STATUTORY OBLIGATION TO USE INDONESIAN LANGUAGE IN CONTRACTS
Law No. 24 of 2009 on National Flag, Language, Emblem and Anthem (“Language Law“) imposes a statutory obligation that the Indonesian language shall be used in memorandum of understandings (“MoU”) or agreements involving Indonesian entities or individuals. If an MoU or an agreement involves a foreign party, it should also be drafted in the national language of the foreign party or in the English language.
The original text of Article 31 of the Language Law is stipulated as below:
– Article 31 paragraph (1): “Bahasa Indonesia wajib digunakan dalam nota kesepahaman atau perjanjian yang melibatkan lembaga negara, instansi pemerintah Republik Indonesia, lembaga swasta Indonesia atau perseorangan warga negara Indonesia.”
– Article 31 paragraph (2): “Nota kesepahaman atau perjanjian sebagaimana dimaksud pada ayat (1) yang melibatkan pihak asing ditulis juga dalam bahasa nasional pihak asing tersebut dan/atau bahasa Inggris.”
Law No. 24 of 2009 can be accessed in this link: UU-Nomor-24-Tahun-2009
Presidential Regulation No. 63 of 2019
Presidential Regulation No. 63 of 2019 concerning the Use of Bahasa Indonesia (“President Regulation No. 63 of 2019”) clarifies that in case of a difference in interpretation of the equivalent or translation, the parties are allowed to agree the prevailing language provision in such MoU or agreements. The original text of Article 26 paragraph (4) of President Regulation No. 63 of 2019 is stipulated as follows: “Dalam hal terjadi perbedaan penafsiran terhadap padanan atau terjemahan sebagaimana dimaksud pada ayat (3), bahasa yang digunakan ialah bahasa yang disepakati dalam nota kesepahaman atau perjanjian.”
Presidential Regulation No. 63 of 2019 can be accessed in this link: Perpres-Nomor-63-Tahun-2019
Supreme Court Circular No. 3 of 2023
Following the Presidential Regulation No. 63 of 2019, the Indonesian Supreme Court, through its 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 (“Supreme Court Circular No. 3 of 2023”), is of the view that a contract between an Indonesian party (individual or private entity) and a foreign party should not be voided by the courts due to the absence of an Indonesian language version. However, this stands provided that the absence is not caused by a party breaching its statutory obligation to act in good faith.
The original text of the Supreme Court Circular No. 3 of 2023 is stipulated as follows: “Lembaga swasta Indonesia dan atau perseorangan Indonesia, yang mengadakan perjanjian dengan pihak asing dalam bahasa asing yang tidak disertai dengan terjemahan bahasa Indonesia tidak dapat dijadikan alasan pembatalan perjanjian, kecuali dapat dibuktikan bahwa ketiadaan terjemahan Bahasa Indonesia karena adanya iktikad tidak baik oleh salah satu pihak.”
Supreme Court Circular No. 3 of 2023 can be accessed in this link: SEMA-No.-3-of-2023