An application to annul an arbitral award may be made if the award is alleged to contain the following elements: (a) letters or documents submitted in the hearings which are admitted to be forged or are declared to be forgeries after the award has been rendered; (b) documents are found after the award has been rendered which are decisive in nature and were deliberately concealed by the opposing party; or (c) an award is made based on fraud committed by one of the parties to the dispute.
In the event of default, the Parties may choose arbitration as a choice of forum rather than court tribunal. In Indonesia, an arbitration is regulated through Law Number 30 of 1999 concerning Arbitration (“Arbitration Law”).
Arbitration and Arbitral Award
Principally, a civil dispute is a general court’s scope of authority. Resolving dispute through arbitration can only be carried out if the parties have agreed that if a dispute or difference of opinion occurs, it will be resolved through arbitration. These agreements can be stated into the form of a clause in the main agreement before a dispute occurs or can also be stated in an arbitration agreement that is separated from the main agreement after a dispute occurs.
Hence, in the event that the parties did not state in their agreements that if a dispute occurs will be resolve by arbitration, then it will be resolve through general court.
However, if both parties did not state the choice of forum to settle their dispute through arbitrations want but still want to settle their dispute through arbitration, then both parties can make an arbitration agreement that stated that dispute resolution will be conducted through arbitration.
Dispute resolution through arbitration can be carried out through arbitration institutions or through ad hoc arbitration depending on the arbitration agreement between the parties. Dispute resolution through arbitration will result in an arbitration decision or arbitral award regarding the dispute which is final and legally binding on the parties.
Annulment Reasons
An arbitral award can be requested to be annulled by one of the parties according to the Arbitration Law. As stipulated in Article 70 of Arbitration Law, an application to annul an arbitral award may be made if the award is alleged to contain the following elements:
- Letters or documents submitted in the hearings which are admitted to be forged or are declared to be forgeries after the award has been rendered;
- Documents are found after the award has been rendered which are decisive in nature and were deliberately concealed by the opposing party; or
- An award is made based on fraud committed by one of the parties to the dispute.
Annulment Procedures
An application for annulment to an arbitral award must be submitted in the form of writing to the Head of the District Court within thirty as from the day the arbitral award was delivered and registered the Clerk of the District Court.
According to the explanation of the Article 70 of Law 30/1999, the application can only be submitted to an arbitral award that are already registered to the district court and the reason of the annulment must be proven first through a court decision. The decision also serves as the basis for the judge to determine whether the annulment application is granted or not.
However, after the Constitutional Court Decision Number 15/PUU-XII/2014, the explanation to Article 70 are declared unconstitutional and no longer in effect. The Parties that dissatisfied with an arbitration award that allegedly contain the elements as stated in Article 70 may submit an annulment application without having to wait for a district court decision.
As stipulated by Article 72 verse (4) of Law 30/1999, an appeal against the District Court decision regarding the arbitral award annulment may be made to the Supreme Court which latter shall decide the matter as the court of final instance. However, Law 30/1999 only regulates the timeframe for the appeal process by the Supreme Court, which is within thirty days after the appeal are received by the Supreme Court and does not set a time limit for an appeal to be submitted.
Legal Consequences of Arbitral Awards Requested for an Annulment
An annulment to an arbitral award that are submitted by the parties then can be nulled completely or partly nulled. The annulment then must be stated in the annulment decision. The head of the District Court can also decide the dispute to be re-examined, either by the same or another arbitrator. The Head of the District Court can also decide that the dispute can no longer resolved through arbitration.
Author: Daffa Zidan
Gaffar & Co. is an Indonesian Boutique Law Firm specializing and focusing in Commercial Law, including Commercial Dispute and Arbitration.
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