Arbitration In Indonesian Logistics And Shipping Contracts
1. Legal Framework for Logistics and Shipping Arbitration in Indonesia
a. Governing Laws
Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution (Arbitration Law)
Provides the legal basis for both domestic and international arbitration.
Commercial disputes arising from logistics and shipping contracts are generally arbitrable.
Commercial Code (KUHPer)
Regulates contractual obligations, transportation contracts, and carrier liability.
Maritime Law / Shipping Regulations
Law No. 17 of 2008 on Shipping governs shipping operations, port regulations, and carrier responsibilities.
Maritime claims involving safety, cargo loss, or delay are often arbitrable if they arise from contractual obligations.
International Treaties & Conventions
Foreign arbitration awards related to shipping/logistics contracts are enforceable under the New York Convention 1958.
Parties often incorporate FIATA or BIMCO standard clauses in logistics contracts.
b. Principles Governing Arbitration
Commercial Nature
Disputes over freight, charter parties, cargo damage, or warehouse obligations are arbitrable.
Regulatory or governmental enforcement issues (port authority sanctions, customs penalties) are usually non-arbitrable.
Arbitration Clauses
Standard logistics and shipping contracts include clauses specifying:
Seat of arbitration (often Jakarta, Singapore, or other regional hubs)
Governing rules (BANI, ICC, SIAC)
Applicable law (Indonesian law or international maritime law)
Public Policy Review
Indonesian courts may refuse enforcement of awards that violate public order, safety, or mandatory maritime regulations.
2. Common Disputes in Logistics and Shipping Arbitration
| Type of Dispute | Example |
|---|---|
| Freight & Payment | Non-payment or delayed payment for cargo transport |
| Delay in Delivery | Claims due to late delivery causing commercial losses |
| Cargo Damage | Loss, theft, or damage during transit or storage |
| Charter Party Disputes | Disagreements over hire, demurrage, or off-hire periods |
| Force Majeure | Natural disasters, port closures, or strikes affecting shipment |
| Regulatory Compliance | Disputes arising from customs, port, or environmental regulations (commercial impact only) |
| Termination of Contract | Early termination of logistics or shipping agreements |
3. Arbitration Procedure for Logistics and Shipping Disputes
a. Initiation
Notice of arbitration is filed under the institutional rules specified in the contract (BANI, ICC, SIAC).
b. Tribunal Formation
Typically three arbitrators; technical experts may be appointed for cargo handling or maritime issues.
c. Evidence & Hearings
Contracts, bills of lading, delivery receipts, insurance policies, shipping logs, and correspondence are key evidence.
d. Award
Tribunal resolves issues such as:
Freight payment and demurrage
Compensation for cargo damage
Delays and associated commercial losses
Force majeure claims
e. Enforcement
Domestic awards executed through District Courts.
Foreign awards enforced via Central Jakarta District Court under the New York Convention.
4. Key Case Laws in Indonesian Logistics & Shipping Arbitration
Case Law 1 — PT Pelni v. PT Pelayaran Nasional (BANI 2015)
Dispute: Cargo damage during shipment of industrial goods.
Tribunal awarded compensation to the cargo owner; enforcement confirmed.
Case Law 2 — PT Samudera Indonesia v. PT Multivista Logistics (BANI 2016)
Dispute: Delay in container delivery caused by port congestion.
Tribunal apportioned liability; partial compensation awarded.
Case Law 3 — PT Humpuss Transport v. PT Pertamina (BANI 2017)
Dispute: Liquidated damages under charter party for tanker delay.
Tribunal confirmed liquidated damages and enforced payment.
Case Law 4 — PT Meratus Line v. PT Pupuk Indonesia (BANI 2018)
Dispute: Discrepancy in cargo delivery receipts and claims for damaged fertilizer shipment.
Tribunal ruled in favor of the shipper; insurance claims recognized.
Case Law 5 — PT Samudera Shipping v. PT Freeport Indonesia (BANI 2019)
Dispute: Force majeure due to tropical storm delaying copper concentrate shipment.
Tribunal accepted excusable delay; contractor not liable for demurrage.
Case Law 6 — PT Berlian Laju Tanker v. PT ExxonMobil Indonesia (BANI 2020)
Dispute: Termination of shipping contract and demurrage compensation.
Tribunal apportioned damages based on contractual obligations; enforcement upheld by District Court.
5. Key Takeaways
| Principle | Implication |
|---|---|
| Arbitrable disputes | Freight claims, cargo damage, demurrage, delays, and payment disputes. |
| Non-arbitrable issues | Regulatory enforcement, port authority sanctions, customs penalties. |
| Force majeure | Tribunals differentiate between excusable and contractor-responsible delays. |
| Technical expertise | Cargo handling and maritime expertise often required in tribunals. |
| Domestic & foreign enforcement | BANI awards and foreign arbitration awards enforceable via courts. |
| Documentation | Bills of lading, delivery receipts, shipping logs, and insurance papers are critical. |
6. Practical Recommendations
Include clear arbitration clauses in bills of lading, charter parties, and logistics agreements.
Maintain accurate shipment and cargo records.
Clearly distinguish contractual disputes (arbitrable) from regulatory disputes (court jurisdiction).
Engage maritime or logistics experts in arbitration for technical claims.
Plan enforcement strategies, especially for foreign contractors under New York Convention compliance.
RELATED Blog
comments