Melbourne Law School - Theses
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ItemIslamising Indonesian laws? : legal and political dissonance in Indonesian shari'a, 1945-2005( 2006)This thesis seeks to offer a different perspective to account for growing demands among Muslims in Indonesia for the incorporation of religious law into the modem nation-state legal system. To this end, this study presents three cases: (1) unsuccessful efforts of Islamic parties to constitutionalise shari'a by amending Article 29 on Religion; (2) the nationalisation of shari'a by the state through the enactment of Zakat Administration Law; and (3) the ulama and the Mahkamah Syar'iyyah in the local implementation of shari'a in Aceh. Through these case studies, the thesis examines the interaction between shari'a and the nation-state and tests the hypothesis that the implementation of shari'a in Indonesia is fundamentally dissonant, in the sense that its implementation is characterized by a continuum between tensions in meanings at one end and direct contradictions in terms at the other. My research has identified a large range of examples of this dissonance at the constitutional level; at the level of political ideology and at the level of subordinate regulations. These dissonances essentially arise because of the difficulty in reconciling the centrality of shari'a for pious Muslims on the one hand, with, on the other hand, the fundamental importance of multi-faith tolerance for the plural religious system that is the heart of the conception of the Indonesia secular national state. The Islamisation of laws in Indonesia has not resulted in the introduction of the shari'a in any real sense. What on the surface may appear to be the Islamisation of laws in Indonesia is in reality a symbolic token for the most part. Although provisions refer formally to shari'a, the whole procedure to carry it out seems an almost irreligious activity, in the sense that it is essentially a secular endeavour. For this reason, instead of seeing the issue solely as an Islamisation of the Indonesian legal system, I argue that it is as much as an Indonesianisation of shari'a law that is currently taking place.
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ItemAdat and land law in a plural system : a study of forestry regulations and Indonesian 'legal development'( 2004)At independence in 1945, Indonesia inherited a plural legal system consisting of adat (traditional customary) law, Islamic law and Dutch law. The development of a unified national legal system was intended to solve legal problems arising from this plurality. However, after decades, the national legal system still does not function satisfactorily. This thesis asks what is wrong with legal development in Indonesia? Adat law, forestry law and land law are used as primary vehicle of analysis, because adat law is the oldest form of law existing in Indonesia and is still widely followed especially among the rural population, still the majority of people in Indonesia. Statutes regarding forestry and land are the formal laws which have the most profound effect on adat law communities. The thesis finds, first, that formal law enforcement in Indonesia is disappointing and this has led to a popular mistrust of the formal legal system. Second, it finds most of the population are still unfamiliar with formal legal norms. This is the result of a clash between, on the one hand, the conceptual notions relied upon by Indonesian government in establishing the law (based on assumption that `the people will follow the law'), and, on the other, those norms central to adat law (`the law will follow people's customs'). This fundamental conflict in grundnorm inevitably leads to disputes in connection with land, particularly in forest areas. These are made worse because rights are not properly enforced and dispute settlement procedures are ineffective. As a result the Indonesian land and forestry law regime is dysfunctional. This has adverse impacts on rural populations, especially adat law communities, in the sense that their land-related rights are weak, ignored or ineffective. The thesis recommends that the formal law-making process should be reformed to better adopt a key element of adat law-making process, that is, public acceptance, through improved consultation and public education. More specifically in relation to land and forestry law, the thesis recommends that formal law expressly acknowledge and protect adat communities and their adat land rights, especially, communal interests in land (ulayat rights). This should be done by new provisions that would: have binding force; allow formal registration of such interests; exclude adat forestland from the definition of state forestland; and acknowledge adat communities as legal persons.
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ItemThe tension between the right of states to control FDI and the commitment to liberalise FDI under international investment instruments( 2004)This study explores the tension between the right of States to control foreign direct investment on one hand and the commitment to provide more favourable treatments to foreign investors on the other, under the circumstances of globalisation of free trade. It argues that the operation of this right has been immensely restricted by treaty and non-treaty based rules as found, in bilateral and multilateral investment instruments. In particular, the World Trade Organisation Agreement on Trade-Related Investment Measures has seriously restricted the right of (developing) States to control foreign direct investment and the behaviour of foreign firms. On the other hand, the existing bilateral and multilateral investment instruments require States to liberalise their foreign direct investment policies and these instruments also offer greater protection to foreign investors than did the customary international rule of States' responsibility for injuries to aliens. Given this fact, from the developing countries' perspective, a new multilateral investment treaty under the auspices of the World Trade Organisation undesirable. Nonetheless, if the pressure from economic globalisation is irresistible and the alternative to a new multilateral treaty is a push toward bilateral arrangements, then the idea of establishing such a treaty is in fact preferable. In this context, a prospective treaty would have to strike a balance between the right of States to control foreign direct investment and the commitment to liberalise foreign direct investment policies. To this effect, a new treaty would have to adopt development provisions, which give (developing) countries the flexibility to undertake obligations and commitments commensurate with their individual needs.
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ItemGood corporate governance in Indonesia- where to from here?( 2001)Poor corporate practices (despite Law number 1 of 1995 concerning Limited Liability Companies), capital market and stock exchange rules, and a dismal record of law enforcement are cited by many quarters of the society as the main culprits for Indonesia's corporate ills. The issue raised by this paper is reform to Indonesia's corporations statutes; regulatory body and judicial system to establish a strong foundation for good corporate governance. This reform is only possible if one has a clear understanding of what the term `corporate governance' means; the elements of good corporate governance; the parties that play a role in creating and maintaining a good standard of corporate governance; and, most importantly, the benefits a country and its people may reap by adopting and adhering to the principles of good corporate governance. All these issued will be addressed in part II of this paper. Part III will deal with real cases arising from poor corporate practices; weak and, to a certain extent, incompetent regulatory bodies; a corporate and security registration system which fails its purpose; and judiciary which is yet to gain the respect of people it serves for its competence and independence. Part IV will be a look at the most common form of corporations currently in existence in Indonesia; their governing regulations; regulatory bodies; and how they actually operate in practice. A proposal for reform of those regulations and other related regulations; regulatory bodies; and the judicial system will be outlined in part V of this paper with part VI deals with conclusion.
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ItemJudicial review in Indonesia: between civil law and accountability?: a study of constitutional court decisions 2003-2005( 2006)This thesis assesses Indonesia's new Constitutional Court (Mahkamah Konstitusi, MK) through an analysis of the decisions it handed down in 2003-2005. Established in 2003, the MK has jurisdiction to resolve jurisdictional disputes between state institutions; to rule on disputed electoral returns and motions to impeach the President or VicePresident; and to review statutes. It is the first Indonesian court to have jurisdiction over these matters. In some of its decisions, the Court has exercised its judicial review powers vigorously. It has struck down unconstitutional statutes, discovered and enforced implied rights and government obligations, and assessed government policy. Its decision-writing style, however, reflects traditional French civil law influence, providing little transparency in its decision-making process. This raises questions about the level of accountability to which the Court exposes itself. Its accountability is brought further into question by some of its institutional characteristics, such as its lack of external supervision, the dearth of judicial training for its judges and the absence of performance-based career incentives. I show that the government is prepared to ignore, or circumvent, decisions of the Court. I argue that to command more respect, the Court could increase the transparency and accountability it provides, by writing decisions that are better reasoned. Alternatively or additionally, it could reduce its activism so as to reduce the level of accountability it should provide. The Court has already begun doing this - notably by declaring that its decisions operate only prospectively and by allowing unconstitutional statutes to stand in the 2005 and 2006 Budget cases. This thesis argues that, although these cases are a good start, the Court could further improve the level of accountability it provides. Unless the Court issues better reasoned decisions, or less political dramatic decisions, or both, the Indonesian government might not comply with the Court's decisions. The government might claim that it does not understand the Court's decisions or the rationale for them, or might be unwilling or unable to comply. Unless the Court succeeds in achieving compliance with its decisions, it may end up being counted in the long list of failed attempts at Indonesian judicial reform.
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ItemIndonesian constitutional reform 1999-2002: an evaluation of constitution-making in transition( 2005)In 1999, the MPR (Majelis Permusyawaratan Rakyat, the People's Consultative Assembly) enacted the First Amendment to the 1945 Constitution of Indonesia. Over each of the next three years, it passed a further amendment. Despite their important contribution to Indonesia's transition from Soeharto's authoritarian regime, no comprehensive study has been made of these four amendments, and the process by which they were produced. This thesis is an attempt to fill this gap, by critically evaluating the process and outcomes of these amendments, in the context of constitutional theory and the experience of other countries, in particular, South Africa and Thailand. This thesis argues that the 1999-2002 constitutional amendments lacked what have widely been accepted as key features of a democratic constitution-making process: (i) there was no clear plan for determining the key elements of the process, such as when the amendment would occur, how it would be conducted, and what the outcomes would be; (ii) the MPR failed to win the people's trust in its capacity as a constitution-making body; and (iii) public participation was limited and badly organized. Many of these problems with the reform process, however, related to fundamental issues within the Constitution itself. It contained two aspects seen as crucial to the identity and survival of the country by most nationalists, including the military: the rejection of an Islamic state and the imposition in its place of a nationalist state ideology, the Pancasila, contained in the preamble to the Constitution. Many nationalists feared that opening the Constitution to real change would jeopardize these positions, which they saw, and still see, as non-negotiable. The result was a slow, patchy and tentative process marked by constant negotiation and deal-making as most stakeholders sought a way to dismantle Soeharto's dictatorship without disturbing these twin nationalist principles. Despite these problems, at the end of the process, the Constitution was more democratic in form. In particular, the amendments established a clearer separation of powers between the executive, legislature and judiciary; and more impressive human rights protections. This is because the euphoric transitional period provided a setting that encouraged open constitutional debates in the MPR and allowed public participation in these debates, despite the flaws in the MPR's system for public engagement. The amended Constitution remains, however, far from perfect. This thesis recommends further amendments to, first, strengthen the system of checks and balances introduced between 1999 - 2002; and, second, to entrench the preamble and guarantee the difficult relationship between Islam and state in their current form.
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ItemEnforcement of foreign arbitral awards in Indonesia: a legal and practical analysis( 1996)Indonesia has ratified the 1958 New York Convention and promulgated Supreme Court Regulation No 1/1990 as its implementing regulation for the recognition and enforcement of foreign arbitral awards. In addition, Indonesia is also the party to the 1965 ICSID Convention. Therefore, foreign arbitral awards should now be enforceable, in theory at least. Yet, in practice the enforcement of foreign arbitral awards in Indonesia remains uncertain. This thesis examines legal and practical problems related to the enforcement of foreign arbitral awards in Indonesia. They include, first, uncertainty as to the application of the competence-competence principle and non-recognition of the severability principle. Secondly, uncertainty as to the legal status of the colonial laws on arbitration, in particular, the provisions of article 100 of the Reglement op de Burgerlijke Rechtsvordering (Regulation on Civil Procedure for European) which are potentially confusing and lead to ambiguity. Thirdly, and related to the first and second matters, uncertainty remains as to the availability of means of recourse against the arbitral awards and in respect of obtaining leave for enforcement. Finally, there are several unclarified matters in Supreme Court Regulation No 1/1990, in particular, the definition and criteria of "foreign arbitral awards", "commercial law" and “public policy” reservations. In addition, this thesis also analyses the academic drafts for reform of current arbitration law. These drafts deal more comprehensively with the practical implementation of arbitration agreements. They recognise the competence-competence principle, provide for the minimal involvement of court in arbitration proceedings and establish simple procedures for the enforcement of foreign arbitral awards. The drafts do, however, retain Supreme Court Regulation No 1/1990 which requires proof of the existence of a bilateral agreement, commercial matter or law and public policy to enforce foreign awards, thus maintaining long-standing problems in enforcement from a lack of definition in the rules. In addition, the problem of the status of the severability principle is not resolved in the drafts.
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ItemCorporate governance in the Indonesian capital market: a legal-sociological study of legal culture( 2000)This thesis examines corporate governance in the Indonesian capital market during the 1990s. The key elements of corporate governance used are: transparency, accountability and predictability. After sketching the salient features of the Indonesian corporate sector, detailed case studies on three banks are undertaken focusing on critical junctures in their corporate lives: Bank Duta (1990); Bank Summa (1992); and Bank Pikko (1997). Since banks are highly regulated entities in Indonesia, studying their corporate governance experience provides a good benchmark of Indonesian corporate governance. The case studies reveal that the written rules on corporate regulation were often not complied with. This finding casts doubt on the effectiveness of corporate law reform initiatives undertaken during the 1990s, including the recent 'rush to law' following the 1997-1999 Asian financial turmoil. To explain the discrepancy between the written provisions and actual practice of Indonesian corporate governance, I create an analytical model based on the sociological concept of legal culture. This model incorporates the work of Lawrence M. Friedman (Stanford University) on legal culture and the work of Ugo Mattei (University of Trento) on patterns of law. According to this model, law reform which targets only changes in legal institutions and substantive written law is unlikely to be effective. This is because legal culture - the third and most important aspect of any legal system - has not been addressed. I then refine the model by identifying two key components of legal culture. I refer to them as legal habit and legal consciousness. Thereafter, I analyse Indonesian legal culture through its legal habit and legal consciousness. The analysis reveals a legal culture that is dominated by two contradictory trends: a conservative trend based on traditional cultural values (patrimonialism); and a progressive trend driven by economic development imperatives (developmentalism). The conclusion which emerges is that past Indonesian corporate governance reforms, despite introducing major changes in legal institutions and substantive law, have not succeeded because of an unreceptive legal culture torn between patrimonialism and developmentalism. I then offer suggestions as to how this tension can be managed so as to create a corporate governance system which respects Indonesia's unique cultural heritage. If these findings can be extrapolated, they highlight the significance of local legal culture for corporate governance reform in emerging and transitional economies. This has important policy ramifications for corporate law reform in these countries.
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ItemThe Indonesian mineral regime: a model for the future: "Learning from other countries in implementing regulatory change"( 2003)Political turmoil and rising social and economic demands have put the Indonesian mining industry in a difficult situation. At the time when industry is experiencing record low prices, critics argue that the Indonesian mineral regime has failed to achieve a proper socioeconomic balance between government, developers and local communities. The government had always claimed, however, that the regime has long been one of the most successful instruments available for attracting and sustaining foreign investment in the mineral sector. Data from the Department of Mines and Energy suggests that the mineral industry has been a key ingredient in the development of the national economy. The mineral regime, nonetheless, faces great critical pressure from the public and the government is moving to respond to these pressures, especially as regards to creating a better form of decentralised mineral agreement that deals more effectively with traditional right-holders who claim mineral exploitation right. Do these demands mean that risks for mineral investments have increased, that resources developers will be subject to demands that cannot be met, or that mining will become an uncertain and unpredictable industry? Can the government create an improved contract system in order to enable the industry to emerge as a stronger more viable and more secure sector, which is at the same time, beneficial for the government and local communities? This thesis focuses on reviewing the socio-economic function and performance of Indonesian CoW system and traditional rights to mineral-rich lands. The thesis also adopts a comparative approach examining similar contracts and equivalent regimes from seven countries. Finally, the thesis makes detailed recommendation for reform of the Indonesian mineral regime drawing on the comparative study.
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ItemThe Indonesian regime of mineral regulation: analysis of the current system and proposals for reform( 1998)Indonesian mineral law (which places emphasis on state-owned and operated mines) is ineffective because, in practice, the private sector (which comprises mainly foreign investment mining companies) carries out most of today’s major mining operations through a contract system which, to some extent, excludes the law. The Mining Act 1967 authorises state corporations to enter such contracts, in practice however, more than one hundred unratified mining contracts (the so-called ‘Contracts of Work’) have been concluded by the government directly with private parties. The Act limits the activities of national private parties in terms of minerals, size of mineral deposits, and their capacity to involve foreign investors in their mining activities. The situation is now that the government does not have sufficient funds to support state mining corporations. The status of most of these corporations has been changed from ‘state companies’ or ‘public corporations’ to ‘limited liability companies’. Thus, the state’s theoretical monopoly in the mining industry has not been applied in practice. The Mining Act 1967 has not, however, been amended to reflect this. Further, there has been a significant shift in the operational sphere of mining law, mainly due to the introduction of environmental and planning law, as well as a relaxation of the foreign investment regime in response to increasing economic globalisation. Reform is therefore required and, in particular, by adopting the concept of privatisation. With privatisation, foreign investors may be offered opportunities to hold licences, and the law may come to better reflect commercial reality and provide mining ventures with more certainty and security. The first part of this dissertation is a discussion of the current mineral regime. The second part looks at the problem of regime in practice and two cases of land compensation are examined. Part three recommends reforms, including, in particular, changing the types of licence by reducing tiers from six to two (exploration and exploitation licences); introducing a system of legislative ratification for government agreements; the passing of separate regulations for quarrying minerals controlled by governors in provinces; and the changing of the mining council’s power to include arbitration on mining disputes.