Resolution of Business Disputes and Recognition of Foreign Arbitral Awards in Indonesia: Barriers and Solutions

Abstract

International commercial arbitration has become the preferred mechanism for resolving cross-border business disputes due to its neutrality, procedural flexibility, and the near-global enforceability of arbitral awards under the 1958 New York Convention. Indonesia, as a contracting state, has regulated the recognition and enforcement of foreign arbitral awards through Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution. Nevertheless, the enforcement of foreign arbitral awards in Indonesia remains inconsistent and often unpredictable. Indonesian courts have denied recognition and enforcement on broad and undefined public policy grounds, procedural technicalities, and restrictive reciprocity requirements. This study aims to identify the main legal, institutional, and practical barriers to the recognition and enforcement of foreign arbitral awards in Indonesia and to propose comprehensive solutions. Using a normative qualitative research method with statutory, conceptual, case, and comparative approaches, this article analyzes primary and secondary legal materials. The findings reveal that the key obstacles include the ambiguous public policy doctrine, the centralized exequatur procedure at the Central Jakarta District Court, limited judicial specialization in international arbitration, and an outdated legislative framework that is not fully aligned with international standards. The article argues that Indonesia needs to amend its arbitration law, restrict public policy defenses to international standards, simplify enforcement procedures, establish specialized commercial courts, and enhance judicial training. These reforms are essential to improve Indonesia’s investment climate and its credibility as a pro-arbitration jurisdiction.