Lost in translation : Indonesian language requirements and the validity of contracts

This article investigates Indonesian laws that require contracts to be in the Indonesian language if a party is Indonesian or an Indonesian entity is ‘involved’. It identifies the problems this creates for business arrangements in Indonesia, particularly those involving investors from English-speaking backgrounds. The article begins with an account of relevant Indonesian statutes and regulations before exploring a series of judicial decisions regarding language requirements for a valid contract. It finds that the Indonesian courts have been inconsistent in their application of law in this area, and that this has created significant uncertainty. It then examines the implications of this situation for legal practice, showing that it has led to increased risks and costs for foreign and local businesses. It concludes with two alternative proposals for reform.