Freedom of Contract: The Indonesian Court's Decisions on Internasional Bussiness Disputes

Abstract

The presence of free trade zone and the increase in cross-border trade, have led to a significant increase in transnational legal relations. As a result, international contracts have become more common, and the principles of freedom of contract, including the freedom to choose the law and forum, have become increasingly important. Freedom of contract is a universal principle. Almost all countries in the world recognize it as a fundamental principle in contracts, including in international business contracts. This principle recognizes that contracts made by the parties act as laws for those compiling them. However, there is still a lack in consistency among Indonesian judges in their interpretation of the choices of law and forum in international contracts. This study examined the raison d’ etre of different views and decisions of Indonesian judges in interpreting the choice of law and the choice of forum, and its implication on the principle of legal certainty in international business disputes. Through the normative legal research elaborated through a case study, this research finds that the views of some Indonesian court judges deviate from the principle of freedom of contract where the law chosen by the parties is based on the considerations of the principle of effectiveness besides focusing on the nature of the case handled. Thus the decision can be executable. The court may need to balance the principle of freedom of contract with other important considerations in order to arrive at a fair decision.