No. 3 of 2006). of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). DEBTOR AND CREDITOR If defendant has agreed in writing to submit to jurisdiction other than his residence or domicile, then plaintiff may, but is not required to, select that elected jurisdiction as All of property of person, whether movable or immovable, whether already in exist- venue for claim. (Art. 118[4] of Renewed Indonesian Code [Reglemen Indonesia yang ence or later acquired, constitutes security for all of person’s obligations. (Art. 1131 of Diperbaharui] [Het Herziene Indonesisch Reglement, Staatsblad 1941:44]; Art. 142[4] of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk Code of Procedure for Areas Outside Java and Madura [Reglemen Acara untuk Daerah Wetboek voor Indonesië]). Luar Jawa dan Madura] [Reglement Tot Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad 1927:227]). ASSIGNMENT: Assignments of claims payable to named person and other intangible goods are ef- fected by means of making either authenticated deed or signed agreement of transfer COURTS AND LEGISLATURE delegating rights over those things to another party. (Art. 613 of Indonesian Civil Code [Reglemen Indonesia yang Diperbaharui] [KUHPer] [Burgerlijk Wetboek voor Indone- COURTS: sië]). Transfer is not binding on debtor until debtor has received notice thereof or has Governing Law.—Indonesian judicial system is governed by Law No. 4 of 2004 dated accepted assignment in writing or acknowledged assignment transfer in writing. (Id.). 15 Jan. 2004 concerning Judiciary and Law No. 14 of 1985 dated 30 Dec. 1985 con- Delivery of indebtedness in favor of bearer is made by delivery of document of in- cerning Supreme Court as am’d by Law No. 5 of 2004 dated 15 Jan. 2004 concerning debtedness. (Id.). Assignment of indebtedness payable to order is made by endorsement Amendment to Law No. 14 of 1985. and delivery of document of indebtedness. (Id.). Indonesian judicial system is composed of following categories of courts: (i) Supreme Court (governed by Law No. 14 of 1985 dated 30 Dec. 1985 concerning Supreme Court ATTACHMENT: as am’d by Law No. 5 of 2004 dated 15 Jan. 2004 concerning Amendment to Law No. See category Civil Actions and Procedure, topic Judgments, subhead Execution of 14 of 1985); (ii) National Civil Courts of General Jurisdiction composed of District Judgments, catchline Seizure. Courts as courts of first instance (governed by Law No. 2 of 1986 dated 8 Mar. 1986 concerning General Judicial System as am’d by Law No. 8 of 2004 dated 29 Mar. 2004 concerning Amendment to Law No. 2 of 1986) and High Courts as court of first appeal BANKRUPTCY: (governed by Law No. 2 of 1986 as am’d by Law No. 8 of 2004); (iii) Constitutional Bankruptcy is governed by Law No. 37 of 2004 dated 18 Oct. 2004 concerning Court (governed by Law No. 24 of 2003 dated 13 Aug. 2003 concerning Constitutional Bankruptcy and Suspension of Debt Payment Obligations. Court); (iv) Administrative Courts (governed by Law No. 5 of 1986 dated 29 Dec. 1986 Definitions.— concerning State Administration Courts as am’d by Law No. 9 of 2004 dated 29 Mar. Bankruptcy means general seizure over all wealth of bankrupt debtor with management 2004 concerning Amendment to Law No. 5 of 1986); (v) Commercial Courts (governed and settlement thereof conducted by curator under supervision of supervising judge. (Art. by Law No. 37 of 2004 dated 18 Oct. 2004 concerning Bankruptcy and Suspension of 1[1] of Law No. 37 of 2004 dated 18 Oct. 2004 concerning Bankruptcy and Suspension Debt Payment Obligations); (vi) Tax Courts (governed by Law No. 14 of 2002 dated 12 of Debt Payment Obligations). Apr. 2002 concerning Tax Courts); (vii) Religious Courts (governed by Law No. 7 of Creditor means person who has claim based on agreement or law, fulfillment of which 1989 dated 29 Dec. 1989 concerning Religious Courts as am’d by Law No. 3 of 2006 may be demanded before court. (Id. at Art. 1[2]). dated 20 Mar. 2006 concerning Amendment to Law No. 7 of 1989); (viii) Children’s Debtor means person who has debt arising out of agreement or law, satisfaction of Courts (governed by Law No. 3 of 1997 dated 3 Jan. 1997 concerning Children’s Courts); which may be demanded before court. (Id. at Art. 1[3]). (ix) Military Court (governed by Law No. 31 of 1997 dated 15 Oct. 1997 concerning Bankrupt debtor means debtor which has been declared bankrupt by Commercial Court Military Court); (x) Industrial Relation Courts (governed by Law No. 2 of 2004 dated decision. (Id. at Art. 1[4] and [7]). 14 Jan. 2004 concerning Industrial Relations Settlement); (xi) Courts of Fisheries Affairs Curator means Estate Property Bureau or individual person who has been appointed (governed by Law No. 31 of 2004 dated 6 Oct. 2004 concerning Fisheries); (xii) Criminal by Commercial Court to manage and settle estate of bankrupt debtor under supervision Corruption Court (governed by Law No. 30 of 2002 dated 27 Dec. 2002 concerning of supervising judge. (Id. at Art. 1[5]). Commission on Eradication of Corruption); (xiii) Human Rights Court governed by Law Debt means obligation which has been expressed or may be expressed as sum of No. 26 of 2000 dated 23 Nov. 2000 concerning Human Rights Court; and (xiv) Syari’ah money, whether in Indonesian currency or foreign currency, whether immediately or Islam Court in Nanggroe Aceh Darussalam Province governed by Law No. 18 of 2001 arising on later date or contingency, which arises out of agreement or law and which dated 9 Aug. 2001 concerning Special Autonomy for Special Region of Aceh as Nang- debtor is obligated to fulfill and if not fulfilled grants right to creditor to obtain fulfillment groe Aceh Darussalam Province as am’d by Law No. 11 of 2006 dated 1 Aug. 2006 from property of debtor. (Id. at Art. 1[6]). concerning Aceh Government. Commercial court means commercial court within sphere/domain of general judicature. National Civil Courts of General Jurisdiction.—National Civil Courts are divided (Id. at Art. 1[7]). into District Courts (courts of first instance), High Courts (courts of first appeal, as matter Supervising judge means judge appointed by court in bankruptcy decision or decision of right) (Art. 3[1] of Law No. 2 of 1986 dated 8 Mar. 1986 concerning General Judicial to suspend debt payment obligations. (Id. at Art. 1[8]). System) and Supreme Court (Id. at Art. 3[2]). Day means calendar day and if last day of period of time falls on Sun. or holiday, next District Court is empowered to examine, decide and settle criminal and civil cases in day is effective day. (Id. at Art. 1[9]). first instance. (Id. at Art. 50). Period of time means duration of time which must be calculated without inclusion of Supreme Court accepts appeals based on questions of jurisdiction and questions of law. commencement date of relevant period of time. (Id. at Art. 1[10]). (Art. I Point 19 of Law No. 5 of 2004 dated 15 Jan. 2004 concerning Amendment to Every person means individual persons or corporations including corporations which Law No. 14 of 1985 amending Art. 30 of Law No. 14 of 1985). Supreme Court judges are formed as legal entities as well as those which are not legal entities in liquidation. by panels of at least three justices and delivers verdict in open public court. (Art. 40 of (Id. at Art. 1[11]). Law No. 14 of 1985). Bankruptcy.—Debtor who has two or more creditors and has not paid at least one Military courts in environment related to military matters consist of Military Court, debt which has already fallen due and payable may be declared bankrupt by decision of High Military Court (court of first appeal), Prime Military Court and Combat Military Commercial Court, either by petition submitted by debtor itself or by petition of one or Court. (Art. 12 of Law No. 31 of 1997 dated 15 Oct. 1997 concerning Military Court). more of debtor’s creditors. (Id. at Art. 2[1]). Supreme Court is court of last resort. (Art. 10[2] of Law No. 4 of 2004; Art. 2 of Law Public prosecutor of Republic of Indonesia also has standing to submit bankruptcy No. 14 of 1985; Art. 8[2] of Law No. 31 of 1997). Military court is authorized to petition in interests of public. (Id. at Art. 2[2]). adjudicate criminal actions alleged to have been committed by soldiers or persons In event debtor is bank, bankruptcy petition may only be submitted by Bank Indonesia. deemed soldiers for special purposes or other persons based upon approval of Minister (Id. at Art. 2[3]). of Law and Human Rights and to decide military administrative disputes. (Art. 9[1] of Only Capital Markets Supervisory Board may file bankruptcy petition against debtor Law No. 31 of 1997). who is party who conducts business activities as: (i) Securities company (defined in Art. State Administrative Courts.—Composed of State Administrative Court and State 1[21] of Law No. 8 of 1995 dated 10 Nov. 1995 concerning Capital Markets as party Administrative High Court. (Art. 5[1] of Law No. 5 of 1986 dated 29 Dec. 1986 who conducts business activities as: (a) Underwriter; (b) broker-dealer; and/or (c) in- concerning State Administration Courts). State Administrative Court is empowered to vestment manager); (ii) Stock exchange (defined in Art. 1[4] of Law No. 8 of 1995 dated hear and decide State administrative disputes. (Art. I Point 2 of Law No. 9 of 2004 10 Nov. 1995 concerning Capital Markets); (iii) clearing and guarantee institute (defined concerning Amendment to Law No. 5 of 1986 amending Art. 4). State administrative in Art. 1[4] of Law No. 8 of 1995 dated 10 Nov. 1995 concerning Capital Markets); or disputes include those arising between persons and/or civil entities and State adminis- (iv) depository and settlement institutions. (Art. 2[4] of Law No. 37 of 2004 dated 18 trative agency and/or official either at national or regional level. (Art. 1[4] of Law No. Oct. 2004 concerning Bankruptcy and Debt Payment Obligation Suspension). 5 of 1986). Appeals from State Administrative High Court are reviewed by Supreme In event debtor is insurance company, reinsurance company, pension fund or State- Court. (Id. at Art. 131[1]). owned enterprise engaging in field of public interest, bankruptcy petition may be sub- Islamic Religious Courts.—Composed of District Religious Courts and High Reli- mitted by Minister of Finance. (Id. at Art. 2[5]). gious Courts. (Art. 3 of Law No. 7 of 1989 dated 29 Dec. 1989 concerning Religious Venue.—Decisions on petitions for declarations of bankruptcy and other matters in Courts as am’d by Law No. 3 of 2006 dated 20 Mar. 2006 concerning Amendment to relation to and/or regulated by Law No. 37 of 2004 are decided by Commercial Court Law No. 7 of 1989). Islamic Religious Courts are empowered to hear, decide and settle with territorial jurisdiction encompassing legal domicile of debtor. (Id. at Art. 3[1]). In civil cases between Muslims in fields of marriage, inheritance, testament, donative event debtor has left territory of Republic of Indonesia, Commercial Court with authority transfers, and syari’ah economy substantively in accordance with Islamic law and pro- to render decision on petitions for declarations of bankruptcy is Commercial Court with cedurally in accordance with civil procedural law applied in National Civil Courts of territorial jurisdiction encompassing last legal domicile of debtor. (Id. at Art. 3[2]). In

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BANKRUPTCY . . . continued appeal no later than two days after petition for appeal has been registered. (Id. at Art. event debtor is partner in general partnership, Commercial Court with territorial juris- 12[2]). diction encompassing legal domicile of general partnership also has authority to render Respondent on appeal may submit contra-memorandum of appeal to Commercial decision on petitions for declarations of bankruptcy. (Id. at Art. 3[3]). In event debtor is Court clerk no later than seven days after date respondent on appeal receives memo- not domiciled in territory of Republic of Indonesia but conducts profession or business randum of appeal. (Id. at Art. 12[3]). Commercial Court clerk is required to deliver in territory of Republic of Indonesia, Commercial Court with authority to render decision contra-memorandum of appeal to petitioner on appeal no later than two days after on petitions for declarations of bankruptcy is Commercial Court with territorial juris- contra-memorandum of appeal is received. (Id. at Art. 12[3]). diction encompassing legal domicile or central office from which debtor conducts its Court clerk is required to deliver petition for appeal, memorandum of appeal and profession or its business within territory of Republic of Indonesia. (Id. at Art. 3[4]). In contra-memorandum of appeal as well as case file to Supreme Court no later than 14 days event debtor is formed as legal entity, its legal domicile is as set forth in its articles of after date petition for appeal is filed. (Id. at Art. 12[4]). association. (Id. at Art. 3[5]). Supreme Court is obligated to study petition for appeal and set day for hearing no later Applications.—In event petition is submitted by debtor still bound in legal marriage, than two days after date petition for appeal is received by Supreme Court. (Id. at Art. petition submission may only occur with agreement of petitioner debtor’s husband or 13[1]). Hearing to examine petition for appeal must be conducted no more than 20 days wife. (Id. at Art. 4[1]). Foregoing spousal consent requirement is not applicable if there after date petition for appeal has been received by Supreme Court. (Id. at Art. 13[2]). is no communal property. (Id. at Art. 4[2]). Decision on petition for appeal must be pronounced no later than 60 days after date Bankruptcy petitions against general partnership must include names and residences petition for appeal is received by Supreme Court. (Id. at Art. 13[3]). Decisions on of each of partners who are bound in joint and several manner to entirety of debt of petitions for appeal contain complete legal considerations upon which decision is based general partnership. (Id. at Art. 5). and must be pronounced in hearing open to public. (Id. at Art. 13[4]). In event there are Bankruptcy petitions are submitted to chairman of Commercial Court. (Id. at Art. 6[1]). differences in opinions of members and chairman of panel of judges, those differences must be included in decision. (Id. at Art. 13[5]). Hearing Timeline.—Court clerk registers bankruptcy petition on date relevant petition Supreme Court clerk is required to deliver copy of decision on appeal to clerk of is filed, and petitioner is provided written receipt which is signed by authorized official Commercial Court no later than three days after decision on appeal has been pronounced. with date of registration. (Id. at Art. 6[2]). Court clerk must deliver bankruptcy appli- (Id. at Art. 13[6]). Bailiff of Commercial Court is obliged to deliver copies of decision cation to chairman of Commercial Court within at most two days after date petition is on appeal to petitioner on appeal, respondent on appeal, curator and supervising judge registered. (Id. at Art. 6[4]). Within period not longer than three days after date bank- no later than two days after decision on appeal is received. (Id. at Art. 13[7]). ruptcy petition is registered, Commercial Court must study petition and set hearing date. (Id. at Art. 6[5]). Hearing for examination of bankruptcy petition must be conducted Supreme Court Reconsideration.—With respect to decisions on bankruptcy petitions within period of not more than 20 days after date petition is registered. (Id. at Art. 6[6]). which have already become legally final and binding, motion for reconsideration may be submitted to Supreme Court. (Id. at Art. 14[1]). Notice of Petition.—Commercial Court is required to notify debtor in event bank- Petitioner for reconsideration is required to deliver memorandum for reconsideration ruptcy petition is submitted by creditor, public prosecutor, Bank Indonesia, Capital to Commercial Court clerk on date petition for reconsideration is to be registered. (Id. Markets Supervisory Board or Minister of Finance. (Id. at Art. 8[1][a]). Commercial at Arts. 12[1] and 14[2]). Court clerk is obligated to send petition for reconsideration and Court may notify creditors in event bankruptcy petition is submitted by debtor and there memorandum for reconsideration to respondent for reconsideration no later than two days is doubt that conditions for declaration of bankruptcy are fulfilled, namely, that debtor after petition for reconsideration has been registered. (Id. at Arts. 12[2] and 14[2]). has two or more creditors and has not paid at least one debt which has already fallen Respondent for reconsideration may submit contra-memorandum for reconsideration due and payable. (Id. at Art. 8[1][b]). to Commercial Court clerk no later than seven days after date respondent for reconsid- Notice must be given by court bailiff by registered express mail no later than seven eration receives memorandum for reconsideration. (Id. at Arts. 12[3] and 14[2]). Com- days before first hearing is to be conducted. (Id. at Art. 8[2]). mercial Court clerk is required to deliver contra-memorandum for reconsideration to Decisions.—Petition for declaration of bankruptcy must be granted if facts or cir- petitioner for reconsideration no later than two days after contra-memorandum for re- cumstances are found to exist by simple proof/evidence that debtor has two or more consideration is received. (Id. at Arts. 12[3] and 14[2]). creditors and has not paid at least one debt which has already fallen due and payable. Court clerk is required to deliver petition for reconsideration, memorandum for re- (Id. at Arts. 2[1] and 8[4]). consideration and contra-memorandum for reconsideration as well as case file to Su- Court must pronounce its decision concerning bankruptcy petition no more than 60 preme Court no later than 14 days after date petition for reconsideration is filed. (Id. at days after date bankruptcy petition is registered. (Id. at Art. 8[5]). Arts. 12[4] and 14[2]). Decision must contain reference to specific article from relevant regulations of law Supreme Court is obligated to study petition for reconsideration and set day for hearing and/or sources of unwritten law which constitute basis of adjudication as well as legal no later than two days after date petition for reconsideration is received by Supreme considerations and opinions which differ from among members or chairman of panel of Court. (Id. at Arts. 13[1] and 14[2]). Hearing to examine petition for reconsideration must judges. (Id. at Art. 8[6]). be conducted no more than 20 days after date petition for reconsideration has been Decision setting forth complete legal considerations upon which decision is based must received by Supreme Court. (Id. at Arts. 13[2] and 14[2]). be announced in hearing open to public and such decision may be implemented/executed Decision on petition for reconsideration must be pronounced no later than 60 days after immediately notwithstanding submission of legal remedies in relation to decision. (Id. at date petition for reconsideration is received by Supreme Court. (Id. at Arts. 13[3] and Art. 8[7]). 14[2]). Decisions on petitions for reconsideration contain complete legal considerations Copies of court decision must be delivered by court bailiff through registered express upon which decision is based and must be pronounced in hearing open to public. (Id. mail to debtor, parties who submitted bankruptcy petition, curator and supervising judge at Arts. 13[4] and 14[2]). In event there are differences in opinions of members and no later than three days after date decision is pronounced. (Id. at Art. 9). chairman of panel of judges, those differences must be included in decision. (Id. at Arts. 13[5] and 14[2]). Notice of Declaration of Bankruptcy.—Within period of no more than five days after Supreme Court clerk is required to deliver copy of decision on reconsideration to clerk date of receipt of bankruptcy declaration decision by curator and supervising judge, of Commercial Court no later than three days after decision on reconsideration has been curator must publish abstract of bankruptcy declaration decision in State Gazette and at pronounced. (Id. at Arts. 13[6] and 14[2]). Bailiff of Commercial Court is obliged to least two daily newspapers designated by supervising judge. (Id. at Art. 15[4]). Abstract deliver copies of decision on reconsideration to petitioner for reconsideration, respondent must contain: (i) Debtor’s name, address and employment; (ii) name of supervising for reconsideration, curator and supervising judge no later than two days after decision judge; (iii) name, address and employment of provisional creditors’ committee, if already on reconsideration is received. (Id. at Arts. 13[7] and 14[2]). appointed; and (iv) place and time for conducting first creditors meeting. (Id. at Art. 15[4]). Cancellation of Bankruptcy Declaration Decision on Appeal or Petition for Re- Preliminary Attachments and Provisional Curators.—Prior to pronouncement of consideration.—In event bankruptcy declaration decision is overturned/cancelled as decision on bankruptcy petition, every creditor, public prosecutor, Bank Indonesia, Capi- result of appeal or petition for reconsideration, all acts which have been conducted by tal Markets Supervisory Board or Minister of Finance may submit petition to court for: curator prior to or on date curator receives notice regarding cancellation of decision (i) Imposition of conservatory attachment over all or part of wealth of debtor; or (ii) remain valid and binding on debtor. (Id. at Art. 16[2]). appointment of provisional curator to supervise management of debtor’s business and Within period of not more than five days after date of receipt of decision on petition payments to creditors, transfers/assignments or encumbrances over wealth of debtor for appeal or decision on petition for reconsideration which cancels bankruptcy decla- which would fall within authority of curator. (Id. at Art. 10[1]). Imposition of conser- ration, curator must publish abstract of bankruptcy declaration decision in State Gazette vatory attachment or appointment of provisional curator may only be granted if necessary and at least two daily newspapers designated by supervising judge. (Id. at Arts. 15[4] and to protect interests of creditors. (Id. at Art. 10[2]). If granted, court may stipulate 17[1]). Abstract must contain: (i) Debtor’s name, address and employment; (ii) name of prerequisites requiring petitioning creditor to post security deemed reasonable by Com- supervising judge; (iii) name, address and employment of provisional creditors com- mercial Court. (Id. at Art. 10[3]). mittee, if already appointed; and (iv) place and time for conducting first creditors meet- ing. (Id.). Supreme Court Appeal.—Legal remedy which may be submitted in relation to Panel of judges canceling bankruptcy declaration decision must stipulate bankruptcy decision on bankruptcy petition is appeal to Supreme Court. (Id. at Art. 11[1]). Petitions costs and compensation for services of curator. (Id. at Art. 17[2]). These costs are to be for appeal must be filed no later than eight days after date decision to be appealed is imposed upon bankruptcy petitioner or upon petitioner and debtor in proportionate pronounced. (Id. at Art. 11[2]). Registration of petition for appeal is made with Com- amounts determined by panel of judges. (Id. at Art. 17[3]). In order to collect bankruptcy mercial Court clerk which adjudicated bankruptcy petition. (Id. at Art. 11[2]). In addition costs and compensation for services of curator, chairman of Commercial Court may issue to submission by debtor and creditor who constitute parties to court proceedings in first execution order upon application of curator. (Id. at Art. 17[4]). instance, petitions for appeal may also be submitted by other creditors who are dissat- In event bankruptcy declaration decision is cancelled, settlements/reconciliations isfied with bankruptcy petition decision. (Id. at Art. 11[3]). which may have been reached are void as matter of law. (Id. at Art. 17[5]). Court clerk is required to register petition for appeal on date petition is submitted. (Id. at Art. 11[4]). Court clerk is also required to provide written receipt signed by clerk dated Curator.—Within bankruptcy petition decision, curator must be appointed and su- same date as date of acceptance of registration. (Id. at Art. 11[4]). pervising judge must be designated from among judges of Commercial Court. (Id. at Art. Petitioner on appeal is required to deliver its memorandum of appeal to Commercial 15[1]). In event neither debtor, creditor or other party with competence to submit bank- Court clerk on date petition for appeal is to be registered. (Id. at Art. 12[1]). Court clerk ruptcy petition submits proposal for appointment of curator to Commercial Court, then is obligated to send petition for appeal and memorandum of appeal to respondent on Estate Property Bureau will be appointed as curator. (Id. at Art. 15[2]).

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BANKRUPTCY . . . continued (Id. at Art. 22[a]); (vi) wages (Id. at Art. 22[b]); (vii) pension funds (Id. at Art. 22[b]); Curators must be independent, may not have conflicting interests with debtor or (viii) copyrights (Art. 4 of Law No. 19 of 2002 dated 29 July 2002 concerning Copy- creditor, and may not be engaged in handling of more than three bankruptcy and payment rights); (ix) sum of money decided by supervisory judge for necessities (Id. at Art. 22[b] obligation suspension cases. (Id. at Art. 15[3]). of Law No. 37 of 2004 dated 18 Oct. 2004 concerning Bankruptcy and Suspension of Management of Bankruptcy Estate.—Curator has authority to implement bank- Debt Payment Obligations); (x) sum of money provided to debtor to fulfill mandatory ruptcy estate managerial and/or settlement tasks from date bankruptcy decision is an- requirements to provide basic necessity of life (Id. at Art. 22[c]). nounced notwithstanding that appeal or motion for reconsideration has been submitted in relation to bankruptcy decision. (Id. at Art. 16[1]). LIENS: Estate Insufficient to Cover Costs.—In event bankruptcy estate is insufficient to pay Liens over Movables and Intangibles.—Fidusia guarantees are governed by Law No. bankruptcy costs, Commercial Court, upon proposal of supervising judge, and after 42 of 1999 dated 30 Sept. 1999 concerning Fidusia Guarantee, effective as of 30 Sept. hearing position of provisional creditors committee if any, as well as after legal notice 1999. to or hearing debtor, may decide to cancel bankruptcy declaration decision. (Id. at Art. Pre-30 Sept. 1999.—Prior to promulgation of Law No. 42 of 1999, Indonesian law did 18[1]). Such decisions must be pronounced in hearing open to public. (Id. at Art. 18[2]). not expressly recognize concept of non-possessory liens over movables and intangibles. Curator is required to publish order canceling bankruptcy declaration decision in State Instead, custom and practice led to development of concept of fiduciary transfers for Gazette and at least two daily newspapers designated by supervising judge. (Id. at Arts. security purposes in financings. (Id. at Point 1[2] of General Elucidation). In fiduciary 15[4] and 19[1]). transfer, debtor transferred to creditor title to goods intended to secure debt with agree- Panel of judges ordering cancellation of bankruptcy must stipulate amount of bank- ment that debtor would be permitted to maintain possession and use of goods as long ruptcy costs and compensation for services of curator. (Id. at Art. 18[3]). Total bankruptcy as he did not default, that possession would be maintained in trust for creditor, that upon costs and compensation for services of curator are to be imposed on debtor. (Id. at Art. satisfaction of outstanding debt creditor would re-convey goods to debtor and that in 18[4]). These costs and compensation for services are granted preference above all other event of default, creditor would have right to execute goods for satisfaction of secured debts which are not secured by collateral. (Id. at Art. 18[5]). No legal recourse may be debt. submitted in relation to decision of panel of judges regarding bankruptcy costs and As of 30 Sept. 1999, Law No. 42 of 1999 became applicable to all fiduciary transfers. compensation for services of curator. (Id. at Art. 18[6]). In order to collect bankruptcy (Id. at Art. 2). costs and compensation for services of curator, chairman of Commercial Court may issue Security Interests Granted Prior to 30 Sept. 1999.—Encumbrances over goods in form execution order upon application of curator with knowledge of supervising judge. (Id. at of fiduciary transfers for security purposes prior to 30 Sept. 1999 continue to be valid Art. 18[7]). provided that contractual provisions governing those security interests do not contravene Petitions for appeal and/or petitions for reconsideration may be filed in relation to Law No. 42 of 1999. (Id. at Art. 37[1]). Encumbrances arising prior to 30 Sept. 1999 decisions canceling bankruptcy declarations. (Id. at Art. 19[2]). must be adjusted to comply with provisions of Law No. 42 of 1999 within period of not In event another petition for declaration of bankruptcy is submitted after decision longer than 60 days following establishment of Fidusia Registry Office (see subhead canceling bankruptcy declaration is pronounced, debtor or petitioner is obligated to prove Definitions, catchline Registration, infra) except that obligation to create deed of fidusia that there are sufficient assets to pay bankruptcy costs. (Id. at Art. 19[3]). guarantee (see subhead Definitions, catchline Deed of Fidusia Guarantee, infra) is not Public Registry.—Commercial Court clerk is required to implement public registry to required. (Id. at Art. 37[2]). Failure to make necessary adjustments shall result in loss record every bankruptcy case in individual manner. (Id. at Art. 20[1]). Public registry is of security interests over subject goods. (Id. at Art. 37[3]). open to public and may be viewed by every person free of charge. (Id. at Art. 20[4]). Definitions.— Public registry must contain following information in orderly manner: (i) Abstract of Fidusia means transfer of rights of ownership in certain goods on basis of trust with bankruptcy decision or decision canceling declaration of bankruptcy; (ii) summary of provision that goods transferred remain under control of their owner. (Id. at Art. 1[1]). contents of settlements/reconciliations and legalization decisions thereof; (iii) cancella- Fidusia guarantee means security interest over both movable, tangible and intangible tions of settlements/reconciliations; (iv) amounts of divisions in settlements; (v) can- goods (particularly buildings which are not able to be encumbered by mortgage rights cellations of bankruptcy declaration decisions due to insufficient estate assets; and (vi) as intended in Law No. 4 of 1996 concerning Mortgage Rights) which remain under rehabilitations. (Id. at Art. 20[2]). Further provisions concerning form and content of control of fidusia provider as security for payment of specific debt and which provides public registry are subject to stipulation by decision of Chairman of Supreme Court. (Id. priority position to fidusia recipient over other creditors. (Id. at Art. 1[2]). at Art. 20[3]). Claim means right to receive payment. (Id. at Art. 1[3]). Effect of Bankruptcy.—Bankruptcy includes all of wealth of debtor at time bank- Goods means all things which are able to be owned or to be transferred, both tangible ruptcy declaration decision is pronounced as well as all that is obtained during bank- and intangible, whether or not registered, movable or immovable and which are not able ruptcy (Id. at Art. 21) with exception of following: (i) Goods, including animals which to be encumbered by mortgage rights or hypothecation. (Id. at Art. 1[4]). are truly needed by debtor in connection with his or her job, equipment/supplies, medical Fiducia provider means individual or corporation owning property which is object of equipment used for health purposes, bed and equipment/supplies which are used by fiducia guarantee. (Id. at Art. 1[5]). debtor and his or her family, and food supplies for 30 days for debtor and his or her Fiducia receiver is individual or corporation possessing claim with right to payment family which are found at his or her place; (ii) anything earned by debtor from his or guaranteed by fiducia guarantee. (Id. at Art. 1[6]). her own work as salary for position or service, as compensation, pension, allowance, Debt means obligation which is or is able to be denominated in either Indonesian or support or alimony to extent determined by supervising judge; or (iii) money which is foreign currency, whether direct or contingent. (Id. at Art. 1[7]). given to debtor to fulfill obligation to provide basic necessities in accordance with law. Creditor means party possessing right of claim arising out of agreement or by law. (Id. (Id. at Art. 22). at Art. 1[8]). Bankrupt debtor includes wife or husband of bankrupt debtor where they are married Debtor means party possessing debt arising out of agreement or by law. (Id. at Art. in communal property. (Id. at Art. 23). 1[9]). Debtor by law loses right of authority and management over debtor’s wealth which Person means individual or corporation. (Id. at Art. 1[10]). becomes subject to bankruptcy estate from date bankruptcy declaration decision is pro- Exclusions from Law No. 42 of 1999.—Law No. 42 of 1999 does not apply to: (i) nounced. (Id. at Art. 24[1]). Date of decision commences from midnight local time. (Id. Mortgage interests in connection with land and buildings to extent that provisions of laws at Art. 24[2]). in effect require registration of security interest in goods (Id. at Art. 3[a]; see Id. at In event funds transfer through bank or non-bank institution is implemented prior to Elucidation of Art. 3[a] [providing that security interest in connection with land and pronouncement of bankruptcy decision, transfer must be continued. (Id. at Art. 24[3]). buildings which are required to be registered which do not qualify for mortgage reg- In event securities transaction has been implemented on securities exchange prior to istration, qualify as object of fidusia guarantee]); (ii) hypothecations over registered ships pronouncement of bankruptcy decision, transaction must be completed. (Id. at Art. 24[4]). with gross volume measurements of 20 cubic meters (m3) or more (Id. at Art. 3[b]); (iii) All obligations of debtor which arise after bankruptcy declaration decision may not be hypothecations over aircraft (Id. at Art. 3[c]); and (iv) pawn security (Id. at Art. 3[d]). paid from bankruptcy estate, except obligations which benefit bankruptcy estate. (Id. at Derivative Nature of Obligation.—Fidusia guarantee is form of agreement which is Art. 25). derivative to principle underlying agreement which creates obligation for parties to fulfill Claims regarding rights and obligations which relate to bankruptcy estate must be certain performances including obligation to give thing, to do thing or to refrain from submitted by or against curator. (Id. at Art. 26[1]). In event claim is to be submitted or doing thing where each such performance is capable of being valued in monetary terms. continued by or against bankrupt debtor, then if that claim results in penalty against (Id. at Art. 4 and Elucidation of Art. 4). bankrupt debtor, aforementioned penalty will not impose legal effect upon bankruptcy Deed of Fiduciary Guarantee.—Fiduciary guarantees must be made in form of notarial estate. (Id. at Art. 26[2]). deeds and are known as deeds of fidusia guarantee. (Id. at Art. 5[1]). Fees charged by notaries for deeds of fidusia guarantee are subject to stipulation by Government Regu- EXECUTIONS: lation. (Id. at Art. 5[2]). Deeds of fidusia guarantee must be made in Indonesian language. See category Civil Actions and Procedure, topic Judgments, subhead Execution of (Id. at Art. 5[1]). Judgments. Deeds of fidusia guarantee must at least contain following: (i) Day, date and hour of making of deed (Id. at Elucidation of Art. 5[1]); (ii) identity of fidusia provider and GARNISHMENT: fidusia recipient (Id. at Art. 6[a]), including (a) full names (Id. at Elucidation of Art. 6[a]), (b) religions (Id. at Elucidation of Art. 6[a]), (c) addresses or domiciles (Id. at Elucidation See category Civil Actions and Procedure, topic Judgments, subhead Execution of of Art. 6[a]), (d) place and date of birth (Id. at Elucidation of Art. 6[a]), (e) gender (Id. Judgments, catchline Seizure. at Elucidation of Art. 6[a]), and (f) employment/work (Id. at Elucidation of Art. 6[a]); (iii) data on underlying agreement (Id. at Art. 6[b]) including kind of agreement and HOMESTEADS: identification of debts secured by fidusia (Id. at Elucidation of Art. 6[b]); (iv) description Homestead is bankruptcy concept not specifically recognized in Indonesian bankruptcy of goods serving as object of fidusia guarantee (Id. at Art. 6[c]) (descriptions of goods law. However, personal exemptions from execution against debtors’ property include: (i) are deemed sufficient where goods are identified and clarification is provided regarding Animals related to debtor’s work (Art. 22[a] of Law No. 37 of 2004 dated 18 Oct. 2004 documentary evidence of ownership) (Id. at Elucidation of Art. 6[c]) (in event goods concerning Bankruptcy and Suspension of Debt Payment Obligations); (ii) personal bed serving as object of fidusia guarantee are in form of stock/inventory which are subject and clothing (Id. at Art. 22[a]); (iii) tools relating to official duties (Id. at Art. 22[a]); (iv) to continuous change and/or are not fixed, such as stocks of basic commodities, finished medical equipment needed by debtor (Id. at Art. 22[a]); (v) food supplies for 30 days products or portfolios of securities companies, then deed of fidusia guarantee must

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LIENS . . . continued Right of Sale.—In event debtor breaches its obligations, fidusia receiver has right to include description of kind, brand and quality of goods) (Id. at Elucidation of Art. 6[c]); sell goods which are object of fidusia guarantee based on power of certificate of fidusia (v) value of guarantee (Id. at Art. 6[d]); and (vi) value of goods serving as object of guarantee itself. (Id. at Art. 15[3]). fidusia guarantee. (Id. at Art. 6[e]). Transfers of rights to claims secured by fidusia have effect of transferring all legal Qualifications of Debts.—Settlement of following types of debts may be secured by rights and obligations of fidusia receiver to new creditor. (Id. at Art. 19[1]). New creditor fidusia guarantees: (i) Existing debts (Id. at Art. 7[a]); (ii) contingent debts arising at is required to register transfer of fidusia guarantee with Fidusia Registry Office. (Id. at future date though subject to present agreement as to total amount to become due (Id. Art. 19[2]). Fidusia guarantees continue to encumber goods following transfer of goods at Art. 7[b]) (such debt may take form of bank guarantee given by creditor to bank on to other persons (Id. at Art. 20) except that goods categorized as stock or inventory do behalf of debtor) (Id. at Elucidation of Art. 7[b]); or (iii) assessable debts including debts not continue to be encumbered by fidusia guarantee following transfer (Id. at Art. 20) in amounts that are calculable at time of execution of fidusia guarantee based upon provided that transfer of stock or inventory which is object of fidusia guarantee is in underlying agreement giving rise to obligation to fulfill commitment such as payment of accordance with customs and practices followed in ordinary course of trading businesses. interest and other costs stipulated in loan agreement (Id. at Art. 7[c] and Elucidation of (Id. at Art. 21[1]). Fidusia provider may not transfer stock or inventory which is object Art. 7[c]). of fidusia guarantee if debtor and/or third party fidusia provider is already in breach of Multiple Fidusia Recipients.—Fidusia guarantees may be given to more than one contract at time of transfer. (Id. at Art. 21[2]). fidusia recipient or to proxies or representatives of fidusia recipients. (Id. at Art. 8). This Fidusia provider is obligated to replace stock and inventory already transferred with provision is intended to insure that fidusia guarantees are available for benefit of lending goods of equivalent kind and value. (Id. at Art. 21[3] and Elucidation of Art. 21[3]). syndications and consortiums. (Id. at Elucidation of Art. 8). Buyers of stock or inventory which is object of fidusia guarantee are free from legal Multiple Fidusia Guarantees Prohibited.—Fidusia providers may not provide multiple claims even though buyer knows of existence of fidusia guarantee; provided that buyer fidusias over same goods which are already object of registered fidusia guarantees. (Id. has already tendered payment for purchase of goods at market price. (Id. at Art. 22). at Art. 17). Fidusia guarantee by its nature transfers ownership in trust to fidusia receiver Market price is price which is actually in effect in market at time of sale of goods, thus and thus multiple ownership transfers are conceptually impossible. (Id. at Elucidation of not justifying impression of existence of deceit by fidusia provider in sale of goods. (Id. Art. 17). at Elucidation of Art. 22). Multiple Goods.—Fidusia guarantees may be granted over one or more kinds of goods, In event that fidusia provider is in breach of contract, products of transfer and/or claims including claims, whether already in existence at time of granting of security interest or arising from transfer of objects of fidusia automatically become objects of fidusia guar- arising later. (Id. at Art. 9[1]). Separate agreement is not required in order to perfect antee by operation of law. (Id. at Art. 21[4]). security interests in goods and claims arising after granting of fidusia guarantee. (Id. at If fidusia receiver agrees that fidusia provider may use, combine, mix or transfer goods Art. 9[2]). or products of goods which are object of fidusia guarantee, or agrees to collect or compromise debt, agreement does not mean that fidusia receiver has released fidusia Products of Goods and Insurance Proceeds.—Unless otherwise agreed, fidusia guar- guarantee. (Id. at Art. 23[1]). antees are deemed to encumber products of goods subject to fidusia guarantee as well Fidusia provider is prohibited from transferring, pawning or leasing to another party as any insurance claim available in event goods are insured. (Id. at Arts. 10[a] and [b]). goods which are object of fidusia guarantee (other than stock or inventory) unless fidusia Registration.—Goods encumbered by fidusia guarantee must be registered in Fidusia provider obtains prior written consent of fidusia receiver. (Id. at Art. 23[2]). Goods which Registry Office. (Id. at Arts. 11[1] and 12[1]). Obligation to register covers goods located are not in form of stock or inventory include, for example, production machinery, private outside of territory of Republic of Indonesia. (Id. at Art. 11[2]). Registration process is cars or private homes. (Id. at Elucidation of Art. 23[2]). intended to publicize granting of fidusia guarantees as well as to provide notice to other Liability of Fidusia Receiver.—Fidusia receivers do not bear responsibility for con- creditors regarding goods subject to fidusia encumbrances. (Id. at Elucidation of Art. 11). sequences of actions or negligence of fidusia provider either arising from contractual Fidusia guarantee is deemed effective on date of recording of fidusia guarantee in relationships or arising from violations of law in connection with use or transfer of goods Fidusia Registry Book. (Id. at Art. 14[3]). which are objects of fidusia guarantee. (Id. at Art. 24). Registration of fidusia guarantee is done at Fidusia Registry Office. (Id. at Art. 12[1]). Termination of Fidusia Guarantees.—Fidusia guarantees terminate for following rea- Fidusia Registry Office is dependent division of Department of Law and Human Rights. sons: (i) Termination of debt which is guaranteed by fidusia (Id. at Art. 25[1][a]) ex- (Id. at Art. 12[3] and Elucidation of Art. 12). Provisions regarding establishment of amples of termination of debts include, among other things, payment of debt and evi- Fidusia Registry Offices outside of Jakarta are governed by Presidential Decrees. (Id. at dence of release of debt in form of official statement made by creditor (Id. at Elucidation Art. 12[4]). Fidusia Registry Office must be established within one year following 30 of Art. 25[1]) existence of fidusia guarantee is dependent upon existence of underlying Sept. 1999. (Id. at Arts. 39 and 41). debt (Id. at Elucidation of Art. 25[1]); (ii) release of right to fidusia guarantee by fidusia Fidusia guarantees must be registered in Fidusia Registry Office. (Id. at Arts. 11[1] and receiver (Id. at Art. 25[1][b]); and (iii) destruction of goods which are object of fidusia 12[1]). First Fidusia Registry Office is located in Jakarta with operational area covering guarantee (Id. at Art. 25[1][c]) except that insurance claims are not terminated upon entire territory of Republic of Indonesia. (Id. at Art. 12[2]). Law No. 42 of 1999 provides destruction of goods (Id. at Art. 25[2]) claim for insurance replaces goods as object of that Fidusia Registry Offices will be established in capital cities of other provinces fidusia guarantee (Id. at Elucidation of Art. 25[2]). throughout Indonesia as need arises. (Id. at Elucidation of Art. 12). Fidusia receiver is required to inform Fidusia Registry Office regarding termination of Request for registration of fidusia guarantee is conducted by fidusia recipient or his fidusia guarantee by submitting statement regarding termination of debt, release of right proxies or representatives. (Id. at Art. 13[1]). Request for registration is conducted by or destruction of goods which are object of fidusia guarantee. (Id. at Art. 25[3]). Upon attachment of declaration of registration of fidusia guarantee. (Id. at Art. 13[1]). Dec- termination of fidusia guarantee, Fidusia Registry Office is required to delete notation of laration of registration of fidusia guarantee must contain following: (i) Identities of fidusia guarantee from Fidusia Registry Book. (Id. at Art. 26[1]). Fidusia Registry Office fidusia provider and fidusia recipient (Id. at Art. 13[2][a]); (ii) date and number of deed is required to publish letter of information stating that relevant certificate of fidusia of fidusia guarantee and name and domicile of notary who made deed of fidusia guarantee guarantee is no longer effective. (Id. at Art. 26[2]). (Id. at Art. 13[2][b]); (iii) data on underlying agreement secured by fidusia guarantee (Id. Priority Rights.—Fidusia receivers have priority rights over other creditors to satis- at Art. 13[2][c]); (iv) description of goods encumbered as objects of fidusia guarantee and faction of debt through payment from proceeds of execution of goods which are object value of those goods (Id. at Art. 13[2][d] and [f]); and (v) value of guarantee (Id. at Art. of fidusia guarantee. (Id. at Arts. 27[1] and [2]). Priority right of fidusia receiver com- 13[2][e]). mences on date of registration of goods in Fidusia Registry Office. (Id. at Elucidation Date of Registration.—Fidusia Registry Office must enter fidusia guarantee in Fidusia of Art. 27[1]). In event that goods which are object of fidusia guarantee are encumbered Registry Book on same date as date of receipt of request for registration. (Id. at Art. by more than one fidusia guarantee, priority right over goods is given to fidusia receiver 13[3]). who has registered first at Fidusia Registry Office. (Id. at Art. 28). Evaluation of Truth of Contents.—Fidusia Registry Office is not empowered to evalu- Priority right of fidusia receiver does not terminate as result of bankruptcy or liqui- ate truth of contents of request for registration. (Id. at Elucidation of Art. 13[3]). Rather, dation of fidusia provider. (Id. at Art. 27[3]). duty of Fidusia Registry Office is limited to checking that contents of declaration of Execution of Fidusia Guarantees.—Upon default to debtor or fidusia provider, ex- registration are complete. (Id. at Elucidation of Art. 13[3]). ecution against goods which are object of fidusia guarantee may be done in accordance with following procedures: (i) Implementation of executorial title granted by virtue of Public Nature of Registration.—All information regarding goods which have become obtaining certificate of fidusia guarantee (Id. at Arts. 15[2] and 29[1][a]); (ii) selling object of fidusia guarantee and which are registered at Fidusia Registry Office are open goods which are object of fidusia guarantee based upon power of fidusia recipient itself to public. (Id. at Art. 18). through public auction along with obtaining settlement of claim from proceeds of sale Registration fees and procedures are subject to Government Regulation. (Id. at Art. (Id. at Art. 29[1][b]); or (iii) private sale performed based upon agreement between 13[4]). fidusia provider and fidusia receiver if through this method highest price for goods Certificates.—Fidusia Registry Office publishes and delivers certificate of fidusia guar- benefiting both parties is able to be obtained. (Id. at Art. 29[1][c]). Any agreement to antee to fidusia recipient on same date as date of receipt of request for registration. (Id. execute fidusia guarantee over goods in manner in conflict with foregoing is void as at Art. 14[1]). Certificate of fidusia guarantee takes form of copy of Fidusia Registry matter of law. (Id. at Art. 32). Book containing notation of contents of declaration of registration. (Id. at Art. 14[2]). Implementation of private sale may be done after period of one month following Certificate must contain words “DEMI KEADILAN BERDASARKAN KETUHANAN provision of notice in writing by fidusia provider and/or fidusia receiver to interested YANG MAHA ESA” in capital letters which translates to “FOR SAKE OF JUSTICE parties and publication of notice in at least two newspapers circulated in relevant geo- BASED ON ALMIGHTY G-D.” (Id. at Art. 15[1]). graphical area. (Id. at Art. 29[2]). In event of change in matters denoted within certificate of fidusia guarantee, fidusia In event goods which are object of fidusia guarantee consist of goods of trade or shares receiver is obligated to file request for registration of modifications to Fidusia Registry which may be sold in market or at stock exchange, sale may be performed at relevant Office. (Id. at Art. 16[1]). Expression of modifications in form of notarial deed is not place in accordance with regulations of law in effect. (Id. at Art. 31). required. (Id. at Elucidation of Art. 16[1]). Notice of modifications to fidusia guarantee Any agreement purporting to grant authority to fidusia receiver to own goods which must be given to all of parties to fidusia guarantee. (Id. at Elucidation of Art. 16[1]). are object of fidusia guarantee if debtor defaults is void as matter of law. (Id. at Art. 33). Fidusia Registry Office is required to enter modifications on same date as date of receipt Surrender of Goods.—Fidusia provider is obligated to deposit goods which are object of request for modification and to publish declaration of modification as inseparable part of fidusia guarantee in framework of implementation of execution. (Id. at Art. 30). In of certificate of fidusia guarantee. (Id. at Art. 16[2]). event that fidusia provider does not deposit goods at time of implementation of execution, Executorial Power.—Certificate of fidusia guarantee possesses same executorial power fidusia receiver has right to take goods and if necessary to request assistance from as court decision which has become final and binding. (Id. at Art. 15[2]). authorized parties. (Id. at Elucidation of Art. 30).

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LIENS . . . continued Second stage of alternative dispute resolution mechanism arises upon failure of parties Surplus Proceeds, Return.—In event proceeds of execution exceed value of guarantee, to settle their dispute or difference of opinion through direct meetings. (Id. at Art. 6[3]). fidusia receiver is obligated to return surplus proceeds to fidusia provider. (Id. at Art. In event of failure to reach settlement agreement through direct meetings within 14 days, 34[1]). parties may enter into written agreement for appointment of one or more experts or Insuffıcient Proceeds, Debtor’s Obligation.—In event proceeds of execution are in- mediator to assist in settlement of their dispute or difference of opinion. (Id. at Art. 6[3]). sufficient to settle debt, debtor continues to be obligated to that part of debt which Date of commencement of 14 day period is not defined in Law No. 30 of 1999. remains unpaid. (Id. at Art. 34[2]). Third stage of alternative dispute resolution mechanism arises upon failure of expert Criminal Sanctions.— advisors or mediator to achieve settlement among parties and signing of written statement Information Manipulation.—Any person intentionally falsifying, modifying, eliminat- by parties to refer dispute or difference of opinion to mediation through arbitration or ing or with any other method giving misleading information, which if matter is known alternative dispute resolution institute. (Id. at Art. 6[4]). to party will not produce agreement of fidusia guarantee, shall be subject to criminal Mediation must commence within seven days following appointment of mediator by imprisonment of at least one year and at most five years and fines of at least Rp arbitration or alternative dispute resolution institute. (Id. at Art. 6[5]). 10,000,000 and at most Rp 100,000,000. (Id. at Art. 35). Confidentiality must be strictly maintained throughout mediation. (Id. at Art. 6[6]). Transfer, Pledge or Lease.—Fidusia provider who transfers, pledges or leases goods Achievement of written agreement signed by all involved parties must be achieved which are object of fidusia guarantee without obtaining prior written consent of fidusia within maximum of 30 days. (Id. at Art. 6[6]). Written settlement agreements are final receiver is subject to criminal imprisonment of up to two years and fines of as much as and binding on parties. (Id. at Art. 6[7]). Settlement agreements must be implemented Rp 50,000,000. (Id. at Art. 36). in good faith. (Id. at Art. 6[7]). Settlement agreements must be registered with District Court with jurisdiction over respondent within period not exceeding 30 days from Mortgages over Land and Buildings.—See category Mortgages. signing. (Id. at Arts. 1[4] and 6[7]). Settlement agreements must be completely performed within period not exceeding 30 days from registration with District Court with juris- PLEDGES: diction over respondent. (Id. at Arts. 1[4] and 6[8]). Pledges are defined as deposit of movable property including bearer debt instruments In event that parties fail to resolve their dispute or difference of opinion through direct as security for debt by delivery of property by debtor to creditor until debt is repaid. (Id. meetings, expert advice or ad hoc or institutional mediation, parties may, by written at Arts. 1150 and 1152 of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] agreement, submit their dispute for settlement through institutional or ad hoc arbitration. [KUHPer] [Burgerlijk Wetboek voor Indonesië]). Pledge right on commercial paper made (Id. at Art. 6[9]). (See topic Arbitration and Award.) to order is established by both endorsement and physical delivery of paper. (Id. at Art. 1152bis). Pledge grants priority security interest over other creditors. (Id. at Art. 1150). ARBITRATION AND AWARD: Pledges are subject to proof in same manner allowed for proof of underlying obli- Arbitration is governed by Law No. 30 of 1999 dated 12 Aug. 1999 concerning gation. (Id. at Art. 1151). Pledges are void if movable property or bearer debt instrument Arbitration and Alternatives Dispute Resolution. This law is binding upon parties to is left in possession or control of debtor or pledgor or returned to debtor or pledgor with dispute who have entered into arbitration agreement that firmly states that all disputes consent of pledgee. (Id. at Art. 1152). Pledge rights on intangible movable property are or differences of opinion that have arisen or may arise in connection with particular legal established by written notice to persons with rights in subject of pledge. (Id. at Art. 1153). relationship shall be settled through arbitration. (Id. at Art. 2). Unless otherwise permitted by court decision, pledgee may not directly appropriate Transitional Application of Law.—Law No. 30 of 1999 specifically revokes provi- ownership interests in pledge upon enforcement sale and any contractual stipulation of sions of Arts. 615-651 of Code of Civil Procedure (Reglemen Acara Perdata) (Reglement right of appropriation is void. (Id. at Arts. 1154 and 1155). Unless otherwise agreed by op de Rechtsvordering, Staatsblad 1847:52), Art. 377 of Renewed Indonesian Code parties, pledge must be sold through public sale in accordance with rules and procedures (Reglemen Indonesia yang Diperbaharui) (Het Herziene Indonesisch Reglement, Staats- customary in location of sale following breach of underlying obligation with application blad 1941:44) and Art. 705 of Code of Procedure for Areas Outside Java and Madura of amount received toward satisfaction of debt plus interest and costs. (Id. at Art. 1155). (Reglemen Acara untuk Daerah luar Jawa dan Madura) (Rechtsreglement Buitengewes- If pledge consists of marketable goods or securities, sale may occur at relevant market, ten, Staatsblad 1927:227) (Id. at Art. 81); except that, for those disputes already referred provided that goods are sold at relevant market through two intermediary brokers ex- to arbitration and already under review but not yet decided as of 12 Aug. 1999, Law No. perienced in trading similar goods. (Id. at Art. 1155). 30 of 1999 shall be of no force and effect and provisions of Arts. 615 through 651 of Pledgee may elect to apply to court for administration of sale, or pledgee may apply Code of Civil Procedure (Reglemen Acara Perdata) (Reglement op de Rechtsvordering, to court for direct transfer of ownership interests in pledge. (Id. at Art. 1156). Pledgee Staatsblad 1847:52), Art. 377 of Renewed Indonesian Code (Reglemen Indonesia yang is obligated to provide legally valid written notice of alienation of pledge to pledgor. (Id. Diperbaharui) (Het Herziene Indonesisch Reglement, Staatsblad 1941:44) and Art. 705 at Art. 1156). Pledgee is responsible for wasting of pledge to extent caused by pledgee’s of Code of Procedure for Areas Outside Java and Madura (Reglemen Acara untuk Daerah negligence. (Id. at Art. 1157). Pledgor is required to compensate pledgee for useful and luar Jawa dan Madura) (Rechtsreglement Buitengewesten, Staatsblad 1927:227) shall necessary expenses incurred in relation to preservation of pledge. (Id. at Art. 1157). continue to govern. (See Id. at Arts. 79 and 81.) See subhead Previous Law, infra, describing provisions of Arts. 615-651 of Code of Civil Procedure (Reglemen Acara Perdata) (Reglement op de Rechtsvordering, Staatsblad 1847:52) and Art. 377 of Re- DISPUTE RESOLUTION newed Indonesian Code (Reglemen Indonesia yang Diperbaharui) (Het Herziene Indo- nesisch Reglement, Staatsblad 1941:44) and Art. 705 of Code of Procedure for Areas ALTERNATIVE DISPUTE RESOLUTION: Outside Java and Madura (Reglemen Acara untuk Daerah luar Jawa dan Madura) (Re- Adat Dispute Resolution—Customary Methods.—Adat law arises out of custom, chtsreglement Buitengewesten, Staatsblad 1927:227). Law No. 30 of 1999 is applicable practice and tradition. It varies across different regions of country and across different to disputes already referred to arbitration but not yet under review as of 12 Aug. 1999. cultural and religious groups. (See category Introduction, topic Government and Legal (Art. 78 of Law No. 30 of 1999). For disputes already decided and attaining permanent System, subhead Legal Pluralism.) legal force, enforcement is conducted in accordance with Law No. 30 of 1999. (Id. at Adat law dispute resolutions are obtained through customary methods of social and Art. 80). physical threat or pressure, negotiation, mediation, arbitration and adjudication. (Agnes Definition of Arbitration.—Arbitration is defined as method for resolution of civil M. Toar, et al, Arbitrase di Indonesia [Jakarta, Ghalia Indonesia, 1995] at 106). Adat law dispute which is adjudicated outside of court system based upon written agreement applied to particular dispute may be mixture of various and differing Adat laws and between parties involved in dispute. (Id. at Art. 1[1]). Islamic law. Adat settlement procedures are generally unwritten. These procedures employ various Subject Matter Permissible.—Disputes subject to settlement through arbitration are forms of negotiation and deliberation to achieve consensus between parties to dispute or only those disputes in trade/commercial sector concerning rights which according to between adjudicators. Various penalties may be applied to party who is found to be at prevailing laws and regulations are fully controlled by parties to dispute. (Id. at Art. 5[1]). fault, such as required apology while having meal with party aggrieved, banishment from Matters deemed to be commercial in nature under Indonesian law include, among other one’s neighborhood, public embarrassment or payment of fine. fields: (i) Matters arising in field of trade and commerce; (ii) banking matters; (iii) finance matters; (iv) investment matters; (v) industrial matters; and (vi) intellectual property Civil Law Alternative Dispute Resolution mechanisms are governed by Law No. 30 rights. (Id. at Elucidation of Art. 66[b]). of 1999 dated 12 Aug. 1999 concerning Arbitration and Alternative Dispute Resolution. Dispute is not subject to settlement through arbitration if dispute cannot be settled Alternative dispute resolution is defined as institute for resolution of dispute or other peacefully according to prevailing laws and regulations. (Id. at Art. 5[2]). Law No. 30 difference of opinion through procedure which is agreed by parties to dispute, such as of 1999 does not provide further clarification of this principle. Parties may agree to out-of-court settlement through consultation, negotiation, mediation, conciliation or ex- settlement of both existing or potential disputes through arbitration. (Id. at Art. 7). pert evaluation. (Id. at Art. 1[10]). Alternative dispute resolution regulations provide means to attempt settlement of disputes through amicable and less adversarial procedures Agreements to Arbitrate must be expressed in written document signed by parties (Id. than arbitration or District Court adjudication. (See Id. at Art. 6.) at Arts. 4[2] and 9[1]) and may be entered into either before or after dispute arises. (Id. Alternative dispute resolution mechanisms governed by Law No. 30 of 1999 apply at Arts. 7 and 9[1]). provided that parties to dispute have entered into alternative dispute resolution agreement Agreements to arbitrate arising subsequent to occurrence of dispute must contain: (i) stipulating that all disputes or differences of opinion in connection with particular legal Description of matter in dispute (Id. at Art. 9[3][a]); (ii) full names and addresses of relationship shall be settled through arbitration or alternative dispute resolution mecha- parties (Id. at Art. 9[3][b]); (iii) full names and addresses of arbitrator or arbitration board nism. (Id. at Art. 2). (Id. at Art. 9[3][c]); (iv) venue where arbitrator or arbitration board will make its decision Failure to settle disputes through alternative dispute resolution mechanisms within (Id. at Art. 9[3][d]); (v) full name of secretary (Id. at Art. 9[3][e]); (vi) period of dispute predefined period of time may result in further referral to arbitration institute or ad hoc resolution (Id. at Art. 9[3][f]); (vii) declaration of preparedness of arbitrator (Id. at Art. arbitration mechanisms agreed in writing by parties. (Id. at Art. 6[9]). Upon written 9[3][g]); and (viii) declaration of preparedness of parties involved in dispute to bear agreement of parties, attempts to settle dispute or difference of opinion shall be made responsibility for all expenses arising out of conduct of dispute resolution activities through one or more expert advisors or through mediator. (Id. at Art. 6[3]). through arbitration (Id. at Art. 9[3][h]). In event that any of above elements are missing Stages.—First stage of alternative dispute resolution requires direct settlement meet- from agreement to arbitrate arising subsequent to existence of dispute, agreement is void ings between parties for period not exceeding 14 days. (Id. at Art. 6[2]). Date of as matter of law. (Id. at Art. 9[4]). commencement of 14 day period is not defined in Law No. 30 of 1999. Results of direct Law, Choice of.—Parties to arbitration agreement are entitled to determine choice of settlement meetings must be set forth in written agreement. (Id. at Art. 6[2]). law to be applied to resolution of their dispute. (Id. at Art. 56[2] and Elucidation of Art.

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ARBITRATION AND AWARD . . . continued refuse to release arbitrator seeking withdrawal, arbitrator may apply for relief from 56[2]). If parties do not otherwise specify applicable law, law of venue of arbitration is chairman of District Court with jurisdiction over respondent. (Id. at Arts. 1[4] and 19[4]). deemed to apply to resolution of dispute. (Id. at Elucidation of Arts. 37[1] and 56[2]). Liability.—Arbitrators may be held liable to compensate parties for loss and expense Equitable Determinations.—Parties are permitted to enter into agreement authorizing arising out of failure of arbitrators to render their decision within designated time limit arbitrator or board of arbitration to render its decision based on strict principles of law without legitimate reason. (Id. at Art. 20). Unless ill will can be proven, arbitrators do or based on equitable principles of fairness and propriety (ex aequo et bono). (Id. at Art. not bear legal liability of any kind for any act taken during course of performance of 56[1] and Elucidation of Art. 56[1]). In event arbitrator or board of arbitration is granted arbitrators. (Id. at Art. 21). freedom to employ equitable principles in determination of resolution of dispute, ap- Refusal Right.—Parties may submit claims of refusal against arbitrator if there is plicable laws and regulations may be set aside by arbitrator or board of arbitration. (Id. sufficient authentic evidence raising doubt concerning unfettered non-partisan perfor- at Elucidation of Art. 56[1]). However, in certain matters where law is mandatory mance of arbitrator’s duties in rendering decision. (Id. at Art. 22[1]). Claim for refusal (dwingende regels), law must be applied and may not be set aside by arbitrator or board may also be lodged against arbitrator if there is proof of family, financial or working of arbitration. (Id. at Elucidation of Art. 56[1]). In event that authority is not given to relationship with one of parties or their proxies. (Id. at Art. 22[2]). Submission of claim decide matter based upon equitable principles, arbitrator or board of arbitrators must demanding refusal against sole arbitrator or member of arbitration board must state render their decision based upon material legal norms as would be applied by judge. (Id. grounds for refusal and must be submitted in writing to arbitrator concerned, other at Elucidation of Art. 56[1]). arbitrators and other party. (Id. at Arts. 23[2], [3] and 24[5]). Claim of right of refusal must be submitted within period not exceeding 14 days from appointment of arbitrator Annulment of Agreements.—Arbitration agreements cannot be annulled as result of concerned (Id. at Art. 24[3]) or within 14 days of date matters constituting grounds for following conditions: (i) Death of party (Id. at Art. 10[a]); (ii) bankruptcy of party (Id. refusal become known. (Id. at Art. 24[4]). Where arbitrators are appointed without court at Art. 10[b]); (iii) novation/assignment/obligation renewal (Id. at Art. 10[c]; Elucidation stipulation, parties are deemed to have waived their right of refusal based upon facts of Art. 10); (iv) insolvency of party (Id. at Art. 10[d]); (v) inheritance (Id. at Art. 10[e]); known to them at time of their acceptance of arbitrator concerned. (Id. at Elucidation of (vi) application of termination provisions of principal agreement underlying dispute (Id. Art. 24[1]). However, right of refusal continues to be exercisable if new facts come to at Art. 10[f]); (vii) assignment of performances of principal agreement underlying dispute attention of party following acceptance of arbitrator concerned. (Id. at Art. 24[1]). to third party even where other party to agreement has given its consent to assignment Right of refusal against arbitrator appointed by chairman of District Court must be (Id. at Art. 10[g]); or (viii) expiration or cancellation of principal agreement underlying submitted to District Court with jurisdiction over respondent. (Id. at Arts. 1[4] and 23[1]). dispute (Id. at Art. 10[h]). Where arbitrators are appointed with court stipulation, right of refusal may only be Jurisdiction of Court.—Existence of written arbitration agreement relating to par- exercised by party based upon facts known after acceptance of court stipulation of ticular matter eliminates right of parties to submit dispute or difference of opinion to arbitrator concerned. (Id. at Art. 24[2]). District Court for resolution. (Id. at Art. 11[1]). Obligation to Withdraw.—In event party agrees with another party’s claim of right of Arbitrators.— refusal, arbitrator concerned must withdraw and alternate arbitrator must be appointed in Authority of Arbitrators.—Agreement providing authority to settle disputes through accordance with Law No. 30 of 1999. (Id. at Art. 24[6]). (See catchline Alternate arbitration is interpreted to provide authority to arbitrator to determine rights and re- Arbitrators, Appointment of, infra, regarding rules of appointment of alternate arbitra- sponsibilities of parties even if those rights and responsibilities are not specifically tors.) In event arbitrator concerned refuses to withdraw, party exercising its right of governed within their agreement. (Id. at Art. 4[1]). refusal may file claim with chairman of District Court with jurisdiction over respondent. Appointment.—Arbitrators may be appointed by parties to dispute, by District Court (Id. at Arts. 1[4] and 25[1]). Following review of arguments, District Court is empowered with jurisdiction over respondent or by arbitration institute. (Id. at Arts. 1[4] and [7]). with discretion to either accept or reject party’s claim of right of refusal based upon Where parties are unable to reach agreement on selection of arbitrators or where there whether claim is found to be reasonable. (Id. at Arts. 1[4] and 25[2]). If claim for refusal are no provisions setting forth rules relating to appointment of arbitrators, chairman of is found to be reasonable, alternate arbitrator must be appointed in accordance with Law District Court with jurisdiction over respondent is empowered to appoint arbitrator or No. 30 of 1999. (Id. at Art. 25[2]). If claim for refusal is found to be unreasonable, arbitration board. (Id. at Arts. 1[4] and 13). arbitrator concerned will continue in his or her role as arbitrator. (Id. at Art. 25[3]). Single Arbitrator.—In cases where parties have agreed that dispute will be reviewed Decision of District Court is final in nature and non-appealable. (Id. at Elucidation of Art. and decided by single arbitrator, parties are obligated to reach agreement regarding 25[1]). appointment of arbitrator. (Id. at Art. 14[1]). Claimant (by registered letter, telegram, Death of Arbitrator.—Arbitrator’s authority is not cancelled upon death of arbitrator telex, facsimile, e-mail or courier) must submit to respondent name of person claimant and said authority is continued by alternate arbitrator appointed in accordance with Law proposes to appoint as sole arbitrator. (Id. at Art. 14[2]). If parties are unable to reach No. 30 of 1999. (Id. at Art. 26[1]). (See catchline Alternate Arbitrators, Appointment of, agreement regarding appointment of sole arbitrator within period of 14 days after re- infra, regarding rules of appointment of alternate arbitrators.) spondent receives claimant’s proposal, then upon request of one of parties, chairman of Termination of Arbitrator.—Arbitrators may be relieved of their duties if they are District Court may appoint arbitrator. (Id. at Art. 14[3]). Chairman of District Court proven to be partisan or to have behaved in improper manner. (Id. at Art. 26[2]). conducts appointment of sole arbitrator based on list of names submitted by parties or Replacement Due to Death, Incapacity or Withdrawal.—If arbitrator dies, becomes based upon list of names obtained from arbitration organization or institute with con- incapacitated or withdraws during course of review of dispute, alternate arbitrator will sideration given to recommendations and objections filed by parties concerning proposed be appointed in manner applicable to appointment of arbitrator who has died, become arbitrators. (Id. at Art. 14[4]). incapacitated or withdrawn. (Id. at Art. 26[3]). Where sole arbitrator or chairman of Three Arbitrators.—Appointment of two arbitrators by parties vests authority in two arbitration board is replaced, review of dispute must be repeated. (Id. at Art. 26[4]). If arbitrators appointed to choose and appoint third arbitrator as chairman of arbitration member of arbitration board other than chairman is replaced, review of dispute need only board. (Id. at Art. 15[1] and [2]). be repeated in manner determined by arbitrators. (Id. at Art. 26[5]). Review may continue If one of parties has not appointed person to be member of arbitration board within based on minutes of hearings, letters in evidence and conclusions previously made. (Id. period of not longer than 30 days after respondent’s receipt of notice of commencement at Elucidation of Art. 26[5]; Art. 75[3]). of arbitration (see subhead Procedures of Arbitration, catchline Notice of Commencement Alternate Arbitrators, Appointment of.—In event of death of arbitrator, acceptance of of Arbitration, infra), arbitrator appointed by other party will act as sole arbitrator and claim of refusal or termination of arbitrator, parties must appoint alternate arbitrator. (Id. his decision will bind both parties. (Id. at Art. 15[3]). at Art. 75[1]). If parties fail to agree on appointment of alternate arbitrator within period In event that two arbitrators appointed by parties do not succeed in appointing third of not longer than 30 days, then chairman of District Court with jurisdiction over arbitrator within period of not longer than 14 days after last arbitrator is appointed, then respondent is obligated to appoint alternate arbitrator at request of one of parties. (Id. at based upon request of one of parties, chairman of District Court may appoint third Arts. 1[4] and 75[2]). arbitrator. (Id. at Art. 15[4]). Appointment of third arbitrator by chairman of District End of Task of Arbitrators.—Tasks of arbitrators shall end in following circumstances: Court is not subject to filing of claim for cancellation. (Id. at Art. 15[5]). (i) Arbitration decision has been issued (Id. at Art. 73[a]); (ii) time period stipulated in Acceptance or Rejection.—Persons appointed as arbitrators may accept or reject their arbitration agreement or as already extended by parties has expired (Id. at Art. 73[b]); appointments by informing parties in writing within 14 days from date of appointment. or (iii) parties agree to revoke appointment of arbitrator (Id. at Art. 73[c]). (Id. at Art. 16). Death of Party.—Death of one of parties will not cause termination of tasks of Civil Agreement.—Written appointment by parties of arbitrator or panel of arbitrators arbitrators. (Id. at Art. 74[1]). along with written acceptance of appointment constitutes civil agreement between ar- Arbitration Fees.—Arbitrator determines arbitration fee. (Id. at Art. 76[1]). Arbitra- bitrator and party appointing him. (Id. at Art. 17[1]). This civil agreement obligates tion fee shall include: (i) Honorarium for arbitrator (Id. at Art. 76[2][a]); (ii) travel and arbitrator to render his decision honestly, justly and in accordance with regulations in other costs and expenses incurred by arbitrator (Id. at Art. 76[2][b]); (iii) costs of effect. (Id. at Art. 17[2]). Civil agreement also binds parties to accept decision as final witnesses and/or expert witnesses needed for review of dispute (Id. at Art. 76[2][c]); and and binding as if it arose by mutual agreement. (Id. at Art. 17[2]). (iv) administrative fees (Id. at Art. 76[2][d]). Arbitration fee shall be for account of losing Qualifications.—Persons eligible for appointment as arbitrators must fulfill following party. (Id. at Art. 77[1]). In event that claim is only partially granted, parties shall bear qualifications: (i) Appointees must be capable of taking legal action (Id. at Art. 12[1][a]); equal responsibility for payment of arbitration fee. (Id. at Art. 77[2]). (ii) women and men are deemed equally competent to serve as arbitrators (Id. at Pre- amble of Elucidation); (iii) appointees must be at least 35 years of age (Id. at Art. Arbitration Institutes are organizations chosen by parties to dispute to issue decisions 12[1][b]); (iv) appointees may not have blood or marital relationship with any of parties regarding certain dispute and/or chosen by parties to issue binding opinions regarding closer than two levels of familial descent (Id. at Art. 12[1][c]); (v) appointees may not legal relationships where disputes have not yet arisen. (Id. at Art. 1[8]). have financial or other interest in outcome of arbitration decision (Id. at Art. 12[1][d]); Jurisdiction and Authority of District Court.—District Court has no authority (lacks (vi) appointees are obligated to inform parties of presence of any matter that may have absolute competence) to adjudicate disputes arising between parties to arbitration agree- potential to impair their freedom or cause partisanship with respect to decision to be ments. (Id. at Art. 3). District Court is required to reject lawsuits and refrain from issued (Id. at Art. 18[1]); (vii) appointees must possess substantial active experience in interference in settlement of disputes subject to agreements to arbitrate, except in matters relevant field for minimum of 15 years (Id. at Art. 12[1][e]) (Law No. 30 of 1999 does which are otherwise specifically regulated in Law No. 30 of 1999. (Id. at Art. 11[2]). not stipulate definition for “relevant field”); and (viii) judges, prosecutors, clerks of court Where District Court lacks absolute competence over matter, District Court is required or other judicial officials are not qualified to serve as arbitrators (Id. at Art. 12[2]). to declare that it is without absolute competence to adjudicate civil case upon request Withdrawal.—Following arbitrator’s written acceptance of appointment, withdrawal is of party at any time during pendency of litigation. (Art. 134 of Renewed Indonesian Code prohibited without approval of parties. (Id. at Arts. 19[1] and 16[2]). Arbitrators desiring [Reglemen Indonesia yang Diperbaharui] [Het Herziene Indonesisch Reglement, Staats- to withdraw must submit written application to parties. (Id. at Art. 19[2]). In event parties blad 1941:44]).

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ARBITRATION AND AWARD . . . continued Failure to Answer.—In event that respondent fails to submit its answer in writing Binding Law between Parties.—From contractual perspective, Indonesian Civil Code within period of 14 days from date respondent receives copy of claim, arbitrator or (Kitab Undang-undang Hukum Perdata) (KUHPer) (Burgerlijk Wetboek voor Indonesië) chairman of arbitration board is required to issue instruction ordering parties or their duly provides that all agreements made in legal manner constitute private law between parties. appointed proxies to appear at first arbitration session which shall be designated to be (Art. 1338 of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer] held within period of not longer than 14 days following issuance of instruction to appear. [Burgerlijk Wetboek voor Indonesië]). (Id. at Art. 41). New York Convention of 1958.—Indonesia is signatory to New York Convention of Failure to Appear.—If claimant fails to appear on day designated for first hearing 1958 on Recognition of Foreign Arbitral Awards. (Presidential Decree No. 34 of 1981 without any legitimate reason and after receiving proper notice, claim shall be declared dated 5 Aug. 1981 concerning Ratification of Convention on Recognition and Enforce- null and void and duties of arbitrator or arbitration board shall be deemed completed. (Id. ment of Foreign Arbitral Awards). New York Convention requires contracting States such at Art. 43). If respondent fails to appear on day designated for first hearing without any as Indonesia to recognize and enforce arbitration agreements and courts of contracting legitimate reason and after receiving proper notice, arbitrator or arbitration board must States are required to refer parties to arbitration upon request of one of parties. (Arts. immediately issue another notice for subsequent hearing set to occur not later than ten II[1] and [3] of New York Convention of 1958 on Recognition of Foreign Arbitral days after respondent receives notice. (Id. at Art. 44[1] and [2]). In event respondent fails Awards). to appear at both first scheduled hearing and subsequent hearing without legitimate Jurisprudence.—Following decisions were issued by Supreme Court of Republic of reason, review of claimant’s claim shall continue in absence of respondent and claimant’s Indonesia ruling that District Court lacked jurisdiction to adjudicate disputes and ruling claim shall be accepted in its entirety unless: (i) Claim is unreasonable (Id. at Art. 44[2]); in favor of enforcement of arbitration clauses: (1) Ahju Forestry Company Limited v. Mr. or (ii) claim is not based on law (Id. at Art. 44[2]). Sutomo, Director of PT. Balapan Jaya is decision of Supreme Court of Republic of Settlement of Dispute.—In event parties appear on designated day, arbitrator or arbi- Indonesia, in Case No. 2924/K/Sip/1981 dated 22 Feb. 1982 enforced validity and tration board is obligated to attempt to assist parties to achieve agreement for settlement binding nature of arbitration provisions undertaken by parties in agreement concerned; of their dispute. (Id. at Art. 45[1]). In event that parties agree to settlement of their (2) PT. Maskapai Asuransi Ramayana v. Sohandi Kawilarang is decision of Supreme dispute, arbitrator or arbitration board is required to prepare deed of settlement. (Id. at Court of Republic of Indonesia, in Case No. 455K/Sip/1982 dated 27 Jan. 1983 provides Art. 45[2]). Deed of settlement is deemed final and binding on parties. (Id. at Art. 45[2]). guidelines for District Courts to determine whether they have jurisdiction over case Arbitrator or board of arbitration is required to order parties to fulfill provisions of deed stating that in event parties have agreed that any dispute between them shall be referred of settlement. (Id. at Art. 45[2]). Review of matters in dispute shall be continued in event to arbitration, District Court shall refer such case to arbitration and reject adjudication that efforts to achieve settlement agreement are unsuccessful. (Id. at Art. 46[1]). of merits thereof; (3) PT. Arpeni Pratama Ocean Line v. PT. Shorea Mas is decision of Clarification Statement.—Prior to continuation of review of dispute following failure Supreme Court of Republic of Indonesia, in Case No. 3179 K/Pdt/1984 dated 4 May to achieve settlement agreement, parties are given final opportunity to submit written 1988 rectifies decision of lower court based on reason that District Court concerned had statements of clarification of their respective positions along with further evidence no absolute competence to adjudicate claim because parties concerned had agreed that deemed necessary by parties in support of their positions. (Id. at Art. 46[2]). Arbitrator such dispute would be referred to arbitration; (4) Dato Wong Heck Guong and PT. or arbitration board determines period during which parties are entitled to submit clari- Metropolitan Timbers Ltd., against Andries Gerardus Pangemanan/ Director of PT. Gapki fication statements. (Id. at Art. 46[2]). Arbitrator or arbitration board has right to request Trading Co. Ltd. is decision of Supreme Court of Republic of Indonesia, in Case No. that parties submit additional statements of clarification, documents or other evidence 255 K/Sip/1976, dated 30 Sept. 1983 expressly states that arbitration clause serves as deemed necessary within period of time designated by arbitrator or arbitration board. (Id. binding law between parties and therefore required District Court to direct parties to file at Art. 46[3]). their case at International Arbitral Tribunal in Singapore in accordance with United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules. Revocation of Claim.—Prior to submission of respondent’s answer, claimant may withdraw its request for settlement of dispute through arbitration. (Id. at Art. 47[1]). Procedures of Arbitration.— Amendment to Claim.—Following submission of respondent’s answer, claimant may Notice of Commencement of Arbitration.—In event party desires to commence arbi- only amend or add to its claim with approval of respondent and only to extent that tration proceedings, that party (“claimant”) must inform other party (“respondent”) by amendment or addendum relates to matters of factual nature and not to legal basis of registered letter, telegram, telex, facsimile, e-mail or by courier that conditions of ar- claim. (Id. at Art. 47[2]). bitration stipulated by parties are in effect. (Art. 8[1] of Law No. 30 of 1999 dated 12 Witnesses.—One or more witnesses or one or more expert witnesses may be called to Aug. 1999 concerning Arbitration and Alternatives Dispute Resolution). testify upon request of parties or upon instruction of arbitrator or arbitration board. (Id. Contents of Notice.—Notice of commencement of arbitration must clearly state: (i) at Arts. 49[1] and 50[1]). Costs relating to calling of witnesses and costs relating to their Name and address of each party (Id. at Art. 8[2][a]); (ii) reference to arbitration clause transportation are borne by party requesting testimony. (Id. at Art. 49[2]). Examinations or agreement in effect (Id. at Art. 8[2][b]); (iii) agreement or matter in dispute (Id. at Art. of witnesses, including expert witnesses, are conducted in accordance with law of civil 8[2][c]); (iv) basis of claim and amount claimed, if any (Id. at Art. 8[2][d]); (v) method procedure. (Id. at Art. 37[3]). Witnesses and expert witnesses are obligated to take oath of resolution preferred (Id. at Art. 8[2][e]); and (vi) agreement in effect regarding number prior to providing information. (Id. at Art. 49[3]). Oath is made in accordance with of arbitrators or if there is no such agreement, submission of proposal regarding odd witness’s religion and includes statement that testimony will be true. (Art. 177 of Code number of arbitrators (Id. at Art. 8[2][f]). of Civil Procedure [Reglemen Acara Perdata] [Reglement op de Rechtsvordering, Staats- Venue for arbitration is designated by arbitrator or arbitration board unless parties have blad 1847:52]). designated venue themselves. (Id. at Art. 37[1]). Arbitrator or arbitration board may Arbitrator or board of arbitration is entitled to request assistance of one or more expert examine witnesses and hold other meetings deemed necessary at place other than des- witnesses for purposes of providing written information regarding particular aspects of ignated venue of arbitration based on considerations such as place of residence of witness dispute. (Id. at Art. 50[1] and Elucidation of Art. 36[2]). Parties are obligated to provide and subject to provisions of code of civil procedure. (Id. at Arts. 37[2] and [3] and any and all information required by expert witnesses. (Id. at Art. 50[2]). Arbitrator or Elucidation of Art. 37[2]). Arbitrator or board of arbitration may conduct examinations arbitration board must forward to parties copies of all information given to or received at location of goods or other matters related to dispute under review and, if deemed from expert witnesses in order to enable parties to respond in writing to such information. necessary, parties shall be summoned in legally valid manner in order to provide them (Id. at Art. 50[3]). In event party deems matter to be unclear, party concerned is entitled with opportunity to be present at review. (Id. at Art. 37[4]). to request that relevant expert witness testify in arbitration hearing in presence of parties Venue of arbitration may determine law to be applied in resolution of dispute. (Id. at or their proxies. (Id. at Art. 50[4]). Elucidation of Art. 37[1] and Elucidation of Art. 56[2]). Minutes of Review and Hearing.—Minutes of review and hearings are prepared by Written Proceedings.—In principle, arbitration proceedings are conducted in writing secretary of arbitrator or arbitration board. (Id. at Art. 51). Appointment of secretary and unless there is agreement among parties to conduct oral proceedings or unless arbitrator provision of opportunity to review and dispute minutes prepared is not regulated by Law or board of arbitration deems oral review necessary. (Id. at Art. 36 and Elucidation of No. 30 of 1999. Art. 36[2]). Arbitration agreements may contain provisions for exchange of letters, Confidential Review.—Proceedings of arbitrator or arbitration board are conducted in telexes, telegrams, facsimiles, e-mails or other forms of communications transmissions. closed manner in order to preserve confidentiality. (Id. at Art. 27). (Id. at Art. 4[3]). Notations of receipt of communication transmissions by parties are Language.—Arbitration proceedings shall be conducted in Indonesian language except obligatory. (Id. at Art. 4[3]). that, with agreement of arbitrator or arbitration board, parties may choose to use another Claim Submission.—Within period designated by arbitrator or arbitration board, claim- language. (Id. at Art. 28). Arbitrator or arbitration board may require that each document ant must submit its claim to arbitrator or arbitration board. (Id. at Art. 38[1]). Claim must or proof be accompanied by translation into language designated by arbitrator or arbi- include following information: (i) Full name and residence or domicile of parties (Id. at tration board. (Id. at Art. 35). Art. 38[2][a]); (ii) brief description of dispute along with attachment of relevant evi- Equal Opportunity to Parties.—Parties shall have same rights and opportunities to dentiary exhibits (Id. at Art. 38[2][b]); (iii) copy of arbitration agreement (Id. at Elu- express their respective opinions. (Id. at Art. 29[1] and Elucidation of Art. 29[1]). cidation of Art. 38[2][b]); and (iv) clear statement of claim including total monetary compensation requested, if any (Id. at Art. 38[2][c] and Elucidation of Art. 38[2][c]). Attorneys and Proxies.—Parties are entitled to elect to be represented by proxies Answer.—Following receipt of claim, arbitrator or chairman of arbitration board is holding special powers of attorney. (Id. at Art. 29[2]). required to deliver copy of claim to respondent along with instruction that respondent Third Party Joinder.—Third parties may join in arbitration proceeding if third parties must submit its answer in writing within period not longer than 14 days from date have related interests and if parties to existing arbitration agree to joinder and if arbitrator respondent receives copy of claim. (Id. at Art. 39). Immediately following receipt of or arbitration board approves joinder. (Id. at Art. 30). answer from respondent by arbitrator or chairman of arbitration board, copy of answer Rules of Procedure.—Where parties do not stipulate rules of procedure, provisions of must be submitted to claimant. (Id. at Art. 40[1]). Law No. 30 of 1999 apply. (Id. at Art. 31[2]). Rules of procedure governing arbitration Counter Claim.—In respondent’s answer or not later than first hearing, respondent is process may be determined by parties to dispute provided such rules are incorporated into entitled to submit its counter claims and opportunity to respond thereto must be provided specific written agreement and provided those rules are not contrary to provisions of Law to claimant. (Id. at Art. 42[1]). Respondent’s counter claims must be reviewed and ruled No. 30 of 1999. (Id. at Art. 31[1]). upon by arbitrator or arbitration board together with primary dispute. (Id. at Art. 42[2]). Venue and Time Limitation.—Where parties have designated rules of procedure, parties First Hearing.—At time of delivery of respondent’s answer to claimant, arbitrator or must also designate venue and period of time for conduct of arbitration. (Id. at Art. chairman of arbitration board is required to instruct parties or their duly appointed 31[3]). In event that parties have not designated either venue or period of time for proxies to appear at first arbitration session designated to be held within period of not conduct of arbitration, arbitrator or arbitration board shall designate them. (Id. at Art. longer than 14 days following issuance of instruction to appear. (Id. at Art. 40[2]). 31[3]).

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ARBITRATION AND AWARD . . . continued arbitrator to clerk of District Court with jurisdiction over respondent. (Id. at Arts. 1[4] Closure of Review.—Upon completion of review of matters in dispute, review must be and 59[3]). Failure to register arbitration decision with clerk of District Court with closed and hearing date must be designated for purpose of pronouncement of arbitration jurisdiction over respondent has effect of preventing enforcement of arbitration decision. decision. (Id. at Art. 55). (Id. at Arts. 1[4] and 59[4]). All costs arising in connection with creation of deed of Death of Party.—Death of one of parties shall extend period for completion of review registration of arbitration decision shall be borne by parties. (Id. at Art. 59[5]). and continuation of tasks of arbitrators for not longer than 60 days from date of death Enforcement.—In event that parties fail to implement arbitration decision voluntarily, of party. (Id. at Art. 74[2]). decision will be enforced based on order of chairman of District Court with jurisdiction Institutes of Arbitration, International or National.—Resolution of disputes may be over respondent at request of one of parties. (Id. at Arts. 1[4] and 61). Chairman of conducted through use of national or international arbitration institutes upon agreement District Court with jurisdiction over respondent must order enforcement of arbitration of parties to dispute. (Id. at Art. 34[1]). Regulations and procedures of institute chosen decision within not longer than 30 days following registration of one of party’s request shall govern arbitration unless otherwise agreed by parties. (Id. at Art. 34[2]). for enforcement. (Id. at Arts. 1[4] and 62[1]). Prior to issuance of order for enforcement, chairman of District Court with jurisdiction over respondent is required to review and Time Limitation.—Unless otherwise agreed by parties, review of dispute must be determine whether arbitration decision is founded upon enforceable arbitration agree- completed within period of not longer than 180 days counting from date of appointment ment, whether proper authorization of arbitrator or board of arbitration has been given, of arbitrator or formation of board of arbitration. (Id. at Arts. 31[3] and 48[1]). 180 day whether dispute is one that is legally subject to resolution through arbitration and whether period of time designated for completion of review of dispute may be extended by arbitration decision is contradictory to public order and decency. (Id. at Arts. 1[4], 4, 5 agreement of parties and by authority of arbitrator or arbitration board. (Id. at Art. 48[2]). and 62[2]). Arbitrator or arbitration board has authority to extend period of time for review if: (i) Chairman of District Court with jurisdiction over respondent is prohibited from re- One of parties files request for extension due to, for example, existence of lawsuit viewing reasons and considerations of arbitration decision. (Id. at Arts. 1[4] and 62[4]). involving or incidental to basic dispute such as request for enforcement of guarantee or Chairman of District Court is prohibited from reviewing reasons and considerations other collateral matter (Id. at Art. 33[a] and Elucidation of Art. 33[a]); (ii) extension is forming basis of arbitration decision in order to ensure that arbitration is truly inde- necessary as result of issuance of provisional decision or preliminary order (Id. at Art. pendent, final and binding. (Id. at Art. 1[4] and Elucidation of Art. 62[4]). 33[b]); or (iii) arbitrator or arbitration board deems extension of time to be necessary in interests of review (Id. at Art. 33[c]). In event that chairman of District Court rules that arbitration decision is not founded upon enforceable arbitration agreement, that proper authorization of arbitrator or board Interpretive Opinions.—Even in absence of dispute, parties to arbitration agreement of arbitration had not been given, that dispute is not one that is legally subject to have right to request binding opinion from arbitration institute concerning particular legal resolution through arbitration or that arbitration decision is contradictory to public order question arising under agreement. (Id. at Art. 52 and Elucidation of Art. 52). For example, and decency, request for enforcement will be denied. (Id. at Art. 62[3]). Decision to parties may request binding opinion regarding, among other things, interpretation of refuse to order enforcement is final and non-appealable. (Id. at Art. 62[3]). unclear or ambiguous provisions of agreement or need for amendment or addition to Form of Order.—Order of chairman of District Court must be in writing on original agreement in view of unforeseen or emergency situations. (Id. at Elucidation of Art. 52). arbitration decision and on authentic copy of arbitration decision issued. (Id. at Art. 63). Interpretive opinions are binding on parties and become part of underlying agreement Arbitration decisions bearing written enforcement order of chairman of District Court between parties. (Id. at Elucidation of Art. 52). Act in contradiction to interpretive must be enforced in manner of enforcement of decisions in civil cases that have attained opinion constitutes breach of underlying agreement. (Id. at Elucidation of Art. 52). permanent legal force. (Id. at Art. 64). Parties are prohibited from taking any action in nature of appeal or other form of International Arbitrations.—International arbitration decision is decision rendered by resistance through any other legal means against mandates of binding interpretive opin- arbitration institute or arbitrator outside of legal territory of Republic of Indonesia, or ion. (Id. at Art. 53). decision of arbitration institute or arbitrator that is regarded as international arbitration Preliminary Orders.—At request of one of parties, arbitrator or arbitration board is decision according to provisions of Indonesian law. (Id. at Art. 1[9]). empowered to issue provisional decisions or other preliminary orders in order to provide Central Jakarta District Court is institution authorized to administer recognition and for orderly proceeding of review of dispute. (Id. at Art. 32[1]). Provisional decisions and enforcement of international arbitration decisions. (Id. at Art. 65). preliminary orders may include decrees for collateral confiscation, orders for bailment to International arbitration decision may be acknowledged and enforced in legal territory third parties or sale of perishable goods. (Id. at Art. 32[1]). of Republic of Indonesia only if it fulfills following conditions: (i) International arbi- Decisions.— tration decision is issued by arbitrator or arbitration board in country which is bound to Contents.—Arbitration decisions must contain following elements: (i) Title of decision bilateral or multilateral agreement with Republic of Indonesia concerning recognition and must contain words “DEMI KEADILAN BERDASARKAN KETUHANAN YANG enforcement of international arbitration decisions (Id. at Art. 66[a]); (ii) international MAHA ESA” in capital letters which translates to “FOR SAKE OF JUSTICE BASED arbitration decision must be limited in scope to those matters considered of trade/ ON ALMIGHTY GD” (Id. at Art. 54[1][a]); (ii) full names and addresses of parties (Id. commercial nature pursuant to Indonesian law (Id. at Art. 66[b]); (iii) international at Art. 54[1][b]); (iii) brief description of dispute (Id. at Art. 54[1][c]); (iv) description arbitration decision must not be contrary to public order (Id. at Art. 66[c]); (iv) inter- of stances of parties (Id. at Art. 54[1][d]); (v) full names and address of arbitrators (Id. national arbitration decision must have obtained enforcement order from Central Jakarta at Art. 54[1][e]); (vi) considerations and conclusions of arbitrator or arbitration board District Court (Id. at Art. 66[d] and Elucidation of Art. 66[d]); and (v) international regarding entire dispute (Id. at Art. 54[1][f]); (vii) opinion of each arbitrator in event that arbitration decision, where it involves Government of Republic of Indonesia as party, there is difference of opinion among members of arbitration board (Id. at Art. 54[1][g]); must have obtained enforcement order from Supreme Court of Republic of Indonesia, (viii) specific orders, commands and/or injunctions of decision (Id. at Art. 54[1][h]); (ix) which order is subsequently delegated to Central Jakarta District Court (Id. at Art. 66[e]). time period for enforcement of order (Id. at Art. 54[4]); (x) venue and date of decision Decision of Supreme Court regarding recognition and enforcement of international ar- (Id. at Art. 54[1][i]); and (xi) signature of arbitrator or each member of arbitration board bitration decision involving Government of Republic of Indonesia as party is final in (Id. at Art. 54[1][j]). nature and no legal remedies of opposition may be submitted. (Id. at Art. 68[1] and [4]). Failure of one of members of arbitration board to sign arbitration decision on account Registration of Decisions.—Request for enforcement of international arbitration de- of illness or death does not impact strength of decision provided that decision states cision is made following submission and registration of decision by arbitrator or his reasons for failure of arbitrator to sign. (Id. at Art. 54[2] and [3]). proxy to clerk of Central Jakarta District Court. (Id. at Art. 67[1]). Delivery of dossier Pronouncement of Decision.—Upon completion of review of matters in dispute, review of request for enforcement of international arbitration decision must include following: must be closed and hearing date must be designated for purpose of pronouncement of (i) Original or copy of international arbitration decision authenticated in accordance with arbitration decision. (Id. at Art. 55). Pronouncement of decision must be made with 30 regulations relating to authentication of foreign documents along with official translation days after review has been closed. (Id. at Art. 57). of decision into Indonesian language (Id. at Art. 67[2][a]); (ii) original or copy of Corrections.—Written period of not longer than 14 days after receipt of decision, arbitration agreement authenticated in accordance with regulations relating to authenti- parties may submit applications to arbitrator or board of arbitration requesting correction cation of foreign documents along with official translation of agreement into Indonesian of administrative errors and/or modification of overly broad and/or deficient decisions. language (Id. at Art. 67[2][b]); and (iii) statement of information from Indonesian dip- (Id. at Art. 58). Right to request correction of administrative error encompasses correc- lomatic representative in country from which international arbitration decision was issued tions in nature of typographical errors, errors in spelling of names and addresses of stating that applicant’s country is bound by either bilateral or multilateral agreement with parties or arbitrators and other such errors that do not have effect of modifying substance Republic of Indonesia concerning recognition and enforcement of international arbitra- of decision. (Id. at Elucidation of Art. 58). Right to request correction of overly broad tion decisions (Id. at Art. 67[2][c]). or deficient decisions encompasses claims that, among other things: (i) Decision grants Law No. 30 of 1999 does not provide rules governing situation where venue of relief that was not requested (Id. at Elucidation of Art. 58); (ii) decision omits resolution issuance of arbitration decision is located in territory of nation different from nationality of one or more issues raised for adjudication (Id. at Elucidation of Art. 58); or (iii) of applicant. Law also fails to state whether it is sufficient that either country of venue decision contains binding provisions that are contradictory to one another (Id. at Elu- or country of applicant are parties to bilateral or multilateral agreements concerning cidation of Art. 58). recognition and enforcement of international arbitration decisions. Final and Binding Nature of Decisions.—Arbitration decisions are of final nature, Enforcement Order.—Issuance of enforcement order obtained from Central Jakarta binding upon parties. (Id. at Art. 60). As such, arbitration decisions are not subject to District Court in relation to international arbitration decision is final in nature and no appeal or other review. (Id. at Elucidation of Art. 60). appeal or cassation may be submitted. (Id. at Art. 68[1]). Enforcement of Arbitration Decisions.— In event Central Jakarta District Court refuses to acknowledge and enforce interna- National Arbitrations.—Within period of not longer than 30 days from date of pro- tional arbitration decision, interested party may appeal District Court’s refusal. (Id. at Art. nouncement of arbitration decision, arbitrator or his proxy must submit and register 68[2]). Supreme Court is required to consider and rule upon each submission of appeal original decision or authentic copy thereof with clerk of District Court with jurisdiction against refusal to acknowledge and enforce international arbitration decision within over respondent. (Id. at Arts. 1[4] and 59[1]). Submission and registration is performed period of not longer than 90 days after request for appeal has been received by Supreme by notation and signing at end of section or margin of decision by clerk of District Court Court. (Id. at Art. 68[3]). with jurisdiction over respondent and arbitrator or his proxy who has made submission. Delegation to District Court in Relevant Jurisdiction.—After Central Jakarta District (Id. at Arts. 1[4] and 59[2]). Notation constitutes deed of registration. (Id. at Art. 59[2]). Court issues enforcement order for international arbitration decision, order is delegated Arbitrator or his proxy is obligated to submit arbitration decision to clerk of District to District Court with relative competence (venue jurisdiction over party subject to Court with jurisdiction over respondent. (Id. at Arts. 1[4] and 59[3]). Arbitrator or his enforcement—enforcement respondent) to carry out enforcement. (Id. at Art. 69[1]). proxy is obligated to submit original or authentic copy of arbitrator’s appointment as Enforcement through confiscation may be conducted against assets and property of

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ARBITRATION AND AWARD . . . continued Following expiration of period for decision, arbitrators are required to render decision enforcement respondent. (Id. at Art. 69[2]). Procedure for both asset and property con- based upon evidence presented as of expiration of period. (Id. at Art. 625). fiscation and other means of enforcement of international arbitration decision are con- Arbitration decisions must include: (i) Date and place of decision (Id. at Art. 632); (ii) ducted in accordance with Indonesian law of civil procedures. (Id. at Art. 69[3]). signature of arbitrators (Id. at Art. 632) (if arbitrator in minority refuses to sign decision, Cancellation of Arbitration Decisions.—Parties are entitled to submit requests for other arbitrators must mention refusal in decision) (Id. at Art. 633); (iii) nicknames, full cancellation of arbitration decision if decision is alleged to contain following elements: names and domiciles of all parties (Id. at Art. 632); (iv) summary of positions of parties (i) Letters or documents submitted in review are admitted or stated to be false following (Id. at Art. 632); (v) legal basis of decision (Id. at Art. 632); and (vi) decision itself (Id. issuance of arbitration decision (Id. at Art. 70[a]); (ii) following issuance of arbitration at Art. 632). decision, documents of decisive nature are found to have been hidden by party (Id. at Enforcement.—Decision signed by majority of arbitrators is enforceable. (Id. at Art. Art. 70[b]); or (iii) ruling is derived out of product of deceit of one of parties (Id. at Art. 633). Arbitrators’ decision must be sent to clerk of District Court of jurisdiction wherein 70[c]). decision is rendered. (Id. at Art. 634). Each of arbitrators must provide copy of their Requests for cancellation of arbitration decisions may only be submitted against appointments along with their decision to clerk. (Id. at Art. 635). Decision of arbitrators arbitration decisions which have already been registered with District Court with juris- is enforced based on order of chairman of District Court. (Id. at Art. 637). Decision is diction over respondent. (Id. at Art. 1[4] and Elucidation of Art. 70). then enforced in accordance with procedures for enforcement of District Court judg- Request for cancellation of arbitration decision must be made during period of time ments. (Id. at Art. 639). not exceeding 30 days following date of delivery and registration of arbitration decision Appeal.—Arbitration decision is appealable if dispute concerns sum in excess of 500 to clerk of District Court with jurisdiction over respondent. (Id. at Arts. 1[4] and 71). gulden. (Id. at Art. 641). Parties may waive their right to appeal. (Id. at Art. 641). Request for cancellation of arbitration decision must be submitted to chairman of District Cancellation of Decision.—Even where there is no right to appeal, cancellation of Court with jurisdiction over respondent. (Id. at Arts. 1[4] and 72[1]). Chairman uses court arbitration decisions may be requested for following reasons: (i) Decision is beyond decision regarding proof of grounds for cancellation as basis for determining whether to scope of authority of arbitration agreement or arbitration generally (Id. at Art. 643[1]); grant or deny cancellation request. (Id. at Art. 1[4] and Elucidation of Art. 70). Chairman (ii) arbitration agreement is invalid (Id. at Art. 643[2]); (iii) decision is made in violation must issue his decision regarding arbitration decision cancellation request within period of arbitration procedures (Id. at Art. 643[3]); (iv) decision relates to something which is of not longer than 30 days following submission of request by interested party. (Id. at beyond claim of party (Id. at Art. 643[4]); (v) decision is contradictory (Id. at Art. Art. 72[3]). 643[5]); (vi) arbitrators were negligent in their decision (Id. at Art. 643[6] and [7]); (vii) Upon acceptance of request for cancellation of arbitration decision, chairman of Dis- decision was rendered based on evidence proven fraudulent (Id. at Art. 643[8]); (viii) new trict Court is required to determine effect of cancellation on arbitration decision including evidence which was intentionally withheld by party is discovered (Id. at Art. 643[9]); or whether cancellation is complete or partial. (Id. at Art. 72[2]). Upon acceptance of (ix) decision was based on fraud or deceit (Id. at Art. 643[10]). cancellation request, chairman also has authority to determine whether same arbitrators Claims for cancellation must be submitted to District Court issuing enforcement order or other arbitrators will review dispute again or whether it is possible to resolve dispute or with jurisdiction over place of arbitration hearing within six months following an- through arbitration. (Id. at Elucidation of Art. 72[2]). nouncement of arbitration decision. (Id. at Arts. 644-646). Appeal against Cancellation Decision.—Decision of chairman of District Court re- Preliminary Decisions.—Arbitrators are empowered to render preliminary judgments lating to request for cancellation is appealable at first and last level to Supreme Court. which are enforceable upon issuance. (Id. at Art. 627). (Id. at Art. 72[4] and Elucidation of Art. 72[4]). Supreme Court is obligated to consider Witnesses.—If witnesses are uncooperative, party may apply to District Court with and issue its decision on appeal of decision of chairman relating to request for cancel- jurisdiction over witness requesting that District Court conduct examination of witness. lation within period of not longer than 30 days following receipt by Supreme Court of (Id. at Art. 630). During period of examination by District Court, arbitration time period request for appeal. (Id. at Art. 72[5]). is suspended. (Id. at Art. 630). Equitable Adjudication.—Unless arbitration agreement authorizes arbitrators to apply International Conventions.—In 1968, Indonesia ratified International Convention on equitable principles in rendering their decision, arbitrators are restricted to strict appli- Settlement of Investment Disputes between States and between Nationals of other States. cation of law to fact. (Id. at Art. 631). In 1981, Indonesia became contracting party to New York Convention on Recognition and Enforcement of Foreign Arbitrage Awards of 1958. Previous Law.— DOCUMENTS AND RECORDS Governing Law.—Arts. 615 through 651 of Code of Civil Procedure (Reglemen Acara Perdata) (Reglement op de Rechtsvordering, Staatsblad: 1847:52), Art. 377 of Renewed ACKNOWLEDGMENTS: Indonesian Code (Reglemen Indonesia yang Diperbaharui) (Het Herziene Indonesisch With exception of documents requiring notarial act (see category Business Regulation Reglement, Staatsblad 1941:44) and Art. 705 of Code of Procedure for Areas Outside and Commerce, topic Frauds, Statute of), Indonesian law does not require acknowledg- Java and Madura (Reglemen Acara untuk Daerah luar Jawa dan Madura) (Reglement Tot ment of signatures on private instruments. In notarial instruments, parties thereto ac- Regeling Van Het Rechtswezen in de Gewesten Buiten Java en Madura, Staatsblad knowledge before notary to have knowledge of contents of instrument, whereas signature 1927:227) constituted governing law prior to enactment of Law No. 30 of 1999 dated of notary constitutes certification of signature of parties. 12 Aug. 1999 concerning Arbitration and Dispute Resolution Alternatives. Signatures on private instruments may be certified by notary, and, if required, signature Agreement to Arbitrate.—Arbitration is recognized as binding under Indonesian law if of notary can be certified by foreign consular officers. parties agree to binding nature of obligation in advance. (See Elucidation of Art. 3[1] of Law No. 4 of 2004 dated 15 Jan. 2004 concerning Judiciary [allowing for settlement of IDENTIFICATION: case through arbitration]). Agreement by all parties effected by dispute is required in Identification is governed by Presidential Decree No. 52 of 1977 dated 20 Sept. 1977 order to adopt arbitration as resolution mechanism. (Arts. 615 and 618 of Code of Civil concerning Resident Registration. Indonesian citizens and aliens who are permanent Procedure [Reglemen Acara Perdata] [Reglement op de Rechtsvordering, Staatsblad residents are required to complete civil registration (Art. 2[1] of Government Regulation 1847:52]). Parties may enter into agreement before or after dispute arises. (Id. at Art. 615 No. 32 of 1954 dated 20 Apr. 1954 concerning Aliens Registration; Art. 1 of Presidential of Code of Civil Procedure [Reglemen Acara Perdata] [Reglement op de Rechtsvorder- Decree No. 52 of 1977), implementation of which includes completing formalities for ing, Staatsblad 1847:52]). Arbitration agreements must be made in writing and signed by and obtaining family identity cards and resident identity cards and recordation concerning all concerned parties. (Id. at Art. 618). If party is unable to sign, arbitration agreement every change which arises. (Art. 2[1] of Presidential Decree No. 52 of 1977). Indonesian must be executed as notarial deed. (Id. at Art. 618). Arbitration agreement must include citizens may request certificates of citizenship from Department of Law and Human subject of dispute, names and domiciles of all parties and names and domiciles of Rights. (Id. at Art. 6; Art. 1 of Decree of Minister of Justice No. JB 3/4/12 dated 14 Mar. arbitrators. (Id. at Art. 618). 1978 concerning Certificates of Citizenship [Surat Bukti Kewarganegaraan Republik Prohibited Subject Matter.—Arbitrations of disputes regarding gifts and testamentary Indonesia]). bequests for necessities of life, housing and clothing, separation of husbands and wives, division of marital property and disputes regarding person’s status are prohibited. (Id. at NOTARIES: Art. 616). Arbitration awards purporting to resolve these issues are void. (Id. at Art. 616). Arbitrators.—All persons are competent to serve as arbitrators except judges, pros- Governing Law.—Notaries are governed by Law No. 30 of 2004 dated 6 Oct. 2004 ecutors, clerks of court, women and children. (Id. at Arts. 34 and 617). Odd number of concerning Notarial Duties. arbitrators must be appointed. (Id. at Art. 618). If parties fail to agree upon selection of Definitions.— arbitrators at time of dispute, one party may request appointments to be made by judge Notary means public official with authority to make authentic deeds and with other of District Court that would have had jurisdiction over dispute absent agreement to authorities as intended by Law No. 30 of 2004. (Art. 1[1] of Law No. 30 of 2004). arbitrate. (Id. at Art. 619). Temporary notarial offıcer means person who is temporarily appointed as notary to Acceptance of duties of arbitrator must be made in writing signed by arbitrator conduct duties of notary who has died, been terminated or suspended. (Id. at Art. 1[2]). concerned. (Id. at Art. 622). Substitute notary means person who is temporarily appointed as notary who is on During designated period of time for hearing dispute, arbitrators cannot be replaced holiday, sick or temporarily prevented from conducting notarial duties. (Id. at Art. 1[3]). except by agreement of parties. (Id. at Art. 620). Special substitute notary means person who is deemed to be special notary for making Arbitrators cannot resign from their duties without permission from parties or from certain deeds as mentioned in letter of appointment of notary, in event in particular judge of District Court that would have had jurisdiction over dispute absent agreement region, regency or city there is only one notary who, according to Law No. 30 of 2004 to arbitrate. (Id. at Arts. 619 and 623). is prohibited from making relevant deed. (Id. at Art. 1[4]). Rules of Procedure.—Arbitration proceedings are conducted in manner stipulated in Organization of notaries means notary professional organization which takes form as arbitration agreement or, if no stipulation is provided, in manner determined by arbi- association which is legal entity. (Id. at Art. 1[5]). trators. (Id. at Art. 624). Supervisory committee means body which possesses authority and responsibility to Decisions.—Arbitration agreements may stipulate time period for rendering arbitration implement cultivation and supervision in relation to notaries. (Id. at Art. 1[6]). decision. (Id. at Art. 620). If no time period if specified, arbitration decision must be Notarial deed means authentic deed which is made by or in presence of notary rendered within six months commencing from date of acceptance of appointment of according to form and procedure stipulated by Law No. 30 of 2004. (Id. at Art. 1[7]). arbitrators. (Id. at Art. 620). If parties fail to present evidence during arbitration period, Minutes of deed means original notarial deed. (Id. at Art. 1[8]). arbitrators may decide to extend proceedings or provide notice that their duties have Copy of deed means verbatim copy of entirety of deed with phrase “provided as copy concluded. (Id. at Art. 626). with same content” included at bottom part of copy of deed. (Id. at Art. 1[9]).

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NOTARIES . . . continued Dishonorable Termination.—Notaries will be terminated dishonorably from their posts Quotation of deed means verbatim quotation of one or several parts of deed with phrase by Minister on proposal of central supervisory committee if: (i) Declared bankrupt based “provided as quotation” included on bottom part of quotation of deed. (Id. at Art. 1[10]). on final court decision (Id. at Art. 12[a]); (ii) existence of guardianship/custodianship for Deed originali means deed for: (i) Payment of rent, interest and pensions (Id. at Art. three or more continuous years (Id. at Art. 12[b]); (iii) conducts acts which disparage 16[3][a]); (ii) offers to pay cash (Id. at Art. 16[3][b]); (iii) protests relating to nonpayment honor and status of notarial post (Id. at Art. 12[c]); or (iv) conduct severe violations or non-receipt of negotiable instruments (Id. at Art. 16[3][c]); (iv) letters of authority/ relating to responsibilities and prohibitions of post (Id. at Art. 12[d]). Notaries will also powers of attorney (Id. at Art. 16[3][d]); (v) official statements of ownership (Id. at Art. be terminated dishonorably by Minister due to imposition of criminal imprisonment 16[3][e]); or (vi) other deeds based upon regulations of law (Id. at Art. 16[3][f]). based on final court decision due to conduct of criminal acts which are punishable with Executorial deed means copy of deed for acknowledgment of indebtedness which criminal imprisonment of five years or more. (Id. at Art. 13). possesses executorial power with words “DEMI KEADILAN BERDASARKAN KETU- HANAN YANG MAHA ESA” which translates to “FOR SAKE OF JUSTICE BASED Authorities.—Notaries are authorized to produce authentic deeds regarding all acts, ON ALMIGHTY G-D” included on head of deed. (Id. at Art. 1[11]). agreements and stipulations which are required by regulations of law and/or which are Notary post formation means determination of number of notaries needed in particular desired by those who are interested to be stated in authentic deeds, to guarantee definitive notarial territory. (Id. at Art. 1[12]). date of making of deed, to store deeds, to give executorial deeds, copies of deeds and Notarial protocol means collection of documents which form State records which must quotations of deeds, provided that production of those deeds is not also assigned to or be stored and protected by notary. (Id. at Art. 1[13]). excluded from another official or another person stipulated by law. (Id. at Art. 15[1]). Minister means Minister with duties and responsibilities in field including notaries. (Id. Notaries are also authorized to: (i) Legalize signatures and stipulate definitive dates of at Art. 1[14]). letters signed underhand with registration in special book (Id. at Art. 15[2][a]); (ii) enter registration of letters signed underhand in special book (Id. at Art. 15[2][b]); (iii) make Appointment and Termination.—Notaries are appointed and terminated by Minister. copies of original letters signed underhand in form of copies containing explanations to (Id. at Art. 2). be written and illustrated in relevant letter (Id. at Art. 15[2][c]); (iv) conduct confirmation Appointment.—Conditions for qualification for appointment to be notary are: (i) In- of conformity of photocopies with original letters (Id. at Art. 15[2][d]); (v) provide legal donesian citizen (Id. at Art. 3[a]); (ii) pious toward almighty G-D (Id. at Art. 3[b]); (iii) information related to productions of deeds (Id. at Art. 15[2][e]); (vi) produce deeds at least 27 years of age (Id. at Art. 3[c]); (iv) of sound mind and body (Id. at Art. 3[d]); related to land (Id. at Art. 15[2][f]); (vii) produce auction minute deeds (Id. at Art. (v) certified graduate of university level legal education and graduate of masters level 15[2][g]); and (viii) other authorities pursuant to regulations of law (Id. at Art. 15[3]). of notarial education (Id. at Art. 3[e]); (vi) already engaged in apprenticeship or actually already worked as employee of notary for 12 continuous months at notary office of own Responsibilities.—In conduct of duties, notary is obligated to: (i) Act honestly, ac- initiative or on recommendation of organization of notaries (Id. at Art. 3[f]); and (vii) curately/thoroughly, independently, unbiased and preserve interests of parties related to not having status as State civil servant, State official, advocate or not in process of legal act (Id. at Art. 16[1][a]); (ii) produce deeds in form of minutes of deeds and store administering another position which by law is prohibited to be concurrent with post of them as part of notarial protocol (storage requirement does not apply when notary issues notary (Id. at Art. 3[g]). deeds originali form) (Id. at Arts. 16[1][b] and [2]); (iii) issue executorial deeds, copies Oath.—Prior to conducting post of notary, notary is obligated to pronounce oath/ of deeds or quotations of deeds based on minutes of deeds (Id. at Art. 16[1][c]); (iv) promise in accordance with notary’s religion in presence of Minister or appointed official provide services in accordance with provisions of Law No. 30 of 2004 except if there (Id. at Art. 4[1]) with following words: are reasons to refuse (Id. at Art. 16[1][d]); (v) keep secret all matters regarding deeds “I swear/promise: That I will obey and be loyal to State of Republic of Indonesia, made and all information which is obtained for purposes of production of deed in Pancasila and Constitution of State of Republic of Indonesia of 1945, Law concerning accordance with oath/promise of post, except if law stipulates otherwise (Id. at Art. Notary Duties as well as other regulations of law; that I will conduct my duties with 16[1][e]); (vi) bind deeds made within one month into books which contain not more than commitment, honesty, accuracy, independence and without bias; that I will preserve/ 50 deeds, and if deed cannot be contained in one book, deed may be bound in more than guard my demeanor, my behavior, and will conduct my responsibilities according to one book, and number of minutes of deed, month and year of its making recorded on professional code of ethics, respect, status, and my responsibility as notary; that I will cover of every book (Id. at Art. 16[1][f]); (vii) make list of protest deeds relating to hold secret contents of deed and information provided in conduct of my duties; that I, nonpayment or non-receipt of negotiable instruments (Id. at Art. 16[1][g]); (viii) make for appointment to this post, either directly or indirectly, in any name or pretext, have list of deeds which relate to last wills and testaments according to time sequence for never and will never give or promise anything to anyone.” (Id. at Art. 4[2]). making of deeds every month (Id. at Art. 16[1][h]); (ix) sending list of deeds relating Foregoing oath/promise must be pronounced within not more than two months of date to last wills and testaments to Department of Wills Central Registry with functions and of decision of appointment as notary. (Id. at Art. 5). Failure to pronounce oath within responsibilities in notarial sector within five days of first week of every following month specified time period may result in revocation of notary appointment by Minister. (Id. (Id. at Art. 16[1][i]); (x) record in repertorium date of sending wills registry at end of at Art. 6). every month (Id. at Art. 16[1][j]); (xi) have seal/stamp which contains symbol of State Notices.—Within 30 days of date of taking notarial post oath/promise, notary is ob- of Republic of Indonesia and in space which encircles it, name, position and related ligated to: (i) Actually conduct duties (Id. at Art. 7[a]); (ii) deliver minutes of notarial domicile (Id. at Art. 16[1][k]) form and measurements of seal/stamp are stipulated by post oath/promise to Minister, organization of notaries and regional supervisory com- Regulation of Minister (Id. at Art. 16[6]); (xii) read deeds in presence of parties with mittee (Id. at Art. 7[b]); and (iii) deliver address of office, signature exemplar and initials presence of at least two witnesses and signed at that time by parties, witnesses and notary along with imprint of seal/stamp in red color to Minister and other official with respon- (Id. at Art. 16[1][l]) reading is not required if parties desire that deed not be read because sibility in field of agrarian/land affairs, organization of notaries, chairman of District it has already been read by parties themselves and they know and understand its contents Court, regional supervisory committee as well as regent or mayor in place of notarial provided that in this matter it is expressed in closing of deed and every page of minutes appointment (Id. at Art. 7[c]). of deed are initialed by parties, witnesses and notary (Id. at Art. 16[7]); and (xiii) receive Honorable Termination.—Notaries are terminated from their post with honor due to: notary candidate apprentices (Id. at Art. 16[1][m]). (i) Death (Id. at Art. 8[1][a]); (ii) reaching age of 65 (Id. at Art. 8[1][b]); (iii) self request If requirements: (i) To read deeds in presence of parties with presence of at least two (Id. at Art. 8[1][c]); (iv) incapacity of mind and/or body for implementation of duties of witnesses and signed at that time by parties, witnesses and notary; or (ii) in event reading post of notary in continuous manner for more than three years (Id. at Art. 8[1][d]); or is not required if parties desire that deed not be read because it has already been read (v) concurrent post as State civil servant, State official, advocate or in process of by parties themselves and they know and understand its contents provided that in this administering another position which by law is prohibited to be concurrent with post of matter it is expressed in closing of deed and every page of minutes of deed are initialed, notary (Id. at Art. 8[1][e]). 65 year age limit may be extended to 67 years upon con- witnessed and notarized, are not met with respect to any deed except last will and sideration of health of relevant notary. (Id. at Art. 8[2]). testament, related deed shall only possess evidentiary power of deed signed underhand. Notaries may be temporarily terminated from their posts due to: (i) Being in process (Id. at Art. 16[8] and [9]). of bankruptcy or suspension of debt payment obligations (Id. at Art. 9[1][a]); (ii) being More than one copy of deeds originali may be made, to be signed at same time, in under guardianship/custodianship (Id. at Art. 9[1][b]); (iii) conducting disgraceful acts same form with same contents, with stipulation on every deed that words “effective as (Id. at Art. 9[1][c]); or (iv) conducting violations relating to responsibilities and prohi- one and one effective for all” are written on every deed. (Id. at Art. 16[4]). Only one bitions of duties (Id. at Art. 9[1][d]). Prior to termination, notary is given opportunity to copy may be made of deeds originali with contents granting authorities which do not yet defend self before supervisory committee in gradual manner (Id. at Art. 9[2]) through contain name of recipient of authorization. (Id. at Art. 16[5]). proceedings first in regional supervisory committee, then in territorial supervisory com- Prohibitions.—Notaries are prohibited from: (i) Conducting duties outside territory of mittee and finally in central supervisory committee (Id. at Elucidation of Art. 9[2]). their posts (Id. at Art. 17[a]); (ii) leaving territory of their posts for more than seven Temporary termination of notary is conducted by Minister on suggestion of central consecutive days without valid/legal reason (Id. at Art. 17[b]); (iii) concurrently serving supervisory committee. (Id. at Art. 9[3]). as State civil servant (Id. at Art. 17[c]); (iv) concurrently serving as State official (Id. at Notaries who are temporarily terminated due to bankruptcy, suspension of debt pay- Art. 17[d]); (v) concurrently serving as advocate (Id. at Art. 17[e]); (vi) concurrently ment obligations or guardianship/custodianship may be reappointed as notary by Minister serving as management or official of State owned enterprise, regional owned enterprise after restoration of their rights. (Id. at Art. 10[1]). Temporary termination based on or private enterprise (Id. at Art. 17[f]); (vii) concurrently serving as land conveyancer conduct of disgraceful acts or violations relating to responsibilities and prohibitions of official outside territory of notary’s post (Id. at Art. 17[g]); (viii) being substitute notary duties is effective for at most six months. (Id. at Art. 9[4]). Notaries who are temporarily (Id. at Art. 17[h]); or (ix) conducting other work in conflict with religious, ethical or terminated due to conduct of disgraceful acts or violations relating to responsibilities and equitable norms, which may influence respect and prestige of notarial post (Id. at Art. prohibitions of duties may re reappointed as notaries by Minister after end of period of 17[i]). temporary termination. (Id. at Art. 10[2]). Notaries who are appointed as State officials are obligated to take leave. (Id. at Art. Honorarium.—Notaries are entitled to receive honorarium for legal services provided 11[1]). Leave becomes effective for period notary administers post as State official. (Id. in accordance with their authorities. (Id. at Art. 36[1]). Size of honorarium to be received at Art. 11[2]). Notaries taking leave are obligated to appoint substitute notaries. (Id. at by notary is based on economic and social valuation of every deed they make. (Id. at Art. 11[3]). In event notary fails to appoint substitute notary, regional supervisory com- Art. 36[2]). mittee will appoint another notary, with legal territory including place of domicile of Economic valuation is determined from object of every deed as follows: (i) Up to Rp notary appointed as State official, to receive notarial protocol. (Id. at Art. 11[4]). Notary 100,000,000 or equivalent grams of gold as appropriate, honorarium to be received is at appointed by regional supervisory committee as holder of temporary notarial protocol. most 2.5% (Id. at Art. 36[3][a]); (ii) above Rp 100,000,000 up to Rp 1,000,000,000 (Id. at Art. 11[5]). Notaries who no longer hold posts as State officials may return to honorarium to be received is at most 1.5% (Id. at Art. 36[3][b]); or (iii) above Rp conduct of notary duties and notarial protocol will be returned to them. (Id. at Art. 11[6]). 1,000,000,000 honorarium to be received is to be based on agreement between notary

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NOTARIES . . . continued Authentic letters of authority/powers of attorney or other documents which become and all parties, provided that it is at most 1% from object for which deed is to be made basis of authority to make deed which is issued in originali form or letters of authority/ (Id. at Art. 36[3]). powers of attorney signed underhand must be attached to minutes of deed (Id. at Art. Social valuation is determined based on social function of object of every deed with 47[1]) and must be explained in deed (Id. at Art. 47[2]) unless letter of authority/power honorarium to be received at most Rp 5,000,000. (Id. at Art. 36[4]). of attorney has already been attached to deed made before same notary and that matter Notaries are obligated to provide legal services in notarial sector on pro bono basis is expressed in deed (Id. at Art. 47[3]). to persons without means. (Id. at Art. 37). Contents of deed may not be modified or supplemented, whether in form of writing which overlaps, is inserted, is scratched off or erased and substituted with other writing. Notarial Deeds.—Every notarial deed consists of: (i) Forward or head of deed (Id. at (Id. at Art. 48[1]). Modifications of deeds in form of supplements, substitutions or Art. 38[1][a]); (ii) body of deed (Id. at Art. 38[1][b]); and (iii) end or close of deed (Id. excoriation in deed are only legal/valid if modification is initialed or other insignia of at Art. 38[1][c]). legalization is given by parties, witnesses and notary. (Id. at Art. 48[2]). Forward or head of deed consists of: (i) Title of deed (Id. at Art. 38[2][a]); (ii) number Every modification of deed must be made on left side of deed. (Id. at Art. 49[1]). If of deed (Id. at Art. 38[2][b]); (iii) hour, day, date, month and year (Id. at Art. 38[2][c]); modification cannot be produced on left side of deed, modification is to be produced at and (iv) full name and domicile of notary (Id. at Art. 38[2][d]). end of deed, before close of deed, with reference to part changed or with insertion of Body of deed consists of: (i) Full name, place and date of birth, citizenship, work, post, supplementary sheets of paper. (Id. at Art. 49[2]). Modifications done without reference domicile and residence of all attending parties and/or persons who they represent (Id. at to part modified render modification void. (Id. at Art. 49[3]). Art. 38[3][a]); (ii) information regarding position of acting parties (Id. at Art. 38[3][b]); If within deed, deletion of word, letter or numeral is required, this matter may be (iii) contents of deed which constitute desires and wishes of parties in interest (Id. at Art. accomplished in such way that which was inserted previously can be read and amounts 38[3][c]); and (iv) full name, place and date of birth, as well as work, post, position and in words, letters or numerals which have been deleted are to be stated at side of deed. residence of every identification witness (Id. at Art. 38[3]). (Id. at Art. 50[1]). Deletions become legal/valid after they are initialed or other insignia End or close of deed consists of: (i) Explanation concerning reading of deed in of legalization/validation is given by parties, witnesses and notary. (Id. at Art. 50[2]). If presence of parties with presence of at least two witnesses (reading is not required if another modification arises in relation to word, letter or numeral, that modification is to parties desire that deed not be read because it has already been read by parties themselves be done on left side of deed or, if notation on left side cannot be done, modification is and they know and understand its contents provided that in this matter it is expressed to be produced at end of deed, before close of deed, with reference to part changed or in closing of deed and every page of minutes of deed are initialed by parties, witnesses with insertion of supplementary sheets of paper. (Id. at Arts. 49 and 50[3]). At close of and notary (Id. at Art. 16[1] and [7] and [4][a]); (ii) explanation concerning signing and every deed number/quantity of modifications, deletions and supplements must be stated. place of signing or translation of deed if any (Id. at Art. 38[4][b]); (iii) full name, place (Id. at Art. 50[4]). and date of birth, work, post, domicile and residence of every witness to deed (Id. at Art. Notaries are authorized to correct written or typed errors found in minutes of deed 38[4][c]); and (iv) explanation concerning nonexistence of modifications arising in pro- which have already been signed. (Id. at Art. 51[1]). Corrections are to be done by duction of deed or explanation concerning existence of modifications which may take production of minutes and provision of notation regarding matter in original minutes of form of additions, deletions or amendments (Id. at Art. 38[4][d]). deed with reference to date and number of deed of correction minutes. (Id. at Art. 51[2]). Deeds of substitute notaries, special substitute notaries and temporary notarial officers Copy of deed of correction minutes must be delivered to all parties. (Id. at Art. 51[3]). must also include number and date of appointment as well as appointing official. (Id. at Notaries are not permitted to produce deeds for themselves, their wives/husbands or Art. 38[5]). other persons who have family relationship with notary whether due to marriage or blood Party appearing before notary must fulfill following conditions: (i) Be at least 18 years relation in ascending or descending vertical line without limitation to degree, as well as of age or already married (Id. at Art. 39[1][a]); and (ii) have capacity to conduct legal in horizontal line to third degree, or become party in deed whether in personal capacity, act (Id. at Art. 39[1][b]). Party must be known to (a) Notary (Id. at Art. 39[2]); or (b) in other capacity or with intermediary of agent/proxy. (Id. at Art. 52[1]). Provisions of be known to two identifying witnesses who are at least 18 years of age or already married Art. 52(1) do not apply in event wife/husband of notary or other persons who have family and who have capacity to conduct legal act (Id. at Art. 39[2]); or (c) be known to two relationship with notary, whether due to marriage or blood relation in ascending or other parties (Id. at Art. 39[2]). Identification must be expressly stated in deed. (Id. at descending vertical line without limitation to degree, as well as in horizontal line until Art. 39[3]). third degree, become parties in public sale, provided public sale can be conducted before Every deed which is to be read by notary must be read in presence of at least two notary, public rental, public contracting or if such persons become members of meetings individual witnesses, except if regulations of law otherwise provide. (Id. at Art. 40[1]). for which minutes are made by notary. (Id. at Art. 52[2]). Violation of Art. 52(1) of Law Witnesses must fulfill following conditions: (i) Be at least 18 years of age or already No. 30 of 2004 has consequence that such deed shall only possess evidentiary force as married (Id. at Art. 40[2][a]); (ii) have capacity to conduct legal act (Id. at Art. 40[2][b]); deed signed underhand in event such deed signed by party, without limiting obligation (iii) understand language utilized in deed (Id. at Art. 40[2][c]); (iv) able to inscribe of notary who made such deed to pay cost, compensation and interest to aforesaid party. signature and initials (Id. at Art. 40[2][d]); and (v) does not possess marital relationship (Id. at Art. 52[3]). or blood relationship in vertical line above or below or laterally up to third degree with Notarial deeds may not contain stipulations or provisions which grant right and/or notary or any parties (Id. at Art. 40[2][e]). Witnesses must be known to notary or be benefit to: (i) Notary, wife or husband of notary (Id. at Art. 53[a]); (ii) witness, wife or introduced to notary or be informed regarding identity and authority of witnesses to husband of witness (Id. at Art. 53[b]); or (iii) persons who have family relationship with notary by parties. (Id. at Art. 40[3]). Identification or declaration concerning identity and notary or witness whether due to blood relation in vertical ascending or descending line authority of witness must be expressly stated in deed. (Id. at Art. 40[4]). without limitation to degree or relation from marriage to third degree (Id. at Art. 53[c]). In event provisions of Arts. 39 and 40 of Law No. 30 of 2004 concerning Qualifi- Notaries may only provide, show or give information concerning contents of deed, cations and Identification of Parties and Witnesses are not fulfilled, deed will only possess executorial deed, copies of deed or quotation of deed to persons with direct interest in evidentiary force as deed signed underhand. (Id. at Art. 41). deed, heirs or persons who obtain rights, except as otherwise stipulated by regulations Notarial deeds are to be written with clarity in relation to other inseparable deeds and of law. (Id. at Art. 54). acronyms cannot be used. (Id. at Art. 42[1]). Spaces and empty intervals within deed are Notaries who issue executorial deeds must make notation in minutes of deed con- to be clearly struck through (marked with lines) prior to signing of deed, except for deeds cerning recipient of executorial deed and date of issuance and notation mentioned must which are printed in format of forms based on regulations of law (Id. at Art. 42[2]) except be signed by notary. (Id. at Art. 55[1]). Executorial deeds of acknowledgment of debt with respect to letters of authority/powers of attorney which do not yet specify name of which are made in presence of notary are copies of deeds which have executorial force. recipient of authorization/powers (Id. at Art. 42[4]). All sums for determination of their (Id. at Art. 55[2]). Executorial deeds of acknowledgment of indebtedness must contain amounts or totals of things which are mentioned in deed, mentioning date, month and phrase “DEMI KEADILAN BERDASARKAN KETUHANAN YANG MAHA ESA” year are to be declared with letters and preceded by numbers. (Id. at Art. 42[3]). which translates to “FOR SAKE OF JUSTICE BASED ON ALMIGHTY G-D” at head Deeds are to be made in Indonesian language. (Id. at Art. 43[1]). In event party does of deed and end or close of deed must contain phrase “given as first executorial” with not understand language used in deed, notary is obligated to translate or clarify/explain mention of name of person requesting it and for whom executorial deed is issued as well contents of that deed in language which is understood by party. (Id. at Art. 43[2]). If as date of its issuance. (Id. at Art. 55[3]). Second and additional executorial deeds may notary is unable to translate or clarify/explain contents, deed must be translated or only be given to persons with direct interest in deed, heirs or persons who obtain rights, clarified/explained by official translator. (Id. at Art. 43[3]). Deed may be made in another except as otherwise stipulated by regulations of law based upon court order/stipulation. language if understood by notary and witnesses if party in interest desires so long as law (Id. at Art. 55[4]). does not stipulate otherwise. (Id. at Art. 43[4]). In event deed is made in language other Imprint of seal/stamp of notary must be affixed to deeds originali, executorial deeds, than Indonesian, notary is obligated to translate it into Indonesian language. (Id. at Art. copies of deeds or quotations of deeds which are issued by notary. (Id. at Art. 56[1]). 43[5]). Imprint of seal must also be affixed to copies of letters attached to minutes of deed. (Id. Immediately after reading deed, deed must be signed by every party, witness and at Art. 56[2]). Letters signed underhand which are validated or legalized, letters signed notary, except if there are parties who are not yet able to inscribe their signature with underhand which are registered and photocopies confirmed by notary must be given mention of reason. (Id. at Art. 44[1]). Reason must be expressly stated in deed. (Id. at imprint of seal/stamp as well as initials and signature of notary. (Id. at Art. 56[3]). Art. 44[2]). Deeds translated or clarified/explained by official translator where notary is Executorial deeds, copies of deeds, quotations of deeds of notaries or validation/ unable to translate or clarify/explain contents must be signed by parties, notary, witnesses legalization of letters signed underhand which are attached to deeds which are to be and official translator. (Id. at Art. 44[3]). Reading, translation or clarification/explanation stored in notarial protocol may only be issued by notary who made them, substitute and signatures must be expressly stated at end of deed. (Id. at Art. 44[4]). notary or legal/valid holder of notarial protocol. (Id. at Art. 57). In event party has interest only in certain part of deed, only that part of deed mentioned In interest of processing of justice, investigators, general prosecutors or judges, with must be read to party. (Id. at Art. 45[1]). If that part is to be translated or clarified/ agreement of regional supervisory committee, are authorized to: (i) Take photocopies of explained, party must inscribe initials and sign that part. (Id. at Art. 45[2]). Reading, minutes of deed and/or letters attached to minutes of deed or notarial protocol stored by translation or clarification/explanation and signatures must be expressly stated at end of notaries; and (ii) call notaries to appear for examination related to deeds made by them deed. (Id. at Art. 45[3]). or notarial protocol which is stored by notary. (Id. at Art. 66[1]). Taking of photocopies If in production of registration of property estate or minutes regarding certain act or of minutes of deed or letters is to be done with transfer minutes. (Id. at Art. 66[2]). event, party may: (i) Reject inscribing signature (with statement in deed with open Sanctions.—Following violations conducted by notaries may result in deed only statement of reason [Id. at Art. 46(2)]); or (ii) not appear in close of deed, so long as possessing evidentiary power of deed signed underhand or deed becoming void as matter party has not yet signed deed; provided in that event it must be stated in deed and deed of law and may constitute grounds for party who suffers loss to claim compensation for must take form of authentic deed. (Id. at Art. 46[1]). expenses, losses and interest from notary (Id. at Art. 84): Failure to send list of deeds

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NOTARIES . . . continued sponsibilities in notarial sector within five days of first week of every following month relating to last wills and testaments to Department of Wills Central Registry with func- (Id. at Art. 16[1][i]); Failure to record in repertory date of sending wills registry at end tions and responsibilities in notarial sector within five days of first week of every of every month (Id. at Art. 16[1][j]); Failure to have seal/stamp which contains symbol following month (Id. at Art. 16[1][i]); Failure to possess seal/stamp which contains of State of Republic of Indonesia and in space which encircles it, name, position and symbol of State of Republic of Indonesia and in space which encircles it, name, position related domicile (form and measurements of seal/stamp as stipulated by Regulation of and related domicile (Id. at Art. 16[1][k]); Failure of party to fulfill conditions of (Id. at Minister (Id. at Art. 16[1][k] and [6]); Conducting duties outside territory of their posts Art. 41): (i) Being at least 18 years of age or already married (Id. at Art. 39[1][a]); (ii) (Id. at Art. 17[a]); Leaving territory of their posts for more than seven consecutive days having capacity to conduct legal act (Id. at Art. 39[1][b]); (iii) being known to (a) Notary without valid/legal reason (Id. at Art. 17[b]); Concurrently serve as State civil servant (Id. at Art. 39[2]); or (b) being known to two identifying witnesses who are at least 18 (Id. at Art. 17[c]); Concurrently serve as State official (Id. at Art. 17[d]); Concurrently years of age or already married and who have capacity to conduct legal act (Id. at Art. serve as advocate (Id. at Art. 17[e]); Concurrently serve as management or official of 39[2]); or (c) being known to two other parties (Id. at Art. 39[2]); Failure to read every State owned enterprises, regional owned enterprises or private enterprises (Id. at Art. deed which is to be read by notary in presence of at least two witnesses (except if 17[f]); Concurrently serve as land conveyancer official outside territory of notary’s post regulations of law otherwise provide) (Id. at Arts. 40 and 41) where witnesses are: (i) (Id. at Art. 17[g]); Being substitute notary (Id. at Art. 17[h]); Conducting other work in At least 18 years of age or already married (Id. at Art. 40[2][a]); (ii) have capacity to conflict with religious, ethical or equitable norms, which may influence respect and conduct legal act (Id. at Art. 40[2][b]); (iii) understand language utilized in deed (Id. at prestige of notarial post (Id. at Art. 17[i]); Conducting post in form of civil federation Art. 40[2][c]); (iv) able to inscribe signature and initials (Id. at Art. 40[2][d]); and (v) without ensuring independence and lack of bias (Id. at Art. 20[1]); Failure to submit do not possess marital relationship or blood relationship in vertical or horizontal straight request for leave of absence in writing along with proposal for appointment of substitute line up to third degree with notary or any parties (Id. at Art. 40[2][e]); Where witnesses notary (Id. at Art. 27); Failure to deposit notarial protocol with substitute notary during are known to notary or have been introduced to notary or notary has been informed leave of absence (Id. at Art. 32[1]); Failure to provide pro bono services to persons regarding identity and authority of witnesses to notary by parties, failure to expressly without means (Id. at Art. 37); Showing or giving information concerning contents of state identification or declaration concerning identity and authority of witness in deed (Id. deed, executorial deed, copy of deed or quotation of deed to persons without direct at Art. 41); Failure of every party, witness, notary and official translator (where neces- interest in deed, heirs or persons who have not obtained rights, except as otherwise sary) to sign deed immediately after reading deed, except if there are parties who are not stipulated by regulations of law (Id. at Art. 54); Failure to create and maintain registry yet able to inscribe their signature with mention of reason (Id. at Art. 44); Modification of deeds, registry of documents signed underhand which have been validated/legalized, or supplementation of contents of deed, whether in form of writing which overlaps, is registry of letters signed underhand which are to be booked and registry of other inserted, is scratched off or erased and substituted with other writing without initialing documents as required by Law No. 30 of 2004 (Id. at Art. 58); Failure to create and or providing other insignia of legalization given by parties, witnesses and notary (Id. at maintain on monthly basis in alphabetical order register of deeds and documents signed Art. 48); Failure to make every modification of deed on left side of deed or, if modi- underhand which have been validated/legalized (Id. at Art. 59); and/or; Failure to deliver fication cannot be produced on left side of deed, failure to produce modification at end notarial protocol to appropriate instrumentality under certain conditions specified by Arts. of deed, before close of deed, with reference to part changed or with insertion of 62 and 63 of Law No. 30 of 2004 (Id. at Art. 63). supplementary sheets of paper (Id. at Art. 49); If within deed deletion of words, letters or numerals is required, this matter may be accomplished in such way that words, letters Void Regulations.—Following regulations have been declared null and void: (i) No- or numerals which were inserted previously can be read and amounts in words, letters tary Law in Indonesia (Reglement op Het Notaris Ambt in Indonesie) (State Gazette or numerals which have been deleted are to be stated at side of deed. (Id. at Art. 50[1]). 1860:3) as last amended by State Gazette of Republic of Indonesia of 1945 No. 101; (ii) Deletions become legal/valid after they are initialed or other insignia of legalization is Ordonantie dated 16 Sept. 1931 concerning Notary Honorarium; (iii) Law No. 33 of 1954 given by parties, witnesses and notary. (Id. at Art. 50[2]). If another modification arises dated 13 Nov. 1954 concerning Vice Notary and Temporary Vice Notary (State Gazette in relation to words, letters or numerals, that modification is to be done on left side of of Republic of Indonesia of 1954 No. 75, Supplement to State Gazette of Republic of deed or, if notation on left side cannot be done, modification is to be produced at end Indonesia No. 700); (iv) Art. 54 of Law No. 8 of 2004 concerning Amendment to Law of deed, before close of deed, with reference to part changed or with insertion of No. 2 of 2004 concerning General Judicial System (State Gazette of Republic of In- supplementary sheets of paper. (Id. at Arts. 49 and 50[3]). At close of every deed donesia of 2004 No. 34, Supplement to State Gazette of Republic of Indonesia No. 4379); number/quantity of modifications, deletions and supplements must be stated. (Id. at Art. (v) Government Regulation No. 11 of 1949 concerning Oath/Promise of Notary Duties. 50[4]). With respect to deletion of words, letters or numerals, failure to accomplish modifi- RECORDS: cation in such way that words, letters or numerals which were inserted previously can be read and amounts in words, letters or numerals that have been deleted are stated at Government maintains registries of births, marriage reports, marriage permits, mar- side of deed, deletions are initialed or other insignia of legalization is given by parties, riages and divorces, changes of family names and deaths. witnesses and notary. (Id. at Art. 50[1] and [2]). Presidential Cabinet Instruction No. 31/U/IN/12/1996 provides that, prior to promul- With respect to modification in relation to words, letters or numerals, failure to produce gation of civil registry law of national nature, population group distinctions (see category modification on left side of deed or, if notation on left side cannot be done, failure to Introduction, topic Government and Legal System, subhead Legal Pluralism, catchline produce modification at end of deed, before close of deed, with reference to part changed Dutch Law [describing population groups]) will not be applied at Civil Registry offices or with insertion of supplementary sheets of paper and failure to state at close of every throughout Indonesia except with respect to distinction between Indonesian citizens and deed, number/quantity of modifications, deletions and supplements (Id. at Arts. 49 and aliens. (Arts. 1 and 2 of Presidential Cabinet Instruction No. 31/U/IN/12/1996 dated 27 50[3]); (1) Failure of notary to correct written and/or typed errors found in minutes of Dec. 1966). However, in practice, Civil Registry offices maintain separate registries for deed which have already been signed by production of minutes and provision of notation births, marriage reports, marriage permits, marriages and divorces, changes of family regarding matter in original minutes of deed with reference to date and number of deed names and deaths for following population groups: (i) Europeans (which also includes of correction minutes and deliver copy of deed of correction minutes to all parties (Id. Japanese and all persons who are neither European, Japanese, indigenous Indonesian or at Art. 51); or (2) production by notaries of deeds for themselves, their wives/husbands East Asian who are subject to family laws which share main principles of Dutch family or other persons who have family relationship with notary whether due to marriage or law and descendants of non-Dutch Europeans, Japanese and all persons who are neither blood relation in ascending or descending vertical line without limitation to degree, as European, Japanese, indigenous Indonesian or East Asian who are subject to family laws well as in horizontal line until third degree, or become party to deed whether in personal which share main principles of Dutch family law); (ii) indigenous Indonesians who have capacity, in other capacity or with intermediary or agent. (Id. at Art. 52[1]). not moved to another population group and other persons who previously belonged to Following violations subject notary to sanctions of: (i) Oral warning (Id. at Art. 85[a]); another population group and then merged themselves into indigenous Indonesian popu- (ii) written warning (Id. at Art. 85[b]); (iii) temporary termination (Id. at Art. 85[c]); (iv) lation group; and (iii) East Asian (which includes all persons who are not included in honorable termination (Id. at Art. 85[d]); or (v) dishonorable termination (Id. at Art. European and indigenous Indonesian population groups). (Art. 163 of Indische 85[e]): Failure to provide notice within 30 days after date of taking notarial post oath/ Staatsregeling [Constitution for Netherlands East Indies]). promise, relating to: (i) Actual conduct of duties (Id. at Art. 7[a]); (ii) minutes of notarial Population Registry is maintained in regencies, municipalities and in Jakarta and post oath/promise to Minister, organization of notaries and regional supervisory com- includes following information: (i) Registration of heads of families and family members mittee (Id. at Art. 7[b]); and (iii) delivery of address of office, signature exemplar and (Art. 3[a][1] of Government Regulation No. 31 of 1998 dated 28 Feb. 1998 concerning initials along with imprint of seal/stamp in red color to Minister and other officials with Delegation of Part of Governmental Management in Management of Population Registry responsibility in field of agrarian/land affairs, organization of notaries, chairman of to Regions); (ii) issuance of family cards (Id. at Art. 3[a][2]); (iii) registration of residents District Court, regional supervisory committee as well as regent or mayor in place of who are entitled to obtain resident identity cards (Id. at Art. 3[b][1]); (iv) issuance of notarial appointment (Id. at Art. 7[c]); Failure to act honestly, accurately/thoroughly, resident identity cards (Id. at Art. 3[b][2]); (v) provision of principle residence numbers independently, unbiased and preserve interests of parties related to legal act (Id. at Art. (Id. at Art. 3[c]); (vi) inclusion of principle residence numbers in every document and 16[1][a]); Failure to produce deeds in form of minutes of deeds and store them as part deed of residents (Id. at Art. 3[c]); (vii) registration of births (Id. at Art. 3[d][1]); issuance of notarial protocol (storage requirement does not apply when notary issues deeds of birth certificates (Id. at Art. 3[d][2]); (viii) registration of marriages for non-Muslim originali form (Id. at Art. 16[1][b]); Failure to issue executorial deeds, copies of deeds residents (Id. at Art. 3[e][1]); (ix) issuance of marriage certificates of non-Muslim resi- or quotations of deeds based on minutes of deeds (Id. at Art. 16[1][c]); Failure to provide dents (Id. at Art. 3[e][2]); (x) registration of divorces for non-Muslim residents (Id. at services in accordance with provisions of Law No. 30 of 2004 except if there are reasons Art. 3[f][1]); (xi) issuance of certificates of divorces for non-Muslim residents (Id. at Art. to refuse (Id. at Art. 16[1][d]); Failure to keep secret all matters regarding deeds made 3[f][2]); (xii) registration of deaths (Id. at Art. 3[g][1]); (xiii) issuance of death certifi- and all information which is obtained for purposes of production of deed in accordance cates (Id. at Art. 3[g][2]); (xiv) registration and issuance of deeds of acknowledgment with oath/promise of post, except if law stipulates otherwise (Id. at Art. 16[1][e]); Failure of children (Id. at Art. 3[h][1]); and (xv) registration of validations of children (Id. at Art. to bind deeds made within one month into books which contain not more than 50 deeds, 3[h][2]). and if deed cannot be contained in one book, deed may be bound in more than one book, Registrations of marriages, divorces and reconciliations based on Islamic law are kept and number of minutes of deed, month and year of its making recorded on cover of every by officer of Marriage Registrar appointed by Minister of Religious Affairs in each book (Id. at Art. 16[1][f]); Failure to make list of protest deeds relating to nonpayment municipality. (Art. 2[1] of Government Regulation No. 9 of 1975 dated 1 Apr. 1975 or non-receipt of negotiable instruments (Id. at Art. 16[1][g]); Failure to make list of concerning Implementation of Law No. 1 of 1974 concerning Marriage; Law No. 32 of deeds which relate to last wills and testaments according to time sequence for making 1954 dated 2 Nov. 1954 concerning Stipulation of Effectiveness of Law No. 22 of 1946 of deeds every month (Id. at Art. 16[1][h]); Failure to send list of deeds relating to last in All Areas Outside Java and Madura; Art. 1[2] of Law No. 22 of 1946 dated 26 Nov. wills and testaments to Department of Wills Central Registry with functions and re- 1946 concerning Registration of Marriages, Islamic Divorces and Reconciliations).

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RECORDS . . . continued Utilization of Foreign Labor.—Every employer who employs foreign labor is re- Registration of marriages solemnized outside of Indonesia must occur at Office of Civil quired to possess written permit from Minister or authorized official. (Id. at Art. 42[1]). Registry in municipality of husband and wife’s domicile within one year following return Representative of foreign nations are exempt from obligation to possess written permit of husband and wife to Indonesia. (Art. 56[1] of Law No. 1 of 1974 dated 2 Jan. 1974 for utilization of foreign labor as diplomatic or consular officials. (Id. at Art. 42[3]). concerning Marriage). Foreign labor may only be employed in Indonesia in employment relationship for specific positions and specific periods of time in accordance with Ministerial Decree and Presidential Decree. (Id. at Art. 42[4] and [5]). Foreign labor whose period of work has EMPLOYMENT expired and cannot be renewed may be replaced by other foreign labor. (Id. at Art. 42[6]). Employers who utilize foreign labor must possess foreign labor utilization plans which LABOR RELATIONS: must be legalized by Minister or authorized official via procedures regulated by Min- Labor Affairs are governed by Law No. 13 of 2003 dated 25 Mar. 2003 concerning isterial Decree. (Id. at Art. 43[1]). Government instrumentalities, international organi- Labor Affairs. zations and representatives of foreign countries are not required to possess foreign labor utilization plans. (Id. at Art. 43[3]). Definitions.— Employee/Laborer means every person who works for receipt of pay/wages or com- Obligations of Employer.—Employers of foreign labor are required to appoint In- pensation in any form. (Id. at Art. 1[3]). donesian citizen labor as working associate/colleague of foreign labor employed for Employer means individual person, entrepreneur, legal entity or other body who em- transfer of technology and transfer of expertise from foreign labor except that employers ploys labor with payment of pay/wages or compensation in any form. (Id. at Art. 1[4]). holding positions as directors and/or commissioners are not required to appoint Indo- Employee/Laborer union means organization which is formed from, by and for em- nesian citizen labor as working associate/colleague of foreign labor. (Id. at Art. 45[1][a] ployees/laborers both from within and outside of company, which is free, open, inde- and [2]). In accordance with Presidential Decree, employers are required to implement pendent, democratic and responsible for struggling for, nurturing of and protection of job education and training of Indonesian labor in accordance with duty qualifications of rights and interests of employees/laborers and improvement of welfare of employees/ position of foreign labor. (Id. at Art. 45[1][b]). laborers and their families. (Id. at Art. 1[17]). Employers are required to pay compensation for every foreign labor person employed Employment agreement is agreement between employee/laborer with entrepreneur or except that obligation to pay compensation is not applicable to government instrumen- employer which includes conditions of work, rights and responsibilities of parties. (Id. talities, representatives of foreign nations, international bodies, social agencies, religious at Art. 1[14]). agencies and educational positions specified by Ministerial Decree. (Id. at Art. 47[1], [2] Employment relationship means relationship between entrepreneur with employee/ and [3]). Amount of compensation and its utilization are subject to Government Regu- laborer based on employment agreement, which possesses elements of job, compensation lation. (Id. at Art. 47[4]). and orders. (Id. at Art. 1[15]). Employers who employ foreign labor are obligated to repatriate foreign labor to their Employment relationship termination means ending of employment relationship due to country of origin after end of employment relationship. (Id. at Art. 48). specific matter which results in ending of rights and obligations between employee/ Prohibitions.—Employers who are natural persons are prohibited from employing laborer and entrepreneur. (Id. at Art. 1[25]). foreign labor. (Id. at Art. 42[2]). Foreign labor may not hold positions with duties Entrepreneur means: (i) Individual, federation, partnership, league, alliance or legal concerning personnel management and/or other positions specified by Ministerial Decree. entity which independently operated company it owns (Id. at Art. 1[5][a]); (ii) individual, (Id. at Art. 46). federation, partnership, league, alliance or legal entity which independently operates Employment Agreements.—Employment relationships arise out of existence of em- company it does not own (Id. at Art. 1[5][b]); or (iii) individual, federation, partnership, ployment agreement between entrepreneur and employee/laborer. (Id. at Art. 50). Em- league, alliance or legal entity located in Indonesia and representing either kind of ployment agreements may be made in writing or orally provided that written employment preceding two types of companies which are domiciled outside of territory of Indonesia agreements must arise in accordance with regulations of law in effect. (Id. at Art. 51). (Id. at Art. 1[5][c]). Employment agreements must be made on basis of: (i) Agreement between both parties; Foreign labor means foreign citizens holding visas with intention of working in (ii) capability or capacity to conduct legal act; (iii) existence of work which is subject territory of Indonesia. (Id. at Art. 1[13]). of agreement; and (iv) absence of conflict between work which is subject to agreement Labor means every person who is capable of performing work utilizing products of and public order, decency and regulations of law in effect. (Id. at Art. 52[1]). goods and/or services both for fulfillment of needs of one’s self as well as for needs of In event employment agreement fails to fulfill aforementioned requirements of mutual society. (Id. at Art. 1[2]). agreement and capacity set forth in Art. 52(1)(a) and (b) of Law No. 13 of 2003 Labor affairs means all matters related to labor prior to, during and after period of concerning Labor Affairs, employment agreement may be cancelled. (Id. at Art. 52[2]). work. (Id. at Art. 1[1]). In event employment agreement fails to fulfill aforementioned requirements of existence Lockout means action by entrepreneur to reject all or part of employees/laborers for of work and public policy set forth in Art. 52(1)(c) and (d) of Law No. 13 of 2003 conduct of work. (Id. at Art. 1[24]). concerning Labor Affairs, employment agreement is void as matter of law. (Id. at Art. Pay/Wages means right of employee/laborer which is received in form of money as 52[3]). compensation from entrepreneur or employer to employee/laborer which is to be stipu- lated and paid in accordance with employment agreement, agreement or regulations of Conflicts between Provisions and Regulations.—Provisions within employment law, including support/aid/subsidies for employee/laborer and his/her family for work agreement regarding “pay/wages” and “rights and obligations” as set forth in Art. and/or services which have already been or will be performed. (Id. at Art. 1[30]). 54[1][e] and [f] of Law No. 13 of 2003 concerning Labor Affairs cannot conflict with Strike means action by employee/laborer which is planned and implemented jointly company regulations, cooperation agreements and regulations of law in effect. (Id. at Art. and/or by employee/laborer union for cessation or delay of work. (Id. at Art. 1[23]). 54[2]). Principles.—Development of labor affairs are based on principles of Pancasila and Specified Term employment agreements may only be made for certain work which Constitution of 1945. (Id. at Art. 2). according to its kind and nature or activity of work will be completed in specified term, namely: (i) Work completed once or of temporary nature (Id. at Art. 59[1][a]); (ii) work Foundation.—Development of labor affairs is to be implemented on basis of integrity which may be completed within period of time which is not longer than three years (Id. through coordination of central and regional sectoral functions. (Id. at Art. 3). at Art. 59[1][b]); (iii) seasonal work (Id. at Art. 59[1][c]); or (iv) work related to new Goals of development of labor affairs are: (i) Empowerment and efficient utilization product, new activity or additional work which is still in trial or development/testing (Id. of labor in optimal and humane manner (Id. at Art. 4[a]); (ii) creation of even distribution at Art. 59[1][d]). of work opportunities and preparation of labor in accordance with needs of national and Employment agreement for specified term may not exist for work which is of con- regional development (Id. at Art. 4[b]); (iii) provision of protection to labor through tinuous nature. (Id. at Art. 59[2]). creation of welfare (Id. at Art. 4[c]); and (iv) improvement of welfare of labor and their Employment agreement for specified term may be extended or renewed. (Id. at Art. families (Id. at Art. 4[d]). 59[3]). Employment agreement for specified term which is based on specified term may Equal Opportunity and Treatment.—All labor possesses equal opportunity without exist for maximum of two years and may only be extended once for term of not longer discrimination in obtaining work (Id. at Art. 5) and equal treatment from entrepreneur than one year. (Id. at Art. 59[4]). (Id. at Art. 6). All labor possess equal rights and opportunities to choose, obtain or change Specified term employment agreements are not subject to trial periods. (Id. at Art. work and obtain reasonable benefits within or outside of country. (Id. at Art. 31). 58[1]). Training is to be implemented and directed toward provision, enhancement and de- Termination of Employment Agreements.—Employment agreements terminate if: (i) velopment of work competence through utilization of increased capabilities, productivity Worker dies (Id. at Art. 61[1][a]); (ii) term of employment agreement ends (Id. at Art. and welfare. (Id. at Art. 9). 61[1][b]); (iii) there is final and binding decision from court and/or final and binding Training is to be implemented in step-by-step manner with consideration of needs of decision or determination of organization for settlement of industrial relations disputes labor market and economic world both within and outside of work relationship on basis (Id. at Art. 61[1][c]); or (iv) specific situation or event arises which is included within of training programs which refer to work competence standards set by Ministerial De- employment agreement, company regulation or cooperation agreement which causes cree. (Id. at Art. 10). termination of employment relationship (Id. at Art. 61[1][d]). All labor is entitled to obtain and/or enhance and/or develop work competence through Employment agreement does not end due to death of entrepreneur or transfer of rights training. (Id. at Art. 11). in company arising out of sale, inheritance or bequest. (Id. at Art. 61[2]). Training is to be conducted by government and/or private training organizations. (Id. If one of parties terminates employment relationship before end of term stipulated in at Art. 13[1]). Private training organizations must obtain permit or register with agency employment agreement for specified term, or party terminates employment relationship responsible in field of labor affairs in relevant Regency or City (Kota). (Id. at Art. 14[2]). for reason other than those set forth in Art. 61(1) of Law No. 13 of 2003 concerning Provisions regarding procedures for issuance of permits and registration of training Labor Affairs, party terminating employment relationship becomes obligated to pay organizations are to be regulated by Ministerial Decree. (Id. at Art. 14[4]). Training compensation to other party in amount of pay/wages of employee/laborer through end operators are required to fulfill following requirements: (i) Provision of training per- of term of employment agreement. (Id. at Art. 62). sonnel (Id. at Art. 15[a]); (ii) existence of curriculum in accordance with level of training Sub-Contracting Work.—Company may transfer part of implementation of work to (Id. at Art. 15[b]); (iii) provision of tools, means and infrastructure for training (Id. at another company through work or employee/laborer service supply contracting agree- Art. 15[c]); and (iv) provision of financing for performance of training operational ment made in writing (Id. at Art. 65[1]) if work fulfills following conditions (which may activities (Id. at Art. 15[d]). be supplemented by Ministerial Decree): (i) Work must be implemented in manner which

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LABOR RELATIONS . . . continued years and company regulations are required to be renewed at end of their terms. (Id. at is separate from primary activities (Id. at Art. 65[2][a]); (ii) work implemented with Art. 111[3]). Provisions of company regulations may not conflict with provisions of direct or indirect instruction from employer (Id. at Art. 65[2][b]); (iii) work constitutes regulations of law in effect. (Id. at Art. 111[2]). supporting activity of company in holistic manner (Id. at Art. 65[2][c]); and (iv) work does not impede production process in direct manner (Id. at Art. 65[2][d]). Industrial Relations Disputes.—Law No. 2 of 2004 dated 14 Jan. 2004 concerning Company appointed to implement work or employee/laborer service supply contract- Settlement of Industrial Relations Disputes governs resolution of industrial relations ing agreement must be in form of legal entity. (Id. at Art. 65[3]). Business enterprise of disputes. Effective date of Law No. 2 of 2004 has been postponed by Government provider of employee/laborer services must take form of legal entity. (Id. at Art. 66[3]). Regulation in lieu of Law No. 1 of 2005 dated 13 Jan. 2005 concerning Postponement Business enterprise of provider of employee/laborer services must possess permit from of Enforcement of Law No. 2 of 2004 on Settlement of Industrial Relations Disputes. instrumentality responsibility in field of labor affairs. (Id. at Art. 66[3]). Law No. 2 of 2004 shall become effective on 14 Jan. 2006. (Art. 1 of Government Work protection and conditions for employees/laborers working for company ap- Regulation in lieu of Law No. 1 of 2005 dated 13 Jan. 2005 concerning Postponement pointed to implement work or employee/laborer service supply contracting agreement are of Enforcement of Law No. 2 of 2004 concerning Settlement of Industrial Relations at least same as work protection and conditions of company giving work or in accordance Disputes). with regulations of law in effect. (Id. at Art. 65[4]). Following are types of industrial relations disputes: (i) Rights disputes (Art. 2[a] Law Employees/laborers from company providing employee/laborer services cannot be No. 2 of 2004 dated 14 Jan. 2004 concerning Industrial Relation Settlement); (ii) interest utilized by employer for performance of principal activities or activities which are disputes (Id. at Art. 2[b]); (iii) employment relationship termination disputes (Id. at Art. directly related to production process, except for supporting service activities or activities 2[c]); and (iv) disputes between employee/laborer unions from only one company (Id. which are not directly related to production process. (Id. at Art. 66[1]). at Art. 2[d]). Entrepreneurs and employees/laborers or employee/laborer unions are required to Disabilities.—Entrepreneur employing labor inflicted with disability is obligated to engage in bipartite discussions to reach agreement for settlement of industrial relations provide protection in accordance with kind and degree of disability (Id. at Art. 67[1]) in disputes. (Id. at Art. 3[1]). accordance with regulations of law in effect (Id. at Art. 67[2]). In event bipartite discussions fail to reach settlement agreement within 30 days from Children.—Entrepreneurs are prohibited from employing children (Id. at Art. 68), date of commencement of discussions, or in event one of parties refuses to engage in subject to following exceptions: prohibition against employing children may be excepted bipartite settlement discussions, bipartite discussions will be deemed to have failed. (Id. for children between ages of 13 and 15 years for conduct of light work provided such at Art. 3[3]). In event of failure of bipartite discussions, either or both disputing parties work does not disturb child’s physical, mental and social health and development (Id. at may submit their disputes for settlement through conciliation or arbitration process. (Id. Art. 69[1]) provided following conditions are met: (i) Written permission is obtained at Art. 4[1] and [3]). from child’s parent or guardian (except if work is in family business) (Id. at Art. 69[2][a] Resolution of disputes through conciliation is to be conducted for resolution of interest and [3]); (ii) employment agreement exists between entrepreneur and child’s parent or disputes, employment relationship termination disputes or disputes between employee/ guardian (except if work is in family business) (Id. at Art. 69[2][b] and [3]); (iii) laborer unions. (Id. at Art. 4[5]). maximum work time is three hours (Id. at Art. 69[2][c]); (iv) work is implemented during Resolution of disputes through arbitration is to be conducted for resolution of interest daylight and does not disrupt school time (Id. at Art. 69[2][d]); (v) work safety and health disputes or disputes between employee/laborer unions. (Id. at Art. 4[6]). (Id. at Art. 69[2][e]); (vi) existence of clear employment relationship (except if work is In event bipartite negotiations fail to produce settlement of industrial relations dispute, in family business) (Id. at Art. 69[2][f] and [3]); and (vii) receipt of pay/wages in one or both parties may register dispute with local government agency responsible for accordance with stipulations in effect (Id. at Art. 69[2][g]). field of labor affairs. (Id. at Art. 4[1]). Party submitting dispute to local government Child of at least 14 years of age (Id. at Art. 70[2]) may conduct work in place of work agency responsible for field of labor affairs must attach evidence that effort to settle which forms part of education and training curriculum which has been legalized by dispute through bipartite discussions have already been conducted. (Id. at Art. 4[1]). In authorized official (Id. at Art. 70[1]) provided following conditions are fulfilled: (i) Clear event party fails to submit such evidence, local government agency responsible for field guidelines/instructions are given regarding method of performance of work and guidance of labor affairs must return documents for completion within seven days from date of and supervision in performance of work (Id. at Art. 70[3][a]); and (ii) work safety and receipt of returned documents. (Id. at Art. 4[2]). health protection is provided (Id. at Art. 70[3][b]). After local government agency responsible for field of labor affairs receives regis- Female employees/laborers under age of 18 years are prohibited from being em- tration of industrial relations dispute from one or more parties, local government agency ployed between hours of 11 p.m. and 7 a.m. (Id. at Art. 76[1]). Entrepreneurs are is obligated to offer all parties opportunity to agree to choose to resolve their disputes prohibited from employing pregnant female employees/laborers if according to statement through conciliation or arbitration. (Id. at Art. 4[3]). of doctor work could endanger health and safety of fetus or mother when work is to occur In event all parties do not declare their election to settle their industrial relations between hours of 11 p.m. and 7 a.m. (Id. at Art. 76[2]). Pursuant to Ministerial Decree dispute through conciliation or arbitration within seven working days, local government providing further detail, entrepreneur who employs female employees/laborers between agency responsible for field of labor affairs is required to delegate resolution of industrial hours of 11 p.m. and 7 a.m. is obligated to: (i) Provide nutritious food and drink (Id. at relations dispute to mediator. (Id. at Art. 4[4]). Art. 76[3][a] and [5]); and (ii) safeguard female employee’s/laborer’s moral decency and In event process of settlement of industrial relations dispute through mediation or safety at all times while she is at place of work (Id. at Art. 76[3][b] and [5]). Pursuant conciliation does not achieve settlement agreement, any one of parties may submit to Ministerial Decree providing further detail, entrepreneur is obligated to provide trans- complaint to Industrial Relations Court. (Id. at Art. 5). portation to and from work for female employees/workers who work between hours of Duties and authorities of Industrial Relations Court with respect to final and binding 11 p.m. and 5 a.m. (Id. at Art. 76[4] and [5]). nature of decisions issued in relation to particular types of industrial relations disputes are as follows: Industrial Relations Court has duty and authority to examine and decide Working Hours.—Every entrepreneur is required to implement provisions concerning rights disputes at first level. (Id. at Art. 56[a]). In event party would like to appeal working hours. (Id. at Art. 77[1]). Subject to certain exceptions defined by Ministerial decision of Industrial Relations Court concerning rights disputes, appellant must submit Decree, normal working hours include: (i) Seven hours per one day and 40 hours per one its appeal within 14 working days from reading of decision of Industrial Relations Court week for six work day week (Id. at Art. 77[2][a] and [4]); or (ii) eight hours per one day by judge at hearing (with respect to parties who are present at that hearing) or within and 40 hours per one week for five work day week (Id. at Art. 77[2][b] and [4]). 14 working days from receipt of notice of decision of Industrial Relations Court (with Subject to certain exceptions defined by Ministerial Decree, entrepreneur who employs respect to parties who were not present at hearing whereat Industrial Relations Court employees/laborers in excess of normal working hours must fulfill following conditions: judge read decision). (Id. at Art. 110). (i) Agreement of relevant employee/laborer (Id. at Art. 78[1][a] and [4]); and (ii) over- Industrial Relations Court has duty and authority to examine and decide interest time may not exceed more than three hours in one day and 14 hours in one week (Id. disputes with decisions issued of final and binding nature. (Id. at Art. 56[b]). Decisions at Art. 78[1][b] and [4]). Entrepreneur employing employee/laborer in excess of normal of Industrial Relations Court in relation to interest disputes are final and binding and thus working hours must pay overtime pay/wages. (Id. at Art. 78[2]). not subject to appeal to Supreme Court. (Id. at Art. 109). Pay/Wages.—In accordance with government regulation, every employee/laborer has Industrial Relations Court has duty and authority to examine and decide employment right to obtain income which fulfills reasonable human needs of life in accordance with relationship termination disputes at first level. (Id. at Art. 56[c]). In event party would form stipulated by government. (Id. at Art. 88[1]). like to appeal decision of Industrial Relations Court concerning employment relationship Employee/Laborer Unions.—Every employee/laborer has right to form and become termination disputes, appellant must submit its appeal within 14 working days from member of employee/laborer union. (Id. at Art. 104[1]). In implementation of industrial reading of decision of Industrial Relations Court by judge at hearing (with respect to relations, employee/laborer unions, in performing their function of protecting orderly and parties who are present at that hearing) or within 14 working days from receipt of notice correct conduct for perpetuation of productivity, channeling aspirations in productive of decision of Industrial Relations Court (with respect to parties who were not present manner, developing skills and expertise and joining in progress of company and strug- at hearing whereat Industrial Relations Court judge read decision). (Id. at Art. 110). gling for welfare of its members and their families, have right to collect and manage Industrial Relations Court has duty and authority to examine and decide disputes funds as well as to account for organization’s funds including strike funds. (Id. at Arts. between employee/laborer unions from only one company with decisions issued of final 102 and 104[2]). and binding nature. (Id. at Art. 56[d]). Decisions of Industrial Relations Court in relation to disputes between employee/laborer unions from only one company are final and Company Regulations.—Entrepreneur employing at least ten employees/laborers is binding and thus not subject to appeal to Supreme Court. (Id. at Art. 109). obligated to produce company regulations unless company already possesses cooperation agreement. (Id. at Art. 108[1] and [2]). Company regulations become effective upon Strikes as basic right of employees/laborers and employee/laborer unions are to be legalization by Minister or appointed official. (Id. at Art. 108[1]). Company regulations conducted in legal, orderly and peaceful manner as effect of failure of negotiations. (Art. are to be arranged by and are responsibility of related entrepreneur. (Id. at Art. 109). 137 of Law No. 13 of 2003). Employees/laborers and/or employee/laborer unions who Entrepreneur is obligated to provide notice and explanation of contents of, and give intend to invite other employees/laborers to strike at time strike is to take place must be manuscript of, company regulations or modifications of them to employees/laborers. (Id. conducted without contravening law. (Id. at Art. 138[1]). Employees/laborers who are at Art. 114). invited to strike may comply with or reject invitation to strike. (Id. at Art. 138[2]). Company regulations must at least contain following: (i) Rights and obligations of Conduct of strike for employees/laborers who work in companies serving public interest entrepreneur (Id. at Art. 111[1][a]); (ii) rights and obligations of employees/laborers (Id. and/or companies with kinds of activities which endanger human life are to be regulated at Art. 111[1][b]); (iii) work conditions (Id. at Art. 111[1][c]); (iv) company rules and in such form so as to not disturb public interest and/or endangerment of safety of other regulations (Id. at Art. 111[1][d]); and (v) term of effectiveness of company regulations persons. (Id. at Art. 139). Conduct of strike for employees/laborers who work in com- (Id. at Art. 111[1][e]). Maximum term of effectiveness of company regulations is two panies serving public interest and/or companies with kinds of activities which endanger

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LABOR RELATIONS . . . continued which is required by his or her religion (Id. at Art. 153[1][c]); (iv) employee/laborer human life which fail to be regulated in such form so as to not disturb public interest marries (Id. at Art. 153[1][d]); (v) female employee/laborer becomes pregnant, gives and/or endangerment of safety of other persons constitutes unlawful strike. (Id. at Arts. birth, miscarries or nurses her baby (Id. at Art. 153[1][e]); (vi) employee/laborer has 139 and 142[1]). blood relationship and/or marital obligation with another employee/laborer in same com- Not less than seven working days prior to implementation of strike, employees/laborers pany, except if already regulated in labor agreement, company regulations or cooperation and employee/laborer unions are obligated to provide written notice to entrepreneur and agreement (Id. at Art. 153[1][f]); (vii) employee/laborer establishes, becomes member of local government agency with responsibility over field of labor affairs (Id. at Art. 104[1]) and/or manages employee/laborer union, employee/laborer engaged in employee/laborer with following minimum informational content: (i) Time (day, date and hour) of com- union activities outside of working hours, or during working hours based upon agreement mencement of and end of strike (Id. at Art. 140[2][a]); (ii) place of strike (Id. at Art. of entrepreneur or based on provisions set forth in labor agreement, company regulations 140[2][b]); (iii) reasons and causes giving rise for need to conduct strike (Id. at Art. or cooperation agreement (Id. at Art. 153[1][g]); (viii) employee/laborer complains about 140[2][c]); and (iv) signatures of chairman and secretary and/or each chairman and entrepreneur to authority concerning entrepreneur’s conduct which brings about charge secretary of employee/laborer unions as parties responsible for strike (Id. at Art. of felonious criminal act (Id. at Art. 153[1][h]); (ix) due to differences in understandings, 140[2][d]). In event strike will be conducted by employees/laborers who are not members religion, political ideology, ethnic group, skin color, class, gender, physical condition or of employee/laborer union, notice must be signed by representative of employees/la- marital status (Id. at Art. 153[1][i]); or (x) employee/laborer is in condition of permanent borers appointed as coordinator and/or responsible party for strike. (Id. at Art. 140[3]). disability, is ill as result of work related accident or is ill due to employment relationship Strike failing to satisfy notice requirements constitutes unlawful strike. (Id. at Arts. 140 which is in accordance with letter of doctor with period of time for recuperation which and 142[1]). cannot be specified (Id. at Art. 153[1][j]). Employment relationship terminations imple- In event strike is implemented without notice to entrepreneur, entrepreneur may take mented based upon aforementioned reasons are void as matter of law and entrepreneur following temporary actions for purposes of safeguarding tools of production and assets is required to re-employ relevant employee/laborer. (Id. at Art. 153[2]). of company: (i) Prohibit all employees/laborers who are on strike from being at location Decision from industrial relations dispute settlement organization is not required in of production process activities (Id. at Art. 140[4][a]); or (ii) prohibit employees/laborers following circumstances: (i) Employee/laborer is still within trial period, if trial period who are on strike from being at location of company (Id. at Art. 140[4][b]). has been stipulated in writing (Id. at Art. 154[a]); (ii) employee/laborer submits written Prior to and during strike, government agency with responsibility over field of labor request to resign based upon his/her own desire and without existence of indications of affairs is obligated to settle problems which arise out of strike by uniting and conferring pressure/intimidation from entrepreneur (Id. at Art. 154[b]); (iii) end of employment with all parties who are in dispute. (Id. at Art. 141[2]). relationship in accordance with employment agreement for specified time for first time No one may hinder right of employees/laborers and employee/laborer unions to utilize (Id. at Art. 154[b]); (iv) employee/laborer reaches age of retirement in accordance with strikes which are conducted in legal, orderly and peaceful manner. (Id. at Art. 143[1]). stipulations of employment agreement, company regulations, cooperation agreement or Everyone is prohibited from conducting arrests/seizures and/or restraints in relation to regulations of law (Id. at Art. 154[c]); or (v) employee/laborer dies (Id. at Art. 154[d]). employees/laborers and management of employee/laborer unions who implement strikes In event of employment relationship termination, entrepreneur is obligated to pay which are conducted in legal, orderly and peaceful manner in accordance with regulations severance money and/or work period appreciation money for period of work and money of law in effect. (Id. at Art. 143[2]). for replacement of rights which should be received. (Id. at Art. 156[1]). In connection with lawful strikes conducted in accordance with performance of man- Art. 158 of Law No. 13 of 2003 provides that entrepreneur may terminate employment datory notice, entrepreneurs are prohibited from: (i) Replacing employees/laborers who relationship of employee/laborer if there is cause arising out of employee/laborer’s strike with other employees/laborers from outside of company (Id. at Art. 144[1][a]); or commission of following major faults: (i) Conduct of fraud, theft or embezzlement of (ii) imposing sanctions or retaliatory actions in any form on employees/laborers and goods or funds belonging to company (Id. at Art. 158[1][a]); (ii) providing false infor- management of employee/laborer unions during and after conduct of strike (Id. at Art. mation or falsifying information resulting in loss to company (Id. at Art. 158[1][b]); (iii) 144[1][b]). drunkenness, drinking hard drinks which are intoxicating, using and/or distributing nar- In event employees/laborers conduct lawful strikes in presentation of claims for nor- cotic, psychotropic and other addictive substances in work environment (Id. at Art. mative rights which have actually been violated by entrepreneur, employees/laborers are 158[1][c]); (iv) conduct of immoral act or gambling in work environment (Id. at Art. entitled to receive pay/wages. (Id. at Art. 145). 158[1][d]); (v) attacking, battering/torturing/mistreating, threatening or intimidating co- workers or entrepreneur in work environment (Id. at Art. 158[1][e]); (vi) tricking/cheat- Lock-out constitutes basic right of entrepreneur for rejection of employees/laborers in ing/persuading co-workers or entrepreneur to conduct act which is against regulations of whole or in part for conduct of work as result of failure of negotiations provided that law (Id. at Art. 158[1][f]); (vii) acting with impropriety, indecency, immorality, care- lock-outs must be conducted in accordance with provisions of law in effect. (Id. at Art. lessness or intent to damage, ruin or allow neglect of things/goods possessed by company 146[1]). Entrepreneur may not legitimize lock-out as act of retaliation in connection with to remain in dangerous situation resulting in loss to company (Id. at Art. 158[1][g]); (viii) normative claims of employees/laborers and/or employee/laborer unions. (Id. at Art. acting with impropriety, indecency, immorality, carelessness or intent to allow neglect of 146[2]). Lock-outs are prohibited for companies serving public interest and/or companies co-worker or entrepreneur in dangerous situation in work place (Id. at Art. 158[1][h]); with kinds of activities which endanger human life, including hospitals, clean water (ix) disclose or leak company secret which should be maintained confidential except in networks, centers of telecommunications management, centers for provision of electric interests of State (Id. at Art. 158[1][i]); or (x) conduct other acts in company environment power, oil and natural gas processing and trains. (Id. at Art. 147). which are subject to criminal punishment of imprisonment of five or more years (Id. at Not less than seven working days prior to implementation of lock-out, entrepreneur Art. 158[1][j]). However, Art. 158 of Law No. 13 of 2003 has been declared uncon- is obligated to provide written notice to employees/laborers, employee/laborer unions and stitutional and of no legal effect by Constitutional Court Decision No. 12 PUU I 2003 local government agency with responsibility over field of labor affairs (Id. at Art. 148[1]) dated 26 Oct. 2004. with following minimum informational content: (i) Time (day, date and hour) of com- mencement of and end of lock-out (Id. at Art. 148[2][a]); (ii) reasons and causes giving rise for need to conduct lock-out (Id. at Art. 148[2][b]); and (iii) signatures of entre- preneur and manager of relevant company (Id. at Art. 148[3]). ENVIRONMENT Notice is not required if: (i) Employees/laborers or employee/laborer union have ENVIRONMENTAL REGULATION: violated notice procedures relating to strikes (Id. at Arts. 140, 148[1] and [2] and 149[6][a]); or (ii) employees/laborers or employee/laborer union have violated normative Environmental protection is governed by Law No. 23 of 1997 dated 19 Sept. 1997 provisions stipulated in employment agreement, company regulations or regulations of concerning Environmental Management and wide range of other environmental legis- law in effect (Id. at Arts. 140, 148[1] and [2] and 149[6][b]). lation including regulation of spatial arrangement and industrial planning and permits, Prior to and during lock-out, government agency with responsibility over field of labor water, noise, air and odor pollution, liquid and other forms of hazardous and toxic wastes affairs is authorized to settle problems which arise out of lock-out by uniting and and administration of Blue Skies and Clean Rivers Programs. conferring with all parties who are in dispute. (Id. at Art. 149[2]). Natural resources are controlled by State and are utilized for greatest possible public welfare. (Art. 33[3] of Constitution of 1945). Government determines national policies Employment Relationship Terminations.—Provisions concerning employment rela- on environmental management and spatial management taking into account religious and tionship terminations set forth in Law No. 13 of 2003 concerning Labor Affairs cover cultural values. (Art. 9[1] of Law No. 23 of 1997 dated 19 Sept. 1997 concerning employment relationship terminations which occur in business organizations which are Environmental Management). legal entities or non-juridic entities, owned by individual natural persons, owned by Air pollution refers to materials, energy and other components entering into ambient federations/partnerships or owned by legal entities, both owned privately and owned by air due to human activities resulting in decline in ambient air quality. (Art. 1[1] of state, whether for social activities or other activities which have management and employ Government Regulation No. 41 of 1999 dated 26 May 1999 concerning Air Pollution other persons with payment of pay/wages or compensation in other forms. (Id. at Art. Control). National ambient air quality objectives have been established as maximum 150). ambient air quality limits to prevent air pollution for number of air pollutants including Entrepreneurs, employees/laborers, employee/laborer unions and government with all particulate, carbon monoxide, sulfur dioxide, nitrogen oxides, and ozone. (Id. at Art. 4[1] efforts must try to avoid employment relationship terminations. (Id. at Art. 151[1]). and Attachment to Id.). Vehicle emissions standards have been promulgated. (See gen- In event all efforts have already been conducted, but employment relationship termi- erally Decision of State Minister of Environment No. 141 of 2003 dated 23 Sept. 2003 nations cannot be avoided, then intentions concerning employment relationship termi- concerning Threshold Gas Exhaust Emission Limits for New Types of Motor Vehicles nations must be discussed by entrepreneur and employee/laborer union or with employee/ in Current Production.) laborer if relevant employee/laborer is not member of employee/laborer union. (Id. at Art. 151[2]). In event parties fail to reach agreement on employment relationship termination, Water pollution refers to emissions of living organisms, materials, energy and/or other dispute may be submitted to local government agency responsible for field of labor affairs components into water due to human activities resulting in decline in water quality. (Art. for settlement in accordance with industrial relations disputes process (see subhead 1[11] of Government Regulation No. 82 of 2001 dated 14 Dec. 2001 concerning Water Industrial Relations Disputes, supra). (Id. at Art. 151[3]). Management Control and Water Pollution Control). Discharge standards have been set Entrepreneur is prohibited from implementing employment relationship terminations for industrial and domestic effluent entering water resources. (Id. at Arts. 1[15] and based on following reasons: (i) Employee/laborer is hindered in entering work due to 21[1]). illness according to statement of doctor for period of time not exceeding 12 consecutive Hazardous waste and poison refers to residual material from efforts and/or activities months (Id. at Art. 153[1][a]); (ii) employee/laborer is hindered in performing work due which contain dangerous materials and/or which because of their nature and/or concen- to performance of obligation concerning State according to provisions of regulations of tration and/or amount, may pollute and/or harm environment and/or endanger health, law in effect (Id. at Art. 153[1][b]); (iii) employee/laborer conducts devotional practice sustainability of human life or other living creatures, whether directly or indirectly. (Art.

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ENVIRONMENTAL REGULATION . . . continued Arts. 1022 and 380[3]); (vii) in state of bankruptcy (Id. at Arts. 1022 and 380[4]); or (viii) 1[2] of Government Regulation No. 18 of 1999 dated 27 Feb. 1999 concerning Man- having dispute in court against interest of testator (Id. at Arts. 1022 and 380[5]). agement of Hazardous Waste and Poison). Procedures and technical requirements for Qualifications.—Minors, married women and persons of unsound mind under guard- storage and collection of waste are also regulated. (Id. at cc. III and IV). ianship and persons incompetent to enter into agreements cannot be executors or ad- ministrators. (Id. at Art. 1006). Powers and Duties.—Executors are authorized to take possession of all or part of ESTATES AND TRUSTS estate of deceased. (Id. at Art. 1007). Authority is limited to one year from date of possession. (Id. at Art. 1007). Executors are prohibited from selling property with in- DEATH (PRESUMPTIONS OF AND ACTIONS FOR): tention of division among heirs. (Id. at Art. 1014). Testators may appoint administrators Person is presumed dead if proved that he has been absent from his residence for: (i) to manage their estates for benefit of heirs for fixed period of time or throughout lives Five years without leaving letter authorizing representative to manage absentee’s wealth, of heirs. (Id. at Art. 1019). property, affairs and interests (Arts. 467 and 468 of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk Wetboek voor Indonesië]); (ii) TRUSTS: ten years if absentee has left letter authorizing representative to manage absentee’s Indonesian law does not specifically define concept of trusts or separation of legal from wealth, property, affairs and interests (Id. at Art. 470); (iii) one year if person was beneficial interests in property. However legal relationships similar to trusts arise in many member of crew or passenger of lost ship or airplane. (Staatsblad 1922:55). areas of Indonesian law. Before presumption of death is declared by judge of District Court, general summons must be published three times in newspapers specified by District Court, posted on main WILLS: doors of District Court and main doors of Regent’s office of last known residence of Civil Code.—Wills of persons not of Islamic faith are governed by Indonesian Civil absentee. (Id. at Art. 467). Declaration of presumption of death is announced in same Code (Kitab Undang-undang Hukum Perdata) (KUHPer) (Burgerlijk Wetboek voor In- newspaper publishing summons. (Id. at Art. 471). After announcement of declaration of donesië). presumption of death, heirs of deceased, by inheritance or testamentary disposition, have Testamentary Capacity.—Wills made by persons under age of 18 are not permitted. (Id. right to control wealth of deceased. (Id. at Art. 472). Heirs bear burden of guarantee at Art. 897). To make or revoke testament, one must be in full possession of his or her implied in law that they will not transfer any interests in corpus of estate. (Id. at Art. faculties. (Id. at Art. 895). Competence of testator is judged as to state of his or her 472). Rights of heirs are merely that of use. (Id. at Art. 474). After passage of 30 years condition at moment testament is made. (Id. at Art. 898). from date declaration of presumption of death is announced by judge or after passage Capacity to Benefit.—Persons benefiting from wills must exist at moment of death of of 100 years after birth date of person presumed dead, then distribution of assets to heirs testator. (Id. at Art. 899). Child in gestation is deemed to exist. (Id. at Art. 2). apparent vests. (Id. at Art. 484). Forms of Wills.—Holographic wills must be signed and written entirely in testator’s Married person whose spouse is missing may petition District Court to give permission handwriting and made and given to notary in presence of two witnesses either open or for marriage to another person if missing spouse has been absent for period of ten years under sealed cover. (Id. at Art. 932). If holographic will is given openly, notary with commencing on day spouse left his/her domicile and there has been no news regarding assistance of two witnesses draws up act of deposit at foot of testament. (Id. at Art. 932). life or death of missing spouse. (Id. at Arts. 493 and 494). If holographic will is given under sealed cover, cover must contain note written and Decision of presumption of death must be recorded in Civil Registry. (Id. at Art. 4). signed by testator stating that will contained within was made by testator and notary draws up act of deposit on cover. (Id. at Art. 932). Holographic wills which merely DESCENT AND DISTRIBUTION: authorize executors generally to make funeral arrangements and to distribute personal belongings need not be delivered to notary or witnessed to be effective. (Id. at Art. 935). Civil Code. —Descent and distributions of decedents who are not of Islamic faith are Notarial wills are made by notaries based on testator’s wishes in presence of two governed by Indonesian Civil Code (Kitab Undang-undang Hukum Perdata) (KUHPer) witnesses. (Id. at Art. 938). Notarial wills must be signed by testator, notary and wit- (Burgerlijk Wetboek voor Indonesië). If deceased leaves no issue, no spouse and no nesses. (Id. at Art. 939). brothers or sisters, inheritance is divided into two equal shares between blood relative Closed or secret wills made by testator outside of presence of notary must be written of maternal and paternal heirs in ascending line. (Art. 853 of Indonesian Civil Code in testator’s or testator’s representative’s handwriting, signed by testator personally and [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk Wetboek voor Indone- given to notary in presence of four witnesses. (Id. at Art. 940). sië]). If deceased leave no issue and no spouse and deceased leaves both parents and only Revocation.—Wills cannot be entirely or partially revoked except by later testament one brother or sister, each share equally. (Id. at Art. 854). If deceased leaves both parents or extraordinary notarial deed specifically stating intention of revocation. (Id. at Art. 992). and more than one brother or sister, each parent will obtain one-fourth of inheritance with Revocation made either expressly or by implication by later testament shall be entirely remainder divided between brothers and sisters. (Id. at Art. 854). If deceased leaves no valid although new testament is invalid due to incompetence or rejection of heirs. (Id. issue and no spouse and leaves only one parent and only one brother or sister, each at Art. 995). obtains half of estate. (Id. at Art. 855). If deceased leaves no issue and no spouse and Lapse.—Testamentary dispositions lapse if heir refuses to accept devise or if heir is leaves only one parent and two siblings, each share equally. (Id. at Art. 855). If deceased incompetent to receive devise. (Id. at Art. 1001). leaves no issue and no spouse, leaves only one parent and leaves more than two siblings, parent will get one-fourth and siblings will share equally. (Id. at Art. 855). If deceased Islamic Law.—Wills are only permissible once testator reaches age of 21. (Art. 194[1] leaves no issue, no spouse and no parents, brothers and sisters of deceased will inherit of Compilation of Islamic Law approved for use by Presidential Instruction No. 1 of 1991 entire estate in equal proportions. (Id. at Art. 856). If deceased leaves no issue, no spouse dated 10 June 1991). Testator may only bequeath one-third of his or her property without and no siblings and leaves one parent, parent obtains entire estate. (Id. at Art. 859). If consent of heirs apparent. (Id. at Art. 201). deceased leaves illegitimate but acknowledged issue along with legitimate issue or spouse, illegitimate child will inherit one-third of share of legitimate child. (Id. at Art. 863). If deceased leaves neither legitimate issue nor spouse but only blood relation in FAMILY ascending line or siblings and illegitimate issue, illegitimate issue will obtain one-half ADOPTIONS: of inheritable estate. (Id. at Art. 863). If deceased only leaves kinsfolk of greater distance, illegitimate child will obtain three-quarters of inheritance. (Id. at Art. 863). If deceased Adoption is governed by Law No. 23 of 2002 dated 22 Oct. 2002 concerning Child leaves no legal heirs, illegitimate child will obtain entire inheritable estate. (Id. at Art. Protection; Decree of Minister of Social Affairs No. 44/HUK/1997 dated 31 July 1997 865). concerning Fostering of Children Welfare through Adoption; Decree of Minister of Social Every heir has right to demand distribution of decedent’s estate. (Id. at Art. 1066). Affairs No. 2/HUK/1995 dated 25 Jan. 1995 concerning Completion of Attachment of Agreements concerning prohibition against distribution of estate are void, provided that Decree of Minister of Social Affairs No. 13/HUK/1993 concerning Implementation of distribution may be postponed for maximum of five years subject to renewal. (Id. at Art. Adoption; Supreme Court Circular Letter No. 2 of 1979 dated 7 Apr. 1979 concerning 1066). Creditors with claims against deceased have right to payment prior to distribution Adoption; and Supreme Court Circular Letter No. 6 of 1983 dated 30 Sept. 1983 of estate. (Id. at Art. 1067). Method of distribution may be determined by heirs if all of concerning Completion of Supreme Court Circular Letter No. 2 of 1979 concerning heirs are competent and they are all present at time of distribution. (Id. at Art. 1069). Adoption. Matters pertaining to distribution must be evidenced in notarial deed (akta notaris). (Id. Adoptions may only be implemented if in best interests of adoptive child and in at Art. 1074). accordance with local custom and regulations of law in effect. (Art. 39[1] of Law No. 23 of 2002 dated 22 Oct. 2002 concerning Child Protection). Adoptive parents must have EXECUTORS AND ADMINISTRATORS: same religion with adoptive child. (Id. at Art. 39[3]). Adoption by foreign citizens may only be conducted as last resort. (Id. at Art. 39[4]). Government and society provide Appointment, Resignation and Removal.—Testator may appoint one or more ex- guidance and supervision relating to adoption. (Id. at Art. 41[1]). ecutors and administrators based on will or appointed by notarial act. (Art. 1005 of Three categories of adoptions are recognized in Indonesia: (i) Adoptions of Indonesian Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk citizens by Indonesian citizens (Point 1[1] of Decree of Minister of Social Affairs No. Wetboek voor Indonesië]). If executors and administrators are unable to carry out or are 2/HUK/1995 dated 25 Jan. 1995 amending Art. II[3][a] of Attachment of Decree of impeded in carrying out administration or distribution according to will and testator has Minister of Social Affairs No. 13/HUK/1993 concerning Implementation of Adoption); not appointed substitute executors and administrators, District Court may appoint re- (ii) adoptions of Indonesian citizens by non-Indonesian citizens (Id. amending Art. placement upon hearing public prosecutor. (Id. at Art. 1020). District Court may remove II.3[b]); and (iii) adoptions of foreign citizens by Indonesian citizens (Id. amending Art. executors and administrators based upon following reasons: (i) Misuse of authority or II.3[c]). Adoptions must be approved by Minister of Social Affairs and registered with neglect of obligation (Id. at Arts. 1022 and 380[2]); (ii) immoral acts (Id. at Arts. 1022 Department of Social Affairs. (Art. IV[1] of Attachment of Decree of Minister of Social and 380[1]); (iii) irrevocable sentence of crimes relating to origin of marriage, decency, Affairs No. 13/HUK/1993). abandonment of person in need of assistance, crimes against freedom, crimes against life Adoptive parents must: (i) Have been married for at least five years unless doctor’s and cruel treatment/torture against children (Id. at Arts. 1022 and 380[7]); (iv) irrevocable letter certifying impossibility of having children is submitted with adoption application criminal sentence of imprisonment of two or more years (Id. at Arts. 1022 and 380[8]); (Point 1[2] of Decree of Minister of Social Affairs No. 2/HUK/1995 amending Art. (v) aiding and abetting or conspiring to commit one of aforementioned criminal offenses V[A][1][a] of Attachment of Decree of Minister of Social Affairs No. 13/HUK/1993); (ii) (Id. at Arts. 1022 and 380[6]); (vi) has been terminated from guardianship or parental be between ages of 30 and 45 years (Art. V[A][1][b] of Attachment of Decree of Minister guardianship due to misuse of authority or neglect of obligation or immoral acts (Id. at of Social Affairs No. 13/HUK/1993); (iii) have no more than one child (Id. at Art.

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ADOPTIONS . . . continued Adat Law.—Husband and wife commit themselves to live together. Husband and wife V[A][1][c]); (iv) be of sound financial, physical and spiritual condition (Id. at Art. decide permanent matrimonial domicile together. Husband has duty to protect his wife V[A][1][d] and [f]); (v) have good behaviour based on statement issued by Indonesian and maintain her according to his social and economic abilities. Police (Id. at Art. V[A][1][e]); (vi) provide written statement stating adoption is con- ducted for child’s welfare (Id. at Art. V[A][1][g]); (vii) provide social report (Id. at Art. INFANTS: V[A][1][h]); (viii) have taken care of adoptive child for at least six months based on Age of Majority varies for different purposes. Generally, age of majority is 21 years. permit from Area Office Head of Department of Social Affairs (Id. at Art. VI[1]); and (Art. 330 of Indonesian Civil Code [Burgerlijk Wetboek voor Indonesië] [Kitab Undang- additionally, foreign adoptive parent applicants must: (a) obtain written agreement from undang Hukum Perdata, KUHPer]). state government of which they hold citizenship (Id. at Art. V[A][2][b]); (b) have been Parental Guardianship.—Age of majority is 18 years for following matters: (i) Chil- working and living legally in Indonesia for at least two consecutive years supported by dren who have not yet reached age of 18 years or who have never married are under statement issued by authorized official (Point 1[3] of Decree of Minister of Social Affairs authority of their parents provided parental authority has not been annulled. (Art. 47[1] No. 2/HUK/1995 amending Art. V[A][2][c] of Attachment of Decree of Minister of of Law No. 1 of 1974 concerning Marriage). Social Affairs No. 13/HUK/1993); and (c) provide periodical report on child’s devel- Citizenship Matters.—Children are deemed Indonesian citizens if they are born outside opment through Indonesian embassy in adoptive parent’s respective country (Art. of legal marriage from foreign State citizen mother who is acknowledged by father who V[A][2][d] of Attachment of Decree of Minister of Social Affairs No. 13/HUK/1993). is Indonesian State citizen as his child and that acknowledgment is made prior to child Foreign citizen children adopted by Indonesian adoptive parents and Indonesian citizen reaching 18 years of age or prior to marriage. (Art. 4[h] of Law No. 12 of 2006 dated children adopted by foreign citizen parents may not be older than five years. (Point 1[4] 1 Aug. 2006 concerning Citizenship of Republic of Indonesia). Children are deemed of Decree of Minister of Social Affairs No. 2/HUK/1995 amending Art. V[A][3][b] of Indonesian citizens if they are born outside of legal marriage, have not yet reached age Attachment of Decree of Minister of Social Affairs No. 13/HUK/1993). Foreign citizens of 18 years, have not yet married and are legally acknowledged by father who has foreign may not adopt children who are already under parental care. (Art. XI[1] of Attachment citizenship. (Id. at Art. 5[1]). of Decree of Minister of Social Affairs No. 13/HUK/1993). Notarial Deeds.—Party appearing before notary must be at least 18 years of age or Examination of motives of adoptive parents and parents giving up child, including already married. (Art. 39[1][a] of Law No. 30 of 2004 dated 6 Oct. 2004 concerning their sincerity, seriousness and awareness of consequences of adoption is substantial Notarial Duties). element of adoption process. (Point IV[3][A][3][3.1] and [3.2] of Supreme Court Circular Female Employees.—Female employees/laborers under age of 18 years are prohibited Letter No. 6 of 1983 dated 30 Sept. 1983 concerning Completion of Supreme Court from being employed between hours of 11 p.m. and 7 a.m. (Law No. 13 of 2003 dated Circular Letter No. 2 of 1979 concerning Adoption). 25 Mar. 2003 concerning Labor Affairs at Art. 76[1]). Wills made by persons below age of 18 years are void. (Art. 897 of Indonesian Civil DIVORCE: Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk Wetboek voor In- Civil Law applies to marriages not based on Islamic law. Divorce must be conducted donesië]). before Court. (Art. 39[1] of Law No. 1 of 1974 dated 2 Jan. 1974 concerning Marriage). Marriage.—Aspiring husband must have attained age of 19 years and wife must be Divorce may only be conducted before court after relevant court attempts and does not at least 16 years, however one may petition court for dispensation. (Art. 7 of Law No. succeed in reconciling differences of parties. (Id. at Art. 39[1]). 1 of 1974 dated 2 Jan. 1974 concerning Marriage). Aspiring spouses may marry without There must be valid reason for divorce. (Id. at Art. 39[2]). Valid reasons include: (i) permission from their parents if they have reached age of 21 years. (Id. at Art. 6[2]). See One spouse commits adultery or becomes drunkard, addict, gambler or any other in- also Art. 156(d) of Compilation of Islamic Law approved for use by Presidential In- curable ill-manner (Art. 19[a] of Government Regulation No. 9 of 1975 dated 1 Apr. struction No. 1 of 1991 dated 10 June 1991 (providing that divorce obligates father to 1975 concerning Implementation of Law No. 1 of 1974 concerning Marriage); (ii) one provide support to children until children become adults and are able to take care of spouse leaves other for two consecutive years without permission of other spouse and themselves; deemed to occur at age of 21). without legal reason or cause beyond spouse’s control (Id. at Art. 19[b]); (iii) one spouse Contracting.—Contracts made by persons below age of majority are voidable. (Arts. becomes subject to sentence of imprisonment for five or more years following marriage 1320[2], 1330[1] and 1446 of Indonesian Civil Code [Kitab Undang-undang Hukum (Id. at Art. 19[c]); (iv) one spouse commits acts of cruelty or mistreatment endangering Perdata] [KUHPer] [Burgerlijk Wetboek voor Indonesië]). other spouse (Id. at Art. 19[d]); (v) one spouse is inflicted with physical defect or disease resulting in inability to serve as spouse (Id. at Art. 19[e]); or (vi) there is no hope for MARRIAGE: spouses to live harmoniously due to disputes and conflicts between them (Id. at Art. 19[f]). Civil Law.—Marriage is governed by Law No. 1 of 1974 dated 2 Jan. 1974 concerning Divorced parents remain obligated to care for and educate their children. (Art. 41[a] Marriage. Marriage is considered legal if conducted in accordance with rules of respec- of Law No. 1 of 1974). Court settles disputes regarding control and custody over tive religion and faith of parties. (Art. 2[1] Law No. 1 of 1974 dated 2 Jan. 1974 children. (Id. at Art. 41[a]). concerning Marriage). For non-Islamic marriages, marriage may be conducted after If husband and wife who have been divorced remarry each other and then get divorced passing of ten days from date of announcement of intent to marry by Civil Registry for second time, they may not remarry each other again unless specifically permitted by Official. (Arts. 2, 8 and 10 of Government Regulation No. 9 of 1975 dated 1 Apr. 1975 their respective religions and faiths. (Id. at Art. 10). concerning Implementation of Law No. 1 of 1974 concerning Marriage). At moment after marriage ceremony in accordance with aforementioned ten-day announcement period, Islamic divorce is applicable for Islamic marriages in accordance with Islamic law. both bride and bridegroom sign marriage deed which is prepared by Civil Registry (Id. at Art. 2[1]; Art. 2 of Compilation of Islamic Law approved for use by Presidential Official based on provisions in effect. (Id. at Art. 11[ 1]). Instruction No. 1 of 1991 dated 10 June 1991). In principle, man may only have one wife and woman may only have one husband. Alimony.— (Art. 3[1] of Law No. 1 of 1974). However, Court may give permission for man to have Civil Law.—Court may obligate ex-husband to pay alimony to his ex-wife. (Art. 41[c] more than one wife if desired by respective parties. (Id. at Art. 3[2]). Permission is only of Law No. 1 of 1974). granted if wife is unable to serve her husband, if wife is inflicted with physical defect Islamic Law.—Ex-wife has right to alimony if divorce was not based on her fault. (Art. or incurable disease, or if wife is barren. (Id. at Art. 4[2]). 152 of Compilation of Islamic Law approved for use by Presidential Instruction No. 1 Marriage is relationship of mutual consent. (Id. at Art. 6[1]). For persons under age of 1991 dated 10 June 1991). Alimony given is in amount of wife’s living costs during of 21 years, parental permission is required. (Id. at Art. 6[2]). Men under 19 years of 90 days Iddah period. (Id. at Arts. 149[b] and 153[2][b]). Besides alimony, ex-wife also age and woman under 16 years of age may not marry without approval from Court. (Id. has right to be paid Mut’ah in form of money or property. (Id. at Art. 149[a]). Mut’ah at Art. 7[1] and [2]). is paid in accordance with ability of ex-husband. (Id. at Art. 160). Marriages are prohibited between parents and their children (Id. at Art. 8[a]), brothers and sisters, parent’s brother or sister or brother or sister of respective grandmothers (Id. HUSBAND AND WIFE: at Art. 8[b]). Marriages are prohibited between people who are related by marriage including parents-in-law, stepchildren, sons and daughters-in-law and stepparents (Id. at Civil Law.—Rights of husband and wife in family and social life are deemed equal Art. 8[c]) and between persons with relation by breast feeding (Id. at Art. 8[d]). with each party entitled to take legal action. (Art. 31[1] and [2] of Law No. 1 of 1974 Marriages may be prevented by objection to Court tendered by immediate family dated 2 Jan. 1974 concerning Marriage). Spouses are obligated to love one another, give members or prospective spouse’s guardians if it is apparent that marriage would bring mutual respect and assistance and be loyal. (Id. at Art. 33). Husband is obligated to give suffering to either prospective spouse. (Id. at Art. 14). Marriage may not proceed until protection to his wife and to provide livelihood according to his capabilities. (Id. at Art. application of objection is revoked by applicant or denied by Court. (Id. at Arts. 18 and 34[1]). Wife is obligated to take care of household matters according to her best efforts. 19). (Id. at Art. 34[2]). Neglect by either husband or wife is grounds for suit in court. (Id. Under certain circumstances, marriages may be annulled by application to Court by at Art. 34[3]). husband or wife or immediate family members of husband or wife if parties are not Community Property.—Property obtained during marriage is considered marital prop- suitable for marriage. (Id. at Arts. 22 and 23). erty. (Id. at Art. 35[1]). Property brought into marriage by each spouse, and property Marriages dissolve by reason of death, divorce or other Court decision. (Id. at Art. 38). obtained by each spouse through gift or inheritance is considered separate property of Marriages occurring outside of Indonesian territory between two persons of Indonesian spouse bringing property into marriage or receiving gift or inheritance. (Id. at Art. 35[2]). citizenship or of Indonesian citizen and foreign citizen must be processed in accordance Dispositions of marital property require consent of both spouses. (Id. at Art. 36[1]). Each with prevailing law of country in which marriage took place, provided that Indonesian spouse is empowered to take any legal action with regard to respective spouse’s separate spouse may not engage in marriage proceeding infringing upon mandates of Indonesian property. (Id. at Art. 36[2]). law. (Id. at Art. 56[1]). Within one year after spouses return to Indonesia, marriage Islamic Law.—Rights and duties of husband and wife are equal in family and social certificate must be recorded at Marriage Registry Office. (Id. at Art. 56[2]). Marriages life, and both have right to take legal action. (Art. 79[2] and [3] of Compilation of Islamic between Indonesian citizens and foreign citizens within Indonesia require proof that legal Law approved for use by Presidential Instruction No. 1 of 1991 dated 10 June 1991). conditions of marriage applicable to laws of foreign citizen’s country have been fulfilled Marital domicile is determined by mutual agreement. (Id. at Art. 78). Husband has duty as well as fulfillment of other Indonesian legal requirements. (Id. at Art. 60[1] and [2]). to provide place to stay for his wife and children (Id. at Art. 81[1]), to protect and Courts referred to under this heading are either Religious Court for Muslim marriages maintain his wife according to his social and economic abilities (Id. at Art. 80[2]) and or National District Court for non-Muslim marriages. (Id. at Art. 63[1]). to provide his wife with religious education (Id. at Art. 80[3]). Wife has duty to serve Civil servants must notify relevant officials of their marriage within one year after their husband based on Islamic law and to arrange for daily household needs. (Id. at Art. 83). marriage. (Art. 2[1] of Government Regulation No. 10 of 1983 dated 21 Apr. 1983

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MARRIAGE . . . continued Border Crossers, Goods Sent by Post and Goods Sent by Forwarding Agents; Art. 3 concerning Permit of Marriage and Divorce for Civil Servants). Civil servants must also Directorate General Customs and Excise Circular No. SE-25/BC/1996 dated 16 July 1996 obtain permits for divorce. (Art. I Point 1 of Government Regulation No. 45 of 1990 concerning Passengers’ Goods Regulation). Import duties must be paid on excess values. dated 6 Sept. 1990 concerning Amendment of Government Regulation No. 10 of 1983 (Art. 2[2] of Minister of Finance Decree No. 490/KMK.05/1996). In addition to grant amending Art. 3). of this exemption, excisable goods in form of 200 cigarettes, 50 cigars, 200gm chip Islamic Law.—Marriage is contract concluded between bridegroom and guardian of tobacco and one liter of ethyl alcohol drinks are exempt from obligation to pay import bride in presence of two witnesses. (Arts. 1[c], 2 and 27 of Compilation of Islamic Law duties, taxes and excises for any passenger or crew. (Id. at Art. 3[1]). If excisable goods approved for use by Presidential Instruction No. 1 of 1991 dated 10 June 1991). It is carried by any passenger exceed amount as above mentioned, excess of excisable goods contract in which “idjab-kabul” (offer and acceptance) of marriage is concluded in shall be declared as goods controlled by and belonging to State and be destroyed. (Id. sacramental words. (Id. at Arts. 1[c] and 27). Mahar, gift from bridegroom to bride, is at Art. 3[2]). Crew members are limited to value of FOB US$50 and must pay import given at ceremony or after if bride agrees. (Id. at Arts. 1[d] and 33[2]). Bride is duty on excess value. (Id. at Art. 5). represented by wali who is bride’s father, or if he is unavailable, another male relative Post.—Goods imported by post with value of less than US$50 shall be exempt from from father’s side of family. (Id. at Arts. 20 and 21). If no male relative from father’s import duty and import related tax. (Art. 10 of Minister of Finance Decree No. 490/ side of family is available, substitute for male family member may act upon appointment KMK.05/1996). by Minister of Religious Affairs or appointed official after decision of religious court. (Id. at Arts. 1[b] and 23). EXCHANGE CONTROL: Adat Law.—Marriage in Adat law sphere gives rise to intercession of clan heads, village chief and parents. Marriage ceremonies conclude when chiefs of community No foreign exchange restrictions are imposed on flow of foreign exchange except with officially announce marriage to community. regard to offshore commercial loans. See subhead Offshore Commercial Loans, infra. Formation.—Marriage is usually preceded by proposal made by parents of aspiring Limitations on right to transport Indonesian Rupiah into or out of territory of Indonesia bridegroom to parents of intended bride. If proposal is accepted, result is usually not provide that each person may carry up to Rp 100,000,000 across Indonesian borders directly marriage but first engagement or betrothal. With acceptance of engagement, without obtaining permit from Bank Indonesia. (Art. 2 of Regulations of Bank Indonesia parties promise to marry and promise becomes binding when presents are exchanged. dated 10 Oct. 2002 concerning Art. Requirements and Procedures of Transporting Rupiah Gifts may be transferred from aspiring bridegroom to intended bride or vice versa Currency Inside or Outside Indonesian Custom Area). Those transporting cash in excess depending on relevant cultural group. Engagement is usually followed by feast attended of Rp 100,000,000 must obtain permit from Bank Indonesia which must be reported to by members of families involved. customs authority at departure point. (Id. at Art. 4[2][b]). Violations of aforementioned provisions are subject to administrative sanctions equivalent to 10% of amount of cash Support.— transported. (Id. at Art. 6[1]). Civil Law.—Father is obligated to provide for all of his children’s living costs and education. (Art. 41[b] of Law No. 1 of 1974 dated 2 Jan. 1974 concerning Marriage). Offshore Commercial Loans.—Team for coordination and management of offshore If father is unable to provide support, court may also obligate mother to support her commercial loans serves to manage utilization of offshore commercial loans in order to children. (Id. at Art. 41[b]). prevent pressure on international balance of payments of Indonesia, avoid confusion in Islamic Law.—Father is obligated to give support called Hadhanah according to his entering international capital markets and ensure that offshore loan repayment obligations ability until his children reach age of 21 years. (Arts. 149[d] and 156[d] of Compilation are kept within limits of Indonesia’s economic capacity. (Point [b] of Consideration of Islamic Law approved for use by Presidential Instruction No. 1 of 1991 dated 10 June Section of Presidential Decree No. 39 of 1991 dated 4 Sept. 1991 concerning Coordi- 1991). Children also have right to receive child support from mother until age of 21 nation and Management of Offshore Commercial Loans). Tim PKLN is governed by years. (Id. at Art. 156[a]). Presidential Decree No. 39 of 1991 dated 4 Sept. 1991 concerning Coordination on Management of Offshore Commercial Loan. Tim PKLN is responsible for determining total amount of offshore loans to be procured from international capital market in fiscal FOREIGN TRADE AND COMMERCE year, stipulating guidelines regarding requirements for commercial offshore loans, de- termining order of priority for usage of commercial offshore loans for financing devel- CUSTOMS: opment projects, fixing schedules for procurement of loans to avoid capital market Customs is governed by Law No. 10 of 1995 dated 30 Dec. 1995 concerning Customs confusion and monitoring plans and realization and utilization of offshore commercial and Law No. 11 of 1995 dated 30 Dec. 1995 concerning Excise. loans. (Id. at Art. 2). Customs relates to all matters connected with control of flow of goods entering or Type of loans subject to approval by Tim PKLN include: (i) Loans connected with leaving Indonesian territory including land, air and sea, special customs and exclusive development projects whose financing is of nature of non-recourse loans, limited recourse economic zones and continental shelf. (Art. 1[1] and [2] of Law No. 10 of 1995 dated loans, advance payments, trustee borrowings, leasing and others of similar nature (Id. at 30 Dec. 1995 concerning Custom). Minister of Finance through Directorate General of Art. 6[a]); and (ii) loans connected with development projects whose financing is based Customs and Excise, is authority responsible for administration of customs regulations. on build, operate and transfer, build and transfer and other similar arrangements (Id. at (Id. at Art. 1[8] and [10]). Goods entering into Indonesian customs area are treated as Art. 6[b]). imports upon which import duty may be assessed. (Id. at Art. 2[1]). Goods which have Types of loans excluded from purview of Tim PKLN’s approval authority include: (i) been or will be loaded onto means of transportation for departure from Indonesian Offshore commercial loans for trading needs of short term nature (Id. at Art. 7[a]); (ii) customs area are deemed as already exported and treated as exported goods. (Id. at Art. offshore commercial loans procured by private companies for development project fi- 2[2]). nancing having nothing to do with government or State owned enterprises (including State banks and State oil and gas company, Pertamina) in form of State capital partici- Anti-Dumping and Countervailing Duties.—Imported goods may be subject to: (i) pation, guarantees for basic material supplies, guarantees for purchase of results of Anti-Dumping penalties if price of imported goods is lower than their normal value in production or activities of any form (Id. at Art. 7[b]); and (iii) other offshore commercial country of export and if imported goods cause or threaten to cause losses (Id. at Art. 18; loans as determined by Tim PKLN (Id. at Art. 7[c]). Art. 2 of Government Regulation No. 34 of 1996 dated 4 June 1996 concerning Anti- Prospective borrowers must submit applications to Tim PKLN to obtain approval to Dumping And Countervailing Duties); or (ii) countervailing duties if price of imported enter international capital markets to procure offshore commercial loans. (Id. at Art. 9). goods reflects benefits from subsidies by government or state bodies, whether directly or indirectly, to export related enterprises if price of imported goods is lower than their FOREIGN EXCHANGE: normal value in country of export and if imported goods cause or threaten to cause losses by Indonesian domestic industries producing goods of same or similar type (Art. 21 of See topic Exchange Control. Law No. 10 of 1995; Art. 3 of Government Regulation No. 34 of 1996). Duty free imports are available for import of personal goods for use by officials FOREIGN INVESTMENT: connected with diplomatic missions of foreign countries, provided those foreign countries Foreign investment is governed by Law No. 1 of 1967 dated 10 Jan. 1967 concerning provide reciprocal benefits to Indonesian diplomats. (Art. 25[1][a] of Law No. 10 of Foreign Investment as amended by Law No. 11 of 1970 dated 7 Aug. 1970 concerning 1995; Art. 2 of Minister of Finance Decree No. 90/KMK.04/2002 dated 12 Mar. 2002 Amendment to Law No. 1 of 1967. Foreign persons or entities are encouraged to concerning Procedure for Duty Free Import and Excise for Goods of Diplomatic Missions participate in all or part of share capital of limited liability companies based upon and Officials). obtaining approval of President and: (i) Minister of Finance for finance and insurance Foreign diplomatic representative offices may import up to 16 assembled four-wheeled sector activities; or (ii) Investment Coordinating Board (BKPM); or (iii) provincial motor vehicles. (Art. 25[1][a] of Law No. 10 of 1995; Art. 5[1] of Minister of Finance Governor for other activities. (Decision of Chairman of Investment Coordinating Board Decree No. 90/KMK.04/2002). Foreign diplomatic consular offices may import up to six No. 57/SK/2004 dated 20 July 2004 concerning Procedures and Guidelines for Request assembled four-wheeled motor vehicles. (Art. 25[1][a] of Law No. 10 of 1995; Art. 5[2] for Investment Established in Framework of Domestic and Foreign Investment). of Minister of Finance Decree No. 90/KMK.04/2002). Participation by foreign investors in certain business activities deemed vital or im- Goods subject to duty free imports also include goods for international organizations; portant to security of State and areas deemed appropriate for fostering of domestic goods for re-export; scientific books; religious, social or cultural charitable donations; investment are either wholly or partially prohibited in accordance with negative invest- museums; zoos and other places open to public; goods relating to scientific research; ment activities list available through Investment Coordinating Board. (Presidential De- goods related to handicapped or blind persons; ammunition; armaments and military cree No. 96 of 2000 dated 20 July 2000 concerning Business Sectors which are Closed equipment including spare parts for national defense needs; goods in interest of national and Business Sectors which are Open with Certain Requirements for Investment as am’d security; sample goods not for sale; coffins and corpses; tools and equipment related to by Presidential Decree No. 118 of 2000 dated 16 Aug. 2000 concerning Amendment to moving of goods and personal goods of passengers, crew members and border crossers. Presidential Decree No. 96 of 2000 concerning Closed and Business Sectors which are (Art. 25[1] of Law No. 10 of 1995). Open with Certain Requirements for Investment). Personal and Other Import Duty Exemptions.—Goods carried by any individual Finance and insurance sector company minimum capitalization is mandated by law. with goods of FOB value of less than US$250 or any family with goods of FOB value (Art. 25[2] of Law No. 1 of 1995; Art. 9[2][c] of Law No. 2 of 1992 dated 11 Feb. 1992 of less than US$1,000 shall be exempt from import duties and import related tax. (Art. concerning Insurance Business). For non-finance related activities, there are no legislated 2[1] of Minister of Finance Decree No. 490/KMK.05/1996 dated 31 July 1996 con- stipulations on minimum capital requirements with exception of Rp 20,000,000 minimum cerning Procedure for Importing Goods Carried by Passengers, Crew Members and capitalization requirement applicable to all Indonesian limited liability companies. (Id. at

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FOREIGN INVESTMENT . . . continued Authority to prevent entry of Indonesian citizens into Indonesia is vested with team Art. 25[1]). In practice Investment Coordinating Board favors foreign investment com- headed by Minister of Law and Human Rights including members from: (i) Armed mitments in excess of US$200,000. Permits are granted for 30 years and may be Forces (Id. at Art. 16[1][a]); (ii) Attorney General’s Office (Id. at Art. 16[1][b]); (iii) extended. (Art. 18 of Law No. 1 of 1967). Department of Foreign Affairs (Id. at Art. 16[1][c]); (iv) Department of Home Affairs (Id. Periodic investment realization and business activity reports must be filed with In- at Art. 16[1][d]); (v) Coordinating Agency in charge of Assistance in Strengthening vestment Coordinating Board. (Art. 8 of Decision of Chairman of Investment Coordi- National Stability (Id. at Art. 16[1][e]); and (vi) State Intelligence Agency (Id. at Art. nating Board No. 61/SK/2004 dated 20 July 2004 concerning Control of Implementation 16[1][f]). of Investment). Entry to Indonesian citizens may be denied if: (i) Citizen has been absent from Indonesia for long time and has shown enmity toward Government of Indonesia or Representative Offices.— Nation (Id. at Art. 18[a]); (ii) citizen’s presence in Indonesia is likely to disrupt process Regional Representative Offıces are utilized by foreign companies and groups of for- of development, lead to national disunity or disrupt national stability (Id. at Art. 18[b]); eign companies for purposes of: (i) Supervising, negotiating with and coordinating or (iii) citizen’s presence in Indonesia is likely to threaten own safety or safety of family affiliated companies; and/or (ii) preparing establishment and development of foreign (Id. at Art. 18[c]). investment company in Indonesia and in other countries. (Art. 1 of Presidential Decree Indonesian police force and immigration officials are empowered to: (i) Receive No. 90 of 2000 dated 10 July 2000 concerning Foreign Representative Offices). reports on criminal actions concerning immigration matters; (ii) summon, examine, Trade Representative Offıces are utilized to act as selling agents, manufacturing agents search, arrest or detain persons suspected of committing criminal acts concerning im- and/or buying agents. (Art. 2 of Decree of Minister of Trade No. 10/M-DAG/PER/3/2006 migration matters; (iii) examine and/or confiscate documents, letters, passports or other dated 29 Mar. 2006 concerning Foreign Trade Representative Office). objects connected with criminal acts concerning immigration matters; (iv) summon per- Construction Company Representative Offıces are utilized by foreign construction sons as witnesses; (v) search certain places where it is suspected that letters, documents, services companies (Art. 2[1] of Regulation of Minister of Public Construction No. passports or other objects connected with criminal acts concerning immigration matters 50/PRT/1991 dated 7 Feb. 1991 concerning Licensing for Foreign Construction Company may be found; and (vi) take fingerprints and pictures of suspects. (Id. at Art. 47[1] and Representative Offices) to obtain business licenses to engage in construction services in [2]). Indonesia with Indonesian participant through Joint Operation (Id. at Arts. 2 and 3). Construction Company Representative Office may not conduct construction service ac- Departure taxes are imposed on persons traveling across Indonesian territorial borders tivities in Indonesia unless they are affiliated with Indonesian participant. (Id. at Art. as follows: (i) Rp 1,000,000 for every person departing by aircraft (Art. 2[a] of Gov- 3[1]). ernment Regulation No. 42 of 2000 dated 23 June 2000 concerning Payment of Personal Income Tax for Persons Departing Abroad); (ii) Rp 500,000 for every person departing by ship (Id. at Art. 2[b]); and (iii) no departure tax for persons departing over land IMMIGRATION borders (Id. at Elucidation of Art. 3). Violations of immigration law are criminal offenses subject to fines and/or impris- ALIENS: onment. (Arts. 48-62 of Law No. 9 of 1992). Aliens are defined as all persons who are not Indonesian citizens.

IMMIGRATION: INTELLECTUAL PROPERTY Governing Law.—Law No. 9 of 1992 dated 31 Mar. 1992 concerning Immigration COPYRIGHT: Affairs governs immigration affairs. Travel in and out of territory of Indonesia is matter of right for Indonesian citizens. Governing Law.—Copyrights are governed by Law No. 19 of 2002 dated 29 July (Art. 2 of Law No. 9 of 1992 dated 31 Mar. 1992 concerning Immigration Affairs). To 2002 concerning Copyrights. travel in or out of territory of Indonesia, every traveler must have passport. (Id. at Art. Law No. 19 of 2002 is effective with respect to: (i) All creations of citizens, residents 3). and legal entities of Indonesia (Art. 76[a] of Law No. 19 of 2002 dated 29 July 2002 Departure permits issued by immigration officials are required in order to permit travel concerning Copyrights); (ii) all creations of those who are not Indonesian citizens, not across Indonesian territorial borders. (Id. at Art. 4[1]). Entry permits issued by immi- residents of Indonesia and not legal entities of Indonesia provided creation has been gration officials are required in order to permit entry into Indonesian territorial borders. published for first time in Indonesia (Id. at Art. 76[b]); (iii) all creations of those who (Id. at Art. 4[2]). are not Indonesian citizens, not residents of Indonesia and not legal bodies of Indonesia All trans-territorial travelers must pass examination by immigration officials at im- provided that (a) country from where creation originated has bilateral agreement con- migration check points. (Id. at Art. 5[1]). Immigration check points are located at ports, cerning protection of copyrights with Republic of Indonesia (Id. at Art. 76[c][i]), or (b) airports and other places determined by Minister of Law and Human Rights. (Id. at Art. country from where creation originated are parties to or participants in same multilateral 5[2]). agreement concerning protection of copyrights (Id. at Art. 76[c][ii]). Every alien entering Indonesian territory must obtain visa (Id. at Art. 6[1]) except: (i) Aliens coming from States excluded from visa requirements by Presidential Decree (Id. Definitions.— at Art. 7[1][a]); (ii) aliens having reentry permits (Id. at Art. 7[1][b]); (iii) captains and Copyright means exclusive right of creator or receiver of rights for publication or crew of ships and airplanes for purposes of anchoring or landing (Id. at Art. 7[1][c]); and duplication of creations or granting of license for publication or duplication of creation. (iv) transit passengers at ports or airports provided they do not leave designated transit (Id. at Art. 1[1]). areas (Id. at Art. 7[1][d]). Creator means one or more persons acting together who based upon their inspirations Immigration officials may refuse entry to travelers who: (i) Do not have valid passports bring into existence creation based upon capabilities of thoughts, imagination, adroitness/ and visas (Id. at Art. 8[a] and [b]); (ii) apparently suffer from mental disorders or dexterity, skills or expertise which are poured forth into form which is of special communicable diseases which might endanger public health (Id. at Art. 8[c]); (iii) do not characteristic and which is of personal nature. (Id. at Art. 1[2]). have reentry permits or permits to enter another country (Id. at Art. 8[d]); or (iv) have Creation means result of every labor of creator that exhibits originality in fields of given false information relating to obtaining passports or visas (Id. at Art. 8[e]). scientific knowledge, art or literature. (Id. at Art. 1[3]). Aliens present in Indonesia are required to possess immigrations affairs permits (Id. Holder of copyright means creator as owner of copyright, or parties who receive at Art. 24[1]) for purposes of: (i) Transit (temporary stay while continuing journey to copyright from creator, or other parties who receive rights extending from copyright of another country) (Id. at Arts. 24[2][a] and 25[1]); (ii) visits (for brief periods for gov- parties who have received copyright. (Id. at Art. 1[4]). ernment assignments, tourism, socio-cultural activities or business) (Id. at Arts. 24[1][b] Publication means readings, broadcasts, exhibits, sales, circulations or distributions of and 25[2]); (iii) residence for limited periods (Id. at Art. 24[2][c]); and (iv) permanent creation through utilization of any means/instruments/tools including Internet media or residence (Id. at Art. 24[2][d]). any means resulting in creation being capable of being read, heard or seen by other Authority to prevent departure of persons from Indonesia is vested with: (i) Minister persons. (Id. at Art. 1[5]). of Law and Human Rights for matters concerning immigration (Id. at Art. 11[1][a]); (ii) Duplication means increases in number/amount of creation, both in its entirety as well Minister of Finance for matters concerning debts owed to State (Id. at Art. 11[1][b]); (iii) as in substantial parts, through utilization of materials which may or may not be same, Attorney General concerning prosecutorial matters (Id. at Art. 11[1][c]); and (iv) Com- including transformations of permanent or temporary manner. (Id. at Art. 1[6]). mander-in-Chief of Armed Forces concerning national security (Id. at Art. 11[1][d]), with Portrait means picture of face of person who is drawn, whether or not together with implementation of orders of exit prevention undertaken by Directorate General of Im- other parts of person’s body, which is created in any manner and by any means/instru- migration (Id. at Art. 11[2]). ments/tools. (Id. at Art. 1[7]). Authority to prevent entry of aliens into Indonesia is vested with: (i) Minister of Law Computer program means compilations of instructions which take form of language, and Human Rights for matters concerning immigration (Id. at Art. 15[1][a]); (ii) Attorney code, sketches or other forms, which if united with media which is capable of being read General concerning prosecutorial matters (Id. at Art. 15[1][b]); and (iii) Commander- by computer will enable computer to work conducting specific functions or to achieve in-Chief of Armed Forces concerning national security (Id. at Art. 15[1][c]), with imple- specific results, including set-up within layout of aforementioned instructions. (Id. at Art. mentation of orders of departure prevention undertaken by Directorate General of Im- 1[8]). migration (Id. at Art. 15[2]). Related rights means rights which are interrelated to copyright, for example exclusive Entry to aliens may be denied if, among other reasons: (i) It is known or suspected rights of actor to duplicate or broadcast performance/exhibition/show; of voice recording that alien is involved in international crime syndication (Id. at Art. 17[1][a]); (ii) alien producer for duplication and lease of voice recording works or sound recording works; has shown enmity toward Government of Indonesia or Nation (Id. at Art. 17[1][b]); (iii) and of broadcasting agencies for making, duplicating or broadcasting of broadcast works. alien is suspected of having committed acts contradictory to public safety, security, order, (Id. at Art. 1[9]). decency, religion or customs of people of Indonesia (Id. at Art. 17[1][c]); (iv) request of Actor means actors, singers, musicians, dancers or those who bring forward, exhibit, another country (Id. at Art. 17[1][d]); (v) alien is wanted for crime for which alien would show, sing, deliver, recite or play musical, drama, dance, literary, folklore or other artistic also be subject to criminal penalty under Indonesian law (Id. at Art. 17[1][d]); (vi) alien work. (Id. at Art. 1[10]). has been expelled or deported from Indonesia (Id. at Art. 17[1][e]); or (vii) other Voice recording producer means persons or legal entities who record and have re- immigration related reason further stipulated by Government Regulation (Id. at Art. sponsibility for conduct of voice or sound recordings for first time, both recordings from 17[1][f]). performance as well as voice or other sound recordings. (Id. at Art. 1[11]).

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COPYRIGHT . . . continued names are mentioned in creation or persons whose names are published as creator of Broadcast agency means broadcast operator organizations in form of legal entities creation (Id. at Art. 5[1][b]); (iii) except if there is evidence to contrary, for lectures/ which conduct broadcasts of broadcast works through utilization of transmissions with talks/presentations which do not utilize written materials and do not provide information or without cable or through electromagnetic systems. (Id. at Art. 1[12]). identifying creator, persons who lecture/talk/present are deemed to be creator of lecture/ License means permit which is granted by holder of copyrights or holder of related talk/presentation (Id. at Art. 5[2]); (iv) if creation consists of several individual/separate rights to another person for publication and/or duplication of creation or product of parts which were created by two or more persons, person who is deemed creator is person related rights upon certain provisions. (Id. at Art. 1[14]). who leads in completion of entire creation in supervisory capacity, or in event no such Minister means Minister in charge of department with scope of duties and responsi- leader exists, person who is deemed creator is person who compiles/assembles creation bility covering developments in field of intellectual property rights including copyrights. without diminishing copyrights in each of respective parts of creation (Id. at Art. 6); (v) (Id. at Art. 1[15]). if creation is designed by person and brought into reality/given shape and carried out/ Directorate General means Directorate General of Intellectual Property Rights which performed by another person under leadership and supervision of designer, creator is exists under department which is headed by Minister. (Id. at Art. 1[17]). person who designed creation (Id. at Art. 7); (vi) if creation is produced in connection Nature of Copyrights.—Copyrights constitute exclusive rights of creators or holders with official duties (by order) of civil servant and his or her relevant government agency of copyrights for publication or duplication of their creations which arise automatically with another party within scope of his/her work, holder of copyrights is government after creation is brought into existence without lessening limitations set forth in pre- agency for whom creation was carried out (unless there is another agreement between vailing regulations of law. (Id. at Art. 2[1]). Copyrights are deemed as movable assets both parties in manner which does not reduce rights of creator when utilization of that and are also recognized as intangibles. (Id. at Art. 3[1]). creation is broadened beyond scope of official duties) (Id. at Art. 8[1] and [2]; Elucidation Creators and/or holders of copyrights in cinematographic and computer programs of Art. 8[1]); (vii) party who produces creative work is deemed to be creator and holder possess rights to grant permission or prohibit other people who without their consent rent of copyrights in creations made within work relations or made based upon orders of other creation for interests which are of commercial nature. (Id. at Art. 2[2]). parties (except if there is another agreement between parties) (Id. at Art. 8[3]); (viii) if legal entity publishes that creation is originated by that legal entity without mentioning Transfers.—Copyrights are transferable in whole or in part by: (i) Inheritance; (ii) gift; individual as creator, then that legal entity is deemed as creator (unless there is evidence (iii) testamentary disposition; (iv) written agreement; and (v) other means of transfer to contrary) (Id. at Art. 9); (ix) State holds copyrights in prehistoric, historic and other authorized in accordance with provisions of law including, for example, transfers in national cultural relics (Id. at Art. 10[1]); and (x) State holds copyrights in folklore and accordance with final and binding court decisions. (Id. at Art. 3[2]; Elucidation of Art. community cultural productions which are jointly possessed such as stories, tales, fairy 3[2][e]). Transfers of copyrights may not be accomplished orally, but must be conducted tales, legends, histories/chronicles, songs, handicrafts, choreography, dances, calligraphy via writing which may but need not take form of notarial deed. (Id. at Elucidation on and other artistic works. (Id. at Art. 10[2]). Art. 3[2]). Portraits.—For duplication and publication of creations, holders of copyrights in Protected Creations.—Creations which are subject to protection are creations in fields portraits of person must first obtain permit from portrayed person, or permit from of scientific knowledge, art and literature including: (i) Books, computer programs, portrayed person’s heirs within period of time of ten years from date of death of pamphlets, layouts, published written works and all other products of written work (Id. portrayed person. (Id. at Art. 19[1]). It is not deemed to be violation of copyrights if at Art. 12[1][a]); (ii) social and university lectures, speeches, talks and other creations portrait of actor in public performance is made even though publication is of commercial of that kind (Id. at Art. 12[1][b]); (iii) mock-ups, visual aids made for needs of education nature, except if there is different declaration by interested party. (Id. at Art. 21). For and scientific knowledge (Id. at Art. 12[1][c]); (iv) songs or music with or without text interests of public safety and/or for needs of criminal court processes, portrait of person (Id. at Art. 12[1][d]); (v) dramas, musical dramas, dances, choreography, things per- in any situation may also be duplicated and published by relevant governmental insti- taining to wayang (shadow plays with leather puppets often dramatizing themes from tutions. (Id. at Art. 22). Hindu epics) and pantomimes (Id. at Art. 12[1][e]); (vi) fine arts in all forms such as paintings, drawings, carvings, calligraphy, engraving, sculptures, collages and applied Term of Protection.— arts (Id. at Art. 12[1][f]); (vii) architecture (Id. at Art. 12[1][g]); (viii) maps (Id. at Art. Lifetime Plus 50 Years.—Copyrights are valid for duration of life of creator and for 12[1][h]); (ix) batik art (Id. at Art. 12[1][i]); (x) photography (Id. at Art. 12[1][j]); (xi) additional 50 years thereafter for following creations: (i) Books, pamphlets and all other cinematography (Id. at Art. 12[1][k]); and (xii) translations, explanations of passages of written work products (Id. at Art. 29[1][a]); (ii) dramas or musical dramas, dances and literature (by supplying additional information), adaptations, anthologies, databases and choreography (Id. at Art. 29[1][b]); (iii) all forms of fine art, such as paintings, carvings other works which are results of transformation of form (Id. at Art. 12[1][l]). and sculptures (Id. at Art. 29[1][c]); (iv) batik art (Id. at Art. 29[1][d]); (v) songs or music with or without text (Id. at Art. 29[1][e]); (vi) architecture (Id. at Art. 29[1][f]); (vii) Unprotected Works.—Copyrights do not arise in: (i) Minutes of open meetings of lectures, speeches and other similar creations (Id. at Art. 29[1][g]); (viii) mock-ups, visual State agencies (Id. at Art. 13[a]); (ii) regulations of law (Id. at Art. 13[b]); (iii) State aid tools (Id. at Art. 29[1][h]); (ix) maps (Id. at Art. 29[1][i]); and (x) translations, speeches or speeches of Government officials (Id. at Art. 13[c]); (iv) court decisions or explanations of passages of literature, adaptations and anthologies. (Id. at Art. 29[1][j]). judicial decrees (Id. at Art. 13[d]); or (v) arbitration decisions or other decisions of same In event foregoing creations are possessed by two or more persons, copyrights are valid kind (Id. at Art. 13[e]). for duration of life of creator who dies last and for additional 50 years thereafter. (Id. Permissible Use.—Following are not deemed violations of copyrights: (i) Publication at Art. 29[2]). and/or duplication of State symbols and national anthem according to their original 50 Years.—Copyrights are valid for period of 50 years from date of first publication characteristics (Id. at Art. 14[a]); (ii) publication and/or duplication of everything which for following creations: (i) Computer programs; (ii) cinematography; (iii) photography; has been published and/or duplicated by or in name of Government, except if copyrights (iv) databases; and (v) works resulting from transformations. (Id. at Art. 30[1]). are actually protected, whether by provisions of law or by declaration in creation itself Layout/Setting.—Copyrights for layout/setting of published written works are valid for or at time creation was published and/or duplicated (Id. at Art. 14[b]); (iii) use/taking of period of 50 years from date of first publication. (Id. at Art. 30[2]). actual news whether in whole or in part from news office, broadcasting agency and Legal Entities.—Copyrights held exclusively by legal entities are valid for period of newspapers or other similar sources, provided that source of news must be cited in 50 years. (Id. at Art. 30[3]). complete form (Id. at Art. 14[c]); and for following, on condition that source is cited or Folklore and Community Cultural Productions.—Copyrights held by State in folklore attached; (i) utilization of creations of other parties for interests of education, research, and community cultural productions such as stories, tales, fairy tales, legends, histories/ scientific written works, compilations of reports, literary critiques and analysis of prob- chronicles, songs, handicrafts, choreography, dances, calligraphy and other artistic works lems, without causing loss to reasonable interests of creators (Id. at Art. 15[a]); (ii) are valid for unlimited period. (Id. at Art. 31[1][a]). use/taking of creations of other parties, both in entirety or in part, for use for interests Unpublished Creation and Unknown Creator.—Copyrights held by State in unpub- of defending within or outside of court (Id. at Art. 15[b]); (iii) use/taking of creations lished creations by unknown creators are valid for period of 50 years from first time of other parties, both in entirety or in part for use for interests of (a) lectures which are creation is publicly known. (Id. at Art. 31[1][b]). exclusively for purposes of education and scientific knowledge (Id. at Art. 15[c][i]), or Published Creation, Unknown Publisher and Unknown Creator.—Copyrights held by (b) exhibitions or performances which do not reap payment provided that it does not State in creations which have already been published by unknown creators and/or pub- inflict losses to creator’s reasonable interests (Id. at Art. 15[c][ii]); (iv) duplication of lishers are valid for period of 50 years from date creation is first publicly known. (Id. creation in field of scientific knowledge, art and literature in Braille for use for interests at Art. 31[1][b]). of blind, except if duplication is of commercial nature (Id. at Art. 15[d]); (v) duplication Published Creation, Known Publisher and Unknown Creator.—Copyrights held by of creation other than computer program, in limited manner by any methods or with any publishers in creations which have already been published by known publishers but by tools or with similar process by public library, scientific or educational institution or unknown creators are valid for period of 50 years from date creation is first published. noncommercial documentation centers solely for purposes of its activities (Id. at Art. (Id. at Art. 31[2]). 15[e]); (vi) modifications which are made based upon technical implementation consid- Creations Announced in Series.—Period of validity of copyrights in creations which erations in architectural works, such as creation of buildings (Id. at Art. 15[f]); and (vii) are announced part by part commences on date of publication of last part. (Id. at Art. creation of reserve/back-up copies of computer programs by owner of computer pro- 32[1]). grams which are conducted only for personal use (Id. at Art. 15[g]). Multiple Volumes.—In determination of validity period of copyrights in creations Prohibited Creations.—Government may prohibit publication of every creation consisting of two or more volumes, as well as for summaries, abstracts, outlines, news, which is in conflict with Government policies in fields of religion, national defense and reports and bulletins published in series and at different times, each volume, summary, security, ethics and morality and public law and order after listening to considerations abstract, outline, news, report and bulletin published is deemed to be separate creation. of Copyright Board. (Id. at Art. 17). (Id. at Art. 32[2]). Government Publication.—Publication of creation which is conducted by Govern- Registration.—Directorate General maintains Registry of Creations and makes entries ment for national interests through radio, television and/or other means of broadcast may in Public Registry of Creations. (Id. at Art. 35[1]). Public Registry of Creations may be be implemented without requesting permission from holder of copyrights provided that viewed by any person without imposition of fees. (Id. at Art. 35[3]). Provisions con- it does not cause loss to reasonable interests of holder of copyrights and provided that cerning registration do not create obligation to register as condition for obtaining copy- holder of copyrights is given fair compensation. (Id. at Art. 18[1]). rights. (Id. at Art. 35[4]). Creators.—Except if there is evidence to contrary, those who are deemed to be Licensing.—Licenses are permits which are granted by holder of copyrights or holder creators are: (i) Persons whose names are registered in Public Registry of Creations of related rights to another person for publication and/or duplication of creation or maintained by Directorate General (Id. at Art. 5[1][a]) (though registration is not required product of related rights upon certain provisions. (Id. at Art. 1[14]). Except if otherwise to obtain copyrights) (Id. at Art. 2[1] and Elucidation of Art. 5[2]); (ii) persons whose agreed, scope of license includes all acts of publication and duplication continuing for

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COPYRIGHT . . . continued License means permit which is given by holder of industrial design rights to another term of license and effective throughout entire territory of Republic of Indonesia. (Id. at party through agreement based upon granting of right (not transfer of right) for enjoy- Art. 45[2]). Except if otherwise agreed, implementation of publication and duplication ment of economic benefits of industrial design which is to be granted protection for of creation pursuant to license obligates licensee to pay royalty to holder of copyrights. certain period of time and pursuant to certain conditions. (Id. at Art. 1[11]). (Id. at Art. 45[3]). Except if otherwise agreed, holder of copyrights continues to be Scope of Rights.—Holders of industrial design rights possess exclusive right to exploit entitled to use copyrights or to grant licenses to other parties for implementation of acts industrial design rights they possess and to prohibit other persons who, without holder’s of publication and duplication of creation. (Id. at Arts. 2 and 46). agreement, produce, use, sell, import, export, and/or distribute goods granted industrial License agreements may not contain provisions which could have effect of causing loss design rights. (Id. at Art. 9[1]). to Indonesian economy or creating unhealthy competition as regulated in accordance with Exclusions.—Use of industrial designs for purposes of research and education are prevailing regulations of laws. (Id. at Art. 47[1]). excluded from scope of industrial design rights provided that there is no loss to rea- License agreements must be registered with office of Directorate General or grant of sonable interests of holder of industrial design rights. (Id. at Art. 9[2]). license will not be deemed legally effective in relation to third parties. (Id. at Art. 47[2]). Objects of Protection.—Industrial design rights are granted for new industrial de- Related Rights.— signs. (Id. at Art. 2[1]). Industrial design is deemed to be ‘‘new’’ if, on date of receipt, Related rights are rights which are interrelated to copyright. (Id. at Art. 1[9]). For industrial design is not same as expression made at earlier time. (Id. at Art. 2[2]). example, exclusive rights of actor to duplicate or broadcast performance/exhibition/show; Industrial design is deemed to have been subject of previous expression if previous of voice recording producer for duplication and lease of voice recording works or sound expression: (i) Occurred before date of receipt (Id. at Art. 2[3][a]); (ii) occurred before recording works; and of broadcasting agencies for making, duplicating or broadcasting date of priority if application is submitted with priority right (Id. at Art. 2[3][b]); or (iii) of broadcast works. (Id. at Art. 1[9]). expression was previously made public or in use in Indonesia or outside of Indonesia (Id. Actors possess exclusive right to grant permission or to prohibit other parties who, at Art. 2[3][c]). Industrial design is not deemed to have already been made public if without consent, make, duplicate or broadcast voice recordings and/or image/picture/ within maximum period of six months prior to date of receipt, industrial design has drawing presentations. (Id. at Art. 49[1]). Producers of voice recordings possess exclusive already been: (i) Exhibited in national or international exhibition in Indonesia or inter- right to grant permission or to prohibit other parties who, without consent, duplicate national exhibition outside of Indonesia which has been officially conducted by Gov- and/or lease voice or sound recording works. (Id. at Art. 49[2]). Broadcasting agencies ernment or conducted by members of community but obtaining official acknowledgment possess exclusive right to grant permission or to prohibit other parties who, without or consent of Government (Id. at Art. 3[a]; Elucidation of Art. 3[a]); or (ii) used in consent, make, duplicate and/or re-broadcast broadcast works through transmissions with Indonesia by designer within framework of experimentation for purposes of education, or without cable or through other electromagnetic systems. (Id. at Art. 49[3]). research or development (Id. at Art. 3[b]). Dispute Resolution.—Holders of copyrights have right to submit claims for com- Exclusion, Objects of Protection.—Industrial design rights cannot be granted if in- pensation to Commercial Court in relation to violations of their copyrights. (Id. at Art. dustrial design contravenes provisions of laws in effect, public order, religion or morality. 56[1]). Holders of copyrights may request confiscation of things which are published and (Id. at Art. 4). duplications of their creations. (Id. at Art. 56[1]). This right does not apply to creations Subjects of Protection.—Those persons with right to obtain industrial design rights held in good faith by party exclusively for personal interests and not for use in relation are designers or persons receiving industrial design rights from designers. (Id. at Art. to activities of commercial nature. (Id. at Art. 57). 6[1]). Holders of copyrights have right to apply to Commercial Court for order for transfer Group of Designers.—In event designer consists of several persons collectively, in- of all or part of results obtained from lectures, scientific meetings and shows or exhibits dustrial design rights are to be granted to those persons jointly except if there is agree- of works which constitute violation of copyrights. (Id. at Art. 56[2]). This right does not ment to contrary. (Id. at Art. 6[2]). apply to creations held in good faith by party exclusively for personal interests and not Offıcial Duties.—In event industrial design is made in connection with official duties for use in relation to activities of commercial nature. (Id. at Art. 57). with another party within work environment (Id. at Art. 7[1]) or in accordance with order Prior to issuance of final decision and for prevention of further losses to party whose which is to be executed in connection with official duties (Id. at Art. 7[2]), holder of rights have been violated, judge may order violator to discontinue its activities of industrial design right is party for whom and/or within whose official duties industrial publication and/or duplication of creation or goods which constitutes violation of copy- design is to be worked, except if there is different agreement between both parties rights. (Id. at Art. 56[3]). This right does not apply to creations held in good faith by without reducing rights of designer if utilization of industrial design is to be broadened party exclusively for personal interests and not for use in relation to activities of com- beyond scope of official duties (Id. at Art. 7[1] and [2]). mercial nature. (Id. at Art. 57). Working Relations.—In event industrial design is created in connection with work or Upon request of party who deems itself to have suffered loss, Commercial Court may on basis of order, person creating industrial design is deemed to be designer and holder issue written decision which is immediately effective to: (i) Prohibit continuing copyright of industrial design rights except if there is agreement to contrary between parties. (Id. violation, especially to prohibit entry of goods which are alleged to be violations of at Art. 7[3]). copyrights or related rights into channels of commerce, including import activities (Id. Application for Registration.—Industrial design rights are granted based upon ap- at Art. 67[a]); (ii) store evidence related to violation of copyrights or related rights for plications. (Id. at Art. 10). Arts. 10-30 of Law No. 31 of 2000 concerning Industrial purposes of avoiding loss of evidence (Id. at Art. 67[b]); (iii) request party who deems Designs dated 20 Dec. 2000 set forth procedures for submission of applications and itself to have suffered loss to provide proof of rights to copyrights or related rights and registration of industrial designs. proof of infringement of those rights (Id. at Art. 67[c]). Registration Cancellation.—Registrations of industrial designs may be cancelled by Commercial Court decisions may only be contested by appeal to Supreme Court. (Id. Directorate General of Intellectual Property Rights based upon written request submitted at Art. 62[1]). by holder of industrial design rights. (Id. at Art. 37[1]; see Id. at Arts. 37-44 [setting forth Parties may elect to settle their disputes through arbitration or alternative dispute procedures for cancellation]). resolution mechanisms. (Id. at Art. 65). Filing of claim does not limit State’s authority to criminally prosecute copyright Transfer.—Industrial design rights may be transferred by: (i) Inheritance (Id. at Art. violations. (Id. at Art. 66). 31[1][a]); (ii) donation (Id. at Art. 31[1][b]); (iii) testamentary disposition (Id. at Art. 31[1][c]); (iv) written agreements (Id. at Art. 31[1][d]); or (v) other manners which are Criminal Sanctions.—Those who intentionally infringe on copyright are subject to condoned by provisions of law (Id. at Art. 31[1][e]). criminal sanctions of imprisonment for terms of up to seven years and/or fines of up to Rp 5,000,000,000. (Id. at Art. 72[1]). Creations or goods which form product of criminal Licensing.—Holders of industrial design rights are vested with right to grant licenses acts related to copyrights or related rights along with tools/instruments used in perfor- to other parties based upon license agreements for implementation of all actions intended mance of relevant criminal acts are subject to seizure and destruction by State, provided within scope of industrial design rights except to extent that license agreement provides that if creation is of artistic and unique nature, preservation may be considered by State. otherwise. (Id. at Arts. 9 and 33). License agreements must be registered in General (Id. at Art. 73). Registry maintained at office of Directorate General of Intellectual Property Rights (Id. at Art. 35[1]) or grant of license will not be deemed effective in relation to third parties INDUSTRIAL DESIGNS: (Id. at Art. 35[2]). Dispute Resolution Forums.—Forums for resolution of disputes relating to industrial Governing Law.—Industrial designs are governed by Law No. 31 of 2000 dated 20 design rights include Commercial Court, arbitration or alternative dispute resolution Dec. 2000 concerning Industrial Designs. mechanisms. (Id. at Arts. 46[2] and 47). Definitions.— Infringement.—Industrial design right infringers are subject to criminal sanctions of Application means request for registration of industrial design which is submitted to imprisonment for up to four years and/or fines of up to Rp 300,000,000. (Id. at Art. Directorate General of Intellectual Property Rights. (Art. 1[3] of Law No. 31 of 2000 54[1]). dated 20 Dec. 2000 concerning Industrial Designs). Date of receipt means date of receipt of application which already fulfills adminis- INTEGRATED CIRCUITS: trative requirements. (Id. at Art. 1[9]). Designer means one or more persons who produce industrial design. (Id. at Art. 1[2]). Governing Law.—Integrated circuit layout designs are governed by Law No. 32 of Expression means expression/disclosure made through printed or electronic media, 2000 dated 20 Dec. 2000 concerning Integrated Circuit Layout Designs. including those expressions disclosed in exhibition. (Elucidation of Art. 2[2]). Definitions.— Industrial design rights means exclusive rights which are given by State of Republic Applicant means party who submits application. (Art. 1[5] of Law No. 32 of 2000 of Indonesia to designer over results of designer’s creation to be exploited by designer dated 20 Dec. 2000 concerning Integrated Circuit Layout Designs). for duration of certain period of time or given by agreement of designer for exploitation Application means request for registration of integrated circuit layout design which is by another party. (Id. at Art. 1[5]). submitted to Directorate General of Intellectual Property Rights. (Id. at Art. 1[4]). Industrial design means creations concerning forms, configurations or compositions of Designer means one or more persons who produce integrated circuit layout design. (Id. lines or colors, or lines and colors, or combinations thereof which have three dimensional at Art. 1[3]). or two dimensional shapes which give aesthetic impressions and are able to be mani- Integrated circuits means products which take form of finished or partially finished fested within three dimensional or two dimensional patterns/models/systems of how products, within which various (at least one) active elements are found, part or all of something is to be done and which is able to be used for production of certain product, which are mutually related/linked to one another and which are integrated within semi- good, industrial commodity or handicraft. (Id. at Art. 1[1]). conductor material which is intended to produce electronic function. (Id. at Art. 1[1]).

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INTEGRATED CIRCUITS . . . continued Paris Convention for Protection of Industrial Property dated 20 Mar. 1883 as Layout-designs means creations in form of three dimensional layout of various ele- already several times amended latest being on 14 July 1967 in Stockholm, Sweden, (Paris ments (at least one of which is active element) which is partly or entirely interconnected Convention) based on Presidential Decree No. 24 of 1979 concerning ratification of Paris within integrated circuit designed for purposes of preparing for production of integrated Convention for Protection of Industrial Property and Convention for Establishing World circuits. (Id. at Art. 1[2]). Intellectual Property Organization. (Presidential Decree No. 24 of 1979 dated 10 May General Registry of Integrated Circuit Layout Designs is not expressly defined in Law 1979 concerning Ratification of Paris Convention for Protection of Industrial Property No. 32 of 2000. However, Law No. 32 of 2000 implies that General Registry of and Convention Establishing World Intellectual Property Organization). Integrated Circuit Layout Designs is maintained by Directorate General of Intellectual Indonesia withdrew its reservation against Arts. 1-12 of Paris Convention by Presi- Property Rights for recordation of integrated circuit layout design rights. (See Id. at Arts. dential Decree No. 15 of 1997. (Art. 1 of Presidential Decree No. 15 of 1997 dated 7 1[9] and 20[2] stating that Directorate General of Intellectual Property Rights must make May 1997 concerning Amendment to Presidential Decree No. 24 of 1979 concerning entry in ‘‘General Registry of Integrated Circuit Layout Designs’’ upon conference of Ratification of Paris Convention for Protection of Industrial Property and Convention Integrated Circuit Layout Design Rights in favor of Applicant.) Establishing World Intellectual Property Organization). Indonesia maintains its reserva- Holder of rights means holder of integrated circuit layout design rights which is tion with regard to Art. 28 paragraph (1) of Paris Convention. (Art. 1 of Presidential designer or recipient of rights from designer which are registered in General Registry of Decree No. 24 of 1979; see Art. 1 of Presidential Decree No. 15 of 1997). Integrated Circuit Layout Designs. (Id. at Art. 1[7]). Patent Cooperation and its Regulations.—Indonesia has ratified Patent Cooperation Integrated circuit layout design rights means integrated circuit layout design rights are and its Regulations resulting from State Members of World Intellectual Property Orga- exclusive rights which are given by State of Republic of Indonesia to designer for results nization meeting in Washington on 19 June 1970 with reservations as to Art. 59 of Treaty. of designer’s creation to be exploited by designer for duration of certain period of time (Art. 1 of Presidential Decree No. 16 of 1997 dated 7 May 1997 concerning Ratification or given by agreement of designer for exploitation by another party. (Id. at Art. 1[6]). of Patent Cooperation Treaty [PCT] and Regulations under PCT). License means permit which is given by holder of rights to another party through agreement based upon granting of right (not transfer of right) for enjoyment of economic World Trade Organization.—Indonesia has ratified Agreement Establishing World benefits of integrated circuit layout design which is to be granted protection for certain Trade Organization and adopted principle agreement of Trade Related Aspects of In- period of time and pursuant to certain conditions. (Id. at Art. 1[13]). tellectual Property Rights, including Trade in Counterfeit Goods/TRIPS as part of Agree- ment Establishing World Trade Organization. (See Law No. 7 of 1994 dated 2 Nov. 1994 Scope of Right.—Holders of rights possess exclusive rights to exploit integrated concerning Ratification of Agreement Establishing World Trade Organization.) circuit layout design rights which they possess and to prohibit others who, without holder of right’s consent, make, use, sell, import, export, and/or distribute goods which contain Trademark Law Treaty.—Indonesia has accepted Trademark Law Treaty dated 27 in whole or in part designs which are already subject of grants of integrated circuit layout Oct. 1994 as drawn up by State Members of World Intellectual Property Organization design rights. (Id. at Art. 8[1]). in Geneva, Switzerland. (Art. 1 of Presidential Decree No. 17 of 1997 dated 7 May 1997 Use of integrated circuit layout designs for purposes of research and education are concerning Ratification of Trademark Law Treaty). excluded from scope of integrated circuit layout design rights provided that there is no loss to reasonable interests of holder of rights. (Id. at Art. 8[2]). PATENTS: Term of Protection.—Integrated circuit layout design rights protection is granted for Governing Law.—Patents are governed by Law No. 14 of 2001 dated 1 Aug. 2001 period of ten years. (Id. at Art. 4[3]). concerning Patents. Objects of Protection.—Integrated circuit layout design rights are granted for original Definitions.— integrated circuit layout designs. (Id. at Art. 2[1]). Integrated circuit layout design is Invention means idea of inventor which is poured forth into activity which solves deemed to be original if design is made up of results of work of designer. (Id. at Art. specific problem in field of technology and is able to take form of product or process 2[2]). Integrated circuit layout design will not be deemed original if, at moment inte- or to perfect/finish and develop product or process. (Art. 1[2] of Law No. 14 of 2001 grated circuit layout design is created, design is something which is general for all dated 1 Aug. 2001 concerning Patents). Term ‘‘invention’’ does not include: (i) aesthetic designers. (Id. at Art. 2[2]). Integrated circuit layout design will not be deemed original creations (Id. at Art. I[1][a][ii][1] of General Elucidation); (ii) schemes (Id. at Art. if it is imitation of results of work of another designer. (Id. at Elucidation of Art. 2[2]). I[1][a][ii][2] of General Elucidation); and (iii) rules and methods for conducting fol- Exclusion, Objects of Protection.—Integrated circuit layout design rights cannot be lowing activities: (a) Mental activities (Id. at Art. I[1][a][ii][3][a] of General Elucidation), granted if integrated circuit layout design contravenes provisions of laws in effect, public (b) games (Id. at Art. I[1][a][ii][3][b] of General Elucidation), (c) business (Id. at Art. order, religion or morality. (Id. at Art. 3). I[1][a][ii][3][c] of General Elucidation), (d) rules and methods regarding computer pro- grams (Id. at Art. I[1][a][ii][4] of General Elucidation), and (e) presentations concerning Subjects of Protection.—Those persons with right to obtain integrated circuit layout certain information (Id. at Art. I[1][a][ii][5] of General Elucidation). design rights are designers or persons receiving integrated circuit layout design rights Inventor means person who either independently or in cooperation with other persons from designers. (Id. at Art. 5[1]). In event designer consists of several persons collec- jointly implements idea which is poured forth into activity which produces invention. (Id. tively, integrated circuit layout design rights are to be granted to those persons jointly at Art. 1[3]). except if there is agreement to contrary. (Id. at Art. 5[2]). License means permit which is given by patent holder to another party based upon In event integrated circuit layout design is made in connection with official duties with agreement granting rights for enjoyment of economic benefits deriving from patent which another party within work environment or in accordance with order which is to be is to be granted for certain period of time and on certain conditions. (Id. at Art. 1[13]). executed in connection with official duties, holder of rights is party for whom and/or Patent means exclusive rights which are granted by State to inventor over results of within whose official duties integrated circuit layout design is to be utilized. (Id. at Art. inventor’s invention in field of technology which is to be exploited by inventor for 6[1] and [2]). Exception to foregoing arises in event of agreement between parties. (Id.). duration of certain period of time or given by agreement of inventor for exploitation by Foregoing does not reduce rights of designer if utilization of industrial design is to be another party. (Id. at Art. 1[1]). broadened beyond scope of official duties. (Id.). In event integrated circuit layout design Patent holder means inventor who possesses patent or party who receives rights in is created in connection with work or on basis of order, person creating integrated circuit patent from possessor of patent or another party who further receives those rights, each layout design is deemed to be designer and holder of rights, except if there is agreement of which is recorded in General Registry of Patents. (Id. at Art. 1[6]). to contrary. (Id. at Art. 6[3]). Scope of Rights.—Patent holders possess exclusive rights to exploit patents they Application for Registration.—Integrated circuit layout designs are granted based possess and to prohibit other parties who without patent holder’s agreement: (i) In case upon applications. (Id. at Art. 9; see Id. at Arts. 9-22 [setting forth procedures for of product patents, make, use, sell, import, rent, transfer or provide for sale or rent or submission of applications and registration of integrated circuit layout designs]). transfer products which have been granted patents (Id. at Art. 16[1][a]); (ii) in case of Registration Cancellation.—Registrations of integrated circuit layout designs may be process patents, utilize production processes which have been granted patents for pro- cancelled by Directorate General of Intellectual Property Rights based upon written duction of goods or for use, sale, import, rent, transfer or provision for sale or rent or request submitted by holder of rights. (Id. at Art. 29[1]; see Id. at Arts. 29-34 [setting transfer of products which have been granted patents (Id. at Art. 16[1][b]). forth procedures for cancellation]). Exclusions.—Utilization of patents for interests of education, research, experimentation Transfer.—Integrated circuit layout design rights may be transferred by: (i) Inherit- or analysis by non-patent holders is permissible provided that such use does not cause ance (Id. at Art. 23[1][a]); (ii) donation (Id. at Art. 23[1][b]); (iii) testamentary disposition loss to reasonable interests of patent holder. (Id. at Art. 16[3]). (Id. at Art. 23[1][c]); (iv) written agreement (Id. at Art. 23[1][d]); or (v) other manners Production/Utilization Obligation.—Patent holders are obligated to make products or which are condoned by provisions of law (Id. at Art. 23[1][e]). utilize processes in Indonesia in relation to which patents have been granted. (Id. at Art. Licensing.—Holders of integrated circuit layout design rights are vested with right to 17[1]). grant licenses to other parties based upon license agreements for implementation of all Dispensation of Indonesian Production/Utilization Requirement.—In event production actions intended within scope of integrated circuit layout design rights except to extent or utilization of patent is only viable on regional basis, patent holder may submit written that license agreement provides otherwise. (Id. at Art. 25). License agreements must be request for dispensation from production or utilization obligation to Directorate General registered in General Registry of Integrated Circuit Layout Designs at office of Direc- of Intellectual Property Rights stating reasons for request and submitting evidence given torate General of Intellectual Property Rights (Id. at Art. 27[1]) or grant of license will by relevant governmental instrumentalities with authority over sector implicated by not be deemed effective in relation to third parties (Id. at Art. 27[2]). patent. (Id. at Art. 17[2] and [3]; Elucidation of Art. 17[2]). Dispute Resolution Forums.—Forums for resolution of disputes relating to integrated Term of Protection.—Patents are granted for period of 20 years starting from date circuit layout design rights include Commercial Court, arbitration or alternative dispute submission of patent application is received, except for simple patents, which are granted resolution mechanisms. (Id. at Arts. 38[2] and 39). for period of ten years starting from date submission of patent application is received. (Id. at Arts. 8[1] and 9). Infringement.—Integrated circuit layout design rights infringers are subject to crimi- Objects of Patents. nal sanctions of imprisonment of up to three years and/or fines of up to Rp 300,000,000. —Patents are granted for inventions which: (i) Are new (Id. at Art. (Id. at Art. 42[1]). 2[1]); (ii) contain inventive step (Id. at Art. 2[1]); and (iii) are capable of industrial application (Id. at Art. 2[1]). Exclusions from Patents.—Patents are not granted for: (i) Inventions relating to pro- INTERNATIONAL INTELLECTUAL PROPERTY CONVENTIONS: cesses or products, publication and use or application of which contradict regulations of Indonesia is signatory to: law in effect, public order or morality (Id. at Art. 7[a]); (ii) inventions relating to methods

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PATENTS . . . continued following conditions (Id. at Art. 6[5]): (a) Essential plant variety generation originates of examination, treatment, medication and/or surgery applied to human beings and/or from plant variety which has already obtained plant variety protection rights or is planted animals (excluding health equipment, substances and medication) (Id. at Art. 7[b]; Elu- based upon regulations of law in effect and not in form of previous essential plant variety cidation of Art. 7[b]); (iii) inventions of scientific or mathematical theories or methods generations (Id. at Art. 6[5][a]), (b) basic nature of plant variety maintains expression of (Id. at Art. 7[c]); or (iv) inventions of all living creatures except microorganisms (Id. at essential characteristics from original plant variety, but may be differentiated in clear Art. 7[d][i]) and biological processes that are essential to produce plants or animals manner from characteristics of original plant variety which arise from actions of descent except for non-biological processes or microbiological processes (Id. at Art. 7[d][ii]). itself (Id. at Art. 6[5][b]), and (c) essential plant variety generation may be obtained from Subjects of Protection.—Those persons with right to obtain patents are inventors or natural or inductive mutation, cloning, individual plant selection, cross pollination and persons receiving patent rights from inventors. (Id. at Art. 10[1]). In event invention is genetic engineering from original plant variety (Id. at Art. 6[5][c]); (iii) plant varieties result of efforts of several persons acting collectively, patent rights in invention will be which are not able to be differentiated in clear manner from protected plant varieties possessed jointly by all of inventors. (Id. at Art. 10[2]). Those persons with right to obtain constituting ‘‘new’’ kinds of species of plants which are ‘‘unique’’, ‘‘uniform’’, ‘‘stable’’ patents in relation to invention which is result of work relationship are parties who and named (Id. at Arts. 2[1] and 6[2][b]); and (iv) plant varieties which are to be provide work unless there is agreement to contrary. (Id. at Art. 12[1]). produced through exploitation of protected plant varieties (Id. at Art. 6[2][c]). Transfer.—Patents may be transferred in whole or in part by: (i) Inheritance (Id. at Actions of Right.—Right of exploitation of plant varieties includes: (i) Production and Art. 66[1][a]); (ii) donation (Id. at Art. 66[1][b]); (iii) testamentary disposition (Id. at Art. multiplication of seeds (Id. at Art. 6[3][a]); (ii) preparation for purposes of propagation 66[1][c]); (iv) written agreement (Id. at Art. 66[1][d]); or (v) other manners which are (Id. at Art. 6[3][b]); (iii) advertising (Id. at Art. 6[3][c]); (iv) offering (Id. at Art. 6[3][d]); condoned by provisions of law (Id. at Art. 66[1][e]). (v) sale or trade (Id. at Art. 6[3][e]); (vi) exporting (Id. at Art. 6[3][f]); (vii) importing Licensing.—Patent holders are vested with right to grant licenses to other parties (Id. at Art. 6[3][g]); and (viii) reserving/setting aside/planning for requirements of fore- based upon license agreements for implementation of actions intended within scope of going (Id. at Art. 6[3][h]). patent rights. (Id. at Arts. 16 and 69[1]). License agreements must be registered with Objects of Protection.—Plant varieties which may be granted plant variety protection office of Directorate General of Intellectual Property Rights or grant of license will not include plant varieties from ‘‘new’’ kinds of species of plants which are ‘‘unique’’, be deemed effective in relation to third parties. (Id. at Art. 72). ‘‘uniform’’, ‘‘stable’’ and named. (Id. at Art. 2[1]). Registration Cancellation.—Patent registrations may be cancelled on following Plant variety is deemed ‘‘new’’ if, at moment of receipt of application for plant variety grounds: (i) Patent holder fails to pay annual fees within time specified by law (Id. at protection rights, substance/material or results of harvest of plant variety: (i) Have never Art. 88); (ii) upon written request of patent holder submitted to Directorate General of been traded in Indonesia or they have already been traded but trading has not been Intellectual Property Rights (Id. at Art. 90[1]); or (iii) by judgment of Commercial Court ongoing for more than one year; or (ii) have already been traded outside of Indonesia (Id. at Art. 91). but trading has not been ongoing for more than: (a) Four years for single season plants; and (b) six years for perennial plants. (Id. at Art. 2[2]). Dispute Resolution Forums.—Forums for resolution of disputes relating to patents Plant variety is deemed ‘‘unique’’ if plant variety is different in clear manner from include Commercial Court (Id. at Art. 117[1]) arbitration or alternative dispute resolution other plant varieties which: (i) Already exist at time of receipt of application for plant mechanisms (Id. at Art. 124). variety protection rights; and (ii) are known to public at time of receipt of application Infringement.— for plant variety protection rights. (Id. at Art. 2[3]). Criminal Sanctions.—Patent rights infringers are subject to criminal sanctions of im- Plant variety is deemed ‘‘uniform’’ if primary or important characteristics of plant prisonment for terms of up to four years and/or fines of up to Rp 500,000,000. (Id. at variety are proven to be uniform even though variations arise as result of differences in Art. 130). method of cultivation and environment. (Id. at Art. 2[4]). Plant variety is deemed ‘‘stable’’ if: (i) Its characteristics do not experience change PROTECTION OF PLANT VARIETIES: after repeated cultivation; or (ii) it is reproduced through special reproductive cycles and Governing Law.—Protection to plant varieties is governed by Law No. 29 of 2000 does not experience change at end of every relevant cycle. (Id. at Art. 2[5]). dated 20 Dec. 2000 concerning Protection of Plant Varieties. Names.—Plant varieties which may be subject of grant of plant variety protection must Definitions.— be given names which thenceforth become name of relevant plant variety, with provision Certificate of plant variety protection rights means official notice of Office for Pro- that: (i) Name of plant variety may continuously be used even though period of protection tection of Plant Varieties agreement to grant of plant variety protection rights. (Art. 34[1] has already expired (Id. at Art. 2[6][a]); (ii) name given may not have effect of causing and [2] of Law No. 29 of 2000 dated 20 Dec. 2000 concerning Protection of Plant confusion in connection with plant variety characteristics (Id. at Art. 2[6][b]); (iii) Varieties). cultivation of plant variety is conducted by plant variety protection rights applicant and General Registry for Plant Variety Protection means official recording registry for all is registered with Office of Plant Variety Protection (Id. at Art. 2[6][c]); (iv) local plant stages and activities in management of plant variety protection. (Id. at Art. 1[16]). varieties are owned by community, controlled by State and implemented by Government Holders of plant variety protection rights means plant breeders or persons or legal (Id. at Art. 7[1] and [2]). Government is required to grant planting rights with respect entities or other parties who have subsequently received plant variety protection rights to local plant varieties under their administration. (Id. at Art. 7[3]). from holders of plant variety protection rights. (Id. at Art. 5[1]). Exclusion.—Plant varieties are not entitled to be granted plant variety protection if License means permit which is granted by holder of plant variety protection rights to exploitation of plant variety contravenes regulations of law in effect, public order, mo- another person or legal entity for exploitation of all or part of plant variety protection rality, religious norms, and preservation of living environment. (Id. at Art. 3). rights. (Id. at Art. 1[13]). Subjects of Protection.—In event plant variety results from basis of work contract, Obligatory license means license which is granted by holder of plant variety protection party who grants work will be holder of plant variety protection rights except if there rights to applicant based upon decision of District Court. (Id. at Art. 1[14]). is agreement to contrary between two parties without depreciating rights of plant breeder. Plant breeders means persons who conduct plant breeding. (Id. at Art. 1[5]). (Id. at Art. 5[2]). Plant variety protection means special protection granted by State (which in this matter In event plant variety results from basis of order, party who issues order will be holder is represented by Government and implemented by Office of Plant Variety Protection) in of plant variety protection rights except if there is agreement to contrary between two connection with plant varieties which are produced by plant breeders through their plant parties without depreciating rights of plant breeder. (Id. at Art. 5[3]). breeding activities. (Id. at Art. 1[1]). Officials of Office for Protection of Plant Varieties.—For so long as person (in- Plant seeds means plants and/or parts of plants which are used for reproduction and/or cluding other persons who, because of their duties, work for and in name of Office for proliferation of plants. (Id. at Art. 1[7]). Protection of Plant Varieties) has active official duties and for period of one year fol- Plant varieties means group of plants from certain species which is indicated by form lowing person’s pension or discontinuation for whatever reason of person’s duties with of plants, growth of plants, leaves, flowers, fruits, seeds and expressions of genotype Office for Protection of Plant Varieties, person is prohibited from submitting applications characteristics or combinations of genotypes which can be differentiated from same kinds for plant variety protection rights, obtaining plant variety protection rights in any manner or species by minimum of one characteristic which does not change/hold constant and or holding rights which are related to plant variety protection (except if plant variety does not experience change upon reproduction. (Id. at Art. 1[3]). protection rights are obtained by transfer due to inheritance). (Id. at Art. 22). Plant breeding means series of research activities and tests or activities of invention and development of plant variety in accordance with standard methodologies for pro- Trademarks.—Plant variety names may also be submitted as trademarks in accor- duction of new plant varieties and maintenance of purity of seed variety to be produced. dance with regulations of law in effect. (Id. at Art. 2[6][f]). (Id. at Art. 1[4]). Term of Protection.—Terms of plant variety protection are: (i) 25 years for single Offıce for Protection of Plant Varieties means organizational unit included within season plants (Id. at Art. 4[1][a]); and (ii) 20 years for perennial plants (Id. at Art. Department of Agriculture implementing duties and responsibilities in field of plant 4[1][b]). variety protection. (Id. at Arts. 1[9] and 11). Applications for Protection.— Plant variety protection rights means special rights which are granted by State to Place of Application Submission.—Applications for plant variety protection rights are breeders and/or holders of plant variety protection rights for exploitation of varieties submitted to Office for Protection of Plant Varieties. (Id. at Art. 11[1]). Applications for resulting from breeding by breeders and holders themselves or for granting of agreements plant variety protection rights must be submitted in writing and in Indonesian language. to other persons or legal entities for exploitation of those rights for duration of specified (Id. at Art. 11[1]). Applications must be accompanied by payment of fees in amounts period of time. (Id. at Art. 1[2]). stipulated by Minister of Agriculture. (Id. at Arts. 1[10] and 11[1]). Scope of Rights and Obligations.—Holder of plant variety protection rights possesses Date of Submission.—Applications for plant variety protection rights are deemed to right to exploit and grant agreements to other persons or legal entities to exploit plant have been submitted on date of receipt of letter of application by Office for Protection varieties in form of: (i) Seeds which are products of harvests which are to be used for of Plant Varieties and upon satisfaction of payment of application fee. (Id. at Arts. 11[1] propagation (Id. at Art. 6[1]), use of results of harvests of protected plant varieties for and 15[1]). Date of receipt of letter of application is date at time Office for Protection propagation must obtain agreement from holder of plant variety protection rights (Id. at of Plant Varieties receives letter of application which completely fulfills application Art. 6[4]); (ii) essential plant variety generations whose origins come from plant varieties requirements. (Id. at Art. 15[2]; see Id. at Arts. 11 and 14[1] [setting forth application which are protected or plant varieties which have already been registered and given name requirements]). (Id. at Art. 6[2][a] and [7]), use of essential plant variety generations which are protected Recording of Date of Receipt.—Date of receipt of letter of application for plant variety or plant variety which has already been registered and given name must obtain agreement protection rights must be recorded in General Registry for Plant Variety Protection by from holder of plant variety protection rights and/or owner of original plant variety upon Office for Protection of Plant Varieties. (Id. at Art. 15[3]).

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PROTECTION OF PLANT VARIETIES . . . continued capable of providing and preparing seed samples of plant varieties which have already Amendment to Applications.—Applications for plant variety protection rights may be been granted plant variety protection rights (Id. at Art. 60[2][c]); (iv) holder of plant amended prior to and during examination. (Id. at Art. 20[1]). variety protection rights does not make available seeds for plant varieties which have Recalling Applications.—Letters of applications for plant variety protection rights may already been granted plant variety protection rights (Id. at Art. 60[2][d]); or (v) holder be recalled upon submission of written request to Office for Protection of Plant Varieties. of plant variety protection rights submits request to Office for Protection of Plant Va- (Id. at Art. 21[1]). rieties for revocation of its plant variety protection rights in writing setting forth reasons Granting or Rejection of Applications.—Office for Protection of Plant Varieties must for request (Id. at Art. 60[2][e]). decide whether or not to grant or reject application for plant variety protection rights within time period of not longer than 24 months counting from date of application for Civil Claims.—In event plant variety protection rights are granted to person or legal substantive examination. (Id. at Arts. 29[1] and 33[1]). entity other than person or legal entity which should be entitled to plant variety protection Certificates of Rights.—In event report of Office for Protection of Plant Varieties rights, person or legal entity with entitlement to plant variety protection rights may file regarding examination results with respect to plant variety being requested for plant claim to District Court. (Id. at Art. 66[1]). Right to claim on grounds of issuance of grant variety protection rights concludes that plant variety in question is in accordance with without entitlement arises as of date of issuance of certificate of plant variety protection requirements of provisions of Law No. 29 of 2000, then Office for Protection of Plant rights. (Id. at Art. 66[2]). Varieties must issue official notice of granting of plant variety protection rights to Holders of plant variety protection rights or holders of licenses or holders of com- applicant in form of ‘‘Certificate of Plant Variety Protection Rights’’. (Id. at Art. 34[1] pulsory licenses are entitled to submit claims for compensation through District Court and [2]). against anyone who intentionally and without right exploits and grants agreements to Rejection of Application.—In event application for plant variety protection rights other persons or legal entities to exploit plant variety protection rights. (Id. at Arts. 6[1] and/or results of examination determine that application does not fulfill provisions of and 67[1]). Arts. 2, 11 and 14 of Law No. 29 of 2000, Office for Protection of Plant Varieties must Temporary Injunctions.—In order to prevent greater loss to party whose rights have reject application for plant variety protection and issue notification of rejection in writing been violated, judge may order violator of plant variety protection rights to temporarily to applicant. (Id. at Art. 35[1]). Appeal requests may be filed in connection with rejection cease in exploitation of activities which are subject of claim during pendancy of ex- of applications related to reasons of substantive nature. (Id. at Art. 36[1]). amination of case by District Court. (Id. at Arts. 6[3] and 68[1]). Recording of Protection.—Once plant variety protection rights have been granted, notation of grant must be recorded in General Registry of Plant Variety Protection. (Id. Criminal Infringement.—Whomsoever intentionally conducts one of following acts at Art. 34[3]). without agreement of holder of plant variety protection rights is guilty of crime pun- Publication.—Once plant variety protection rights have been granted, publication of ishable by imprisonment of up to seven years and fines of up to Rp 2,500,000,000: (i) grant must be made in Official Plant Variety Protection Gazette. (Id. at Art. 34[3]). Production and multiplication of seeds (Id. at Arts. 6[3][a] and 71); (ii) preparation for Examinations.— purposes of propagation (Id. at Arts. 6[3][b] and 71); (iii) advertising (Id. at Arts. 6[3][c] Authorized Agency.—Substantive examinations are conducted by Office for Protection and 71); (iv) offering (Id. at Arts. 6[3][d] and 71); (v) sale or trade (Id. at Arts. 6[3][e] of Plant Varieties. (Id. at Art. 30[1]). Substantive examinations comprise investigations and 71); (vi) exporting (Id. at Arts. 6[3][f] and 71); (vii) importing (Id. at Arts. 6[3][g] into characteristics of newness, uniqueness, uniformity and stability. (Id. at Art. 30[1]). and 71); or (viii) reserving/setting aside/planning for requirements of foregoing (Id. at Requests for substantive examinations in relation to applications for plant variety pro- Arts. 6[3][h] and 71). tection rights must be submitted to Office for Protection of Plant Varieties in writing Following persons who commit following acts or omissions are guilty of crimes with within one month following end of publication period. (Id. at Art. 29[1]; see Arts. 24-28 criminal sanctions of imprisonment of up to five years and fines of up to Rp of Law No. 29 of 2000 setting forth publication requirements and procedures). 1,000,000,000: (i) Plant variety protection consultants who intentionally: (a) Fail to register with Office for Protection of Plant Variety Protection (Id. at Arts. 13[1] and 72), Confidentiality.—Counting from date of receipt of letter of application for plant or (b) fail to protect confidentiality of plant varieties and all documents comprising variety protection, all employees in sphere of Office for Protection of Plant Varieties are application for plant variety protection rights until date of publication of application for obligated to protect plant variety secrets and all documents comprising application for plant variety protection (Id. at Arts. 13[1] and 72); (ii) employees of Office for Protection plant variety protection rights until date of publication of relevant application. (Id. at Art. of Plant Varieties who intentionally fail to protect plant variety secrets and all documents 23; see Arts. 24-28 of Law No. 29 of 2000 setting forth publication requirements and comprising application for plant variety protection rights commencing from date of procedures). receipt of letter of application for plant variety protection through date of publication of Transfer.—Plant variety protection rights may be transferred by: (i) Inheritance (Id. relevant application (Id. at Arts. 23 and 72); (iii) whomsoever intentionally for com- at Art. 40[1][a]); (ii) donation (hibah) (Id. at Art. 40[1][b]); (iii) testamentary disposition mercial purposes: (a) Uses fruits of harvest from plant variety which is protected pro- (Id. at Art. 40[1][c]); (iv) written agreements in form of notarial deeds (Id. at Art. vided that use is not for commercial purposes (Id. at Arts. 10[1][a] and 73), (b) uses plant 40[1][d]); or (v) other manners condoned by provisions of law (Id. at Art. 40[1][e]). variety which is protected for activities related to research, plant breeding and combi- Recordation.—Every transfer of plant variety protection rights must be recorded at nations of new plant varieties (Id. at Arts. 10[1][b] and 73), or (c) use by Government Office for Protection of Plant Varieties in General Register for Plant Variety Protection. of plant variety which is protected within framework of food and medication procure- (Id. at Art. 40[3]). ment/supply policy with care taken for economic rights of holders of plant variety protection rights (Id. at Arts. 10[1][c] and 73); or (iv) whomsoever intentionally fails to Licensing.—Holders of plant variety protection rights have right to grant licenses to fulfill confidentiality protection obligations arising in context of examination based upon other persons or other legal entities based on license agreement letters. (Id. at Art. 42[1]). application for plant variety protection rights (Id. at Arts. 30[3] and 74). Residual Rights.—Unless there is agreement to contrary, holders of plant variety Actions constituting crimes are deemed to be felonies. (Id. at Art. 75). protection rights continue to be entitled to implement plant variety protection rights Exclusion from Infringement.—Following forms of exploitation of plant variety pro- themselves or to grant licenses to other third parties. (Id. at Art. 42[2]). tection rights are not deemed to constitute infringements: (i) Use of fruits of harvest from Recordation.—License agreements must be recorded at Office for Protection of Plant plant variety which is protected provided that use is not for commercial purposes (Id. at Varieties in General Register for Plant Variety Protection. (Id. at Art. 43[1]). Art. 10[1][a]); (ii) use of plant variety which is protected for activities related to research, Third Parties.—In event license agreement is not recorded with Office for Protection plant breeding and combinations of new plant varieties (Id. at Art. 10[1][b]); and (iii) use of Plant Varieties, license agreement has no legal effect upon third parties. (Id. at Art. by Government of plant variety which is protected within framework of food and 43[2]). medication procurement/supply policy with care taken for economic rights of holders of Compulsory Licenses.—Every person or legal entity, after elapse of 36 months from plant variety protection rights (Id. at Art. 10[1][c]). date of granting of plant variety protection rights, may submit request for compulsory Civil Claims and Criminal Prosecutions.—Right to file civil claims does not limit right license to District Court for exploitation of relevant plant variety protection rights. (Id. of State to prosecute criminal offenses related to plant variety protection rights infringe- at Art. 44[1]). Implementation of compulsory licenses is accompanied by obligation ments. (Id. at Art. 69). imposed upon holder of compulsory license to pay royalties to holder of plant variety protection rights in amount and in accordance with procedures which are to be stipulated by District Court. (Id. at Art. 48[1] and [2]). Holder of compulsory license is required TRADEMARKS: to record compulsory license received with Office for Protection of Plant Varieties in Governing Law.—Trademarks and service marks are governed by Law No. 15 of General Register for Plant Variety Protection. (Id. at Art. 50[1]). 2001 dated 1 Aug. 2001 concerning Marks. Termination of Rights.—Plant variety protection rights terminate in following events: (i) Expiration of term (Id. at Arts. 56[a] and 57); (ii) cancellation/nullification (Id. at Art. Definitions.— 56[b]); or (iii) revocation by authorized agency (Id. at Arts. 56[c] and 60[1]). Cancel- Applicant means party who submits application. (Id. at Art. 1[6] of Law No. 15 of 2001 lation/nullification of plant variety protection rights is implemented by Office for Pro- dated 1 Aug. 2001 concerning Marks). tection of Plant Variety Protection. (Id. at Art. 58[1]). Application means request for registration of mark which is submitted in writing to Directorate General of Intellectual Property Rights. (Id. at Art. 1[5]). Cancellation/nullification.—Plant variety protection rights may be cancelled/nullified Collective mark means mark which is utilized for goods and/or services with same based upon following exclusive grounds (Id. at Art. 58[2] and [3]): (i) Failure to meet characteristics which are to be traded by one or more persons acting jointly or legal entity conditions of newness and uniqueness at time of granting of plant variety protection for differentiation with other goods and/or services of same kind. (Id. at Art. 1[4]). rights (Id. at Art. 58[2][a]); (ii) failure to meet conditions of uniformity and stability at License means permit which is given by holder of rights to registered mark to another time of granting of plant variety protection rights (Id. at Art. 58[2][b]); or (iii) plant party through agreement based upon granting of right (not transfer of right) for exploi- variety protection rights were granted to party who did not have entitlement thereto (Id. tation of mark, both for all or part of kinds of goods and/or services which are registered at Art. 58[2][c]). for certain period of time and upon certain conditions. (Id. at Art. 1[13]). Revocation of plant variety protection rights is implemented by Office for Protection Mark means sign which takes form of picture, name, words, letters, numbers, symbols, of Plant Variety Protection. (Id. at Art. 60[1]). Plant variety protection rights may be compositions of colors or combinations of aforementioned elements which possess dis- revoked based upon following grounds: (i) Holder of plant variety protection rights has tinguishing characteristics and are to be utilized in activities relating to trade in goods not fulfilled obligation to pay annual fees within time period of six months (Id. at Art. or services. (Id. at Art. 1[1]). 60[2][a]); (ii) conditions/characteristics of protected plant varieties have already changed Servicemark means mark which is utilized for services which are to be traded by one or are no longer in accordance with provisions of newness, uniqueness, uniformity or or more persons acting jointly or legal entity for differentiation with other goods of same stability (Id. at Arts. 2 and 60[2][b]); (iii) holder of plant variety protection rights is not kind. (Id. at Art. 1[3]).

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TRADEMARKS . . . continued Cancellation Claims.—Interested parties may file claims for cancellation of regis- Trademark means mark which is utilized for goods which are to be traded by one or tration of mark if registration: (i) Is based upon application which has been submitted more persons acting jointly or legal entity for differentiation with other goods of same by applicant in bad faith (Id. at Arts. 4 and 68[1]); (ii) contravenes provisions of laws kind. (Id. at Art. 1[2]). in effect, religious morality, decency or public order (Id. at Arts. 5[a] and 68[1]); (iii) Scope of Right.—Rights in marks are exclusive rights which are granted by State to does not possess distinguishing characteristics (Id. at Arts. 5[b] and 68[1]); (iv) has mark owners which are registered in General Registry of Marks for certain period of time already become part of public domain (Id. at Arts. 5[c] and 68[1]); (v) takes form of for utilization by holder of mark itself or for utilization by another party to whom information or relates to goods or services for which registration has already been applied permission for utilization of mark has been granted. (Id. at Art. 3). (Id. at Arts. 5[d] and 68[1]); (vi) bears basic or complete resemblance to mark, rights in which are held by another party and which has already been previously registered for Term of Protection.—Registered marks enjoy protection for period of ten years from same type of goods and/or services (Id. at Arts. 6[1][a] and 68[1]); (vii) bears basic or date of receipt of registration of mark concerned. (Id. at Art. 28). Extension of ten year complete resemblance to well known mark, rights to which are held by another party for period of protection is available upon application if mark is being used in trade and same type of goods and/or services (Id. at Arts. 6[1][b] and 68[1]); or (viii) bears basic commerce. (Id. at Arts. 28 and 36). or complete resemblance to well known geographical indication (Id. at Arts. 6[1][c] and Objects of Protection.—Marks protected under Law No. 15 of 2001 include trade- 68[1]). marks and servicemarks. (Id. at Art. 2). Claims for cancellation of registration of marks are filed by interested parties with Registration Exclusions.—Marks may not be registered if they: (i) Are based upon Commercial Court. (Id. at Art. 68[3]). application which has been submitted by applicant in bad faith (Id. at Art. 4); (ii) Cancellation claims may only be filed within period of five years from date of contravene provisions of laws in effect, religious morality, decency or public order (Id. registration of mark. (Id. at Art. 69[1]). Cancellation claim is not subject to five year at Art. 5[a]); (iii) do not possess distinguishing characteristics (Id. at Art. 5[b]); (iv) have statute of limitations if claim is based upon contravention of religious morality, decency already become part of public domain (Id. at Art. 5[c]); or (v) take form of information or public order. (Id. at Art. 69[2]). or relate to goods or services for which registration has already been applied (Id. at Art. Dispute Resolution Forums.—Forums for resolution of disputes relating to marks 5[d]). include Commercial Court, arbitration or alternative dispute resolution mechanisms. (Id. Application Rejection.—Directorate General of Intellectual Property Rights must at Arts. 76[2] and 84). reject any application if mark: (i) Bears basic or complete resemblance to mark which Claims.—Holder of rights in mark may file claim against another party who, without is possessed by another party and which has been previously registered for same type right, exploits mark which in principle or in totality is of same kind as goods or services of goods and/or services (Id. at Art. 6[1][a]); (ii) bears basic or complete resemblance related to registered mark of holder. (Id. at Art. 76[1]). Holder of rights in mark may to well known mark possessed by another party for same type of goods and/or services request compensation of damages (Id. at Art. 76[1][a]) and/or cessation of all activities (Id. at Art. 6[1][b]); (iii) bears basic or complete resemblance to well known geographical related to exploitation of mark (Id. at Art. 76[1][b]). indication (Id. at Art. 6[1][c]); (iv) constitutes or resembles names of well known Preliminary Injunctions.—During pendency of claim, in order to prevent greater loss, individuals, photographs or names of legal entities belonging to others, except if there upon request of either plaintiff (either holder of rights in mark or holder of license rights), is written agreement from entitled person (Id. at Art. 6[3][a]); (v) constitutes or resembles judge may order defendant to cease production, distribution, entry and/or trade in goods name or abbreviation of name, flag, emblem or symbol of country or of national or or services which are exploiting mark in manner without right. (Id. at Art. 78[1]; Art. international agency, except if there is written agreement from authorized party (Id. at 85[a]). Judge of Commercial Court may also order seizure of evidence related to mark Art. 6[3][b]); or (vi) constitutes or resembles official sign or stamp or insignia used by violation. (Id. at Art. 85[b]). Evidence must be sufficient. (Id. at Arts. 85[a] and 86). Government institution, except if there is written agreement from authorized party (Id. at Art. 6[3][c]). Licensee Claims.—Holders of registered license rights may submit claims indepen- dently or together with relevant holder of rights in mark. (Id. at Art. 77). Geographical Indication Exceptions.—Geographical indications are subject to pro- Appeals of decisions of Commercial Court may only be filed in Supreme Court. (Id. tection to extent that they are signs which show area of origin of certain good which, at Arts. 79 and 82). because of geographical environmental factors, including natural factors, human factors or combination of those two factors, gives certain characteristic or quality to good which Infringements.— is produced. (Id. at Art. 56[1]). Criminal Sanctions.—Intentional exploitation without right of mark which is totally Geographical indications may be protected after registration on basis of request filed same as that of registered mark owned by another party for goods and/or services of kind (Id. at Art. 56[2]) by institutions representing community in area of production of which are produced and/or traded is guilty of commission of criminal offence with relevant goods which consists of: (a) Parties exploiting goods which take form of penalties of up to five years imprisonment and/or fines of up to Rp 1,000,000,000. (Id. products of nature or natural wealth (Id. at Art. 56[2][a][1]); (b) producers of agricultural at Art. 90). products (Id. at Art. 56[2][a][2]); (c) producers of handicrafts or industrial products (Id. If mark is basically same penalties go up to four years imprisonment and/or fines of at Art. 56[2][a][3]); (d) traders who sell goods (Id. at Art. 56[2][a][4]); (e) authorized up to Rp 800,000,000. (Id. at Art. 91). institutions (Id. at Art. 56[2][b]); or (f) consumer groups representing consumers of goods Intentional exploitation without right of sign which is totally same as geographical (Id. at Art. 56[2][c]). indication owned by another party for goods which are same or of same kind as goods which are registered is guilty of criminal offence with penalties of up to five years Collective Mark Registration.—Collective marks may be registered if application for imprisonment and/or fines of up to Rp 1,000,000,000. (Id. at Art. 92[1]). registration contains statement of intention to use mark collectively. (Id. at Art. 50[1]). If sign is basically same penalties go up to four years imprisonment and/or fines of Application for registration of collective mark must include copy of provisions regu- up to Rp 800,000,000. (Id. at Art. 92[2]). lating exploitation of mark as collective mark. (Id. at Art. 50[2]). Regulations governing Trade in goods and/or services which are known or should have been known to exploitation of mark must be signed by all holders of rights in mark. (Id. at Art. 50[2]). constitute goods and/or services which are product of mark infringements are guilty of Collective mark exploitation regulations must include: (i) Nature, general characteristics criminal offence with penalties of up to one year imprisonment and/or fines of up to Rp and quality of goods or services related to mark (Id. at Art. 50[3][a]); (ii) provisions 200,000,000. (Id. at Art. 94[1]). relating to rights of holder of rights in collective mark to conduct effective supervision over use of mark (Id. at Art. 50[3][b]); and (iii) sanctions for violation of exploitation TRADE SECRETS: regulations (Id. at Art. 50[3][c]). Amendments to exploitation regulations relating to collective marks must be submitted to Directorate General of Intellectual Property Rights Governing Law.—Trade secrets are governed by Law No. 30 of 2000 dated 20 Dec. for recordation. (Id. at Art. 53[1]). 2000 concerning Trade Secrets. Transfer.—Rights in registered marks may be transferred by: (i) Inheritance (Id. at Definitions.— Art. 40[1][a]); (ii) testamentary disposition (Id. at Art. 40[1][b]); (iii) donation (Id. at Art. License means permit which is granted by holder of trade secret rights to another party 40[1][c]); (iv) agreement (Id. at Art. 40[1][d]); or (v) other manners condoned by through agreement based upon granting of right (not transfer of right) for enjoyment of provisions of law (Id. at Art. 40[1][e]). Requests for recordation of transfers of rights in economic benefits of trade secret which is granted protection for certain period of time marks in General Registry of Marks must be submitted to Directorate General of In- and pursuant to certain conditions. (Art. 1[5] of Law No. 30 of 2000 dated 20 Dec. 2000 tellectual Property Rights. (Id. at Art. 40[2]). concerning Trade Secrets). Trade secrets means information which is not known to public in field of technology Licensing.—Holders of rights to registered marks are vested with right to grant and/or business, which has economic value because of its utilization in business activities licenses to other parties through agreements that receiver of license will exploit mark for and which is protected as secret by owner of trade secret. (Id. at Art. 1[1]). part or all of kinds of goods or services. (Id. at Art. 43[1]). License agreements are Trade secret rights means rights in trade secrets which arise under Law No. 30 of 2000. effective throughout entire territory of Republic of Indonesia, unless otherwise agreed, (Id. at Art. 1[2]). for period of time which is not longer than period of time of protection of registered mark. (Id. at Art. 43[2]). Scope of Right.—Scope of protection of trade secrets includes methods of production, methods of processing, methods of sale or other information in field of technology and/or Deletion of Registration.—Registered marks may be deleted from General Registry business which possesses economic value and which is not known to general public. (Id. of Marks upon: (i) Initiative of Directorate General of Intellectual Property Rights (Id. at Art. 2). at Art. 61[1]); (ii) application of relevant holders of rights to mark (Id. at Art. 61[1]); or (iii) submission by third parties of lawsuit to Commercial Court (Id. at Art. 63). Rights of Owner.—Owner of trade secret possesses right to: (i) Exploit trade secret Registrations of marks may be deleted on initiative of Directorate General of Intel- (Id. at Art. 4[a]); (ii) provide license or prohibit other parties from exploiting trade secret lectual Property Rights if: (i) Mark is not used in connection with trade in goods and/or (Id. at Art. 4[b]); and (iii) provide license or prohibit other parties to disclose trade secret services for three consecutive years from date of registration or last use, unless there is for interests of commercial nature (Id. at Art. 4[b]). reason which is deemed acceptable by Directorate General of Intellectual Property Rights Subject of Protection.—Trade secrets are subject of protection if: (i) Information is including: (a) Import prohibitions (Id. at Art. 61[3][a]), (b) prohibitions which are related of secret nature (Id. at Art. 3[1]) (information is considered secret if it is only known to licenses for distribution of goods which use relevant mark or provisional/temporary to certain parties or if it is not known to public [Id. at Art. 3(2)]); (ii) information has decisions from authorized parties (Id. at Art. 61[3][b]), (c) other prohibitions, forms of economic value (Id. at Art. 3[1]) (information is considered to possess economic value which are stipulated by Government regulation (Id. at Art. 61[3][c]); or (ii) mark is used if it is information which is secret in nature and if it is able to be used for conduct of for kinds of goods and/or services which are not in accordance with kinds of goods or activities or efforts which are commercial in nature or which are capable of increasing services which were subject of registration request (Id. at Art. 61[2][b]). economic profits [Id. at Art. 3(3)]); and (iii) secrecy of information is protected through

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TRADE SECRETS . . . continued Legal aid means legal services which are provided by advocate without charge (pro proper efforts (Id. at Art. 3[1]) (secrecy of information is considered to be protected if bono) to clients who are not financially capable to pay honorarium. (Id. at Art. 1[9]). owner or all of parties who are authorized by owner have taken reasonable and proper Minister means Minister with duties and responsibilities which include field of law and steps to protect it [Id. at Art. 3(4)]). legislation. (Id. at Art. 1[10]). Minister responsible for field of law and legislation is Transfer.—Trade secret rights may be transferred by: (i) Inheritance (Id. at Art. Minister of Law and Human Rights. (Arts. 25[2] and 35 of Presidential Regulation No. 5[1][a]); (ii) donation (Id. at Art. 5[1][b]); (iii) testamentary disposition (Id. at Art. 9 of 2005 dated 31 Jan. 2005 concerning Status, Tasks, Functions, Organizational Struc- 5[1][c]); (iv) written agreement (Id. at Art. 5[1][d]); or (v) other manners condoned by tures and Operational Procedures of State Ministerial Office). provisions of law (Id. at Art. 5[1][e]). Qualifications.—In order to be deemed to have been appointed as advocate, person All forms of transfers of trade secret rights must be recorded with Directorate General must: (i) Hold degree with background of higher legal education (Id. at Art. 2[1]); (ii) of Intellectual Property Rights. (Id. at Art. 5[3]). Transfers of trade secret rights which participate in advocate special professional education program conducted by, and pass are not recorded with Directorate General of Intellectual Property Rights do not have test administered by, Organization of Advocates (Id. at Arts. 2[1] and 3[1][f]); (iii) hold legal effect upon third parties. (Id. at Art. 5[4]). Indonesian citizenship (Id. at Art. 3[1][a]); (iv) reside in Indonesia (Id. at Art. 3[1][b]); Licenses.—Holders of trade secret rights are vested with right to grant licenses to other (v) not carry status of State civil servant or State official (Id. at Art. 3[1][c]); (vi) be at parties based upon license agreements for implementation of (unless otherwise agreed) least 25 years of age (Id. at Art. 3[1][d]); (vii) apprentice for minimum of two continuous (Id. at Art. 6): (i) Exploitation of trade secret (Id. at Arts. 4[a] and 6); (ii) granting years in advocate’s office (Id. at Art. 3[1][g]); (viii) never convicted of crime of ill will licenses or prohibition of other parties from exploiting trade secret (Id. at Arts. 4[b] and (felony) that is punishable by imprisonment of five years or more (Id. at Art. 3[1][h]); 6); (iii) granting licenses or prohibition of other party to disclose trade secret for interests and (ix) be of good behavior, honest, responsible, fair and possess high integrity (Id. at of commercial nature (Id. at Arts. 4[c] and 6). Art. 3[1][i]). Unless otherwise agreed, holder of trade secret right itself continues to be able to Oath.—Prior to conducting professional activities, advocate is obligated to swear oath implement trade secrets or grant licenses to third parties for implementation of (Id. at Art. in accordance with his/her religion or sincerely and wholeheartedly promise in public 7): (i) Exploitation of trade secret (Id. at Arts. 4[a] and 7); (ii) granting licenses or hearing at High Court in territory of advocate’s domicile. (Id. at Art. 4[1]). prohibition of other parties from exploiting trade secret (Id. at Arts. 4[b] and 7); (iii) Status of Advocates.—Advocates have status as free and independent upholders of granting licenses or prohibition of other parties to disclose trade secret for interests of law. (Id. at Art. 5[1]). commercial nature (Id. at Arts. 4[c] and 7). License agreements must be recorded with Directorate General of Intellectual Property Sanctions.—Advocates may be subject to sanctions based upon following reasons: (i) Rights. (Id. at Art. 8[1]). Trade secret license agreements which are not recorded with Ignoring/disregarding/neglecting or abandoning interests of his/her client (Id. at Art. Directorate General of Intellectual Property Rights do not have legal effect upon third 6[a]); (ii) acting or behaving in manner which is not proper/fitting/decent in relation to parties. (Id. at Art. 8[2]). opponents or professional colleagues (Id. at Art. 6[b]); (iii) displaying attitude, behaving, Civil Claims.—Holders of trade secret rights or recipients of licenses may file claims speaking or issuing statements indicating behavior disrespectful of law, legislative regu- against anyone who intentionally and without right engages in: (i) Exploitation of trade lations or courts (Id. at Art. 6[c]); (iv) acting in manner conflicting with professional secret (Id. at Arts. 4[a] and 11[1]); (ii) granting licenses or prohibition of other parties responsibility, honor, standards, dignity, prestige or status (Id. at Art. 6[d]); (v) con- from exploiting trade secret (Id. at Arts. 4[b] and 11[1]); (iii) granting licenses or ducting violations of regulations of law and/or acting disgracefully (Id. at Art. 6[e]); or prohibition of other parties to disclose trade secret for interests of commercial nature (Id. (vi) violating advocate’s oath or promise and/or code of professional ethics of advocates at Arts. 4[c], 11[1] and 13); (iv) repudiation of agreement or written or oral obligation (Id. at Art. 6[f]). for protection of trade secret (Id. at Arts. 4[1] and 13); or (v) obtaining or controlling Forms of sanctions that may be imposed on advocate include following: (i) Verbal trade secret in manner which violates provisions of law in effect (Id. at Arts. 4[1] and warnings (Id. at Art. 7[1][a]); (ii) written warnings (Id. at Art. 7[1][b]); (iii) temporary 14). suspension from profession for periods from three to 12 months (Id. at Art. 7[1][c]); or Person will not be deemed to have infringed upon trade secret by disclosing trade (iv) permanent suspension from profession (Id. at Art. 7[1][d]). secret or repudiating agreement or written or oral obligation for protection of trade secret Sanction process is implemented by Honorary Committee of Organization of Advo- (Id. at Arts. 13 and 15) if: (i) Act of disclosure of trade secret or exploitation of trade cates in accordance with code of professional ethics of advocates. (Id. at Art. 7[2]). secret is based upon interests of national security, health or public safety (Id. at Arts. 13 Honorarium.—Advocates are entitled to receive honorariums for legal services al- and 15[a]); or (ii) act is derived out of process of reverse engineering of product produced ready given to clients in reasonable amount based upon agreement of parties. (Id. at Art. from exploitation of trade secret owned by another person which is conducted for 21). exclusive purpose of further development of relevant product (Id. at Arts. 13 and 15[b]). Legal Aid—Pro Bono.—Advocates are obligated to provide legal aid without charge Dispute Resolution Forums.—Forums for resolution of disputes relating to trade to persons seeking justice who are not financially able to pay honorarium. (Id. at Art. secret rights include Commercial Court, arbitration or alternative dispute resolution 22[1]). mechanisms. (Id. at Arts. 11[2] and 12). Upon request of all of parties in criminal or civil Foreign advocates may not appear in court hearings in Indonesia. (Id. at Art. 23[1]). proceeding, judge may order that hearings be conducted in closed manner. (Id. at Art. Foreign advocates may not practice and/or open legal services office or representative 18). office in Indonesia. (Id. at Art. 23[1]). Infringement.— Advocate offices may employ foreign advocates as employees or expert staff in field Criminal Sanctions.—Anyone who intentionally and without right: (i) Exploits trade of foreign law based upon permit from Government with recommendation from orga- secret of another party; (ii) discloses or prohibits disclosure of trade secret (Id. at Arts. nization of advocates. (Id. at Art. 23[2]). 13 and 17[1]); (iii) repudiates agreement or written or oral obligation for protection of Foreign advocates are required to give free (pro bono) legal services for specified trade secret (Id. at Arts. 13 and 17[1]); or (iv) obtains or controls trade secret in manner period of time within realm of legal education and research. (Id. at Art. 23[3]). Foreign which violates regulations of law in effect (Id. at Arts. 14 and 17[1]), is guilty of criminal advocates providing legal services in Indonesia in violation of law may be subject to offense and may be punished by up to two years imprisonment and/or fines of up to Rp criminal sanctions including imprisonment. (Id. at Arts. 24 and 31). 300,000,000 (Id. at Art. 17[1]). Code of Ethics.—Organization of advocates must compose code of professional ethics of advocates in order to protect dignity and honor of profession of advocates. (Id. at Art. 26[1]). Advocates are obligated to submit to and to comply with code of professional LEGAL PROFESSION ethics of advocates and stipulations of Honorary Committee of organization of advocates. (Id. at Art. 26[2]). LEGAL PROFESSION: Criminal Sanctions.—Law No. 18 of 2003 provides that any person who intentionally Governing Law.—Legal profession is governed by Law No. 18 of 2003 dated 5 Apr. engages in advocate profession and holds himself/herself out as if he/she is advocate 2003 concerning Advocates. though he/she is not advocate pursuant to provisions of Law No. 18 of 2003 may be Definitions.— punished by up to five years imprisonment and fines of up to Rp 50,000,000. (Id. at Art. Advocate means persons engaged in profession of providing legal services, both within 31). However, Art. 31 of Law No. 18 of 2003 has been declared unconstitutional and of and outside of court, who fulfill requirements pursuant to provisions of Law No. 18 of no legal effect by Constitutional Court Decision No. 006/PUU-II/2004 dated 8 Dec. 2004. 2003. (Art. 1[1] Law No. 18 of 2003 dated 15 Apr. 2003 concerning Advocates). Legal services means services given by advocate in form of giving legal consultations, legal assistance, implementing authorizations, representing, accompanying, defending MORTGAGES and engaging in other legal actions for legal interests of client. (Id. at Art. 1[2]). Client means persons, legal entity or other organization who receives legal services CHATTEL MORTGAGES: from advocate. (Id. at Art. 1[3]). Organization of advocates means professional organization established based on Law See category Debtor and Creditor, topic Liens, subhead Liens over Moveables and No. 18 of 2003. (Id. at Art. 1[4]). Intangibles (Fidusia Guarantees). Supervision means technical and administrative actions related to advocates for pro- tection in order to ensure that profession is conducted in accordance with code of MORTGAGES: professional ethics of advocates and regulations of law regulating profession of advo- Governing Law.—Mortgages on land and land related object is governed by Law No. cates. (Id. at Art. 1[5]). 4 of 1996 dated 9 Apr. 1996 concerning Mortgage. Self protection means right and opportunity which is granted to advocates to put forth Mortgage on land and land related objects must be prepared by land conveyancer reason as well as to protest/oppose things that cause loss to advocate in performance of official (PPAT) in writing in form of deed of mortgage grant. (Arts. 1[1] and 10[2] of advocate’s profession or in relation to organization of advocates. (Id. at Art. 1[6]). Law No. 4 of 1996 dated 9 Apr. 1996 concerning Mortgage). PPATs are general Gov- Honorarium means compensation for legal services received by advocate based on ernment licensed officials vested with authority to draw up deeds of transfer, proxies and agreement with client. (Id. at Art. 1[7]). mortgages in relation to land. (Id. at Art. 1[4]). PPAT has responsibility to record Foreign advocate means foreign citizen who is advocate who conducts profession mortgages with Land Affairs Office (Id. at Art. 13[1]) within seven days following within territory of Republic of Indonesia based upon conditions stipulated in regulations execution of mortgage deed (Id. at Art. 13[2]), failing which PPAT is subject to warning, of law. (Id. at Art. 1[8]). suspension and ultimately termination of PPAT license (Id. at Art. 23[1]).

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MORTGAGES . . . continued return goods or their value after deduction of debts incurred in process of administration Mortgage deed must be registered and mortgage certificate must contain words “DEMI upon return of absentee. (Id. at Art. 463). KEADILAN BERDASARKAN KETUHANAN YANG MAHA ESA” which translate to Estate Property Bureau is required to: (i) Take inventory and describe property en- ‘‘FOR SAKE OF JUSTICE ON BASIS OF ONE AND ONLY G-D’’ (Id. at Art. 14[2]) trusted to it (Id. at Art. 464); (ii) provide report to public prosecutor (Id. at Art. 465); to have force of final legal judgment execution order (Id. at Art. 14[3]). and (iii) produce securities, negotiable instruments and documents concerning manage- Land Affairs Office issues mortgage certificate in accordance with regulations of law ment of property (Id. at Art. 465). in effect. (Id. at Art. 14[1]). If absentee returns following declaration of presumption of death or if proof that Mortgages may be made over several land titles as security for single debt, specifying absentee is still alive is received, those who have enjoyed product or income of absen- that payment in installments releases land titles as debt is satisfied in accordance with tee’s property must return one-half of value of product, income and property. (Id. at Art. their values. (Id. at Art. 2[2]). Single mortgage may cover one or more debts to one or 482). If absentee returns after 15 years but prior to 30 years, one-fourth must be returned. more creditors. (Id. at Art. 3[2]). (Id. at Art. 482). For return of absentee after 30 years, see category Estates and Trusts, Mortgages may be imposed at time of or following time underlying obligation arises. topic Death (Presumptions of and Actions for). (Id. at Art. 3[1]). Mortgages may be conveyed over rights to ownership, rights to cultivate or rights to DOWER AND CURTESY: development of land and may also encumber fixtures. (Id. at Art. 4[1] and [4]). Multiple Dower and curtesy are not provided under Indonesian law. mortgages are permitted with priority based on date of registration with Land Affairs Office. (Id. at Art. 5[2]). If two competing mortgages bear same registration date, date LANDLORD AND TENANT: of mortgage deed determines priority. (Id. at Art. 5[3] and [4]). Mortgages run as burden with transfer of ownership benefits in mortgaged property. (Id. at Art. 7). Housing Premises.—Housing leases are governed by Law No. 4 of 1992 dated 10 Upon default of underlying obligation, first mortgagee has right to sell property Mar. 1992 concerning Housing and Dwelling, Government Regulation No. 44 of 1994 through public auction and apply proceeds to sale of mortgagor’s outstanding obligations. dated 26 Dec. 1994 concerning Residential Dwelling by Non-Owners and Indonesian (Id. at Art. 6). Mortgagee is not authorized to directly set off value of property against Civil Code (Kitab Undang-undang Hukum Perdata) (KUHPer) (Burgerlijk Wetboek voor debt and any provisions to contrary are void as matter of law. (Id. at Art. 12). Indonesië). Non-owner possessors of house must obtain approval or permission from Bestowal of mortgage is technically and necessarily preceded by pledge to mortgage owner. (Art. 2[1] of Government Regulation No. 44 of 1994 dated 26 Dec. 1994 con- as security for satisfaction of particular debt. (Id. at Art. 10[1]). Pledge is expressed in cerning Residential Dwelling by Non-Owners). Duration of lease term may not exceed underlying agreement creating secured obligation. (Id. at Art. 10[1]). Proxy authorizing duration of right in land held by lessor. (Id. at Art. 5[3]). Lease agreements must stipulate conveyance of mortgage without right of substitution is also required. (Id. at Art. rental rate, term and rights and obligations of parties. (Id. at Art. 4[2]). Properties that 15[1][b]). are subject of dispute may not be leased. (Id. at Art. 4[3]). Government provides model deed of mortgage. (Id. at Art. 17). Deed of mortgage must Lessor’s responsibilities include: (i) Delivery of leased premises to lessee (Art. 1550[1] contain following information: (i) Name, identity and Indonesian domicile (foreign par- of Indonesian Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk ties may elect domicile in Indonesia) (Id. at Art. 11[1][a] and [b]); (ii) description of debts Wetboek voor Indonesië]); (ii) maintenance of premises in condition to serve purpose for secured (Id. at Art. 11[1][c]); (iii) value of security (Id. at Art. 11[1][d]); and (iv) clear which it is intended (Id. at Art. 1550[2]); and (iii) insuring quiet enjoyment of lessee (Id. description of object of mortgage (Id. at Art. 11[1][e]). at Art. 1550[3]). Deed may include: (i) Restrictions on mortgagor’s right to lease or modify leases or Lessor is responsible for all patent and latent defects of rented property preventing use receive advance rent relating to property (Id. at Art. 11[2][a]); (ii) restrictions on mort- thereof and lessor is required to provide compensation for damages arising from those gagor’s right to modify condition of property (Id. at Art. 11[2][b]); (iii) grant of right to defects. (Id. at Art. 1552). mortgagee to manage property following default by mortgagor (Id. at Art. 11[2][c]); (iv) Upon complete destruction of premises for reasons not fault of lessor or lessee, lease grant of right to mortgagee to take steps to prevent wasting of property or loss of interests agreement terminates. (Id. at Art. 1553). Upon partial destruction, lessee may request in property (Id. at Art. 11[2][d]); (v) grant of right to first mortgagee of direct power of reduction of rental rate or cancellation of lease but is not entitled to claim other damages. sale upon default (Id. at Art. 11[2][e]); (vi) promise that mortgagor will not vacate (Id. at Art. 1553). mortgage without advance written agreement from mortgagee (Id. at Art. 11[2][f]); (vii) During term of lease, lessor is not permitted to alter physical structure of leased restrictions on transfer of property by mortgagor (Id. at Art. 11[1][g]); (viii) grant of right premise. (Id. at Art. 1554). to mortgagee to receive compensation in event of condemnation action by State (Id. at Lessor is not responsible for unlawful acts of third parties effecting lessee’s quiet Art. 11[2][h]); (ix) pledge of insurance proceeds benefiting property (Id. at Art. 11[1][i]); enjoyment. (Id. at Art. 1556). Lessee is entitled to claim proportionate reduction in rent (x) pledge by mortgagor to vacate property upon enforcement of mortgage (Id. at Art. if his enjoyment is disturbed by lawsuit relating to ownership of demised premises 11[2][j]); and (xi) pledge that mortgagee will return land title certificate upon satisfaction provided that lessor is given notice of disturbance. (Id. at Art. 1557). of underlying obligations (Id. at Arts. 11[2][k] and 14[4]). Lessee’s responsibilities include obligation to utilize and preserve premises in respon- Mortgages are transferable in interests of law in event of assignment of underlying sible manner, fulfill all lease obligations, pay rent on time and vacate premises at end obligation, by subrogation, by inheritance or by similar circumstances. (Id. at Art. 16[1]). of lease term. (Id. at Art. 1560). If lessee utilizes house for purposes not intended in lease Transferees must register their transfers with Land Affairs Office. (Id. at Art. 16[2]). agreement, lessor may terminate lease. (Id. at Art. 1561). If mortgagor breaches its pledge, property may be sold by first mortgagee through Upon termination of lease, lessee is obligated to return house to lessor in its proper public auction pursuant to applicable procedures. (Id. at Art. 20[1]). Mortgagor and condition, ordinary wear and tear excluded, or in condition stipulated in lease agreement. mortgagee may agree to sale executed informally if in this way highest price can be (Id. at Art. 1562; Art. 8[3] of Government Regulation No. 44 of 1994). Lessee is obtained (Id. at Art. 20[2]), provided that sale may only be executed after: (i) Passage responsible for all damages to leased property during rental period except for those of one month from (a) notification in writing by buyer and/or holder of mortgage to proven not to be lessee’s fault. (Art. 1564 of Indonesian Civil Code [Kitab Undang- concerned parties, and (b) announcement in mass media or at least two newspapers undang Hukum Perdata] [KUHPer] [Burgerlijk Wetboek voor Indonesië]). If damage circulating in area concerned; and (ii) during publication period there is no objection results from fire, lessor bears burden of proving lessee’s fault. (Id. at Art. 1565). from creditors (Id. at Art. 20[3]). POWER OF ATTORNEY: Buyer of property sold by mortgage at public auction imposed by injunction of District Court or in informal voluntary transaction should obtain and file with Land Affairs Office See category Business Organizations, topic Agency. statement of clearance of mortgage rights on property exceeding purchase price paid and file statement with Land Affairs Office. (Id. at Art. 19[1]). REAL PROPERTY: Mortgages cancel due to: (i) Cancellation of underlying obligation (Id. at Art. Governing Law.—Land ownership and rights are governed by Law No. 5 of 1960 18[1][a]); (ii) release by mortgagee (Id. at Art. 18[1][b]); (iii) clearance based on ranking dated 24 Sept. 1960 concerning Basic Agrarian Law; Law No. 16 of 1985 dated 31 Dec. by District Court (Id. at Art. 18[1][c]); or (iv) cancellation of underlying land title (Id. 1985 concerning Apartments; Government Regulation No. 40 of 1996 dated 17 June at Art. 18[1][d]). Cancellation of underlying land title does not cancel underlying ob- 1996 concerning Right to Cultivate, Right to Build and Right to Use Land; Law No. 41 ligation. (Id. at Art. 18[4]). Land Affairs Office expunges record of mortgage from land of 2004 dated 27 Oct. 2004 concerning Wakaf; and Government Regulation No. 28 of book of titles and nullifies mortgage certificate. (Id. at Art. 22[1]). Creditor must provide 1977 dated 17 May 1977 concerning Wakaf Title. written statement of settlement or other relinquishment of mortgage to enable Land Only Indonesian citizens may hold full rights to land, air and water. (Art. 9[1] of Law Affairs Office to nullify mortgage lien. (Id. at Art. 22[4]). Otherwise, interested parties No. 5 of 1960 dated 24 Sept. 1960 concerning Basic Agrarian Law). No distinction is must obtain District Court order for expungement directed to Land Affairs Office. (Id. made between rights of men and women. (Id. at Art. 9[2]). at Art. 22[5]). If dispute regarding underlying obligation is before another court, ex- Agrarian law in effect in relation to land, water and airspace is adat law to extent not pungement suit is removed to that other court. (Id. at Art. 22[6]). in conflict with State and national interests, on basis of unified nation in accordance with Indonesian socialism as well as regulations set forth in Law No. 5 of 1960 and other regulations of law derived from Law No. 5 of 1960 with attention given to elements PROPERTY which are based on religious law. (Id. at Art. 5). Right of Ownership is most powerful and fullest right in land which may be pos- ABSENTEES: sessed by person. (Id. at Art. 20[1]). Right of ownership is alienable and devisable only to Indonesian citizens. (Id. at Art. If person has been absent without leaving another with power of attorney to manage 20[2] and 21[1]). Government may stipulate legal entities with capacity for ownership. absentee’s affairs, upon request of interested parties or upon demand of public prosecutor, (Id. at Art. 21[2]). District Court with jurisdiction over domicile of absentee shall order Estate Property Foreigners, including former Indonesian citizens, who inherit or otherwise obtain Bureau to manage property and represent absentee’s interests. (Id. at Art. 463 of Indo- transfers through marriage of right of ownership must transfer or release right within one nesia Civil Code [Kitab Undang-undang Hukum Perdata] [KUHPer] [Burgerlijk Wetboek year or right reverts to State. (Id. at Art. 21[3]). voor Indonesië]). Right of ownership terminates if right is voluntarily relinquished, if land is abandoned, If property and interests of absentee are few, upon request of interested parties or on if land is deemed destroyed or State condemns land for reasons of public interest upon demand of public prosecutor, District Court may vest spouse or one or more blood or payment of just compensation. (Id. at Art. 27). other relations of absentee with authority to manage property and represent absentee’s Right of ownership can be object of mortgage. (Id. at Art. 25; Art. 4[1][a] of Law No. interests. (Id. at Art. 463). Spouse or other relation exercising authority is obligated to 4[1][a] of 1996).

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REAL PROPERTY . . . continued comprised of group of individual heirs (‘‘Tax Subjects’’). (Art. I Point 1 of Law No. 17 Right to Cultivate is right to organize farm, plantation, animal husbandry or fishing of 2000 dated 2 Aug. 2000 concerning Third Amendment to Law No. 7 of 1983 amending enterprises on land. (Art. 28[1] and Elucidation of Art. 28 of Law No. 5 of 1960). Right Art. 2[1] and Elucidation of Art. 2[1]). See category Business Organizations, topic to cultivate is authority granted directly by State. (Id. at Art. 28[1]). Companies, subhead Permanent Establishments for definition of ‘‘Permanent Establish- Restrictions on size of land conveyed by right to cultivate vary based on use and ment’’. circumstances with minimum conveyance of five hectares. (Id. at Art. 28[2]). Representative agencies of foreign countries, officials of diplomatic missions and Only Indonesian citizens and legal entities established pursuant to Indonesian law and consulates, and international organizations designated by Minister of Finance who are not domiciled in Indonesia may hold right to cultivate. (Id. at Art. 30[1]). Other individuals engaged in business or other income earning activities in Indonesia are excluded from or legal entities obtaining right to cultivate must relinquish or transfer right to qualified definition of tax subjects. (Id. at Art. I Point 2 amending Art. 3). person within one year. (Id. at Art. 30[2]). Tax subjects are categorized as resident or nonresident. (Id. at Art. I Point 1 amending Right to cultivate is mortgagable. (Id. at Art. 33; Art. 4[1][b] of Law No. 4 of 1996). Art. 2[3] and [4]). Resident tax subjects include any individual residing or present in Right to cultivate is conveyed for periods of between 25 (Id. at Art. 29[1]) and 35 years Indonesia for more than 183 days in period of 12 months, organizations set up or depending on intended use (Id. at Art. 29[2]). 25-year renewals are available based on domiciled in Indonesia and unitary estates. (Id. at Art. I Point 1 amending Art. 2[3][a]). needs of relevant circumstances. (Id. at Art. 29[3]). Other persons, including permanent establishments, are characterized as nonresident tax Right to cultivate terminates as result of expiration of validity period, termination due subjects. (Id. at Art. I Point 1 amending 2[4][a]). to failure of nationality qualifications, relinquishment by holder, revocation due to failure Taxable income includes any economic benefit received or earned by tax subject from to utilize or for public interests, abandonment or destruction of land. (Id. at Art. 34). within as well as outside Indonesia in whatever name or form (Id. at Art. I Point 3 Right to Build is right to construct and possess buildings above land which do not amending Art. 4[1]), including: (i) Compensation or rewards received or earned in personally belong to possessor. (Id. at Art. 35[1]). Land owned by State or privately may connection with work or services including but not limited to salaries, wages, allowances, be subject to right to build. (Id. at Elucidation of Art. 35). honorariums, commissions, bonuses, gratuities and pensions (Id. at Art. I Point 3 amend- Right to build may initially be granted for 30 years with 20 year extension available ing Art. 4[1][a]); (ii) prizes and awards from lotteries or work or activities (Id. at Art. upon application. (Id. at Art. 35[1] and [2]). I Point 3 amending Art. 4[1][b]); (iii) business profits (Id. at Art. I Point 3 amending Art. Only Indonesian citizens and legal entities established pursuant to Indonesian law and 4[1][c]); (iv) gains from sale or transfer of property (Id. at Art. I Point 3 amending Art. domiciled in Indonesia may hold right to build. (Id. at Art. 36[1]). Other individuals or 4[1][d]); (v) tax refunds already calculated as costs (Id. at Art. I Point 3 amending Art. legal entities obtaining right to build must relinquish or transfer right to qualified person 4[1][e]); (vi) interest including premiums, discounts and compensation due to debt within one year. (Id. at Art. 36[2]). repayment guarantees (Id. at Art. I Point 3 amending Art. 4[1][f]); (vii) dividends Right to build is mortgagable (Id. at Art. 39; Art. 4[1][c] of Law No. 4 of 1996), including those paid by insurance companies to policyholders and payments of business alienable, devisable and inheritable (Id. at Art. 35[3]; Art. 34 of Governmental Regulation profits of cooperatives (Id. at Art. I Point 3 amending Art. 4[1][g]); (viii) royalties (Id. No. 40 of 1996). at Art. I Point 3 amending Art. 4[1][h]); (ix) rents and other income connected with use Right to build terminates upon expiration, termination due to failure of qualifications, of property (Id. at Art. I Point 3 amending Art. 4[1][i]); (x) annuities received or accrued relinquishment by holder, revocation for public interests, abandonment or destruction. (Id. at Art. I Point 3 amending Art. 4[1][j]); (xi) gains due to cancellation of debt except (Id. at Art. 40). certain amounts stipulated by Government Regulation (Id. at Art. I Point 3 amending Art. Creation, transfer and cancellation of right to build must be registered with Land 4[1][k]); (xii) surplus differences due to revaluation of assets (Id. at Art. I Point 3 Registry Office. (Id. at Art. 38[1]). amending Art. 4[1][m]); (xiii) insurance premiums (Id. at Art. I Point 3 amending Art. Right of Use is right to use and/or to collect products of land. (Id. at Art. 41[1]). Right 4[1][n]); (xiv) contributions received or accrued by association from its members where of use may be obtained from State or from private land owners. (Id. at Art. 41[1]). contributions of members are determined on basis of volume of their business or inde- Right of use may be given for maximum of 25 years and may be extended for pendent work (Id. at Art. I Point 3 amending Art. 4[1][o]); (xv) increases in net assets maximum of 20 years (Art. 45[1] of Government Regulation No. 40 of 1996) if: (i) Land from income not yet subject to tax (Id. at Art. I Point 3 amending Art. 4[1][p]); and (xvi) is still utilized in productive manner according to its characteristics (Id. at Art. 46[1][a]); foreign currency gains (Id. at Art. I Point 3 amending Art. 4[1][l]). (ii) holder has performed conditions as stipulated in granting of right (Id. at Art. Nontaxable income includes: (i) Aid and contributions (Id. at Art. I Point 3 amending 46[1][b]); and (iii) holder remains personally qualified to hold right of use (Id. at Art. Art. 4[3][a][1]); (ii) gifts received by immediate family members or religious organi- 46[1][c]). zations or educational or social organizations or small scale business units or coopera- Right of use may be granted for unlimited duration to governmental organizations, tives sanctioned by Minister of Finance so long as gift is unrelated to business, work, representatives of foreign countries and international, religious and social institutions. ownership or control (Id. at Art. I Point 3 amending Art. 4[3][a][2]); (iii) transfers by (Id. at Art. 45[3]). inheritance or will (Id. at Art. I Point 3 amending Art. 4[3][b]); (iv) property including Right of use may be transferred gratuitously, for fee or in exchange for service. (Art. cash payments received by legal entities as substitute for shares or in place of capital 41[2][b] of Law No. 5 of 1960). participation (Id. at Art. I Point 3 amending Art. 4[3][c]); (v) compensation or rewards Right of use may be held by Indonesian citizens, aliens domiciled in Indonesia, entities in connection with work or services received or earned in kind and/or fringe benefits from formed pursuant to laws of and domiciled in Indonesia or entities formed pursuant to tax subject or government (Id. at Art. I Point 3 amending Art. 4[3][d]); (vi) payments foreign laws and domiciled in foreign countries so long as foreign entity has represen- from insurance companies to individuals in connection with health insurance, accident tative in Indonesia. (Id. at Art. 42; Art. 39 of Government Regulation No. 40 of 1996). insurance, life insurance, endowment insurance and scholarship insurance (Id. at Art. I Government, representatives of foreign governments and international institutions and Point 3 amending Art. 4[3][e]); (vii) dividends or other distributions of profits received social and religious institutions may also hold right of use. (Id. at Art. 39). or earned by resident taxpayer limited liability company and specific other similar bodies Right of use may only be transferred on land under State control if permitted by State from capital participation in Indonesian business entity (Id. at Art. I Point 3 amending and for land privately owned if permitted by agreement of owner. (Id. at Art. 54[2]). Art. 4[3][f]); (viii) pension fund contributions and income earned by certain pension fund Right to use terminates upon expiration, cancellation, termination due to failure of investments (Id. at Art. I Point 3 amending Art. 4[3][g] and [h]); (ix) profit distributions qualifications, relinquishment by holder, revocation for public interests, abandonment or received by members of limited partnerships, associations, firms and consortiums (Id. at destruction. (Id. at Art. 55[1]). Art. I Point 3 amending Art. 4[3][i]); and (x) bond interest received by investment fund companies (Id. at Art. I Point 3 amending Art. 4[3][j]). Rules applying to taxation of permanent establishments are designed to capture tax on TAXATION worldwide income of related organization earned in direct connection with activities of permanent establishment, while excluding other unrelated activities. CONSUMPTION TAXES: Untaxed income for individuals includes first Rp 2,880,000 earned with additional Rp See topic Value Added Tax. 1,440,000 for married taxpayers, additional Rp 2,880,000 for wife whose income is consolidated with income of her husband and additional Rp 1,440,000 for each imme- EMPLOYMENT TAXES: diate family member who is full dependent, up to maximum of three. (Id. at Art. I Point See topic Income Tax. 5 amending Art. 7[1]). These amounts are adjustable by Minister of Finance. (Id. at Art. I Point 5 amending Art. 7[3]). GIFT TAX: Government assumes income tax obligation on first Rp 1,000,000 per month earned by private individuals working in Indonesia and earning not more than Rp 2,000,000 per Lottery prizes, gifts and awards are taxable through withholdings which are final in month. (Arts. 1 and 2 of Government Regulation No. 47 of 2003 dated 21 Sept. 2003 nature with respect to foreign recipients and which are creditable against year end tax concerning Income Tax Borne by Government on Worker’s Income from Work Ren- liability for domestic recipients. dered). INCOME TAX: Taxable income is calculated by deducting costs and expenses, depreciation, pension fund contributions, capital losses, foreign currency exchange losses, costs of research and Governing Tax.—Income tax is governed by Law No. 7 of 1983 dated 31 Dec. 1983 development, amortization, depreciation and costs of scholarships, apprenticeships and concerning Income Tax as already amended by Law No. 7 of 1991 dated 30 Dec. 1991 training from gross income. (Art. I Point 4 of Law No. 17 of 2000 amending Art. 6[1] concerning Amendment to Law No. 7 of 1983; Law No. 10 of 1994 dated 9 Nov. 1994 of Law No. 10 of 1994). concerning Amendment to Law No. 7 of 1983; Law No. 17 of 2000 dated 2 Aug. 2000 Following are not deductible in calculation of taxable income: (i) Payments of profits concerning Third Amendment to Law No. 7 of 1983; Law No. 6 of 1983 dated 31 Dec. in whatever names or forms (Id. at Art. I Point 6 amending Art. 9[1][a]); (ii) costs charged 1983 on General Tax Provisions and Procedures as already amended by Law No. 9 of for personal interests of shareholders, partners or members of firms (Id. at Art. I Point 1994 concerning Amendment to Law No. 6 of 1983 dated 9 Nov. 1994; and Law No. 6 amending Art. 9[1][b]); (iii) accumulation of reserves (except bad debt claims reserves 16 of 2000 dated 2 Aug. 2000 concerning Second Amendment of Law No. 6 of 1983. for banks and related to lease options, reserves for insurance business and mining Tax subjects include all persons, private and State owned enterprises, organizations, reclamation costs) (Id. at Art. I Point 6 amending Art. 9[1][c]); (iv) health, accident, life, partnerships, limited liability companies, cooperatives, commercial associations, foun- endowment and scholarship insurance premiums paid by individual taxpayers (except for dations, mass organizations, socio-political organizations, institutes, mutual funds, pen- employers paying on behalf of employees and treating premiums as employee income) sions funds and other forms of business units including foreign entities deemed to be (Id. at Art. I Point 6 amending Art. 9[1][d]); (v) compensation or rewards in connection present in Indonesia through permanent establishments and undivided unitary estates with work or services paid in kind and as fringe benefits except as otherwise specified

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INCOME TAX . . . continued years. (Id. at Art. 214). International drivers licenses are valid for one year and cannot by Decree of Minister of Finance (Id. at Art. I Point 6 amending Art. 9[1][e]); (vi) be extended. (Id. at Art. 233). Drivers licenses are issued by traffic unit of Department excessive compensation paid to shareholders or parties with special relationships in of Police. (Id. at Art. 216). Minimum age for motorcycle drivers license is 16 years and connection with work performed (Id. at Art. I Point 6 amending Art. 9[1][f]); (vii) for cars minimum age is 17 years. (Id. at Art. 217[1][d]). donations, aid, inheritance or testamentary dispositions (Id. at Art. I Point 6 amending There is no obligation to underwrite risk of loss through insurance except with respect Art. 9[1][g]); (viii) income taxes (Id. at Art. I Point 6 amending Art. 9[1][h]); (ix) costs to public transportation. (Art. 32[1] of Law No. 14 of 1992 dated 12 May 1992 con- paid or incurred for personal interests of tax subjects or their dependents (Id. at Art. I cerning Traffic and Road Transportation). Registration is required for all vehicles used Point 6 amending Art. 9[1][i]); (x) salaries paid to members of partnerships or non- on road. (Art. 172[1]) of Government Regulation No. 44 of 1993). corporate enterprises whose capital is not divided into shares (Id. at Art. I Point 6 amending Art. 9[1][j]); and (xi) tax related fines and sanctions (Id. at Art. I Point 6 SHIPPING: amending Art. 9[1][k]). Indonesian admiralty and maritime law is founded on principles of international con- Tax rates applied to resident tax subjects who are individuals are 5% for first Rp ventions (see category Treaties and Conventions), Indonesian Commercial Code (Kitab 25,000,000 (subject to applicable exclusions); 10% for next Rp 25,000,000; 15% on Undang-undang Hukum Dagang) (KUHD) (Wetboek van Koophandel voor Indonesië) income above Rp 50,000,000 up to Rp 100,000,000; 25% on income above Rp regulating mortgages and other liens, master and seamen, pilotage and towage, wrecks 100,000,000 up to Rp 200,000,000; and 35% on income exceeding Rp 200,000,000. (Id. and salvage and carriage of goods (which is also covered by United Nations Convention at Art. I Point 10 amending Art. 17[1][a]). on Carriage of Goods by Sea of 1978 and Law No. 21 of 1992 dated 17 Sept. 1992 Tax rates applied to resident tax subjects who are bodies, groups and agencies are 10% concerning Shipping regulating registration, safety and pollution, inspection and control, for income up to Rp 50,000,000; 15% for income above Rp 50,000,000; and 30% for masters and seaman and wreck and salvage). income exceeding Rp 100,000,000. (Id. at Art. I Point 10 amending Art. 17[1][b]). Ship Registration.—Ships qualified for Indonesian registry are those which are at Taxes are paid on monthly basis through withholdings by income paying parties and least 20 cubic meters or equivalent, owned by Indonesian citizens or Indonesian legal payments by tax subjects directly. Income paid by resident tax subjects and permanent entities, established pursuant to laws of Indonesia and domiciled in Indonesia. (Art. 46[2] establishments to resident tax subjects or permanent establishments is subject to tax of Law No. 21 of 1992 dated 17 Sept. 1992 concerning Shipping). withholding of 15% of gross amount of: (i) Dividends (Id. at Art. I Point 13 amending Art. 23[1][a][1]); (ii) interest, including premiums, discounts and compensations for loan Collision.—Indonesia has ratified 1972 International Regulation for Preventing Col- repayment guarantees (Id. at Art. I Point 13 amending Art. 23[1][a][2]); (iii) royalties (Id. lisions at Sea. (Presidential Decree No. 50 of 1999 dated 8 Oct. 1979 concerning at Art. I Point 13 amending Art. 23[1][a][3]); and (iv) gifts or rewards (Id. at Art. I Point Ratification on Convention on International Regulation for Preventing Collisions at Sea). 13 amending Art. 23[1][a][4]). Interest earned on savings paid by cooperatives is subject to withholding at rate of 15% and is final in nature. (Id. at Art. I Point 13 amending Art. 23[1][b]). Withholding of 15% TREATIES AND CONVENTIONS of net income estimates based on ratios determined by Minister of Finance are required for: (i) Rents and other income connected with use of property (Id. at Art. I Point 13 TREATIES: amending Art. 23[1][c][1]); and (ii) compensation connected with technical, manage- Multilateral Treaties and Conventions.—Indonesia is signatory to numerous mul- ment, construction, consulting and other services other than those received by individual tilateral treaties and conventions, examples of which are: (i) Charter of United Nations taxpayers and already subject to withholding by their employers (Id. at Art. I Point 13 and Statute of International Court of Justice, 26 June 1945; (ii) International Covenant amending Art. 23[1][c][2]). on Civil and Political Rights (Law No. 12 of 2005 dated 28 Oct. 2005 concerning There is no withholding for: (i) Income paid or owed to banks (Id. at Art. I Point 13 Ratification of International Covenant on Civil and Political Rights; (iii) International amending Art. 23[4][a]); (ii) rents paid or owed in connection with leases with purchase Covenant on Economic, Social and Cultural Rights (Law No. 11 of 2005 dated 28 Oct. options (Id. at Art. I Point 13 amending Art. 23[4][b]); (iii) dividends paid between 2005 concerning Ratification of International Covenant on Civil and Political Rights; (iv) domestic companies (Id. at Art. I Point 13 amending Art. 23[4][c]); (iv) interest on bonds Convention on International Civil Aviation, 7 Dec. 1944; (v) Convention on Privileges earned by investment fund companies (Id. at Art. I Point 13 amending Art. 23[4][d]); (v) and Immunities of United Nations, 13 Feb. 1946 (Presidential Decree No. 51 of 1969 certain income earned by venture capital companies in relation to business partner dated 24 June 1969 concerning Ratification of Three Conventions: Convention on Privi- organizations with small and medium-scale business partners (Id. at Art. I Point 13 leges and Immunities of United Nations 1946; Convention on Privileges and Immunities amending Art. 23[4][e]); (vi) residual from business activities of cooperatives paid to its of Specialized Agencies 1947; Convention on Privileges and Immunities of International member (Id. at Art. I Point 13 amending Art. 23[4][f]); and (vii) interest on deposits not Atomic Energy Agency 1959); (vi) Convention on Privileges and Immunities of Spe- exceeding limit stipulated by Minister of Finance (Id. at Art. I Point 13 amending Art. cialized Agencies, 21 Nov. 1947 (Presidential Decree No. 51 of 1969); (vii) Vienna 23[4][g]). Convention on Diplomatic Relations and Optional Protocol to Vienna Convention on Income paid by resident tax subjects or permanent establishments to nonresident tax Diplomatic Relations concerning Acquisition of Nationality, 1961 (Law No. 1 of 1982 subjects are subject to 20% withholding tax, deemed final in nature (subject to certain dated 25 Jan. 1982 concerning Ratification to Vienna Convention on Consular and exceptions), on following: (i) Dividends (Id. at Art. I Point 15 amending Art. 26[1][a]); Diplomatic Relations and Optional Protocol to Vienna Convention on Diplomatic Re- (ii) interest, including premiums, discounts and compensation for loan repayment guar- lations concerning Acquisition of Nationality, 1961 and Ratification to Vienna Conven- antees (Id. at Art. I Point 15 amending Art. 26[1][b]); (iii) royalties, rents and other tion on Consular Relations and Optional Protocol to Vienna Convention on Consular income connected with use of property (Id. at Art. I Point 15 amending Art. 26[1][c]); Relations concerning Acquisition of Nationality, 1963); (viii) Vienna Convention on (iv) compensation for services (Id. at Art. I Point 15 amending Art. 26[1][d]); (v) gifts Consular Relations and Optional Protocol to Vienna Convention on Diplomatic Relations and awards (Id. at Art. I Point 15 amending Art. 26[1][e]); and (vi) pensions and other concerning Acquisition of Nationality, 1961 and Vienna Convention on Consular Rela- periodic payments (Id. at Art. I Point 15 amending Art. 26[1][f]). tions and Optional Protocol to Vienna Convention on Consular Relations concerning Tax liabilities run to managers of legal entities; receivers and custodians of bankrupts; Acquisition of Nationality, 1963 (Law No. 1 of 1982 dated 25 Jan. 1982 concerning heirs, executors and trustees of undivided estates; and guardians of minors. (Art. 1, Point Ratification to Vienna Convention on Consular and Diplomatic Relations and Optional 31 of Law No. 16 of 2000 dated 2 Aug. 2000 concerning Second Amendment of Law Protocol to Vienna Convention on Diplomatic Relations concerning Acquisition of Na- No. 6 of 1983 concerning General Tax Provisions and Procedures amending Art. 32). tionality, 1961 and Ratification to Vienna Convention on Consular Relations and Optional These representatives are individually responsible for payment of taxes due unless they Protocol to Vienna Convention on Consular Relations concerning Acquisition of Na- can prove and convince Director General of Taxation that they should not be held liable tionality, 1963); (ix) Convention on Special Missions, 8 Dec. 1969 (Law No. 2 of 1982 due to their relevant position and activities. (Id.). dated 25 Jan. 1982 concerning Ratification to Special Missions Convention); (x) Con- vention on Elimination of All Forms of Discrimination against Women, 18 Dec. 1979 INHERITANCE TAX: (Law No. 7 of 1984 dated 24 July 1984 concerning Ratification to Elimination of All Forms of Discrimination against Women); (xi) Convention against Torture and other Inheritance tax is not imposed in Indonesia. Inhumane or Degrading Treatment or Punishment, 10 Dec 1984 (Law No. 5 of 1998 dated 28 Sept. 1998 concerning Ratification Convention Against Torture and other Cruel, VALUE ADDED TAX: Inhumane or Degrading Treatment or Punishment); (xii) International Convention against Governing Law.—Value added tax is governed by Law No. 18 of 2000 dated 2 Aug. Apartheid in Sports, 10 Dec. 1985 (Presidential Decree No. 48 of 1993 dated 26 May 2000 concerning Second Amendment to Law No. 8 of 1983 concerning Value Added Tax of 1993 concerning Ratification of International Convention against Apartheid in Sports); on Goods and Services and Sales Tax on Luxury Goods. (xiii) Convention on Rights of Child, 20 Nov. 1989 (Presidential Decree No. 36 of 1990 Value added tax is imposed on goods and services which are used by or performed dated 25 Aug. 1990 concerning Convention on Rights of Child); (xiv) International or provided by someone within territory of Indonesia. (Art. I Point 6 of Law No. 18 of Opium Convention, 11 Dec. 1946; (xv) Single Convention on Narcotics Drugs of 1961 2000 dated 2 Aug. 2000 concerning Second Amendment to Law No. 8 of 1983 con- (Law No. 8 of 1976 dated 26 July 1976 concerning Ratification of Single Convention cerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods on Narcotic Drugs and its Amending Protocol); (xvi) Protocol Amending Single Con- amending Art. 4). vention on Narcotics Drugs of 1961, 25 Mar. 1972 (Law No. 8 of 1976 dated 26 July 1976 concerning Ratification of Single Convention on Narcotic Drugs and its Amending Protocol); (xvii) United Nations Convention against Illicit Traffic in Narcotics and Psy- TRANSPORTATION chotropic Substances, 20 Dec. 1988 (Law No. 7 of 1997 dated 24 Mar. 1997 concerning Ratification of United Nations Convention against Illicit Traffic in Narcotic Drugs and MOTOR VEHICLES: Psychotropic Substances); (xviii) Constitution of World Health Organization, 22 July Car ownership is allowed for foreigners. Car rental with or without driver is readily 1946 (Presidential Decree No. 175 of 1950 dated 19 May 1950 ratifying Constitution of available at reasonable rates. World Health Organization); (xix) General Agreement on Tariffs and Trade, 30 Oct. 1947 Indonesian or international drivers license is needed to drive in Indonesia. (Art. 211[1] (Indonesia became member of GATT on 24 Feb. 1950; (xx) Agreement Establishing of Government Regulation No. 44 of 1993 dated 14 July 1993 concerning Vehicles and Asian Development Bank, 4 Dec. 1965 (Law No. 8 of 1966 dated 8 Nov. 1966 con- Drivers). To obtain drivers license, following are required: (i) Copies of identity card and cerning Ratification of Indonesian Membership to Asian Development Bank); (xxi) Con- certificate of good health (Id. at Art. 218[2][a] and [b]); (ii) certificate of blood type (Id. stitution of United Nations Industrial Development Organization, 8 Apr. 1979 (Presi- at Art. 218[2][c]); (iii) recent photograph (Id. at Art. 218[2][d]); and (iv) driving and rules dential Decree No. 58 of 1980 dated 29 Sept. 1980 concerning Ratification of of road test (Id. at Art. 218[2][e] and [f]). Indonesian drivers licenses are valid for five Constitution of United Nations Industrial Development Organization/UNIDO); (xxii)

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TREATIES . . . continued (lix) Guadalajara Convention, 18 Sept. 1961; (lx) International Labor Organization Con- Charter of Asian and Pacific Development Centre, 1 Apr. 1982; (xxiii) Agreement to vention No. 182 concerning Prohibition and Immediate Action for Elimination of Worst Establish South Centre, 1 Sept. 1994 (Presidential Decree No. 1 of 1995 dated 13 Jan. Forms of Child Labor (Law No. 1 of 2000 concerning Ratification ILO Convention No. 1995 concerning Ratification of Agreement to Establish South Centre); (xxiv) Customs 182 dated 8 Mar. 2000 concerning Prohibition and Immediate Action for Elimination of Convention on Containers, 2 Dec. 1972 (Presidential Decree No. 45 of 1989 dated 31 Worst Forms of Child Labor); (lxi) International Labor Organization Convention No. 138 Aug. 1989 concerning Ratification of Customs Convention on Containers, 1972); (xxv) concerning Minimum Age for Admission to Employment (Law No. 20 of 1999 dated 7 Customs Convention on International Transport of Goods under Cover of TIR Carnets May 1999 concerning Ratification of International Labor Organization Convention No. (TIR Convention), 14 Nov. 1975 (Presidential Decree No. 46 of 1989 dated 31 Oct. 1989 138 concerning Minimum Age for Admission to Employment); (lxii) International Labor concerning Ratification of Custom Convention on International Transport of Goods Organization Convention No. 105 concerning Abolition of Forced Labour (Law No. 19 Under Cover of TIR Carnets); (xxvi) Convention on International Maritime Organization, of 1999 dated 7 May 1999 concerning Ratification to ILO Convention No. 105 con- 6 Mar. 1948 (Indonesia became member of IMO in 1961); (xxvii) Convention on Code cerning Abolition of Forced Labour); (lxiii) ILO Convention No. 81 concerning Labour of Conduct for Liner Conferences, 5 Feb. 1975 (Presidential Decree No. 40 of 1976 dated Inspection in Industry and Commerce, 25 July 2003 (Law No. 21 of 2003 dated 25 July 28 Aug. 1976 ratifying Convention on Code of Conduct for Liner Conferences); (xxviii) 2003 concerning Ratification of ILO Convention concerning Labour Inspection in In- Statutes for International Centre for Genetic Engineering and Biotechnology, 13 Sept. dustry and Commerce); (lxiv) Protocol 9 Dangerous Goods, 20 Sept. 2002 (Presidential 1983; (xxix) Convention on Political Rights of Women, 31 Mar. 1953 (Law No. 68 of Decree No. 21 of 2003 dated 11 Apr. 2003 concerning Ratification of Protocol 9 Dan- 1958 dated 28 Aug. 1958 concerning Ratification of Convention on Political Rights of gerous Goods); (lxv) Protocol on Notification Procedures, 7 Oct. 1998 (Presidential Women); (xxx) Agreement Establishing Asian Coconut Community, 12 Dec. 1968 (Presi- Decree No. 55 of 2003 dated 21 July 2003 concerning Ratification of Protocol on dential Decree No. 43 of 1969 dated 10 May 1969 concerning Ratification of Agreement Notification Procedures); (lxvi) Protocol to Implement Third Package of Commitments Establishing Asian Coconut Community); (xxxi) Agreement Establishing Southeast Asia under ASEAN Framework Agreement on Services, 31 Dec. 2001 (Presidential Decree Tin Research and Development Centre, 28 Apr. 1977 (Presidential Decree No. 39 of 1977 No. 90 of 2003 dated 14 Nov. 2003 concerning Ratification of Protocol to Implement dated 30 July 1977 concerning Ratification of Agreement Establishing Southeast Asia Tin Third Package of Commitments Under ASEAN Framework Agreement on Services); Research and Development Center); (xxxii) Agreement Establishing Common Fund for (lxvii) Second Additional Protocol to Constitution of Asian-Pacific Postal Union, 18 Dec. Commodities, 27 June 1980 (Presidential Decree No. 70 of 1980 dated 26 Dec. 1980 2000 (Presidential Decree No. 94 of 2003 dated 14 Nov. 2003 concerning Ratification concerning Ratification of Agreement Establishing Common Fund for Commodities); of Second Additional Protocol to Constitution of Asian-Pacific Postal Union); (lxviii) (xxxiii) Sixth International Tin Agreement, 26 June 1981 (Presidential Decree No. 58 of Agreement on Augmentation of ASEAN Science Fund, 8 Apr. 2000 (Presidential Decree 1981 dated 4 Dec. 1981 concerning Ratification of Sixth International Tin Agreement); No. 95 of 2003 dated 14 Nov. 2003 concerning Ratification of Agreement on Augmen- (xxxiv) International Natural Rubber Agreement, 20 Mar. 1987 (Presidential Decree No. tation of ASEAN Science Fund dated 14 Nov. 2003); and (lxix) Framework Agreement 34 of 1987 dated 5 Oct. 1987 concerning Ratification of International Natural Rubber on Comprehensive Economic Co-Operation between Association of South East Asian Agreement); (xxxv) Terms of Reference of International Tin Study Group, 7 Apr. 1989 Nations and People’s Republic of China, 4 Nov. 2002 (Presidential Decree No. 48 of (Presidential Decree No. 63 of 1989 dated 20 Dec. 1989 concerning Ratification of Final 2004 dated 15 June 2004 concerning Ratification of Framework Agreement on Com- Resolution of United Nations of Tin and Annex concerning Terms of Reference of prehensive Economic Co-Operation between Association of South Asia Nations and International Tin Study Group); (xxxvi) Terms of Reference of International Copper People’s Republic of China); (lxx) International Treaty on Plant Genetic Resources for Study Group, 24 Feb. 1989 (Presidential Decree No. 62 of 1989 dated 20 Dec. 1989 Food and Agriculture (Law No. 4 of 2006 dated 20 Mar. 2006 concerning Ratification concerning Ratification of Final Resolution of United Nations of Copper and Annex of International Treaty on Plant Genetic Resources for Food and Agriculture); (lxxi) concerning terms of Reference of Copper Study Group); (xxxvii) International Agree- Agreement on Network of Aquaculture Centres in Asia and Pacific as amended by ment on Jute and Jute Products, 3 Nov. 1989 (Presidential Decree No. 5 of 1991 dated Governing Council at its 14 Meeting 28 Mar.—1 Apr. 2003, Yangoon, Myanmar (Presi- 29 Jan. 1991 concerning Ratification of International Agreement on Jute and Jute Prod- dential Regulation No. 72 of 2005 dated 16 Nov. 2005 concerning Ratification of ucts); (xxxviii) International Tropical Timber Agreement, 26 Jan. 1994 (Presidential Agreement on Network of Aquaculture Centres in Asia and Pacific as amended by Decree No. 4 of 1995 dated 23 Jan. 1995 concerning Ratification of Agreement on Governing Council at its 14 Meeting 28 Mar.—1 Apr. 2003, Yangoon, Myanmar); (lxxii) International Tropical Timber, 1994); (xxxix) International Coffee Agreement, 28 Sept. Protocol to Amend Basic Agreement on ASEAN Industrial Cooperation Scheme (Presi- 2000 (Presidential Decree No. 33 of 2002 dated 20 May 2002 concerning Ratification dential Regulation No. 16 of 2006 dated 11 June 2006 concerning Ratification on of International Coffee Agreement, 2001); (xl) Convention on High Seas, 29 Apr. 1958 Protocol to Amend Basic Agreement on ASEAN Industrial Cooperation Scheme); (lxxiii) (Law No. 19 of 1961 dated 6 Sept. 1961 concerning Ratification on Three Geneva Agreement between Governments of Member Countries of Association of Southeast Conventions of 1958 concerning Sea Law); (xli) Convention on Fishing and Conser- Asian Nations and Government of Russian Federation on Economic and Development vation of Living Resources of High Seas, 29 Apr. 1958 (Law No. 19 of 1961 dated 6 Cooperation (Presidential Regulation No. 69 of 2006 dated 26 June 2006 concerning Sept. 1961 concerning Ratification of Geneva Convention of 1958 concerning Sea Law); Ratification on Agreement between Governments of Member Countries of Association of (xlii) Convention on Continental Shelf, 29 Apr. 1958 (Law No. 19 of 1961 dated 6 Sept. Southeast Asian Nations and Government of Russian Federation on Economic and De- 1961 concerning Ratification of Geneva Convention of 1958 concerning Sea Law); (xliii) velopment Cooperation). United Nations Convention on Law of Sea, 10 Dec. 1982 (Law No. 17 of 1985 dated Trade and Investment Agreements.—Indonesia is signatory to numerous trade and 31 Dec. 1985 concerning Ratification to United Nations Convention on Law of Sea); investment agreements with following countries: People’s Democratic Republic of Al- (xliv) Convention on Recognition and Enforcement of Foreign Arbitral Awards, 10 June geria (Presidential Decree No. 44 of 2001 dated 29 Mar. 2001 concerning Ratification 1958 (Presidential Decree No. 34 of 1981 dated 5 Aug. 1981 concerning Ratification of of Agreement between Government of Republic of Indonesia and Government of Re- Convention on Recognition and Enforcement of Foreign Arbitral Awards); (xlv) Agree- public of Algeria concerning Capital Investment); Argentina Republic (Presidential De- ment Establishing Asia Pacific Institute for Broadcasting Development, 12 Aug. 1977 cree No. 167 of 2000 dated 1 Dec. 2000 concerning Ratification Agreement between (Presidential Decree No. 32 of 1989 dated 28 June 1989 concerning Ratification of Government of Republic of Indonesia and Government of Republic of Argentina con- Agreement Establishing Asia Pacific Institute for Broadcasting Development with cerning Capital Investment); Commonwealth of Australia (Presidential Decree No. 6 of Amendment); (xlvi) Constitution of Asia-Pacific Tele-Community, 27 Mar. 1976 (Presi- 1973 dated 27 Feb. 1973 concerning Ratification of Trade Agreement between Govern- dential Decree No. 12 of 1985 dated 28 Feb. 1985 concerning Ratification of Constitution ment of Republic of Indonesia and Government of Australia; Presidential Decree No. 36 of Asian-Pacific Tele-Community); (xlvii) Convention on Prohibition of Development, of 1993 dated 15 May 1993 concerning Ratification of Agreement between Government Production, Stock Piling and Use of Chemical Weapons and on their Destruction, 13 Jan. of Republic of Indonesia and Government of Australia concerning Promotion and Pro- 1993 (Law No. 6 of 1998 dated 30 Sept. 1998 concerning Ratification of Convention on tection of Investments); People’s Republic of Bangladesh (Presidential Decree No. 36 of Prohibition of Development, Production, Stock Piling and Use of Chemical Weapons and 1978 dated 23 Oct. 1978 ratifying Trade Agreement between Government of Republic on Their Destruction); (xlviii) Vienna Convention for Protection of Ozone Layer, 22 Mar. of Indonesia and Government of People’s Republic of Bangladesh; Presidential Decree 1985 (Presidential Decree No. 23 of 1992 dated 13 May 1992 concerning Ratification No. 200 of 1998 dated 28 Dec. 1998 concerning Ratification of Agreement between of Vienna Convention for Protection of Ozone Layer and Montreal Protocol on Sub- Government of Republic of Indonesia and Government of People’s Republic of Bang- stances that Deplete Ozone Layer as Adjusted and Am’d by Second Meeting of Parties ladesh concerning Promotion and Protection of Investments); Kingdom of Belgium in London); (xlix) Basel Convention on Control of Trans-Boundary Movement of Haz- (Presidential Decree No. 42 of 1972 dated 25 May 1972 ratifying Agreement between ardous Wastes and their Disposal, 22 Mar. 1989 (Presidential Decree No. 61 of 1993 Republic of Indonesia and Government of Kingdom of Belgium concerning Encour- dated 12 July 1993 concerning Ratification of Basel Convention on Control of Trans- agement and Reciprocal Protection of Investment and its Protocol); Republic of Bulgaria Boundary Movement of Hazardous Wastes and their Disposal); (l) United Nations Frame- (Presidential Decree No. 78 of 2004 dated 27 Sept. 2004 concerning Ratification of work Convention on Climate Change, 9 May 1992 (Law No. 6 of 1994 dated 1 Aug. Agreement between Government of Republic of Indonesia and Government of Republic 1994 concerning Ratification of United Nations Framework Convention on Climate of Bulgaria concerning Promotion and Protection of Investments); Kingdom of Cambodia Change); (li) Convention on Biological Diversity, 5 June 1992 (Law No. 5 of 1994 dated (Presidential Decree No. 40 of 1998 dated 10 Mar. 1998 concerning Ratification of Trade 1 Aug. 1994 concerning Ratification of United Nations Convention on Biological Di- Agreement between Government of Republic of Indonesia and Government of Kingdom versity); (lii) Convention on Stamp Laws in Connection with Checks, 10 Mar. 1931; (liii) of Cambodia; Presidential Decree No. 2 of 2000 dated 3 Jan. 2000 concerning Ratifi- Agreement on Common Effective Preferential Tariff (CEPT) Scheme for ASEAN Free cation of Agreement between Government of Republic of Indonesia and Government of Trade Area (AFTA), 15 Dec. 1995 (Presidential Decree No. 85 of 1995 dated 30 Dec. Kingdom of Cambodia concerning Ratification of Agreement between Government of 1995 concerning Ratification of Protocol to Amendment Agreement on Common Ef- Republic of Indonesia and Government of Kingdom of Cambodia on Promotion and fective Preferential Tariff (CEPT) Scheme for ASEAN Free Trade Area); (liv) Framework Protection of Capital Investment); Canada (Presidential Decree No. 30 of 1973 dated 28 Agreement on Enhancing ASEAN Economic Cooperation, 28 Jan. 1992; (lv) Protocol July 1973 concerning Ratification of Agreement between Government of Republic of Amendment to Memorandum of Understanding concerning Brand-to-Brand Comple- Indonesia and Government of Canada concerning Promotion and Protection of Invest- mentation on Automotive Industry under Basic Agreement on ASEAN Industrial ments); Republic of Chile (Presidential Decree No. 7 of 1993 dated 15 Jan. 1993 Complementation, Mar. 1995; (lvi) Southeast Asia Nuclear Weapon Free Zone Treaty, concerning Ratification of Trade Agreement between Government of Republic of Indo- Dec. 1995 (Law No. 9 of 1997 dated 2 Apr. 1997 concerning Ratification of Treaty on nesia and Government of Republic of Chile); People’s Republic of China (Presidential Southeast Asia Nuclear Weapon Free Zone); (lvii) Agreement Establishing World Trade Decree No. 5 of 1995 dated 27 Jan. 1995 concerning Ratification of Agreement between Organization, 15 Dec. 1993 (Law No. 7 of 1994 dated 2 Nov. 1994 concerning Rati- Government of Republic of Indonesia and Government of People’s Republic of China fication of Agreement Establishing World Trade Organization); (lviii) Convention of Paris concerning Promotion and Protection of Investments and Its Protocol); Republic of Cuba for Protection of Industrial Property, 14 July 1967 (Presidential Decree No. 24 of 1979 (Presidential Decree No. 45 of 1999 dated 19 May 1999 concerning Ratification of dated 10 May 1979 ratifying Convention of Paris for Protection of Industrial Property); Agreement between Government of Republic of Indonesia and Government of Republic

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TREATIES . . . continued (Presidential Decree No. 146 of 1998 dated 16 Sept. 1998 concerning Ratification of of Cuba concerning Promotion and Protection of Investments); Kingdom of Denmark Trade Agreement between Government of Republic of Indonesia and Government of (Presidential Decree No. 90 of 1968 dated 6 Mar. 1968 concerning Ratification of Republic of The Sudan); Swiss Confederation (Presidential Decree No. 9 of 1976 dated Agreement concerning Encouragement and Reciprocal Protection of Investments be- 2 Mar. 1976 concerning Ratification of Agreement between Government of Republic of tween Government of Republic of Indonesia and Government of Denmark); Arab Re- Indonesia and Government of Swiss Federation concerning Encouragement and Recip- public of Egypt (Presidential Decree No. 64 of 1977 dated 7 Dec. 1977 concerning rocal Protection of Investments); Syrian Arab Republic (Presidential Decree No. 27 of Ratification of Trade Agreement between Government of Republic of Indonesia and 1976 dated 15 June 1976 concerning Ratification of Trade Agreement between Gov- Government of Arab Republic of Egypt; Presidential Decree No. 61 of 1994 dated 5 Aug. ernment of Republic of Indonesia and Government of Syrian Arab Republic; Presidential 1994 concerning Ratification of Agreement between Government of Republic of Indo- Decree No. 159 of 1998 dated 18 Sept. 1998 concerning Ratification of Agreement nesia and Government of Arab Republic of Egypt on Promotion and Protection of between Government of Republic of Indonesia and Government of Syrian Arab Republic Investments); Republic of Finland (Presidential Decree No. 82 of 1996 dated 25 Oct. on Promotion and Protection of Investments); Kingdom of Thailand (Presidential Decree 1996 concerning Ratification of Agreement between Government of Republic of Indo- No. 90 of 1998 dated 23 June 1998 concerning Ratification of Agreement between nesia and Government of Republic of Finland on Promotion and Protection of Invest- Government of Republic of Indonesia and Government of Kingdom of Thailand on ments); Republic of France (Presidential Decree No. 10 of 1975 dated 10 Apr. 1975 Promotion and Protection of Investments); Tunisian Republic (Presidential Decree No. ratifying Agreement between Republic of Indonesia and France Republic on Encour- 31 of 1984 dated 23 Apr. 1984 concerning Ratification of Trade Agreement between agement and Protection of French Capital in Indonesia); Federal Republic of Germany Government of Republic of Indonesia and Government of Tunisian Republic; Presidential (Presidential Decree No. 7 of 1969 dated 18 Jan. 1969 concerning Ratification of Agree- Decree No. 52 of 1992 dated 12 Sept. 1992 concerning Ratification of Agreement ment between Government of Republic of Indonesia and Government of Federal Re- between Government of Republic of Indonesia and Government of Tunisian Republic on public of Germany concerning Promotion and Protection of Investments; Presidential Promotion and Protection of Investments); Republic of Sudan (Presidential Decree No. Decree No. 3 of 1976 dated 14 Jan. 1976 concerning Ratification of Trade Agreement 146 of 1998 dated 16 Sept. 1998 concerning Ratification of Trade Agreement between between Government of Republic of Indonesia and Government of Federal Republic of Government of Republic of Indonesia and Government of Republic of Sudan; Presi- Germany); Republic of Hungary (Presidential Decree No. 2 of 1976 dated 14 Jan. 1976 dential Decree No. 107 of 1998 dated 27 July 1998 concerning Ratification of Agreement concerning Ratification of Trade Agreement between Government of Republic of Indo- between Government of Republic of Indonesia and Government of Republic of Turkey nesia and Government of Republic of Hungary; Presidential Decree No. 53 of 1992 dated on Promotion and Protection of Investments); United States of America (Presidential 12 Sept. 1992 concerning Ratification of Agreement between Government of Republic Decree No. 97 of 1967 ratifying Agreement between Government of Republic of In- of Indonesia and Government of Republic of Hungary on Promotion and Protection of donesia and Government of United States of America concerning Investment Capital Investments); Republic of India (Presidential Decree No. 302 of 1968 dated 26 Oct. 1968 Security); and Socialist Republic of Vietnam (Presidential Decree No. 42 of 1978 dated concerning Ratification of Trade Agreement between Government of Republic of Indo- 13 Dec. 1978 concerning Ratification of Trade Agreement between Government of nesia and Government of Republic of India); Islamic Republic of Iran; Republic of Iraq Republic of Indonesia and Government of Socialist Republic of Vietnam; Presidential (Presidential Decree No. 27 of 1977 dated 4 Apr. 1977 concerning Ratification of Trade Decree No. 115 of 1993 dated 3 Dec. 1993 concerning Ratification of Agreement Agreement between Government of Republic of Indonesia and Government of Republic between Government of Republic of Indonesia and Government of Socialist Republic of of Iraq); Italian Republic (Presidential Decree No. 60 of 1994 dated 2 Aug. 1994 Vietnam on Promotion and Protection of Investments). concerning Ratification of Agreement between Government of Republic of Indonesia and Tax Treaties.—Indonesia has signed and ratified bilateral tax treaties with following Government of Italian Republic on Promotion and Protection of Investments); Japan; countries: People’s Democratic Republic of Algeria (Presidential Decree No. 155 of 2000 Kingdom of Jordan (Presidential Decree No. 5 of 1999 dated 8 Jan. 1999 concerning dates 8 Nov. 2000 concerning Ratification of Agreement between Government of Re- Ratification of Agreement between Government of Republic of Indonesia and Govern- public of Indonesia and Government of People’s Democratic Republic of Algeria for ment of Kingdom of Jordan concerning Promotion and Protection of Investments); Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes Democratic People’s Republic of Korea (Presidential Decree No. 29 of 2001 dated 8 Mar. on Income and Assets and Protocol and Diplomatic Exchange of Note); Arab Republic 2001 concerning Ratification of Agreement between Government of Republic of Indo- of Egypt (Presidential Decree No. 153 of 1998 dated 18 Sept. 1998 concerning Rati- nesia and Government of Democratic People’s Republic of Korea concerning Promotion fication of Agreement between Government of Republic of Indonesia and Government and Protection of Investments); Lao People’s Democratic Republic (Presidential Decree of Arab Republic of Egypt for Avoidance of Double Taxation and Prevention of Fiscal No. 15 of 1995 dated 16 Mar. 1995 concerning Ratification of Agreement between Evasion with respect to Taxes on Income); Commonwealth of Australia (Presidential Government of Republic of Indonesia and Government of Lao People’s Democratic Decree No. 62 of 1992 dated 10 Nov. 1992 concerning Ratification of Convention Republic on Promotion and Protection of Investments); Federation of Malaysia (Presi- between Government of Republic of Indonesia and Government of Australia for Avoid- dential Decree No. 34 of 1994 dated 26 May 1994 concerning Ratification of Agreement ance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on between Government of Republic of Indonesia and Government of Federation of Ma- Income); Republic of Austria (Presidential Decree No. 8 of 1987 dated 20 Apr. 1987 laysia on Promotion and Protection of Investments and Its Protocol); Mongolia; Kingdom concerning Ratification of Convention between Government of Republic of Indonesia of Morocco (Presidential Decree No. 170 of 1999 dated 20 Dec. 1999 concerning and Government of Republic of Austria for Avoidance of Double Taxation and Prevention Ratification of Agreement between Government of Republic of Indonesia and Govern- of Fiscal Evasion with respect to Taxes on Income and on Capital and Its Protocol); ment of Kingdom of Morocco concerning Promotion and Protection of Investments; People’s Republic of Bangladesh (Presidential Decree No. 68 of 2006 dated 23 June 2003 Presidential Decree No. 3 of 1990 dated 11 Jan. 1990 concerning Ratification of Trade concerning Ratification of Agreement between Government of People’s Republic of Agreement between Government of Republic of Indonesia and Government of Kingdom Bangladesh for Avoidance of Double Taxation and Prevention of Fiscal Evasion with of Morocco); Kingdom of The Netherlands (Presidential Decree No. 58 of 1994 dated Respect to Taxes on Income and Its Protocol); Kingdom of Belgium (Presidential Decree 2 Aug. 1994 concerning Ratification of Agreement between Government of Republic of No. 149 of 1998 dated 18 Sept. 1998 concerning Ratification of Agreement between Indonesia and Government of Kingdom of Netherlands on Promotion and Protection of Government of Republic of Indonesia and Government of Kingdom of Belgium for Investments); Kingdom of Norway (Presidential Decree No. 55 of 1994 dated 22 July Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes 1994 concerning Ratification of Agreement between Government of Republic of Indo- on Income); Brunei Darussalam (Presidential Decree No. 57 of 2000 dated 20 Apr. 2000 nesia and Government of Kingdom of Norway concerning Promotion and Protection of concerning Ratification of Agreement between Government of Republic of Indonesia and Investments); Islamic Republic of Pakistan (Presidential Decree No. 63 of 1996 dated 16 Government of Brunei Darussalam for Avoidance of Double Taxation and Prevention of Aug. 1996 concerning Ratification of Agreement between Government of Republic of Fiscal Evasion with respect to Taxes on Income); Republic of Bulgaria (Presidential Indonesia and Government of Islamic Republic of Pakistan on Promotion and Protection Decree No. 33 of 1991 dated 18 July 1991 concerning Ratification of Convention of Investments); Republic of The Philippines; Polish People’s Republic (Presidential between Government of Republic of Indonesia and Government of Republic of Bulgaria Decree No. 54 of 1974 dated 16 Nov. 1974 concerning Ratification of Trade Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes between Government of Republic of Indonesia and Government of Polish People’s on Income and Its Protocol); Canada (Presidential Decree No. 57 of 1979 dated 3 Dec. Republic; Presidential Decree No. 6 of 1976 dated 7 Feb. 1976 concerning Ratification 1979 concerning Ratification of Convention between Government of Republic of Indo- of Trade Agreement between Government of Republic of Indonesia and Government of nesia and Government of Canada for Avoidance of Double Taxation and Prevention of Polish People’s Republic); Independent State of Papua New Guinea (Presidential Decree Fiscal Evasion with respect to Taxes on Income and on Capital); People’s Republic of No. 51 of 2001 dated 17 Apr. 2001 concerning Ratification of Agreement between China (Presidential Decree No. 58 to 2003 dated 21 July 2003 concerning Ratification Government of Republic of Indonesia and Government of Independent State of Papua of Agreement between Government of Republic of Indonesia and Government of Peo- New Guinea concerning Promotion and Protection of Investments); Romania (Presiden- ple’s Republic of China to Avoid Double Taxation and Prevent Evasion of Income- tial Decree No. 9 of 1992 dated 4 Feb. 1992 concerning Ratification of Trade Agreement Related Tax); Czech Republic (Presidential Decree No. 79 of 1995 dated 6 Dec. 1995 between Government of Republic of Indonesia and Government of Romania; Presidential concerning Ratification of Agreement between Government of Republic of Indonesia and Decree No. 61 of 1999 dated 24 June 1999 concerning Ratification of Agreement Government of Czech Republic for Avoidance of Double Taxation and Prevention of between Government of Republic of Indonesia and Government of Romania concerning Fiscal Evasion with respect to Taxes on Income); Kingdom of Denmark (Presidential Promotion and Protection of Investments); Russian Federation (Presidential Decree No. Decree No. 15 of 1986 dated 21 Apr. 1986 concerning Ratification of Convention 137 of 1999 dated 18 Nov. 1999 concerning Ratification of Trade Agreement between between Government of Republic of Indonesia and Government of Kingdom of Denmark Government of Republic of Indonesia and Government of Russian Federation concerning for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes Promotion and Protection of Investments); Slovak Republic (Presidential Decree No. 66 on Income and Its Protocol); Republic of Finland (Presidential Decree No. 49 of 1987 of 1994 dated 20 Sept. 1994 concerning Ratification of Agreement between Government dated 11 Dec. 1987 concerning Ratification of Convention between Government of of Republic of Indonesia and Government of Slovak Republic on Promotion and Pro- Republic of Indonesia and Government of Republic of Finland for Avoidance of Double tection of Investments; Presidential Decree No. 7 of 2003 dated 23 Jan. 2003 concerning Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Its Ratification of Trade Agreement between Government of Republic of Indonesia and Protocol); Republic of France (Presidential Decree No. 12 of 1980 dated 28 Jan. 1980 Government of Slovak Republic); Kingdom of Spain (Presidential Decree No. 53 of 1995 concerning Ratification of Convention between Government of Republic of Indonesia dated 31 July 1995 concerning Ratification of Agreement between Government of Re- and Government of Republic of France for Avoidance of Double Taxation and Prevention public of Indonesia and Government of Kingdom of Spain on Reciprocal Promotion and of Fiscal Evasion with respect to Taxes on Income and on Capital); Federal Republic of Protection of Investments); Democratic Socialist Republic of Sri Lanka (Presidential Germany (Presidential Decree No. 57 of 1991 dated 20 Nov. 1991 concerning Ratifi- Decree No. 6 of 1997 dated 12 Mar. 1997 concerning Ratification of Agreement between cation of Convention between Government of Republic of Indonesia and Government of Government of Republic of Indonesia and Government of Democratic Socialist Republic Federal Republic of Germany for Avoidance of Double Taxation and Prevention of Fiscal of Sri Lanka on Promotion and Protection of Investments); Republic of The Sudan Evasion with respect to Taxes on Income and on Capital); United Kingdom of Great

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. INDO – 46 INDONESIA LAW DIGEST TREATIES AND CONVENTIONS

TREATIES . . . continued Republic of Indonesia and Government of Russian Federation for Avoidance of Double Britain and Northern Ireland (Presidential Decree No. 118 of 1993 dated 8 Dec. 1993 Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and on concerning Ratification of Convention between Government of Republic of Indonesia Capital); Republic of Seychelles (Presidential Decree No. 168 of 1999 dated 20 Dec. and Government of United Kingdom of Great Britain and Northern Ireland for Avoidance 1999 concerning Ratification to Agreement between Government of Republic of Indo- of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income nesia and Governing of Republic of Seychelles for Avoidance of Double Taxation and and on Capital Gains); Hungarian People’s Republic (Presidential Decree No. 60 of 1989 Prevention of Fiscal Evasion with respect to Taxes on Income); Republic of Singapore dated 9 Dec. 1989 concerning Ratification of Convention between Government of Re- (Presidential Decree No. 60 of 1990 dated 20 Dec. 1990 concerning Ratification to public of Indonesia and Hungarian People’s Republic for Avoidance of Double Taxation Agreement between Republic of Indonesia and Republic of Singapore for Avoidance of and Prevention of Fiscal Evasion with respect to Taxes on Income and Its Protocol and Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income); Exchange of Note); Republic of India (Presidential Decree No. 47 of 1987 dated 8 Dec. Slovak Republic (Presidential Decree No. 2 of 2001 dated 5 Jan. 2001 concerning 1987 concerning Ratification of Convention between Government of Republic of Indo- Ratification to Agreement between Government of Republic of Indonesia and Govern- nesia and Government of Republic of India for Avoidance of Double Taxation and ment of Slovak Republic for Avoidance of Double Taxation and Prevention of Fiscal Prevention of Fiscal Evasion with respect to Taxes on Income and Its Protocol); Italian Evasion with respect to Taxes on Income); Republic of South Africa (Presidential Decree Republic (Presidential Decree No. 48 of 1990 dated 9 Oct. 1990 concerning Ratification No. 148 of 1998 dated 18 Sept. 1998 concerning Ratification of Agreement between of Convention between Government of Republic of Indonesia and Government of Italian Government of Republic of Indonesia and Government of Republic of South Africa for Republic for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes respect to Taxes on Income and on Capital); Islamic Republic of Iran (Presidential Decree on Income); Kingdom of Spain (Presidential Decree No. 36 of 1990 dated 29 Sept. 1999 No. 18 of 2006 dated 11 May 2006 concerning Ratification of Agreement between concerning Ratification to Agreement between Government of Republic of Indonesia and Government of Republic of Indonesia and Government of Islamic Republic of Iran for Government of Kingdom of Spain for Avoidance of Double Taxation and Prevention of Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes Fiscal Evasion with respect to Taxes on Income, renewed 1999); Democratic Socialist on Income); Japan (Presidential Decree No. 79 of 1982 dated 27 Oct. 1982 concerning Republic of Sri Lanka (Presidential Decree No. 6 of 1994 dated 17 Feb. 1994 concerning Ratification of Convention between Government of Republic of Indonesia and Govern- Ratification of Convention between Government of Republic of Indonesia and Govern- ment of Japan for Avoidance of Double Taxation and Prevention of Fiscal Evasion with ment of Democratic Socialist Republic of Sri Lanka for Avoidance of Double Taxation respect to Taxes on Income and on Capital); Kingdom of Jordan (Presidential Decree No. and Prevention of Fiscal Evasion with respect to Taxes on Income); Republic of The 151 of 1998 dated 18 Sept. 1998 concerning Ratification of Convention between Gov- Sudan (Presidential Decree No. 150 of 1998 dated 18 Sept. 1998 concerning Ratification ernment of Republic of Indonesia and Government of Kingdom of Jordan for Avoidance of Agreement between Government of Republic of Indonesia and Government of Re- of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income public of The Sudan for Avoidance of Double Taxation with respect to Taxes on Income); and on Capital); Republic of Korea (Presidential Decree No. 12 of 1989 dated 8 Mar. Syrian Arab Republic (Presidential Decree No. 176 of 1998 dated 29 Sept. 1998 con- 1989 concerning Ratification of Convention between Government of Republic of Indo- cerning Ratification of Convention Agreement between Government of Republic of nesia and Government of Republic of Korea for Avoidance of Double Taxation and Indonesia and Government of Syrian Arab Republic for Avoidance of Double Taxation Prevention of Fiscal Evasion with respect to Taxes on Income and Its Protocol); Grand and Prevention of Fiscal Evasion with Respect to Taxes on Income); Kingdom of Sweden Duchy of Luxembourg (Presidential Decree No. 7 of 1994 dated 17 Feb. 1994 concerning (Presidential Decree No. 19 of 1989 dated 29 Nov. 1989 concerning Ratification of Ratification of Convention between Government of Republic of Indonesia and Govern- Convention between Government of Republic of Indonesia and Government of Kingdom ment of Grand Duchy of Luxembourg for Avoidance of Double Taxation and Prevention of Sweden for Avoidance of Double Taxation and Prevention of Fiscal Evasion with of Fiscal Evasion with respect to Taxes on Income and on Capital); Federation of respect to Taxes on Income and on Capital); Swiss Confederation (Presidential Decree Malaysia (Presidential Decree No. 31 of 1992 dated 26 June 1992 concerning Ratification No. 48 of 1989 dated 31 Aug. 1989 concerning Ratification of Convention between of Convention between Government of Republic of Indonesia and Government of Fed- eration of Malaysia for Avoidance of Double Taxation and Prevention of Fiscal Evasion Government of Republic of Indonesia and Government of Swiss Confederation for with Respect to Taxes on Income and on Its Protocol); Republic of Mauritius (Presi- Avoidance of Double Taxation with respect to Taxes on Income and Its Protocol); dential Decree No. 6 of 1998 dated 12 Jan. 1998 concerning Ratification of Convention Kingdom of Thailand (Presidential Decree No. 28 of 1981 dated 7 July 1981 concerning between Government of Republic of Indonesia and Government of Republic of Mauritius Ratification of Convention between Government of Republic of Indonesia and Govern- for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes ment of Kingdom of Thailand for Avoidance of Double Taxation and Prevention of Fiscal on Income); Kingdom of The Netherlands (Presidential Decree No. 11 of 1994 dated 24 Evasion with respect to Taxes on Income and on Capital); Republic of Turkey (Presi- Feb. 1994 concerning Ratification of Convention between Government of Republic of dential Decree No. 160 of 1998 dated 18 Sept. 1998 concerning Ratification of Agree- Indonesia and Government of Kingdom of The Netherlands for Avoidance of Double ment between Government of Republic of Indonesia and Government of Republic of Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and on Turkey for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect Capital, renewed 2002); New Zealand (Presidential Decree No. 48 of 1987 dated 11 Dec. to Taxes on Income); Republic of Tunisia (Presidential Decree No. 19 of 1993 dated 24 1987 concerning Ratification of Agreement between Government of Republic of Indo- Feb. 1993 concerning Ratification of Agreement between Government of Republic of nesia and Government of New Zealand for Avoidance of Double Taxation and Prevention Indonesia and Government of Republic of Tunisia for Avoidance of Double Taxation and of Fiscal Evasion With Respect to Taxes on Income and Its Protocol); Kingdom of Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital); Ukraine Norway (Presidential Decree No. 45 of 1988 dated 8 Nov. 1988 concerning Ratification (Presidential Decree No. 155 of 1998 dated 18 Sept. 1998 concerning Ratification of of Convention between Government of Republic of Indonesia and Government of King- Agreement between Government of Republic of Indonesia and Government of Ukraine dom of Norway for Avoidance of Double Taxation and Prevention of Fiscal Evasion with for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes respect to Taxes on Income and on Capital); Islamic Republic of Pakistan (Presidential on Income and Its Protocol); United States of America (Presidential Decree No. 44 of Decree No. 4 of 1991 dated 23 Jan. 1991 concerning Ratification of Convention between 1988 dated 31 Oct. 1988 concerning Ratification of Convention between Government of Government of Republic of Indonesia and Government of Islamic Republic of Pakistan Republic of Indonesia and Government of United States of America for Avoidance of for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and on Income); Republic of The Philippines (Presidential Decree No. 48 of 1981 dated 28 Capital); United Arab Emirates (Presidential Decree No. 156 of 1998 dated 18 Sept. 1998 Oct. 1981 concerning Ratification of Convention between Government of Republic of concerning Ratification of Agreement between Government of Republic of Indonesia and Indonesia and Government of Republic of The Philippines for Avoidance of Double Government of United Arab Emirates for Avoidance of Double Taxation and Prevention Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income); Republic of Fiscal Evasion with respect to Taxes on Income and Its Protocol); Republic of of Poland (Presidential Decree No. 72 of 1993 dated 4 Aug. 1993 concerning Ratification Uzbekistan (Presidential Decree No. 161 of 1998 dated 18 Sept. 1998 concerning Rati- of Convention between Government of Republic of Indonesia and Government of Re- fication of Agreement between Government of Republic of Indonesia and Government public of Poland for Avoidance of Double Taxation and Prevention of Fiscal Evasion with of Republic of Uzbekistan for Avoidance of Double Taxation and Prevention of Fiscal respect to Taxes on Income); Portuguese Republic (Presidential Decree No. 7 of 2004 Evasion with respect to Taxes on Income); Socialist Republic of Vietnam (Presidential dated 26 Jan. 2004 concerning Ratification of Convention between Government of Decree No. 177 of 1998 dated 29 Sept. 1998 concerning Ratification of Agreement Republic of Indonesia and Government of Portuguese Republic for Avoidance of Double between Republic of Indonesia and Socialist Republic of Vietnam for Avoidance of Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Its Double Taxation and Prevention of Fiscal Evasion with respect to Taxes and Its Pro- Protocol); Romania (Presidential Decree No. 147 of 1998 dated 18 Sept. 1998 concerning tocol); Bolivarian Republic of Venezuela (Presidential Decree No. 158 of 1998 dated 18 Ratification of Agreement between Government of Republic of Indonesia and Govern- Sept. 1998 concerning Ratification of Convention between Government of Republic of ment of Romania for Avoidance of Double Taxation and Prevention of Fiscal Evasion Indonesia and Government of Bolivarian Republic of Venezuela for Avoidance of Double with respect to Taxes on Income); Russian Federation (Presidential Decree No. 148 of Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Its 1999 dated 3 Dec. 1999 concerning Ratification of Convention between Government of Protocol).

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