Indonesian Shipping Law – Marine Casualty

Indonesia has not ratified the Nairobi International Convention on the Removal of Wrecks of 2007. Law No. 17 of 2008 regarding Shipping (the "Shipping Law"), as implemented by Minister of Transportation ("MOT") Regulation No. PM 71 of 2013, as lastly amended by MOT Regulation No. PM 38 of 2018 regarding Salvage and Underwater Works ("MOT Reg 71/2013, as amended"), obliges a vessel owner to remove its shipwreck and/or cargo that are disturbing navigational safety and security within 180 days after such vessel and/or cargo sank.

MOT Reg 71/2013, as amended also requires vessel owners to insure their vessels with wreck removal insurance or protection and indemnity insurance from an insurance company recognised by the Government of Indonesia. This requirement is waived for war vessels, state vessels used for governmental duty, and motor vessels with a gross tonnage of less than 35 tonnes.

Salvage/General Average

We are not aware of any salvage conventions that have been ratified by Indonesia.

MOT Reg 71/2013, as amended defines salvage as the provision of aid to a vessel and/or its cargo that has suffered a vessel accident or perils of the sea, including removing the shipwreck or underwater obstacle or other object.

MOT Reg 71/2013, as amended as well as Government Regulation No. 24 of 2018 regarding Electronically Integrated Business Licensing Service ("GR 24/2018") provides that a salvage operation may only be conducted by a business entity specifically engaging in the salvage business, fulfils the technical requirements under MOT Reg 71/2013, as amended and holds Commercial and Operational Licence issued by the Online Single Submission ("OSS") system under the name of Salvage and Underwater Works Business Approval (Persetujuan Perusahaan Salvage dan Pekerjaan Bawah Air).

Under Article 547 of the Indonesian Commercial Code ("ICC"), a salvage reward shall be paid for any salvage operation. Such reward must be paid even if the salvage operation is not successful, unless otherwise agreed by the parties. The salvor is also entitled to receive compensation for costs, losses and loss of profits. Indonesia has not ratified the York-Antwerp Rules, but parties may agree to incorporate such rule within their agreements. In the absence of a contractual provision on general average, the provisions of the ICC shall apply.

Limitation of Liability

Indonesia has not ratified the International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships of 1957 or the International Convention on the Limitation of the Liability for Maritime Claims of 1976, including their Amendment Protocols.

Based on the original text of Article 474 of the ICC, the liability of a vessel owner due to vessel collision or cargo claims is limited to 50 gulden (the currency used by the Netherlands during the East Indies occupation) per cubic metre of the net tonnage of a vessel. A mechanically moved vessel shall have the tonnage of the machinery added to the gross tonnage to determine the net tonnage for vessel collision liability.

However, the tonnage of such machinery shall be deducted from the gross tonnage to determine net tonnage for cargo claims liability. The ICC uses 50 gulden because the ICC was enacted during the Dutch occupation of Indonesia and it has not been amended since Indonesia\'s independence in 1945.

The limitation Fund

Indonesian law does not specifically regulate the form or amount of a limitation fund. In practice, a shipper may request the vessel owner to provide a cash deposit to be used as a limitation fund.

This is an excerpt from The International Comparative Legal Guide to: Shipping Law 2020.

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