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International Arbitration Awards: New Interpretation by the Constitutional Court
An International Arbitration Award refers to a decision issued by an arbitration institution or individual arbitrator outside Indonesia or recognized as an international award under Indonesian law. In Decision No. 100/PUU-XXII/2024, the Constitutional Court (MK) provided a new interpretation of Article 1, paragraph 9 of Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution (UU AAPS). The Court partially granted the petition filed by Togi M. P. Pangaribuan, removing the word "considered" from the provision.
Constitutional Judge Ridwan Mansyur explained that the use of the word "considered" creates legal uncertainty because, according to the dictionary, the word has ambiguous meanings like “think,” “guess,” or “assume,” which may change depending on the evidence and facts presented. Therefore, to avoid ambiguity and ensure legal certainty, the Court ruled that the word "considered" should be removed.
By eliminating the word "considered," the Court clarified that the definition of international arbitration awards in Indonesia must be based on a territorial concept, referring to decisions issued by arbitration institutions or arbitrators outside Indonesia's jurisdiction. This is aimed at preventing potential legal loopholes and ensuring consistency in the application of the law.
Moreover, the Court emphasized the importance of principles such as national sovereignty, economic interests, and the efficiency and effectiveness of international dispute resolution. The Court also highlighted the need for harmonizing national and international law to ensure that Indonesia remains respected in global legal forums, particularly in international arbitration, while providing legal certainty for the benefit of the nation's social welfare.
