Snapshot: carriage of goods by sea in Indonesia

Newbuilding contracts

Transfer of title

When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass?

In principle, the parties are allowed to decide and agree on when the ownership title of the ship will pass. There is neither statutory guidance nor standard form on the terms of transfer of title. Parties may agree to pass the title to the buyer upon delivery and full payment or during construction.

Law No. 17 2008 on Shipping, as last amended by Law No. 6 2023 on Stipulation of Government Regulation in lieu of Law No. 2 2022 on Job Creation into Law (the Shipping Law) and Minister of Transportation No. 39 2017 on Registration and Nationality of Vessel (MoTR No. 39/2017), has provided guidance on the requirements for registration of ship (deed of registration), among others that it has obtained a measurement certification and that the purchase from the shipbuilder must be accompanied by documents such as the shipbuilding contract, the minutes of handover or delivery, builder certificate and proof of full payment.

Refund guarantee

What formalities need to be complied with for the refund guarantee to be valid?

The law is silent on this matter. The validity of the terms regarding the guarantee between the shipbuilder and shipowner will be subject to the Indonesian Civil Code’s general contract principles regarding the validity of the contract.

Court-ordered delivery

Are there any remedies available in local courts to compel delivery of the vessel when the yard refuses to do so?

This remedy may be pursued through a general civil claim against the yard to the relevant court under the grounds of breach of contract or unlawful act (tort). The court with jurisdiction may compel delivery in the interim or following the final decision of a substantiated claim.

Defects

Where the vessel is defective and damage results, would a claim lie in contract or under product liability against the shipbuilder at the suit of the shipowner; a purchaser from the original shipowner; or a third party that has sustained damage?

Referring to the consumer protection law, the definition of ‘consumer’ is a person who uses a product or service for their personal use or that of other people. Therefore, the product liability claim may not apply to the second condition. If there is a specific shipbuilding or sale and purchase contract, the claim for defects and damages of the vessel should be based on the agreed terms under the contract. In the event of a third party sustaining damage to defects of a vessel that is not bound to contracts with the shipbuilder or shipowner, the aggrieved third party may make a claim against the party that caused the harm based on an unlawful act (tort) claim.

Ship registration and mortgages

Eligibility for registration

What vessels are eligible for registration under the flag of your country? Is it possible to register vessels under construction under the flag of your country?

Registration of vessels is governed under Ministry of Transport Regulation (MoTR) No. 39/2017. Vessels eligible to be registered are ships, fishing boats and vessels that sail on rivers and lakes.

According to article 5(2) of MoTR No. 39/2017, the requirements to register a vessel are as follows:

• a vessel with at least seven gross tonnage;
• a vessel owned by Indonesian nationals or a legal entity established under Indonesian law and domiciled in Indonesia; and
• a vessel belonging to an Indonesian joint-venture legal entity whose majority shares are owned by Indonesian nationals.

?

Regarding vessels under construction in Indonesia or outside Indonesia, the law allows their registration under the Indonesian flag temporarily as written in article 14 of MoTR No. 39/2017. The registered vessel should at least possess a hull, main deck and the entire upper structure in the final stages of construction.

Who may apply to register a ship in your jurisdiction?

As regulated by MoTR No. 39/2017, the following may apply to register a ship in Indonesia:

• Indonesian nationals;
• a legal entity established under Indonesian law and domiciled in Indonesia; or
• a legal entity in a joint venture, the majority of whose shares are owned by Indonesian nationals.

?

Based on the letter from the Ministry of Transportation dated 4 August 2017 on MoTR No. 39/2017, a vessel registered by a joint venture company should be a ship owned by an Indonesian private legal entity with the majority shareholders being Indonesian nationals or a ship owned by an Indonesian public legal entity with foreign shareholders not exceeding 49 per cent.

Documentary requirements

What are the documentary requirements for registration?

To register a vessel under the Indonesian flag, the following documents are needed:

• An application letter.
• Evidence of vessel ownership:for vessels under construction at the shipyard:a shipbuilding contract or shipbuilding agreement letter;minutes of the ship handover;a shipyard certificate (builder certificate); andproof of payment for ship construction;for vessels under construction by a traditional shipbuilder:a builder certificate acknowledged by the head of the district; ora builder certificate accompanied by a certificate of ownership issued by the head of the district;for vessels that were previously registered under another flag:a bill of sale legalised before and attested by a public notary or by a government official authorised by the original flag country; andprotocol of delivery and acceptance;for vessels that are granted by individuals, a legal entity grant certificate before the notary is required;for inherited vessels, an inheritance statement issued by the court is required;for vessels obtained as a result of a dispute between individuals or Indonesian entities, the final and binding court decision is required; andfor vessels obtained by a government auction, the auction minutes are required.
• The shipowner’s identity.
• The shipowner’s tax registration number.
• The vessel’s measurement certificate.
• The vessel’s safety examination report, issued by a marine inspector.
• Power of attorney if the application submission and ship registration process is represented, provided that:the owner is an individual or group;the owner is a legal entity;the owner resides in a place other than the place of registration; orthe owner is a ministry or an institution.
• Proof of payment of ship transfer fees in accordance with the laws and regulations.
• A recommendation letter from the responsible ministry regarding special fishing vessel activities.

?

For used foreign-flagged vessels obtained through import, the original deletion certificate from the original flag country must be submitted for registration.

Dual registration

Is dual registration and flagging out possible and what is the procedure?

Under articles 160 and 167 of the Shipping Law, dual registration and flagging out are prohibited.

Mortgage register

Who maintains the register of mortgages and what information does it contain?

As stipulated under article 60 of the Shipping Law, registration of a mortgage is completed by a registration official through a mortgage deed.

Pursuant to article 30 of MoTR No. 39/2017, a mortgage deed includes:

• the number and date of the deed;
• the name and domicile of the registrar and ship transfer registrar;
• the name and domicile of the mortgage giver and recipient;
• the number and date of the registration deed or deed of transfer of name;
• ship data;
• the basis for changing the mortgage;
• the mortgage value; and
• other information as agreed.

Limitation of liability

Regime

What limitation regime applies? What claims can be limited? Which parties can limit their liability?

Indonesia has yet to ratify the International Convention relating to the Limitation of Liability of Owners of Sea-Going Ships 1957 and the International Convention on Limitation of Liability for Maritime Claims 1976.

However, the Indonesian Commercial Code provides certain limitations of liability as follows:

• As stipulated under article 470(2), the carrier may limit their liability over packages unless they have been informed of the value and characteristics of the packages before or while receiving them. The package value must be less than 600 Netherlands Indies guilders.
• The carrier may limit their liability on the damages suffered by the carried packages to 50 Netherlands Indies guilders per cubic metre of the net tonnage of the ship. For a mechanically propelled ship, the gross tonnage of ship weight is deducted from the weight of space occupied by the means of propulsion. This is as provided under article 474.
• Regarding collision cases, article 541 provides that the ship is only liable for a maximum of 50 Netherlands Indies guilders per metre cubic of her net tonnage. If the ship is self-propelled, the net tonnage should be calculated by deducting the weight of space occupied by the engine.

?

The Commercial Code has not been revised or developed since Indonesia’s independence in 1945. Furthermore, there is no guidance regarding the equivalent amount of Netherlands Indies guilders to the present Indonesian rupiah or other currencies. However, several court decisions have referred to the gold price at that time in interpreting Netherlands Indies guilders, to determine the amount of compensation.

Under article 476 of the Commercial Code, the liability limitation provisions may not apply if the damage is a result of intent or serious fault by the carrier, prompting claims of full compensation. Any conditions made that contravene this will be void.

Procedure

What is the procedure for establishing limitation?

Indonesian law has specifically regulated the procedure for establishing limitation. Further, article 316a of Reglement op de Rechtsvordering (RV) (the former Dutch civil procedural law) provides that a cash deposit must be submitted to the court’s clerk or registrar at the court where the vessel is registered.

Break of limitation

In what circumstances can the limit be broken? Has limitation been broken in your jurisdiction?

There is no precedent regarding the breaking of liability limitation. Generally, this limit may be broken in cases of serious negligence of the master or crew, force majeure, an act of God or failure from the shipper to properly inform the carrier of the nature of the goods or the parties’ consent.

Passenger and luggage claims

What limitation regime applies in your jurisdiction in respect of passenger and luggage claims?

Indonesia has not ratified the International Convention relating to the Limitation of Liability of Owners of Sea-Going Ships 1957. However, the Commercial Code recognises the following carriers’ limitations of liability:

• based on article 470(2) of the Commercial Code, stipulated related to the package limitation of liability;
• based on article 474(2) of the Commercial Code, stipulated related to the tonnage limitation of liability; and
• based on article 541 of the Commercial Code, stipulated related to collision cases in particular.

Port state control

Authorities

Which body is the port state control agency? Under what authority does it operate?

The port state control officer (PSCO) is regulated under Minister of Transportation Regulation (MoTR) No. PM 119 of 2017 (MoTR No. 119/2017) regarding PSCO of Safety and Seaworthiness of Foreign Vessel. This regulation is supplemented by Regulation No. H–103/1/9/DJPL-18 regarding the Implementation of Safety and Seaworthiness of Foreign Vessel Inspection. This implementing regulation provides that the PSCO is an official or officer at the Directorate General of Sea and Transportation at the Ministry of Transportation who must supervise the safety and seaworthiness of foreign vessels in accordance with the relevant international conventions. Further, the authority of the PSCO is delegated to the harbour master, to supervise the safety and seaworthiness of vessels, as stipulated under article 208 of the Shipping Law.

Sanctions

What sanctions may the port state control inspector impose?

A vessel may be detained by the PSCO if, through an inspection, a ‘detainable deficiency’ is found.

Appeal

What is the appeal process against detention orders or fines?

The shipowner or operator may submit a complaint against the PSCO’s decision to detain a vessel under detainable deficiency pursuant to MoTR No. 119/2017. A follow-up or re-inspection can be requested and there will be a non-tax state revenue tariff imposed in the amount of US$350 as regulated by Government Regulation No. 15 2016 concerning Type and Tariff of Non-Tax State Revenue at the Ministry of Transportation.

Additionally, article 11 of MoTR No. 119/2017 provides that the flag state may submit a report to the Tokyo memorandum of understanding panel to conduct a review (a detention review panel) to obtain clarity with regard to the procedure and technical aspects used by the PSCO in stating the results of the inspection.

Classification societies

Approved classification societies

Which are the approved classification societies?

Referring to article 3 of Minister of Transportation Regulation No. PM 61 2014 (MoTR No. 61/2014) on Amendments to MoTR No. PM 7 of 2013 on Classification Obligations for Indonesian Flag Ships at Classification Bodies, below are the approved foreign international classification societies:

• American Bureau of Shipping;
• Bureau Veritas;
• China Classification Society;
• Croatian Register of Shipping;
• Det Norske Veritas;
• Germanischer Lloyd;
• Indian Register of Shipping;
• Korean Register of Shipping;
• Lloyd's Register;
• Nippon Kaiji Kgokai;
• Polish Register of Shipping;
• Registro ltaliano Navale; and
• Russian Maritime Register of Shipping.

?

Indonesia has its own national classification society (PT Biro Klasifikasi Indonesia (Persero) (BKI)). As stipulated in MoTR 61/2014, every Indonesian flagged vessel must be classified either by BKI or one of the aforementioned approved foreign classification societies that have fulfilled the statutory requirements, including having an Indonesian national surveyor in all of their Indonesian branch offices.

Liability

In what circumstances can a classification society be held liable, if at all?

The MoTR No. 61/2014 does not provide any provisions on whether a classification society can be held liable. However, in practice, it is possible to file a claim against BKI on the grounds of unlawful acts, as was done in North Jakarta District Court Decision No. 418/Pdt.G/2017/PN Jkt Utr. The plaintiff demanded that BKI issue a class maintenance certificate; however, the claim was rejected and further information on the panel of judges’ decision is not publicly available.

Collision, salvage, wreck removal and pollution

Wreck removal orders

Can the state or local authority order wreck removal?

Based on Ministry of Transportation Regulation (MoTR) No. 27 2022 on Salvage and/or Underwater Works, if the wreck or cargo, or both, is dangerous to its surroundings, the harbour master may order the shipowner to remove the wreck into the port that has jurisdiction.

International conventions

Which international conventions or protocols are in force in relation to collision, wreck removal, salvage and pollution?

Indonesia has not ratified the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels 1910. However, Indonesia has ratified the Convention on the International Regulations for Preventing Collisions at Sea 1972 by enactment of Presidential Decision No. 50 1979.

Indonesia has ratified the Nairobi International Convention on the Removal of Wrecks 2007 (the Nairobi Convention), as seen in Presidential Decision No. 80 2020 on the Ratification of the Nairobi International Convention on the Removal of Wrecks. Therefore, all provisions stated in the Nairobi Convention are in force and apply to vessels operating in Indonesian waters.

Indonesia has also ratified the International Convention on Civil Liability for Oil Pollution Damage 1969 and enacted Presidential Decision No. 18 1978. In addition, Presidential Decision No. 52 1999 was enacted to ratify the 1992 protocol and to amend the convention. Indonesia has not ratified any international conventions concerning salvage.

Salvage

Is there a mandatory local form of salvage agreement or is Lloyd’s standard form of salvage agreement acceptable? Who may carry out salvage operations?

Indonesia does not strictly regulate salvage agreements and Lloyd’s standard form of salvage agreement is not prohibited. However, the MoTR concerning Salvage and/or Underwater Works as last amended by MoTR No. PM 27 2022 states that salvage must be carried out within 180 days of the ship sinking or running aground.

According to article 3 of the above-mentioned regulation, salvage operation is to be carried out by a business entity specifically established to conduct salvage operations, underwater works or both.

Ship arrest

International conventions

Which international convention regarding the arrest of ships is in force in your jurisdiction?

Indonesia is not a party to either the International Convention Relating to the Arrest of Sea-Going Ships 1952 or the International Convention on the Arrest of Ships 1999.

Claims

In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested? Can a bareboat (demise) chartered vessel be arrested for a claim against the bareboat charterer? Can a time-chartered vessel be arrested for a claim against a time-charterer?

Pursuant to article 222 of the Shipping Law, a ship that is involved in a criminal investigation or civil claim may be arrested. Associated ships cannot be enforced or arrested in Indonesian jurisdiction according to the Shipping Law.

The Shipping Law defines a maritime claim as one arising out of, and that must have a direct connection to, the operation of the vessel. According to the Law, this includes:

• any loss or damage caused by the operation of the ship;
• any salvage operation;
• any salvage agreement or pilotage; or
• any agreement relating to the use or hire of the ship.

?

The Shipping Law does not provide any regulations or guidance on claims against the bareboat, time charterer, or both. If the vessel is involved in a criminal investigation or civil claim, or there is a claim against the bareboat or time charterer directly operating the vessel, then the vessel is subject to arrest for these claims.

Maritime liens

Does your country recognise the concept of maritime liens and, if so, what claims give rise to maritime liens?

Indonesia has ratified the International Convention on Maritime Liens and Mortgages 1993 by the enactment of Presidential Decree No. 44 2005. Article 4 of this convention is reflected in article 65 of the Shipping Law. However, currently, no regulation under Indonesian law provides guidance or any time frame when enforcing a maritime lien against a vessel.

Wrongful arrest

What is the test for wrongful arrest?

No Indonesian law regulates specifically on wrongful arrest of a vessel. However, in general, if the grounds of or conduct of arrest in civil or criminal proceedings are not in accordance with the prevailing laws (eg, conducted by authorities without lawful grounds or court order) then a wrongful arrest may be argued.

Bunker suppliers

Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel?

According to article 223 of the Shipping Law, cost-related bunkering activities provide a legitimate basis for a maritime claim. However, for a vessel to be arrested the general civil proceeding applies. This means there must be a contractual relationship between the shipowner and the bunker supplier.

Security

Will the arresting party have to provide security and in what form and amount?

Article 722 of Reglement op de Rechtsvordering (RV) allows the court to order the arresting party to pay a security (guarantee fee) upon the arrest of a ship. However, in practice, it is rare for courts to apply this provision considering that the nature of such a provision is not imperative.

How is the amount of security the court will order the arrested party to provide calculated and can this amount be reviewed subsequently? In what form must the security be provided? Can the amount of security exceed the value of the ship?

There is no law regarding the specific security amount required.

Formalities

What formalities are required for the appointment of a lawyer to make the arrest application? Must a power of attorney or other documents be provided to the court? If so, what formalities must be followed with regard to these documents?

There are no specific formalities to make an arrest application in Indonesia.

As the arrest of a ship occurs through civil or criminal proceedings, a specific power of attorney (PoA) should be provided to the court or the police. If the PoA is issued in a foreign language then it must be prepared in Bahasa Indonesian too. Furthermore, in cases where the PoA is issued or executed outside of Indonesia, it should be notarised by a public notary and legalised by a diplomatic representative, such as the Republic of Indonesia’s embassy. However, if the issuing or executing country is also a signatory of the Apostille Convention then the PoA need not be legalised by the diplomatic representative.

All documented evidence in a foreign language must be submitted along with the formal or sworn Indonesian translation.

Ship maintenance

Who is responsible for the maintenance of the vessel while under arrest?

Indonesian law does not specifically regulate the responsibility for vessel maintenance during arrest. In practice, this cost is usually borne by the owner or operator of the vessel, or arresting party.

Proceedings on the merits

Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?

Generally, the arresting party must first submit a claim on its merits in court before submitting other orders, such as obtaining security by arresting the vessel before the same court that has jurisdiction over the claim.

Injunctions and other forms of attachment

Apart from ship arrest, are there other forms of attachment order or injunctions available to obtain security?

The claimant can request for attachment of the opposing party’s known assets other than the vessel to obtain monetary security before the final court decision. According to Indonesian law, several types of attachment orders can be requested from the panel of judges, namely security attachment for the defendant's goods and security attachment for the plaintiff’s goods. Based on article 1131 of the Indonesian Civil Code, security attachment of the defendant's goods can be carried out on movable and immovable goods, both existing and future. Furthermore, based on article 226 of the Indonesian Civil Procedural Law Herzien Inlandsch Reglement (HIR), it is stated that, in principle, the owner of any movable goods can submit a request orally or in writing to a judge to have the goods confiscated if they are in the hands of another person.

Delivery up and preservation orders

Are orders for delivery up or preservation of evidence or property available?

Indonesian law does not regulate orders for delivery up or preservation of evidence or property.

Bunker arrest and attachment

Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?

Indonesian law does not regulate the arrest of a bunker separately from the arrest of the vessel. The Shipping Law only regulates the arrest of vessels.

Judicial sale of vessels

Eligible applicants

Who can apply for judicial sale of an arrested vessel?

The plaintiff may submit the judicial sale of an arrested vessel.

Procedure

What is the procedure for initiating and conducting judicial sale of a vessel? How long on average does it take for the judicial sale to be concluded following an application for sale? What are the court costs associated with the judicial sale? How are these costs calculated?

The judicial sale of the vessel is carried out within general civil court proceedings that have obtained a final and binding judgment in favour of the claimant. This is part of the execution proceedings. If the respondent refuses to voluntarily comply with the judgment, then the claimant must apply to the district court to enforce the judgment against the respondent.

The respondent will be given a maximum of eight days to comply with the judgment after appearing before the court chair. Otherwise, the district court will issue an order to seize the respondent’s vessel, which will be sold at a public auction (judicial sale). The proceeds of the auction must be distributed to the claimant to satisfy the claim awarded in the judgment and, if applicable, to the relevant parties. The claimant must pay the cost of the public auction to the court in advance, which shall include costs related to the public announcement.

The auction office must make two public announcements before the auction is held. The first will be by flyer, physical media, electronic media or newspaper. The second will be by newspaper and must be published within 14 days of the first announcement and at least 14 days before the date of the auction.

After the auction, each district court may charge different court costs for the judicial sale. This cost may also be incurred from the process within the auction office and for the change or transfer of ownership of the vessel.

Claim priority

What is the order of priority of claims against the proceeds of sale?

The priority of claims based on Indonesian Law is as follows:

• the cost of the auction or execution;
• any debt occurred from the seafarer’s agreement;
• any costs of salvage, pilotage and shipping dues; and
• any debt from the collision (in collision cases).

Legal effects

What are the legal effects or consequences of judicial sale of a vessel?

The judicial sale of a vessel occurs as an execution or enforcement of a final and binding court decision. It should be carried out following a court decision against the vessel owner as the debtor in the case, whereby the judicial sale of the vessel must pay monetary compensation over the monetary damages or carry out a criminal decision that concerns the vessel.

When a party purchases or procures a vessel through a judicial sale, they obtain the rights and title as purchaser or owner in good faith. Information related to whether prior liens and encumbrances on the vessel are all lifted may or may not be known and thus not declared by the court or the auction house. If a vessel is sold with liens and encumbrances, the security right holder may file a rebuttal claim against the sale.

Foreign sales

Will judicial sale of a vessel in a foreign jurisdiction be recognised?

There are no specific regulations governing this matter, but if the sale is carried out in accordance with the statutory provisions in that jurisdiction and is not in violation or conflict with Indonesian law then it shall be recognised by Indonesian law.

International conventions

Is your country a signatory to the International Convention on Maritime Liens and Mortgages 1993?

Indonesia has ratified the International Convention on Maritime Liens and Mortgages 1993 by virtue of Presidential Decree No. 44 2005.

Carriage of goods by sea and bills of lading

International conventions

Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules?

Indonesia has not ratified any of the rules mentioned.

Multimodal carriage

Are there conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading?

In Indonesia, multimodal carriage is governed by Government Regulation No. 8 2011 concerning Multimodal Carriage and Minister of Transportation Regulation No. 8 2012 concerning the Implementation and Commercialisation of Multimodal Carriage. The regulations do not specifically mention a bill of lading but there is a multimodal marriage document as the contractual basis for carriage.

Indonesia has been a signatory to the ASEAN Framework for Multimodal Transport since 17 November 2005. This framework is ratified through Presidential Regulation No. 14 2016 concerning the Ratification of the ASEAN Framework Agreement on Multimodal Transport (the ASEAN Framework Agreement on Multimodal Transport).

Title to sue

Who has title to sue on a bill of lading?

Article 510 of the Commercial Code states ‘The legal holder has the right to demand delivery of the goods at the destination in accordance with the contents of the bill of lading.’ However, besides the legal holder, cargo owners or the cargo insurers (by subrogation) are entitled to bring cargo claims against the carrier for any loss or damage arising out of the carrier’s alleged fault for the carrier’s default.

Charter parties

To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsee of the bill?

In general, provisions based on the charter party can be included in the bill of lading. This is because the bill of lading can contain matters agreed upon by the parties, including regarding jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsement of the bill.

Demise and identity of carrier clauses

Is the ‘demise’ clause or identity of carrier clause recognised and binding?

There is no specific regulation or definition that recognises the demise clause or identity of carrier clause in Indonesia. The validity and bindingness of the clause will be based on the principle of freedom of contract.

Shipowner liability and defences

Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual carriers?

Generally, the shipowner is fully responsible for the cargo carried by the shipowner. However, if the shipowner can prove that the damage to the cargo was not the fault of or did not result from any negligence of the shipowner, then they are not responsible for the cargo.

Deviation from route

What is the effect of deviation from a vessel’s route on contractual defences?

Generally, any consequences of deviation from a vessel’s route is governed in the contract.

Liens

What liens can be exercised?

The Shipping Law permits liens from being exercised. Article 65 of the Shipping Law states that the following claims will give rise to a maritime client attached to the vessel:

• claims for wages and other sums due to the master, officers and other members of the vessel’s complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;
• claims in respect to loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;
• claims for reward for the salvage of the vessel;
• claims for port, canal, and other waterway dues and pilotage dues; and
• claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passengers’ effects carried on the vessel.

Delivery without bill of lading

What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability?

The carrier is liable for the delivery of cargo without producing the bill of lading. There are no provisions that limit the carrier’s liability in such a situation and, in theory, the parties can regulate and limit the carrier’s liability by considering the applicable laws and regulations.

Shipper responsibilities and liabilities

What are the responsibilities and liabilities of the shipper?

The shipper must hand over the goods or cargo carried in accordance with when they received the goods and at the agreed time. Any failure to fulfil this obligation due to the shipper’s fault or negligence may result in the shipper being held liable for the damages.

Shipping emissions

Emission control areas

Is there an emission control area (ECA) in force in your domestic territorial waters?

The ECA is based on Annex IV of the Protocol of 1997 to the International Convention for the Prevention of Pollution from Ships 1973. There is no ECA in force in the domestic territorial waters of Indonesia.

Sulphur cap

What is the cap on the sulphur content of fuel oil used in your domestic territorial waters? How do the authorities enforce the regulatory requirements relating to low-sulphur fuel? What sanctions are available for non-compliance?

The sulphur content of fuel oil is regulated in Circular Letter of Director General of Sea Transportation No. SE 35 2019 concerning the Obligation to Use Low Sulfur Fuel and the Prohibition of Transporting or Carrying Fuel that Does Not Meet the Requirements and Management of Waste from Exhaust Gas Recirculation from Ships. Since 1 January 2020, vessels sailing in Indonesia must use fuel with a sulphur content of a maximum 0.5 per cent by mass. However, there are no sanctions for non-compliance.

Ship recycling

Regulation and facilities

What domestic or international ship recycling regulations apply in your jurisdiction? Are there any ship recycling facilities in your jurisdiction?

Indonesian law does not yet specifically regulate ship recycling. However, the Shipping Law defines ‘ship scrapping’ as cutting and destroying ships that are no longer used in a safe and environmentally sound manner that must be done in line with the marine environment protection requirements.

Jurisdiction and dispute resolution

Competent courts

Which courts exercise jurisdiction over maritime disputes?

There is no specific court in Indonesia for shipping dispute settlements. All shipping disputes are submitted to and examined by the relevant district court. The Civil Procedural Law provides the jurisdiction applicable for dispute settlement by a certain district court as being:

• the district court where the defendant is domiciled; or
• if the defendant’s domicile is unknown, the claim will be submitted to the district court in the plaintiff’s domicile.

?

Indonesia does have a maritime court, but its authority is limited to the following:

• to examine the causes of ship accidents and determine whether there were breaches of the code of ethics and seafaring professional standards carried out by the master or ship officers, or both, in the event of ship accidents; and
• to carry out further examination of investigation results issued by the Directorate General of Sea and Communication at the Indonesian Ministry of Transportation.

Service of proceedings

In brief, what rules govern service of court proceedings on a defendant located out of the jurisdiction?

The Indonesian Civil Procedural Laws consisting of Herzien Inlandsch Reglement, Rechtreglement voor de Buitengewesten (HIR), and Reglement op de Rechtsvordering (RV) govern the service of court proceedings on defendants. If the party or defendant is domiciled in another country, the court will summon the party through diplomatic channels.

Arbitration

Is there a domestic arbitral institution with a panel of maritime arbitrators specialising in maritime arbitration?

No.

Foreign judgments and arbitral awards

What rules govern recognition and enforcement of foreign judgments and arbitral awards?

In Indonesia, arbitration is governed under Law No. 30 1999 concerning Arbitration and Alternative Dispute Resolution (the Arbitration Law). The Law recognises foreign arbitration awards, including those related to maritime disputes, as Indonesia has ratified the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards through the enactment of Presidential Decree No. 34 1981.

For a foreign arbitral award to be recognised and enforced in Indonesia, the award must be examined by the Central Jakarta District Court. This foreign arbitral award must also satisfy the requirements laid out in article 66 of the Arbitration Law.

Asymmetric agreements

Are asymmetric jurisdiction and arbitration agreements valid and enforceable in your jurisdiction?

There is no Indonesian law that regulates usage of the asymmetric jurisdiction clause. However, the general principle is that parties have the freedom to decide which forum they would like their dispute to be settled in, including any court. In practice, the court usually declines to hear cases where the parties have chosen arbitration as their dispute settlement mechanism in their agreement.

Breach of jurisdiction clause

What remedies are available if the claimants, in breach of a jurisdiction clause, issue proceedings elsewhere?

The party may submit an objection or demurrer regarding the non-competence of the jurisdiction to challenge the submission relating to any breach of a jurisdiction clause.

What remedies are there for the defendant to stop domestic proceedings that breach a clause providing for a foreign court or arbitral tribunal to have jurisdiction?

The party may submit an objection or demurrer on the breach of dispute settlement clause in the agreement. This can also be supported by citing Indonesian court decisions that have declared repeatedly that Indonesian courts have no jurisdiction to adjudicate the case as the parties in the agreement have agreed to elect a foreign court or arbitral tribunal as the dispute settlement forum.

Limitation periods for liability

Time limits

What time limits apply to claims? Is it possible to extend the time limit by agreement?

According to article 1967 of the Indonesian Civil Code, generally there is a 30-year time limit for any legal claim. However, specifically for maritime claims, the time limit for cargo claims is one year (article 481 in conjunction with article 741 of the Commercial Code) and for all legal claims regarding compensation for damages due to collisions, it is two years (article 741 of the Commercial Code).

The restriction of the time limit for claims may also be decided by the parties based on the principle of freedom of contract.

Court-ordered extension

May courts or arbitral tribunals extend the time limits?

Indonesian law is silent regarding the extension of time limits by courts or arbitral tribunals.

Miscellaneous

Maritime Labour Convention

How does the Maritime Labour Convention apply in your jurisdiction and to vessels flying the flag of your jurisdiction?

Indonesia has ratified the Maritime Labour Convention 2006 and enacted Law No. 15 2016 concerning the Ratification of the Maritime Labour Convention 2006. The Ministry of Transportation has also enacted Minister of Transportation Regulation No. PM 58 2021 concerning Maritime Labour Convention Certification.

Relief from contractual obligations

Is it possible to seek relief from the strict enforcement of the legal rights and liabilities of the parties to a shipping contract where economic conditions have made contractual obligations more onerous to perform?

Legally, all provisions contained in the shipping contract must be implemented by the parties. If there are matters that hinder or interfere with the implementation of the shipping contract, the parties can agree on this matter if it is based on good faith in implementing the shipping contract.

Other noteworthy points

Are there any other noteworthy points relating to shipping in your jurisdiction not covered by any of the above?

Shipping Law requires that domestic sea transportation must be carried out by an Indonesian shipping company using an Indonesian-flagged vessel and Indonesian crew. In Indonesia, this is known as the cabotage principle. The MoTR No. PM 2 of 2021 on the procedures and requirements for the granting of foreign vessel utilisation approval for activities other than the domestic carriage of passengers or goods, or both, lists the types of activities for which foreign vessels may be used, namely:

• ?oil and gas surveys;
• drilling;
• offshore construction;
• offshore operational support;
• dredging;
• salvage and underwater works;
• electricity activities (performed by power plant vessels); and
• jetty construction.

?

Any foreign-flagged vessels must be approved to use a foreign vessel after obtaining their standard shipping licence.

Update and trends

Key developments of the past year

Are there any emerging trends or hot topics that may affect shipping law and regulation in your jurisdiction in the foreseeable future?

Regulations related to the Indonesian Shipping Law have been furthered by the issuance of Law No. 6 of 2023 on the Stipulation of Government Regulation in lieu of Law No. 2 of 2022 on Job Creation into Law (the Job Creation Law). Further, the Indonesian government recently enacted Government Regulation No. 13 2022 on the implementation of security, safety and law enforcement in Indonesian waters and Indonesian jurisdictions to provide authority to the Indonesian Maritime Security Agency to inspect the vessel, where it is alleged that shipping regulations have been violated.

The Minister of Transportation has also issued Regulation No. 27 of 2022, which serves as the third amendment to Minister of Transportation Regulation No. 71 of 2013 on salvage and wreck removal works, wherein it emphasises the implementation of the Nairobi Convention, namely, that any vessel sailing within Indonesian waters must have wreck removal insurance.

DISCLAIMER:

This disclaimer applies to the publication of articles by Anggraeni and Partners. By accessing or reading any articles published by Anggraeni and Partners, you acknowledge and agree to the terms of this disclaimer:

No Legal Advice: The articles published by Anggraeni and Partners are for informational purposes only and do not constitute legal advice. The information provided in the articles is not intended to create an attorney-client relationship between Anggraeni and Partners and the reader. The articles should not be relied upon as a substitute for seeking professional legal advice. For specific legal advice tailored to your individual circumstances, please consult a qualified attorney.

Accuracy and Completeness: Anggraeni and Partners strive to ensure the accuracy and completeness of the information presented in the articles. However, we do not warrant or guarantee the accuracy, currency, or completeness of the information. Laws and legal interpretations may vary, and the information in the articles may not be applicable to your jurisdiction or specific situation. Therefore, Anggraeni and Partners disclaim any liability for any errors or omissions in the articles.

No Endorsement: Any references or mentions of third-party organizations, products, services, or websites in the articles are for informational purposes only and do not constitute an endorsement or recommendation by Anggraeni and Partners. We do not assume responsibility for the accuracy, quality, or reliability of any third-party information or services mentioned in the articles.

No Liability: Anggraeni and Partners, its partners, attorneys, employees, or affiliates shall not be liable for any direct, indirect, incidental, consequential, or special damages arising out of or in connection with the use of the articles or reliance on any information contained therein. This includes but is not limited to, loss of data, loss of profits, or damages resulting from the use or inability to use the articles.

No Attorney-Client Relationship: Reading or accessing the articles does not establish an attorney-client relationship between Anggraeni and Partners and the reader. The information provided in the articles is general in nature and may not be applicable to your specific legal situation. Any communication with Anggraeni and Partners through the articles or any contact form on the website does not create an attorney-client relationship or establish confidentiality.

By accessing or reading the articles, you acknowledge that you have read, understood, and agreed to this disclaimer. If you do not agree with any part of this disclaimer, please refrain from accessing or reading the articles published by Anggraeni and Partners.

?

For further information, please contact:

WWW.AP-LAWSOLUTION.COM

P: 6221. 7278 7678, 72795001

H: +62 811 8800 427

?

Anggraeni and Partners, an Indonesian law practice with a worldwide vision, provides comprehensive legal solutions using forward-thinking strategies. We help clients manage legal risk and resolve disputes on admiralty and maritime law, complicated energy and commercial issues, arbitration and litigation, tortious claims handling, and cyber tech law.

?

S.F. Anggraeni

Managing Partner

[email protected]

?

Reynalda Basya Ilyas

Senior Associate

[email protected]

?

Melvin Julian

Middle Associate

[email protected]