Unravelling Choice of Law in International Commercial Contracts

Acknowledgments vii
List of Figures xiii
List of Tables xiii
Abbreviations xv

Chapter 1 Introduction 1
1.1 An Outline of the Research Background 1
1.1.1 The Deviation of Choice of Law in Indonesia 1
1.1.2 The Continuous Advancement of Choice of Law 4
1.2 Research Questions and Objectives 7
1.3 Scope and Limitation of the Research 8
1.3.1 Central Concepts 8
1.3.2 Why Choice of Law 9
1.3.3 Why Indonesia 10
1.4 Choice of Research Methodology and Sources 12
1.4.1 Doctrinal Method 12
1.4.2 Interviews 14
1.5 Academic and Societal Relevance of the Research 16
1.6 Structure of the Research 18

Chapter 2 The Labyrinth of Choice of Law 21
2.1 Overview 21
2.2 The Evolvement of Choice of Law 21
2.2.1 The Early Days 21
2.2.2 The Rise of Acknowledgement 27
2.2.3 The Remaining Reluctance 32
2.2.4 The Continuing Harmonisation Attempts 34
2.3 Theoretical Justification 38
2.3.1 State-Sovereigntist Perspective 39
2.3.2 Party-Sovereigntist Perspective 41
2.4 Functioning Choice of Law 43
2.4.1 Internationality of the Contract 43
2.4.2 Type of Contract 45
2.4.3 The Validity of Choice of Law Agreement 46
2.4.4 The Chosen Law 48
2.4.5 Choice of Invalidating Contract 50
2.5 Limits of Choice of Law 52
2.5.1 Public Order (Ordre Public) 52
2.5.2 Mandatory Rules 53
2.6. Conclusions 55

Chapter 3 Civil Law, PIL, and Choice of Law in Indonesia 57
3.1 Overview 57
3.2 The Arrival that Changed the East Indian Archipelago 58
3.2.1 Vereenigde Oost-Indische Compagnie 59
3.2.2 Introduction of Dutch Laws to the Dutch East Indies 60
3.3 Indonesian Civil Law 64
3.3.1 Application of the Burgerlijk Wetboek voor Indonesië 65
3.3.2 Contract Law 67
3.4 Indonesian Civil Procedure 71
3.4.1 The Law of Civil Procedure 71
3.4.2 The Judicial System 72
3.4.3 Yurisprudensi 74
3.5 Indonesian Private International Law 77
3.5.1 Historical Context 77
3.5.2 The Work of Sudargo Gautama 79
3.5.3 Sources of Indonesian Private International Law 83
3.5.4 The Role of Court Decisions 86
3.5.5 The Attempts to Codify PIL Rules 88
3.5.6 Participation in International Conventions 89
3.6 Choice of Law in Indonesia 90
3.6.1 A Doctrine Introduced by Indonesian Scholars 90
3.6.2 More Recent Scholarly Writings 98
3.6.3 Stipulation in National Legislation 106
3.6.4 Choice of Law Provisions in the Indonesian PIL Bill 108
3.7 Conclusions 110

Chapter 4 Choice of Law and the Indonesian Judicial Practice 111
4.1 Overview 111
4.2 Data Collection: General Aspects 111
4.3 The Court Decisions 114
4.3.1 Refusing Jurisdiction on the Basis of Choice of Foreign Forum 114
4.3.2 Refusing Jurisdiction on the Basis of Choice of Foreign Law 120
4.3.3 Disregarding Choice of Foreign Forum and Choice of Foreign Law 130
4.4 The Judicial Practice: Findings and Observations 144
4.4.1 General Observations 144
4.4.2 Tactics for Linking Disputes to Indonesia 147
4.4.3 Conflation of Choice of Law and Choice of Forum 152
4.4.4 Reference to a Misleading Court Decision 156
4.4.5 Historical Influence on the Judicial Practice 157
4.4.6 The Role of an Expert Witness 159
4.4.7 Scepticism Regarding the Judges 161
4.4.8 Freedom of Contract Principle as the Legal Source of Choice of Law 163
4.4.9 Reliance on the Objective Factor with Regard to PIL Rules 164
4.5 Conclusions 165

Chapter 5 The Challenges in Applying Choice of Foreign Law in
Indonesia: Interviews Findings 167
5.1 Overview 167
5.2 Data Collection: General Aspects 167
5.3 Choice of Law: Legal Practitioners’ Views 171
5.3.1 Familiarity with Choice of Law 171
5.3.2 Freedom of Contract Principle as the Legal Source of Choice of Law 173
5.3.3 The Importance of Choice of Law 174
5.4 International Commercial Contract Disputes: Legal Practitioners’ Views 175
5.4.1 Jurisdiction of the Indonesian Court 175
5.4.2 Choice of Foreign Law by the Parties 179
5.4.3 Peculiarities in the Court Practice 185
5.5 Difficulties Encountered by Legal Practitioners 188
5.5.1 Limited Regulatory Frameworks 188
5.5.2 Shortcomings in the Judicial System 190
5.5.3 The Negative Public Perception of the Courts 197
5.5.4 Language 199
5.6 Conclusions 200

Chapter 6 Conclusions 203
6.1 Overview 203
6.2 Theoretical Discourse and Regulatory Framework of Choice of Law 203
6.3 Unravelling Choice of Law in Indonesia 207
6.3.1 Scholarly Works 207
6.3.2 Regulatory Frameworks 210
6.3.3 The Judicial Practice 211
6.3.4 Factors Influencing the Reluctance and Unpredictability 214
6.4 Recommendations and Further Research 223
6.4.1 The Ways Forward 223
6.4.2 Improving the Understanding of Choice of Law 224
6.4.3 Improving the Regulatory Frameworks Involving Choice of Law 227
6.4.4 Improving the Judicial Practice 229
6.5 Final Remarks 232

Bibliography 235
List of Regulations 261
List of Cases 269
Annexes 273