CONSTITUTIONAL COURT VIEW IN THE ANNULMENT OF THE ELUCIDATION OF ARTICLE 70 OF ARBITRATION LAW

 In Legal Updates, Uncategorized

The petitioners who submitted a judicial review of Elucidation of Article 70, Law No. 30/1999, assumed the phrase must be proven by a court decision in the Elucidation of Article 70, has stricken off the allegation elements which contained in Article 70. This would lead to a new norm which is not consistent.

Some Constitutional Court awards often become the change milestone in the dynamics of the applicable law in Indonesia. Through one of its decision, No. 15/ PUU-XII/ 2014, the Constitutional Court has given such better opportunity to the seekers of justice, which was not satisfied with the arbitration award.

As we know, the arbitration award is a final and binding decision. It means no further legal efforts against the award may be filed. However, the Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolutions (“Law No. 30/1999”) in a limited manner has accommodated the interests of those who feel aggrieved to request annulment of the arbitration award.

Even though it is possible to apply for an annulment of an arbitration award, some parties or legal practitioners consider the application for annulment which is set in a limited manner is hard (or almost impossible) to be implemented since it requires the element of presumption as defined in article 70 of Law No. 30/1999, at least it allegedly contain such as the following elements:

  1. Letters or documents submitted in the hearings which are acknowledged to be forged or are declared to be forgeries after the award has been issued;
  2. Documents are found after the award has been issued which are decisive in nature and were deliberately concealed by the opposing party; or
  3. An award is made based on fraud committed by one of the parties to the dispute.

These terms set in article 70 is very difficult to be implemented or is unable to be operated due to the existence of the other conditions set in the Elucidation of Article 70 of Law No. 30/1999 which states:

An application for annulment can only be submitted against the arbitration award, which was registered in the Court. The reasons for the annulment request referred to in this article must be proven by a court decision. If the court declares that these reasons are proved or disproved, then it can be used as a basis for consideration to grant or refuse the request.

These were then tested by the Constitutional Court. The petitioners who submitted a judicial review of Elucidation of Article 70, Law No. 30/1999, assumed the phrase must be proven by a court decision in the Elucidation of Article 70, has stricken off the allegation elements which contained in Article 70. This would lead to a new norm which is not consistent. The Elucidation of the article may be interpreted that an annulment of the award is possible if the award allegedly contained the elements stated in Article 70 of Law No. 30/1999, and it must first be proven by a court decision.

On the grounds of this inconsistency, the petition for clarification of Elucidation of article 70, Law 30/1999 has been filed, and the Constitutional Court granted the petition. It is interesting to observe the consideration of the judge in granting the petition. Here the author extracted the judge’s consideration.

Legal Considerations of the Constitutional Court

  1. Elucidation of Article 70 of Law 30/1999 has changed article norm become a new norm

According to the Constitutional Court, the intent contained in Article 70 of Law No. 30/1999 is quite clear (expressis verbis) so it does not need to be interpreted. The issue is the Elucidation of Article 70 of Law No. 30/1999 raises new norms which negate the applicability of Article 70 of Law No. 30/1999 so it will rise to legal uncertainty.

The Constitutional Court found that the phrase “alleged” is hypothetical, subjective, one-sided, and a priori. This means an application for annulment is temporarily still at the level of allegations which according to the annulment Applicant there is a presumption of dishonesty during the resolution process through arbitration.

Meanwhile, the phrase “must be proved by a court decision” in the Elucidation of Article 70 of Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolutions, made the word “alleged” lost its meaning and rises a new meaning instead. According to the Constitutional Court the phrase “must be proved by a court decision“, is something that no longer hypothetical, subjective, one sided and a priori since it has been verified through evidence. Thus, in this case the court have as a conclusion that the Elucidation of Article 70 of Law No. 30/1999 alter the meaning of allegations into something definite by a judicial verdict so it is judicially proven that it creates legal uncertainty.

  1. Elucidation of Article 70 of Law No. 30/1999 is making multi interpretation

Constitutional Court found the article 70 of Law No. 30/1999 is quite clear and does not need to be interpreted. It is the Elucidation of Article 70 that led into multiple interpretations. The Constitutional Court found the opportunity for multiple interpretations, at least grounded on the following:

  1. Whether the reason for filing the petition must be proven in the court in advance as a condition of annulment, or
  2. Whether the reason for annulment must be proven in a court hearing concerning application for annulment

Dualism Interpretation

The Elucidation of this article raises multiple interpretations as follow:

  1. Whether the Applicant must submit one of the filing reasons to the court prior to file the petition in order to obtain a judgment and this reason become the initial reason for filing an annulment application; or
  2. The reasons which within allegation level must be proven in in a court where the annulment application filed. So it will draw implication of the legal uncertainty that create injustice.

Furthermore, the Applicant will be faced with two court proceedings when filing for annulment application. It will give occasion to implication on much longer settlement process which is not in accordance with the promptly principle of arbitration.

This is clearly contrary to article 71 of Law No. 30/1999 which state that “An application for annulment of an arbitration award must be submitted in writing within not more than thirty (30) days from the date such arbitration award was submitted for registration to the Registrar of District Court“. As this is the case, in practice the 30 day period may simply cannot be met.

Based on consideration of the Constitutional Court to cancel the Elucidation of Article 70 of Law No. 30/1999, it implicates a bigger opportunity to the parties who are not satisfied with the arbitration award to be able to apply for annulment through the court, on limitative condition that must be met, namely the existence of the “the alleged” element as mentioned in Article 70 of Law No. 30/1999, which is not necessarily to be proven in court.

What BP Lawyers can do for you:

We can assist you to analyze whether an arbitration award has elements which allow its annulment. In addition, we can also help you in submitting annulment application of arbitration award in State Court. Contact us now at:

Email: ask@bplawyers.co.id

Phone: +62821 1000 4741

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