Port Services And Concession Disputes In Indonesia
I. Legal Framework Governing Port Services and Concessions in Indonesia
1. Core Legislation
Port services and concessions in Indonesia are primarily governed by:
Law No. 17 of 2008 on Shipping (Shipping Law)
Introduced port business entity (BUP) concept
Ended the historical monopoly of state-owned port operators (Pelindo)
Requires concession or cooperation agreements for port operation
Government Regulation No. 61 of 2009 on Port Affairs, as amended by GR No. 64 of 2015
Regulates port operation, licensing, concession duration
Clarifies role of Port Authorities (Otoritas Pelabuhan)
Minister of Transportation Regulations
Particularly on port services tariffs, safety, and concession procedures
Competition Law – Law No. 5 of 1999
Relevant where port concessions create monopolistic practices or abuse of dominance
II. Typical Types of Port Services and Concession Disputes
Port disputes in Indonesia generally fall into five categories:
Validity of concession agreements
Extension of concessions without tender
Tariff-setting disputes
Competition and monopoly allegations
Termination and takeover of port assets
III. Case Laws on Port Services and Concession Disputes (Indonesia)
Case 1: KPPU Decision No. 15/KPPU-I/2014 – JICT Concession Extension
Parties Involved:
PT Pelabuhan Indonesia II (Pelindo II)
PT Jakarta International Container Terminal (JICT)
Hutchison Ports Holdings
Key Issue:
Pelindo II extended JICT’s concession without an open tender, granting control until 2039.
Legal Findings:
The Indonesian Competition Commission (KPPU) held that:
The extension violated Law No. 5 of 1999
Pelindo II abused its dominant position
The extension restricted competition in container terminal services
Significance:
Landmark case establishing that SOEs are not immune from competition law
Reinforced tender requirements under the Shipping Law
Case 2: Supreme Court Decision No. 72 P/HUM/2017 (Judicial Review of Port Regulations)
Issue:
Judicial review of Ministry of Transportation regulations allowing Pelindo to maintain dominant operational roles.
Holding:
The Supreme Court ruled that:
Ministerial regulations must align with Law No. 17 of 2008
Port operation must be competitive and concession-based
Regulatory favoritism toward Pelindo was unlawful
Significance:
Strengthened the separation between regulator (Port Authority) and operator (BUP)
Case 3: Pelindo III vs. PT BOS (Berkah Industri Terminal Dispute – Gresik Port)
Issue:
Dispute over exclusive rights to provide stevedoring and terminal services.
Claims:
PT BOS argued Pelindo unlawfully restricted access
Pelindo claimed legacy operational authority
Outcome:
Courts and regulators emphasized:
Post-2008 regime requires non-exclusive access
Operational rights must arise from concessions, not historical practice
Significance:
Demonstrated legal shift from monopoly-based port management to open access
Case 4: Batam Port Concession Dispute – BP Batam vs. Private Operators
Issue:
Authority conflict between:
Batam Free Trade Zone Authority (BP Batam)
Ministry of Transportation / Port Authority
Legal Question:
Who has the authority to grant port concessions in special economic zones?
Resolution:
Central government affirmed:
Port concessions remain subject to Shipping Law
Special zones cannot bypass national port governance rules
Significance:
Clarified jurisdictional conflicts in port concessions
Case 5: KPPU Decision No. 13/KPPU-I/2015 – Belawan Port Services
Issue:
Alleged monopolistic practices by Pelindo I in:
Pilotage
Towage services
Findings:
KPPU held:
Mandatory use of Pelindo subsidiaries restricted competition
Violated Articles 17 and 19 of Competition Law
Sanctions:
Administrative fines
Order to open access to private service providers
Significance:
Confirmed that auxiliary port services are also subject to competition law
Case 6: Makassar New Port Concession Dispute (Pelindo IV vs. Private Contractors)
Issue:
Disputes related to:
Concession scope
Asset ownership
Revenue-sharing mechanisms
Key Legal Points:
Concession agreements must:
Clearly define asset reversion
Comply with GR No. 61 of 2009
Ambiguity led to arbitration and renegotiation
Significance:
Highlighted contractual risks in large-scale port PPP projects
IV. Key Legal Principles Emerging from Indonesian Case Law
1. Mandatory Competitive Tendering
Courts and KPPU consistently hold that:
Concessions must be awarded through transparent tender
Direct appointment is exceptional, not the rule
2. Separation of Roles
Port Authorities: regulator and landlord
Port Operators (BUP): commercial operators
Any overlap risks illegality
3. SOEs Subject to Competition Law
Pelindo entities are fully subject to:
Law No. 5 of 1999
KPPU jurisdiction
4. Concession ≠ Ownership
Port assets remain state-owned
Operators receive time-limited economic rights only
V. Conclusion
Port services and concession disputes in Indonesia reflect the country’s transition from state monopoly to regulated competition. Case law shows consistent judicial and regulatory efforts to:
Enforce the Shipping Law
Prevent abuse of dominance
Promote transparency in concessions
Align SOE conduct with competition principles
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