Use of the Indonesian Language in Contract Documents:
On 30 September 2019, the President of the Republic of Indonesia issued the Presidential Regulation No.63 of 2019 on the Use of Bahasa Indonesia (“PR 63/2019”) as the implementing regulation of Law No. 24 of 2009 on National Flag, Language, Emblem and National Anthem (“Law 24/2009”).
PR 63/2019 confirms the requirement of Law 24/2009 on the use of Bahasa Indonesia in any contract involving state institutions, Indonesian government authorities, Indonesian private entities or Indonesian nationals. If a foreign party is involved in such a contract, the contract shall also be written (“ditulis juga”) in the national language of the relevant foreign party and/or in English.
The noteworthy provisions of PR 63/2019 are: (i) the foreign language/English version of a contract is used as an equivalent (padanan) or translation of the Bahasa Indonesia version of such contract to ensure consistent understanding of the contract by the parties in Article 26 (3) of PR 63/2019; and (ii) in the case of different interpretations between the foreign language/English version and the Bahasa Indonesia version of a contract, the prevailing language should be the agreed governing language in such contract - Article 26 (4) of PR 63/2019.
The provision of Article 26 (3) of PR 63/2019 has raised different interpretations which question the commonly adopted practice on the timing in getting the Bahasa Indonesia translations of the English version. One may interpret Article 26 (3) of PR 63/2019 as a requirement to have the Bahasa Indonesia version signed on or before the signing of the foreign language and/or the English language version. We are of the view that Article 26 (3) of PR 63/2019 should be interpreted in conjunction with the main provisions of Law 24/2009 as the higher-ranked basic law. Law 24/2009 does not explicitly oblige that the Bahasa Indonesia version shall be executed first.
Accordingly, this provision should be viewed from the perspective of the objective or function of the foreign language/English version of the, namely as the “equivalent” (padanan) of the Bahasa Indonesia version for the purpose of achieving common understanding on the substance of the contract between the parties. It is acknowledged that, with or without PR 63/2019, the ultimate zero risk approach would always be the “dual language execution” approach - and this position would not change following the issuance of PR 63/2019.
However, based on the foregoing, the adoption of the current market practice to have the Bahasa Indonesia version executed after the signing of the relevant contract in cases where the foreign language is selected as the prevailing language would still be in line with the requirements of both Law 24/2009 and PR 63/2019.