Client Alert – Updates on INDONESIAN LANGUAGE CONTRACT

In December 2023, Circular No. 3 of 2023 was enacted by the Supreme Court of the Republic of Indonesia, regarding the Implementation of the Formulation of the Results of the 2023 Supreme Court Plenary Meeting as Guidelines for the Implementation of Duties for Courts ("SEMA No. 3/2023")[1]. SEMA No. 3/2023 is directed towards all heads of first instance courts and courts of appeal, providing guidelines for judges across Indonesia to ensure uniformity in the application of the law and consistency in court decisions. This article presents one of the key points and commentary on SEMA No. 3/2023.

One of the key points outlined in SEMA No. 3/2023

One of the key points outlined in SEMA No. 3/2023 is the Indonesian language requirement, stipulating that judges cannot base annulments solely on the absence of the Indonesian language in agreements involving both foreign and Indonesian parties, unless it can be proven that the absence of an Indonesian language version was due to bad faith by one of the parties. However, this paragraph essentially contradicts its own ruling in 2015 (please refer to this article: “INDONESIAN LANGUAGE CONTRACT OBLIGATION UNDER LANGUAGE LAW” https://zelojapan.com/lawsquare/26498).

Commentary regarding SEMA No. 3/2023:

1. SEMA No. 3/2023 is applicable only to Indonesian courts and does not extend to arbitration bodies, thus it is unlikely to affect disputes settled through arbitration, which is normally the dispute resolution option chosen by parties involved in cross-border transactions.
2. There is no definition or explanation provided on what constitutes "bad faith."  
3. Unlike Presidential Regulation No. 63 of 2019, which formally serves as the implementing regulation of the Indonesian language law[2], a Circular Letter serves only as a guideline for judges in Indonesia. While it can be comforting to know the intention of the circular letter, which is to unify the approach taken by Indonesian courts in rendering their decisions, it does not carry a direct binding enforcement effect towards contracting parties and cannot formally supersede or override the obligations stipulated by regulations to have an Indonesian version of agreements signed.

Based on the foregoing, it is advisable for parties entering into contracts with Indonesian counterparts to still ensure the signing of an Indonesian version in compliance with the requirements of the Indonesian Language Law.

Please let us know if you have further questions or may need our assistance on this matter. For further information on the above, about our firm or any other matters, please contact through the form.

The information provided in this Alert does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.

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[1] Surat Edaran Nomor 3 Tahun 2023 tentang Pemberlakuan Rumusan Hasil Rapat Pleno Kamar Mahkamah Agung Tahun 2023 Sebagai Pedoman Pelaksanaan Tugas Bagi Pengadilan.

[2] Law No. 24 of 2009 on National Flag, Language, Coat of Arms and Anthem.