Singapore Law Blog

Singapore is gaining popularity as an arbitration centre for foreign businesses based in Indonesia. Many Indonesian investors are resolving their business disputes in Singapore because they fear their rights may not be well protected by the Jakarta courts.

In a news article, it was reported that Singapore is seen as a good alternative because of its geographical proximity and cultural familiarity to Indonesia. Foreign investors, including those from Singapore, are generally keen to increase their business in Indonesia.

But one fear of foreign investors is that their rights may not be respected by the Indonesian courts. According to the SingaporeLaw Commitee, the number of Indonesian businesses seeking arbitration in Singapore rose to eight in 2005 compared to just one in 2001.

Said Lim Tean, country head (Indonesia Desk), SingaporeLaw Committee, "There has been a definite increase in the number of Indonesian cases that have come to Singapore. And with a resurgent Indonesian economy, we certainly expect to see that figure going up year by year."

Said Professor Hikmahanto Juwana, the dean of University of Indonesia's law faculty, "If the investors have no confidence in Indonesian arbitration law or they don't have confidence to settle the dispute in Indonesia, what I'm proposing is for them to still invest in Indonesia, but to settle, if they have a dispute, outside of Indonesia. The question is where outside. When we say outside, it is better to be not far away outside, but in a country which is near. Here, Singapore is a reasonable choice for Indonesia and foreign investors, if they have disputes, to resolve their disputes here and even use Singapore law."