Starting from 1 March 2022, property buyers have one more item on their to-do list when purchasing properties in Indonesia. Pursuant to Ministry of Land Affairs/National Land Agency Circular Letters (No. HR.02/153-400/II/2022, No. HR.02/164-400/II/2022, and No. 5/SE-400.HK.02/II/2022), buyers must have an active membership in the nation’s social security program or BPJS Kesehatan before they can register the right over land or apartment that they have purchased.
In doing so, the government aims to boost the implementation of BPJS Kesehatan and simultaneously enhance public access to quality healthcare. Thus, going forward, the Ministry of Land Affairs/National Land Agency will verify the status of an applicant’s membership in BPJS Kesehatan before registering any right over land, pending the implementation of an integrated system between the Ministry and BPJS Kesehatan.
Similar to most jurisdictions, Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution ("Indonesian Arbitration Law") recognises at least two types of decision that can be rendered by a tribunal. The first is a decision solely based on the four corners of contracts and the law (including the parties' contract), while the second is a decision based on the principles of equity and fairness, also known as ex aequo et bono.
The Indonesian Arbitration Law allows a tribunal to render a decision based on the ex aequo et bono principle, but only if the parties have agreed that the tribunal can do so. However, there has been a recent and worrying trend where arbitral tribunals have applied this principle without the parties' agreement.
In this article, we look into the statutory framework for the application of the ex aequo et bono principle, and how it has been applied in recent arbitrations.
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