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Enforcement of International Investment Arbitration Awards: Comparative Analysis of Indonesia and China
Enforcement of International Investment Arbitration Awards: Comparative Analysis of Indonesia and China
Indonesia and China's enforcement of International Investment Arbitration Awards (IIRA). The study is on whether China should build up an arbitration system for investment disputes and how successful Indonesia's dispute resolution system is. To analyze the data, the research makes use of secondary data and qualitative data from sources including treaties, laws, regulations, and court decisions. The several issues with both nations, including imprecise laws and burdensome documentation requirements. Although Indonesia has put in place a suitable system, the government ought to do away with any interference with state immunity, judicial review, and public order. From the standpoints of theory and practice, China should do away with interference with state immunity, judicial review, and public order, and build a system. The purpose of the paper is to present a comparative analysis of the relevant practices in Indonesia and China.
Under international accords, including Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution, the Indonesian government has complied with its responsibilities. An arbitration panel located in a nation that signed the bilateral or multilateral agreement with Indonesia must render the Investor-State Arbitration Award. The award shall not contravene public order and adhere to Indonesian trade law. The petitioner has to get an Exequatur from the Supreme Court before it may be enforced. In contrast to standard international arbitration verdicts, this approach calls for certificates, verified copies, agreement copies, and registration.
Similar to Indonesia, China is a party to both the Washington and New York Conventions; however, the Supreme Court has declared that investor-state conflicts are not covered by the New York Convention. In China, there's no alternative way for awards from investment arbitration to be recognized and enforced. Six cases involving China as the Respondent are now active on the ICSID Platform; one case is still pending. There are still five cases outstanding, though, and if the investor wins, the Chinese government will immediately and efficiently implement the system. The establishment of a mechanism will bring the investment dispute system to completion and boost confidence in China among international investors.
China is accountable for fulfilling its duties under several treaties, such as the New York and Washington Conventions. Regarding the recognition and execution of arbitral judgments rendered inside the borders of a State and resulting from legal or physical disputes between individuals, the New York Convention is applicable. China's claim of immunity from this treaty is unfounded legally. China, meanwhile, has stated that investment issues between Sweden and China fall under the purview of the New York Convention. Seven ICSID cases that Indonesia has participated in as the respondents have all come to a close. The investor won these cases because of the tribunal's rulings.
Following the worldwide pandemic, Indonesia's economy needs to recover and grow, and the newly passed Omnibus Law on Job Creation has strengthened the nation's investment climate. However, more international investors would pick Indonesia over nations with inadequate procedures for resolving investment disputes if the Recognition and Enforcement Mechanism was strengthened. Indonesia ought to designate a capable body to supervise the acceptance and implementation of judgments made by foreign arbitrators, validate the specific protocol, specify and update the documentation needs, define the jurisdiction of the court, and disseminate pertinent data regarding the acceptance and implementation process. This would make it easier to guarantee that investors have access to the original contract or a duplicate of it, which is sometimes challenging for international investors to get. By international law, the rule should also make clear the boundaries of the court's jurisdiction, including its ability to amend, revoke, and set aside awards.
Regardless of local or international law, China has the legal right to set up a system for foreign investment arbitration verdicts. The Civil Procedure Law permits the implementation of foreign treaties with provisions that differ from Chinese law, but the Chinese Arbitration Law only applies to disputes between equal people. But there are other contentious issues to take into account, such as public policy, governmental immunity, and judicial review authority. China should work to finish enacting laws about state immunity domestically and to set up a system of enforcement for other countries that have investment issues with Chinese firms. Since the Judicial Review Power is inapplicable to non-China, it ought to be restricted to the provisions of the Washington Convention. China ought to think about adopting policies like those of Indonesia, reversing the Supreme Court's ruling that excluded applications about investment disputes from the New York Convention, and altering the structure of the New York Investment Treaty (BIT).
The enforcement of awards from international arbitration has been addressed by Working Group III, but no concrete agreement has been made. Investors may pursue international petitions or diplomatic protection if they choose not to pursue enforcement. The relationship between the states and the nation's standing abroad may be impacted by this. As parties to the Washington Convention, China and Indonesia are obligated to uphold the rulings of arbitration. The investor may file a lawsuit with the International Court of Justice (ICJ) and may be entitled to diplomatic protection if the state neglects to fulfil its duty. With 189 member nations, the World Bank can offer a practical answer. The World Bank has the authority to impose sanctions on nations that fail to meet their obligations. One such sanction might be the suspension of loans until the state complies. To fulfil their obligations under international law and further their respective nations' growth, China and Indonesia should both endeavour to improve their systems.
- Indonesia has a structured arbitration system but needs to minimize interference from state immunity, judicial review, and public order to enhance investor confidence.
- China lacks a clear mechanism for recognizing and enforcing investment arbitration awards, necessitating reforms to build investor trust.
- Both countries must improve their arbitration enforcement systems to comply with international treaties and support economic growth.
