Indonesian Legal Contracts: Applicable Language in Contract
Does Indonesian Law No. 24 of 2009 address which language prevails in the event of a conflict between the Indonesian and English texts?
Law No. 24 of 2009 is silent regarding conflicts or differences in interpretation between the Indonesian and English texts. However, Presidential Regulation No. 63 of 2019, which implements Law No. 24 of 2009, addresses this issue. According to Article 26 (4) of Presidential Regulation No. 63 of 2019, in the event of a conflict or difference in interpretation between the Indonesian and English texts, the language that will prevail is the one specified in the memorandum of understanding or agreement.
Article 26 of Presidential Regulation No. 63 of 2019 offers further clarification on the languages used in agreements.
The English version (or any other foreign language version) of an agreement serves as the equivalent (padanan) or translation (terjemahan) of the Indonesian version, ensuring that the parties’ understanding is aligned.
In cases where there is a discrepancy in interpretation between the Indonesian version and the English version (or any other foreign language version), the version accepted by the parties will take precedence.
Timing for the preparation and execution of the Indonesian version of an agreement
With respect to the timing for the preparation and execution of the Indonesian version of an agreement, Article 31 of Law No. 24 of 2009 does not explicitly mandate that the Indonesian version of an English agreement be prepared concurrently with or prior to the execution of the English version by the parties. However, it is considered best practice that when the parties desire to have an agreement in English, both the Indonesian and English versions should be executed simultaneously.
Consequences of non-compliance
Law No. 24 of 2009 does not provide specific penalties for failing to meet the language requirements. Nevertheless, there is a case in which an Indonesian court has invalidated a contract that was not executed in the Indonesian language, citing a failure to meet the validity criteria established in the Indonesian Civil Code. In response to this event, the Supreme Court issued Circular Letter No. 3 of 2023, which states that a contract between an Indonesian party and a foreign party should not be deemed void by the courts due to the absence of an Indonesian language version.
Read other articles : STATUTORY OBLIGATION TO USE INDONESIAN LANGUAGE IN CONTRACTRS
References:
- Law No. 24 of 2009 dated July 9, 2009 on National Flag, Language, and Coat of Arms, and Anthem;
- Presidential Regulation No. 63 of 2019 dated September 30, 2019 on Use of Indonesian Language; and
- Supreme Court Circular Letter No. 3 of 2023 concerning the Enforcement of 2023 Supreme Court Chamber Plenary Meeting Result Formulations as Guidelines for the Implementation of the Duties of the Court.