The Commercial Dispute Procedural Reform in Indonesia Is Missing a (Big) Point

By early 2026, the Indonesian government has enacted a major regulatory reform on its criminal law enforcement. Now, it seems that a reform on civil/commercial dispute procedure is underway. Several legislative meetings have recently been held to get the ball rolling.

At this time, I haven’t been able to get the copy of the draft law. However, we can sense its content and scope by reading some secondary sources (such as the official academic paper that urges for reform and preliminary meeting notes) that are available.

First of all, surely this law is a much-needed step in the right direction. The current commercial dispute procedure is still based on a very old colonial rules that are scattered throughout several regulations. The future law seeks to very much fix this issue by codifying all aspects into one document while at the same time modernising all the rules.

Nevertheless, as a practicing commercial dispute lawyer, I find that the current discussion lacks something that I (and many of our clients) would really like to see. Let me explain.

No Help for Asset Tracing

Let’s say that you’re a creditor who seeks to recover a debt through a court dispute. If you get a binding favourable court decision, that is just half the battle. You would want to see it enforced also. After all you’re in this for the money, not for the paper containing the verdicts.

You would be lucky if the debtor complied voluntarily with that decision. But what if they won’t? Then you must tell the court the detailed information on the debtor’s assets and request for their confiscation.

Here lies the problem because, more often than not, you have no idea about those assets. Furthermore, at this point usually it’s already too late to begin searching for them—they might have been sold, the losing party might have changed domicile, etc.

In law school we’ve been told about this court petition called security confiscation. The idea is to petition the court to order the other party not to sell or transfer some specific assets. But the legal threshold for this petition to be granted is too high and it again would require the creditor to provide all the evidence regarding the debtor’s ownership and possession.

In conclusion, as a creditor you are left alone by the system to use your own resources to find this crucial information and tell the judge all about it. The judge will just passively receive the information and act based on it.

If the case value is worth fighting for and you are resourceful, then you might consider using a private investigator’s service. But at the end of the day, the investigator might not allow you to use their report as reference in court due to potential legal risk (i.e. some of the information in the report might have been obtained not through legal means and the debtor might pursue a legal action because of that).

If the case value is not worth it, then the only rational choice for you would be to cut loss, cease the court proceeding and enjoy life. This happens a lot too and there’s no shame in it.

The current legislative discussion on the procedural reform is seemingly oblivious to this issue. Reading through the preliminary documents so far, I’ve found no helpful idea or innovative proposal to address this problem.

How Others Have Tackled This

Needless to say, I’m no expert on civil dispute procedures in other countries. However, I did spend some time thinking and reading on some good ideas on this subject. The main idea is this: at some point, and to some legally appropriate extent, the court should back the creditor in discovering the debtor’s assets.

The creditor (backed by a court order) should have an opportunity to demand some documents or do an interview regarding the debtor’s assets. This process can happen sometime after the proceeding has commenced, but as early as possible.

The information that the debtor’s provide should be under oath. The documents must be true. There should be a serious legal consequence if any of these is later proven to be a lie. The creditor can then request the court to temporarily restrict any action that may jeopardize the assets or change their ownership.

Some limitations can also be put in place to prevent the debtor from being unduly violated. The discovery process can happen privately. The assets that are revealed can be limited—just enough to proportionally secure the material damages.

All other guarding provisions can be put here and there to prevent abuse. But the bottom line is that the court cannot leave the creditor alone on this aspect.

How We Currently Tackle This Problem

Having said all the above, when a dispute occurs, we need to act fast. We cannot afford to wait until the regulation is perfect before proceeding. So, we need to strategize with the cards with which we’re dealt.

What strategies can we do to optimise recovery with in the current state of the civil procedural law in Indonesia? Below are a few of our strategies that we usually use.

1. Capitalise on negotiating out-of-court settlement. Through the discussion and negotiation with the other party, we can understand their situation—and spot opportunities for settlement. Maybe the debtor can pay the principal outstanding now, if only interests and penalties are waived. Maybe the debtor can pay everything in full, but they need some restructuring in the payment schedule (and for that they don’t mind putting a significant asset on the line as collateral).

   From personal experience, I can testify that implementing some good negotiation principles (like the ones explained in the book “Getting to Yes”) can increase the chance of voluntary compliance by the debtor. This saves you from a prolonged court enforcement process.

2. Do some research on the counterparty before starting a court litigation. This gives us information about their business condition (whether they’re still running or have closed, etc.) and their assets. From that we can make a preliminary assessment on the likelihood of payment or successful enforcement.

3. In some cases, collateral assets should be agreed upon contractually since the early stage. There are some common collateral assets like a land parcel or vehicles.

   Beyond that, you might try the concept of ‘liquidated damage.’ Basically, it means that the contract can include a clause that says if such and such is breached, then the other party shall pay a specific amount. In addition, this amount can then (partially or fully) deposit to an agreed account, to be executed if the breach happens or fully returned to the original owner if the contract ends without any incident.

Court civil dispute in Indonesia is often a complex process that requires many strategies to win. However, in the context of commercial debt recovery, it is fair to say that the current state of the law is still a bit rigged against the creditor.

Hope you enjoy this article. If you have any questions, feel free to contact us at info@shepherdlegal.id.