Indonesia as the world’s largest archipelagic state holds a strategic maritime position. However, the commonly referred arbitration institute i.e., Badan Arbitrase Nasional (BANI Arbitration Center) lacks specialization in handling maritime disputes and has limited international cases. The absence of a dedicated maritime arbitration institution creates significant gaps in dispute resolution, hinders legal certainty, and has the potential to harm Indonesia’s reputation as a reliable global maritime hub. Thus, a maritime arbitration institution is essential to protect Indonesia’s maritime future and ensure a robust economic infrastructure.

By Setyawati Fitrianggraeni, Deviana Bella Saputra, Irvena A. Dewanto

Introduction

With its strategic location at the crossroads of major international sea lanes, Indonesia plays a vital role in global trade and shipping. Despite that, when maritime disputes arise in  Indonesian waters, parties frequently seek resolution abroad. Reliance on the foreign arbitral forum emphasizes a significant gap in Indonesia’s legal framework i.e., the absence of a dedicated maritime arbitration institution.

The significance of this issue is evident domestically, regionally and globally. Domestically, Indonesia’s economic and strategic future is inherently maritime, which was recognized in 2014 with the “Global Maritime Fulcrum” (GMF) policy, a vision to leverage the nation’s strategic position for economic growth.[1] The call for a dedicated maritime arbitration institution is also consistent with Asta Cita (eight essential points of the Indonesia 8^th President Mission) which particularly highlights the importance of intensifying legal reform to achieve the nation’s vision of Golden Indonesia 2045.[2] Regionally, Singapore’s dominance in maritime arbitration demonstrates how specialized institutions attract international business. Singapore already hosts the Singapore Chamber of Maritime Arbitration (“SCMA”). Globally, Indonesia’s location along the Straits of Malacca and other vital shipping lanes means that disputes arising in Indonesian waters frequently involve multinational stakeholders. Without its own recognized maritime arbitration institution, Indonesia loses opportunities to anchor these disputes within its jurisdiction and to demonstrate its leadership as a maritime nation.

This article will discuss the urgency to establish a maritime arbitration institution is an urgent step to strengthen Indonesia’s legal and economic infrastructure. It elaborates why the absence of such an institution is detrimental to domestic businesses, what lessons can be learned from international practice and how Indonesia can position itself as a credible venue for maritime dispute resolution.

From a legal standpoint, Indonesia has the basic framework. Arbitration is governed by Law Number 30 of 1999 on Arbitration and Alternative Dispute Resolution (“Law 30/1999”) and there are several derivative regulations regarding foreign arbitral awards. However, these frameworks are general in nature and do not address the technical intricacies of maritime disputes, in contrast to the specialized rules and procedures found in foreign maritime arbitration institution.

Legal Analysis

The statutory basis for Arbitration in Indonesia is stipulated in Law 30/1999. Despite the law’s acknowledgement that consider arbitral awards as a legitimate form of dispute settlement that renders final and binding decision to the parties, the stipulations of the law itself are drafted in general terms and were not established for sector specific arbitration framework i.e., specifically for maritime disputes. This absence of specialization should be viewed as a structural gap in Indonesia’s arbitration regime, especially given its identity as the world’s largest archipelagic state and its growing ambitions in the maritime sector as part of its national development strategy.

Moreover, since Indonesia lacks a dedicated maritime arbitration institution,  parties turn to BANI Arbitration Center as the country’s preferred chosen arbitration forum. BANI is still a generalist body. BANI has no specialized provisions or framework for maritime disputes.  Instead, the handling of such cases depends largely on the availability of arbitrators with maritime law expertise, rather than being designed specifically to address the unique complexities of maritime arbitration. While this offers some degree of competence, and although allows  BANI to manage disputes in a broad sense, it lacks the specialized focus and procedural framework found in institutions dedicated for the maritime industry. In contrast, Singapore through SCMA has established itself as a trusted forum by offering rules and procedures crafted for maritime disputes, as well as access to a panel of arbitrators with substantial industry expertise. This contrast underscores why many parties perceive Singapore as a more reliable forum for maritime arbitration than Indonesia.

In consideration of the limitations, if the parties wish to choose a designated arbitration institution for maritime dispute, the alternative is to pursue settlement through a foreign institution. If parties choose this option, the  award is considered an international arbitral award. International awards  introduce another hurdle in the enforcement. In reference to the provisions of Article 66  (d) of Law 30/1999, an international arbitral award can only be implemented after obtaining exequatur (recognition) by Central Jakarta District Court. This indicates that court intervention still holds the power to determine the enforcement of international arbitral award in Indonesia.[3]

The exequatur process itself is often criticized for causing delays and being time consuming. It requires numerous procedural requirements and extensive paper work.[4] In practice, the process can take several months to complete before the recognition is granted. During this time, the disputing parties are exposed to the uncertainty of any potential risks while waiting for the finalization, this can render Indonesia’s enforcement mechanism being perceived as  creating legal uncertainty. Naturally, this is  inconsistent with arbitration’s promise of speed and finality. This procedural hurdle stands in contrast to streamlined enforcement practices in jurisdictions like our neighbour i.e., Singapore which supports efficient maritime arbitration and predictable enforcement, which makes them far more attractive to shipping companies and international traders seeking certainty in maritime arbitration.

Furthermore, with the absence of dedicated maritime institution in Indonesia, the problems intensify further. BANI offers no specialized procedural rules or a panel of arbitrators formally equipped with maritime law competencies. By comparison, foreign arbitration institution such as SCMA apply industry specific rules, and are experienced. Without similar specialization, Indonesia struggles to build trust among maritime stakeholders, who overwhelmingly prefer the certainty and expertise offered abroad.

The lack of dedicated maritime institution has significant consequences for Indonesia. This weakens Indonesia’s ability to provide effective dispute resolution within its own maritime domain. This gap also raises sovereignty implications, as maritime disputes involving Indonesian waters, ships flying the Indonesian flag, and contracts entered into by Indonesian companies are often resolved in foreign jurisdictions. Unless the issues are addressed, Indonesia is at risk of continued dependence on foreign arbitration institution, which undermine the national ambition to establish itself as a Global Maritime Fulcrum. The reliance on foreign forums not only undermines the domestic arbitration landscape but also limits its ability to control disputes vital to its maritime economy. Establishing a specialized maritime arbitration institution is therefore essential, both as a legal development and as a step towards strengthening sovereignty.

 Key Takeaways and Action

1. Policymakers/Regulators should strengthen Indonesia’s arbitration framework by introducing maritime-specific provisions under Law 30/1999, streamlining the exequatur process for enforcing international arbitral awards, and issuing clearer regulatory guidance on subrogation practices. These reforms would reduce uncertainty, accelerate enforcement, and enhance Indonesia’s capacity to manage disputes within its maritime sector.
2. Industrial actors should ensure that carriage contracts and bills of lading include enforceable arbitration clauses binding upon insurers, while also incorporating clear provisions on subrogation rights in marine insurance policies. They should support subrogation practices with proper formalities, such as issuing a Declaration or Notification of Subrogation, and work closely with insurers to accelerate claims recovery and minimize disruptions in cargo carriage.
3. Legal practitioners should draft and negotiate robust arbitration clauses tailored to maritime disputes, advise clients on the potential costs and implications of choosing foreign forums, and design enforcement strategies that anticipate Indonesia’s procedural complexities. In addition, practitioners should guide clients in formalizing subrogation rights to ensure insurers’ legal standing and maximize recovery outcomes.

 Closing Reflections

The absence of a dedicated maritime arbitration institution leaves Indonesia dependent on foreign forums, weakening both efficiency and sovereignty in resolving disputes within its own waters. Establishing a specialized institution would provide certainty for businesses, efficiency for dispute resolution, and credibility for Indonesia’s maritime policy. Furthermore, it is not just about improving dispute resolution, but it is about securing Indonesia’s position as a Global Maritime Fulcrum. By strengthening legal infrastructure, Indonesia can ensure that maritime disputes central to its economy are resolved domestically, reinforcing trust, competitiveness, and national authority in global shipping and trade. (DBS/IAD)

 

 References

Cabinet Secretariat of the Republic of Indonesia, ‘Speech by President Joko Widodo at the 9th East Asia Summit in Nay Pyi Taw, Myanmar’ (2014) <https://setkab.go.id/pidato-presiden-ri-joko-widodo-pada-ktt-ke-9-asia-timur-di-nay-pyi-taw-myanmar-13-november-2014/>

Sari NJ, Zulfikar AA and Dorlah S, ‘Implementation of International Arbitration Awards in Indonesia from the Perspective of Legal Value Theory’ (2024) 31 Jurnal Media Hukum 167

SCMA, ‘Maritime Arbitration Enforcement Series’ (2021)

Presidential Regulation No. 12 of 2025 on National Medium-Term Development Plan, appendix 1, 45.

 [1] Cabinet Secretariat of the Republic of Indonesia, ‘Speech by President Joko Widodo at the 9th East Asia Summit in Nay Pyi Taw, Myanmar’ (2014) <https://setkab.go.id/pidato-presiden-ri-joko-widodo-pada-ktt-ke-9-asia-timur-di-nay-pyi-taw-myanmar-13-november-2014/>.

[2] Presidential Regulation No. 12 of 2025 on National Medium-Term Development Plan, appendix 1, 45.

[3] Niken Junika Sari, AA Zulfikar and S Dorlah, ‘Implementation of International Arbitration Awards in Indonesia from the Perspective of Legal Value Theory’ (2024) 31 Jurnal Media Hukum 167, 168.

[4] SCMA, ‘Maritime Arbitration Enforcement Series’ (2021) 3.

 

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