Governing Law and Jurisdiction Clause in Transnational Contract Disputes in Indonesian Court

Abstract

In today’s business world, the odds that one’s company or self becomes involved in a dispute containing international repercussions are higher than before. Typically, businesses are initiated with a contract, and if such contract contains foreign or international elements, then it is known as international contract, and shall be handled quite differently compared to its national counterparts. Some international contracts contain a governing law and jurisdiction clause in the event of dispute for the sake of legal certainty. The determination of governing law and jurisdiction is connected to the principle of freedom of the parties alongside pacta sunt servanda. The Indonesian Civil Code recognizes both principles, intending judges and third parties to honor a legally signed and executed agreement as one would honor law. However, in practice, deviations are bound to happen. This paper attempts to discuss the principle of Private International Law in Indonesia, specifically how the governing law and jurisdiction clause in transnational business contracts involving one or more Indonesian party is regarded in Indonesian courts.