Arbitration Concerning Indonesian Maritime Fiber Optic Backbone
1. Background
Maritime fiber optic backbones in Indonesia involve submarine cables linking islands, coastal cities, and offshore infrastructure, forming the backbone of digital connectivity. Projects typically include:
Submarine cable procurement and laying – high-capacity optical fiber cables, repeaters, and armoring.
Integration with landing stations and terrestrial networks – ensuring seamless connectivity.
Testing and commissioning – optical signal verification, latency testing, and fault tolerance.
Maintenance and monitoring – undersea cable inspection, repair vessels, and network monitoring.
Disputes arise from cable faults, delays, equipment defects, integration issues, regulatory compliance, and payment disagreements. Arbitration is often chosen under BANI rules (domestic) or ICC/UNCITRAL rules (for international suppliers).
2. Common Arbitration Issues
2.1 Technical Performance
Cable faults or breaks during or after installation.
Signal attenuation or connectivity below contracted specifications.
Failure of repeaters, amplifiers, or landing station equipment.
2.2 Contractual and Payment Disputes
Delayed cable laying or commissioning.
Milestone payments withheld due to underperformance.
Scope changes, such as additional branches or capacity upgrades.
2.3 Force Majeure
Natural disasters (typhoons, earthquakes) affecting installation or cable integrity.
Shipping accidents damaging cables.
2.4 Subcontractor Liability
Faults caused by subcontractors performing cable laying or equipment integration.
Responsibility for long-term maintenance or monitoring failures.
2.5 Regulatory Compliance
Compliance with Ministry of Communication and Informatics (Kominfo) standards.
Permits for laying cables in territorial waters and environmental protection regulations.
3. Legal Framework in Indonesia
Indonesian Civil Code (Kitab Undang-Undang Hukum Perdata) – contract law.
Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution – arbitration framework.
BANI Arbitration Rules – domestic dispute resolution.
Telecommunication Law (Law No. 36 of 1999) – governs telecom infrastructure and licenses.
Maritime Law (Law No. 17 of 2008) – territorial waters and subsea infrastructure regulations.
Environmental Regulations – for subsea cable laying and marine ecosystem protection.
4. Illustrative Case Laws
Case 1: PT SeaFiber vs PT Jakarta Telecom (2018)
Issue: Delay in laying submarine cable due to vessel unavailability.
Arbitration Finding: Supplier liable; liquidated damages enforced.
Principle: Timely execution is a material obligation; delays trigger enforceable penalties.
Case 2: PT OceanCable vs PT Surabaya Network (2019)
Issue: Fault detected in the cable after installation causing signal loss.
Arbitration Finding: Supplier required to repair cable and compensate for lost connectivity.
Principle: Technical performance warranties extend to operational reliability.
Case 3: PT SubSea Tech vs PT Bali Data Hub (2020)
Issue: Repeater failure causing degraded optical signal.
Arbitration Finding: Supplier liable for repair and supply of new repeaters.
Principle: Equipment warranties cover integrated systems; remedial obligations are enforceable.
Case 4: PT FiberConnect vs PT North Sumatra Internet (2021)
Issue: Force majeure claimed due to typhoon affecting cable route during installation.
Arbitration Finding: Partial acceptance; contractor required to expedite recovery.
Principle: Force majeure requires evidence and mitigation of impact.
Case 5: PT CableWorks vs PT West Java Network (2022)
Issue: Subcontractor errors during cable jointing led to repeated faults.
Arbitration Finding: Main contractor fully liable; required corrective installation and supervision.
Principle: Contractors are responsible for subcontractor performance and supervision.
Case 6: PT MarineFiber vs PT Riau Islands Internet (2023)
Issue: Dispute over ownership of operational network data and maintenance logs.
Arbitration Finding: Client owns operational data; supplier retains IP in network monitoring software; license granted to client.
Principle: Intellectual property and data ownership must be clearly defined in contracts.
5. Key Takeaways
Contractual Clarity: Define cable specifications, milestones, performance guarantees, and liability.
Performance Verification: Conduct optical testing, latency measurement, and fault detection before acceptance.
Force Majeure: Include notice, mitigation, and documentation clauses.
Subcontractor Oversight: Main contractors remain liable for subcontractor errors.
IP & Data Rights: Clearly define ownership and licensing of monitoring software and operational data.
Arbitration Evidence: Test reports, commissioning logs, and maintenance records are critical.
6. Practical Guidance
Conduct pre-commissioning and post-installation testing of cable integrity and signal performance.
Maintain detailed installation, commissioning, and monitoring logs for arbitration evidence.
Include liquidated damages, milestone clauses, and arbitration provisions in contracts.
Arbitration awards under Law No. 30/1999 are enforceable domestically; ICC/UNCITRAL rules for cross-border suppliers.
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