The Contract You Sign in Bali May Be Invalid!
Many foreigners in Bali face the situation: when renting property, buying real estate, or entering into a contract with a PT PMA company, they are offered to sign a contract in English or Russian. At first glance, this seems convenient and understandable. However, there is a legal trap hidden here.
What's the issue?
According to Article 31 of Law No. 24 of 2009 "On the Flag, Language, Emblem, and Anthem of Indonesia," any contract concluded in Indonesia involving Indonesian legal or physical entities must be drafted in Indonesian.
The Supreme Court of Indonesia has already considered similar disputes and declared such contracts, signed only in English, invalid. The argument was simple: violating the mandatory requirement of the law renders the contract void.
Is any contract invalid?
Even if a contract drafted only in English is deemed valid, it will still be extremely difficult and expensive for a foreigner to protect their interests. All legal proceedings in Indonesia are conducted solely in the national language — Indonesian. Judges consider cases only in this language, making it impossible to fully use an English-language contract as evidence. Proceedings in English are only allowed in BANI arbitration, and even then only if judges proficient in English can be found. In practice, this is rare, so the risk of being left without legal protection is very high.
How to protect yourself?
To have legal force in Indonesia, your contract must be drafted in Indonesian. It's best to create a bilingual version in Indonesian and English or a language convenient for you, but the Indonesian text will still be decisive for the court. However, this is just one of many aspects that can affect your contract, and it's necessary to carefully verify and know numerous nuances.
Therefore, if you are entering into an important contract in Bali, it is most reasonable to entrust its review to licensed lawyers. Only a specialist can carefully examine the text in Indonesian, identify hidden risks, and prepare a conclusion on the contract's compliance with Indonesian law norms. Furthermore, the lawyer will pay attention to clauses that may infringe on your interests and suggest ways to adjust them. This approach allows you to avoid mistakes and protect yourself from potential problems in the future.
