The obligation to use Indonesian Language in the Formation of Contract with Foreign Investor: Problems and the Need to Amend the Indonesian Law No. 24 of 2009

Abstract

Language in international business contracts is very important. Determination of language is freedom to contract of the parties. The use of Indonesian language in contract is regulated under Law 24/2009 and Law 2/2014. The norms of Article 31 paragraph (1) of Law 24/2009 and Article 43 paragraph (1) of the Law 2/2014 use the word of "mandatory", and do not include any sanctions if Article 31 paragraph (1) of Law 24/2009 and Article 43 paragraph (1) Law 2/2014 is violated. The first problem is, does the obligation to use Indonesian language in making international contracts is a legal rule that can be cancel the contract and how is the obligation to use Indonesian language in contracting related to the principle of freedom of contract and the legal terms of the agreement? The research method is normative legal research which bases its analysis on legislation related to the research problems. The results of the study, first, Article 31 of Law 24/2009 and Article 43 of Law 2/2014 concerning the use of Indonesian language in making international contracts can be categorized into legal rules without sanctions (lex imperfecta). The obligation to use Indonesian language in an international contract is not legal rule that could make the contract null and void. Second, the use of Indonesian in making international contracts both notarial and private made agreement in accordance with Article 1320 of the Civil Code, Law 24/2009, and Law 2/2014. Moreover, the use of language in international contracts becomes the freedom of the parties.