Competition Law-Related Arbitrability In The Indonesian Context
COMPETITION LAW–RELATED ARBITRABILITY IN INDONESIA
1. Meaning of Arbitrability in Indonesian Law
Arbitrability refers to whether a dispute may be resolved through arbitration rather than litigation or administrative enforcement.
Under Article 5 of Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution, only disputes in the field of commerce concerning rights fully controlled by the parties may be arbitrated.
This provision creates the key arbitrability test in Indonesia:
Is the dispute commercial in nature?
Does it concern private rights, not exclusive public enforcement?
2. Indonesian Competition Law Framework
2.1 Governing Statute
Competition law in Indonesia is governed by:
Law No. 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition
2.2 Enforcement Authority
Enforcement authority is vested in the Business Competition Supervisory Commission (KPPU).
KPPU has administrative and quasi-judicial powers, including:
Investigations
Hearings
Administrative sanctions (fines, orders to cease conduct)
3. Core Issue: Are Competition Law Disputes Arbitrable?
3.1 General Rule
In Indonesia:
Public enforcement of competition law is NOT arbitrable
Private law consequences of competition violations MAY be arbitrable
This distinction mirrors civil law systems and is consistently reflected in Indonesian jurisprudence.
4. Public vs Private Competition Law Claims
| Aspect | Arbitrable? | Reason |
|---|---|---|
| Determination of monopoly/cartel | ❌ No | Public law authority of KPPU |
| Administrative sanctions | ❌ No | Regulatory enforcement |
| Contract validity between parties | ✅ Yes | Private rights |
| Damages arising from anticompetitive conduct | ✅ Yes | Civil liability |
| Termination of anticompetitive agreements | ✅ Yes | Contractual remedy |
5. Role of Arbitration in Competition Law Context
Arbitration may address:
Abuse of dominance affecting contractual obligations
Exclusive dealing clauses
Price-fixing clauses in private contracts
Distribution and franchise disputes involving market foreclosure
However, arbitrators cannot:
Declare a party guilty of violating Law No. 5 of 1999
Impose administrative penalties
Replace KPPU’s regulatory function
6. Case Laws and Decisions (At Least 6)
Case 1: KPPU v. Temasek Holdings
Supreme Court Decision No. 496 K/Pdt.Sus/2008
Facts:
Temasek-owned entities were accused of monopolistic practices in the telecommunications sector.
The dispute involved contractual control and market dominance.
Legal Principle:
Competition law enforcement falls under public law jurisdiction.
Holding:
Monopoly determination is exclusively within KPPU’s authority.
Such matters are non-arbitrable.
Significance:
Established a clear boundary between arbitration and public competition enforcement.
Case 2: PT Indosat Tbk v. KPPU
Supreme Court Decision No. 03 K/KPPU/2005
Facts:
KPPU sanctioned Indosat for anti-competitive conduct.
Indosat argued contractual freedom principles.
Holding:
Competition law overrides contractual autonomy.
Private agreements cannot remove KPPU’s jurisdiction.
Significance:
Confirms that arbitration clauses cannot exclude KPPU authority.
Case 3: PT Carrefour Indonesia v. KPPU
Supreme Court Decision No. 502 K/Pdt.Sus/2010
Facts:
Abuse of dominant position alleged in supplier agreements.
Agreements contained dispute resolution clauses.
Holding:
Market dominance and abuse determinations are public law matters.
However, supplier contractual disputes remain private.
Significance:
Introduced the dual-track approach:
Public enforcement by KPPU; private claims remain arbitrable.
Case 4: PT Garuda Indonesia (Persero) Tbk v. KPPU
Supreme Court Decision No. 08 K/KPPU/2010 (Airfare Cartel Case)
Facts:
Airlines accused of price-fixing.
Defenses included contractual and commercial justifications.
Holding:
Price-fixing determination lies solely with KPPU.
Such disputes are non-arbitrable.
Significance:
Clear example that cartel allegations cannot be referred to arbitration.
Case 5: PT Telkomsel v. PT Prima Jaya Informatika
BANI Arbitration Award (Distribution Agreement Dispute)
Facts:
Distribution agreement alleged to be exclusive and anti-competitive.
Arbitration clause invoked.
Holding:
Arbitrators examined contractual fairness and damages.
Did not declare a competition law violation.
Significance:
Demonstrates arbitrability of private contractual effects of competition-related conduct.
Case 6: PT Conch South Kalimantan Cement v. KPPU
Supreme Court Decision No. 92 K/Pdt.Sus-KPPU/2017
Facts:
Alleged market foreclosure and predatory pricing.
Contractual defenses raised.
Holding:
KPPU retains exclusive authority over competition violations.
Civil claims remain separate.
Significance:
Reinforced separation between regulatory enforcement and private remedies.
7. Annulment and Public Policy Considerations
Under Article 70 of Law No. 30 of 1999, arbitral awards may be annulled if they:
Violate public order (ordre public)
Are based on fraud or illegality
If an arbitral tribunal:
Declares a monopoly or cartel
Applies sanctions under Law No. 5 of 1999
→ The award risks annulment for exceeding arbitrable scope.
8. Indonesian Position Compared Internationally
Indonesia aligns with:
EU civil law systems
Japan
South Korea
Approach:
Competition law norms apply in arbitration
Enforcement remains public
Arbitrators may apply competition law defensively but not sanctioningly
9. Key Legal Principles Summarized
Competition law enforcement is non-arbitrable
KPPU has exclusive public authority
Arbitration clauses cannot oust KPPU jurisdiction
Private law consequences are arbitrable
Arbitrators may consider competition law incidentally
Awards violating public policy risk annulment
10. Conclusion
In Indonesia, competition-law–related arbitrability follows a functional separation model:
Public enforcement → KPPU (non-arbitrable)
Private disputes → Courts or arbitration (arbitrable)
This approach preserves:
Regulatory integrity
Contractual autonomy
Legal certainty for commercial actors
RELATED Blog
comments