All the questions

Shipping contracts

i Shipbuilding

The price of ships in Indonesia reached 1,900 US dollars per ton.⁴ This relatively high cost (for example, compared to the price of a ship in China – US$1,200 per ton) due to a complex distribution network (for ship components) has led to an increase in component prices. of ships.

The enactment of the Job Creation Law No. 11 of 2020 (the Job Creation Law) was expected to improve the performance of the Indonesian shipbuilding industry. However, the Job Creation Act actually provided less of a solution to the complex distribution network of ship components.

The Job Creation Act amended several articles of the Navigation Act, namely:

1. all purchases, constructions and manufactures of ships must comply with international safety standards (previously only comply with ship safety requirements); and
2. the vessel design validation system is to be conducted by the centralized licensing system (previously validated by the Ministry of Transport).⁵

According to the Ministry of Transportation Regulation No. 39 of 2017 on Vessel Registration and Nationality (MOTR 39/2017), ownership of a vessel under construction in Indonesian territory or abroad can be registered temporarily in Indonesia through a temporary registration certificate.

The shipping industry in Indonesia has recently been heavily affected by the covid-19 pandemic.⁶ Nevertheless, in 2021 and 2022, some Indonesian shipbuilders successfully built warships, namely, KRI Teluk Palu – 523, KRI Golok and KRI Pollux – 935for the Indonesian Navy.^seven

ii Carriage contracts

The main legislation applicable to transport contracts is mainly governed by the Commercial Code and the Navigation Law. Indonesia is not a party to the Hague, Hague-Visby, Hamburg or Rotterdam Rules.

iii Freight Claims

Article 468, paragraph (2) of the Commercial Code provides that a carrier is obliged to indemnify any damage resulting from his non-delivery of the goods, in whole or in part, or any damage to the related goods, to unless the carrier can establish that the damage or non-delivery of the goods was caused by an unforeseeable event beyond the control of the carrier, due to its nature, to the circumstances or due to a defect in the goods, or at the fault of the sender. The provisions relating to the carrier’s responsibilities in the event of loss or damage to goods are stipulated in Articles 40 to 42 of the Navigation Act.

In practice, the shipper, consignee, rightful bill of lading holder, cargo owner or cargo insurer (by subrogation) has the right to sue the carrier for loss or damage resulting from an alleged fault of the carrier.

Article 466 of the Commercial Code defines “carrier” as the person who is obliged to provide full or partial services under time charter, voyage charter or other carriage of goods by sea. Indonesian courts may identify the carrier as the shipowner, the party who issued the bill of lading, by reference to the bill of lading header, or to whom the charter is paid. Death clause or carrier identity clause is not widely known in Indonesia.

All relevant provisions of the charter party may be incorporated into the bill of lading. However, the charter party and the bill of lading must be duly signed by the contracting parties.

iv Limitation of Liability

Indonesia has not ratified the 1957 International Convention relating to the Limitation of the Liability of Owners of Seagoing Ships (including the 1979 Protocol amending the Convention) and the 1976 International Convention on the Limitation of Liability maritime claims (including the 1996 Protocol amending the Convention) .

Carrier’s Limitation of Liability

The Commercial Code recognizes the following limitation of liability for carriers:

1. the carrier is authorized to affix a number of limitations or limitation of liability to the parcel if the cost of the parcel is less than 600 Netherlands East Indies guilders, as stipulated in article 470, paragraph (2) of the commercial code ;
2. in the event of collision, Article 541 of the Commercial Code provides for a limitation of liability up to 50 Dutch East Indian guilders per cubic meter of net tonnage of the vessel, plus, for mechanically propelled vessels, the amount which was deducted to determine this gauge of the GT for the space occupied by the means of propulsion; and
3. Section 474 of the Commercial Code states that the limit of liability in tonnage is 50 Dutch East Indian guilders per cubic meter, plus, for mechanically propelled vessels, the amount which has been deducted in determining this tonnage from the GT for the space occupied by means of propulsion.

The Commercial Code was never developed or modernized after Indonesia gained independence in 1945. There is no clear guidance on how Indonesian courts should interpret how the liability amount of 50 or 600 Dutch East India guilders should be applied at present. However, several court decisions have referred to the price of gold to determine the amount of compensation.

Collision Liability Limitation

In addition to the above, the Commercial Code regulates the following limitation of liability in the event of a collision:

1. whether the collision is accidental, whether caused by force majeure or if the cause of the collision is uncertain, the damages are borne by those who suffered them (article 535);
2. if the collision is caused by the fault of one of the ships, the obligation to repair the damage rests with the party who committed the fault (article 536); and
3. if two or more ships are at fault in the collision, the liability of each ship is proportional to the degree of fault committed (article 537).