The court system provides effective recourse for resolving commercial disputes. The judiciary is nominally independent under the law, and legal practitioners say irregular payments and other collusive practices often influence case preparation and the judicial ruling.
In several instances the local courts accepted jurisdiction over commercial disputes despite contractual arbitration clauses calling for adjudication in foreign venues. Indonesia is a signatory to the Convention On The Settlement Of Investment Disputes Between States And Nationals Of Other States (ICSID).
So far only one US investment company has brought a case to the ICSID, which ruled in its favor.
Indonesia's Arbitration Law recognizes the right of parties to apply any rules of arbitration procedure they may mutually agree upon, and provides default procedural rules that apply if no other rules have been designated.
An Indonesian commercial arbitration board, BANI, is available if both parties agree. Companies have resorted to ad hoc arbitrations in Indonesia using the United Nations Commission on International Trade Laws (UNCITRAL) arbitration rules, as well as others.
Other companies in Indonesia have used ICC arbitrations. On 12 August 1999 Indonesia's Parliament passed Arbitration Law Number 30, endowing the District Court of Central Jakarta with the power to enforce international arbitration awards.
Prior to the enactment of the new Arbitration law in 1999, enforcement lay with the Supreme Court, which was slow to act on decisions. Since 1999, Indonesian courts have swiftly enforced international arbitration awards with some executed within a month of the request for enforcement.
The new law greatly reduces instances where district courts fail to apply the law, and legal practitioners predict the process should improve as more judges educate themselves about arbitration.
Since 1981, when Indonesia joined the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, fewer than two dozen foreign awards have registered with Indonesian courts (most of which have been enforced). The domestic and international press have widely publicized recent cases where those awards have not been enforced.