RECOGNITION AND ENFORCEMENT OF INDONESIAN SHARIA ARBITRATION AWARDS IN FOREIGN COUNTRIES: CHALLENGES AND OPPORTUNITIES

Abstract

The Sharia Arbitration Board (Basyarnas) in Indonesia was formed to resolve disputes arising from agreements that are based on Islamic law. The existence of this body is essential in Indonesia, considering that the majority of the Indonesian Moslem community has begun to develop and utilize a Sharia-based economic system. During the current economic globalization, it is possible that foreign elements come into play in economic relationships. Thus, in the event of a dispute, the prevailing party must be able to use a Basyarnas arbitration award for enforcement and execution in the country where the losing party's assets are stored. By using a normative legal research method, this paper examines the efficacy of Basyarnas arbitration awards recognition and enforcement, particularly in countries with common law systems. Under the New York Convention on the Enforcement of Foreign Arbitral Awards, Basyarnas arbitration awards should not only be recognized and enforced in the court of the country of origin but also in jurisdictions where the losing parties’ assets located. This study concludes that Basyarnas arbitration awards should also be recognized and enforced in the countries with common law systems, because Sharia law is contrary to public policy in domestic law in the enforcing state. Hence, Basyarnas arbitration awards can be recognized in other countries if the award does not conflict with public policy in the enforcing state.