Critical Aspects of the Shipping Law Third’s Amendment
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General Overview
The new Indonesian Government has introduced the Law No. 66 of 2024 regarding the Third Amendment of the Law No. 17 of 2008 regarding Shipping Law (“Amendment of Shipping Law”). This new regulation has changed several important aspects, including those related to vessel ownership limits, port operations, maritime affairs, port state control authority, and many others.
This ARMA Update focus on the key points and notable changes set out in the Amendment of Shipping Law. We also provide our commentary with regard to this update. Below is a summary of key changes to the Amendment of Shipping Law:
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| No | Article | Original Article prior the amendment | Amendment of Shipping Law | ARMA Law Commentary |
|---|---|---|---|---|
I. Vessel Ownership and Registration |
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| 1 | 29 paragraph (2) | Indonesian individuals or business entities may cooperate with foreign shipping companies, foreign legal entities, or foreign nationals in the form of a joint venture by establishing a shipping company that owns at least one Indonesian-flagged vessel with a minimum size of 5,000 Gross Tonnage (GT) and manned by Indonesian crew. | Business Entities specifically established to carry out Shipping activities whose shares are entirely owned by Indonesian citizens may cooperate with foreign shipping companies and form joint ventures of shipping company whose majority shares are owned by Business Entities specifically established to carry out Transport activities in Waters and must own and operate Indonesian-flagged vessels with a minimum size of GT 50,000 (fifty thousand gross tonnage) per vessel and manned by Indonesian crew. | Foreign investment companies in Indonesia are only permitted to own and register vessel with a minimum of gross tonnage (“GT”) in the amount of 50,000 GT.
With this new GT requirement, It seems that the new regime is aiming for large investment coming from global shipping industry player
However, this new requirement is exempted for joint ventures that have been operating in the mining sector and other specific shipping industries before this change took effect. This is reasonable given the limited availability of vessel with a GT 50,000 specification (for instance, in the mining sector, which commonly uses tug and barges, there are relatively few with a gross tonnage of 50,000 GT). |
| 2 | Article 158A paragraph (1) | N/A | A Shipping Company that is a joint venture as referred to in Article 29 paragraph (2) with a foreign party whose majority shares are owned by a Shipping company whose shares are entirely owned by Indonesian citizens, to carry out commercial activities, must register Vessels with a minimum size of GT 50,000 (fifty thousand gross tonnage) per Vessel. | |
| 3 | Article 158A Paragraph (2) | N/A | Indonesian legal entities that are joint ventures with foreign parties whose majority shares are owned by legal entities whose shares are entirely owned by Indonesian citizens, to carry out special shipping activities in the industrial and/or mining sectors, must register vessels with a minimum size of GT 50,000 (fifty thousand gross tonnage) per vessel. | |
| 4 | Article 346A Paragraph (1) letter (c) | N/A | When this Law enters into force: provisions related to shipping company which are joint ventures as referred to in Article 29 paragraph (21) and Vessel registration as referred to in Article 158A shall be exempted for shipping companies which are joint ventures or Indonesian legal entities which are joint ventures to carry out Special Shipping activities, in the fields of industry and/or mining, which have carried out business activities and operated Vessel before this Law comes into force. | |
| 5 | Article 347A | N/A | Stipulation in Article 29 paragraph (2) and Article 158A shall enter into force 1 (one) year as of the enactment of this Law. (by 28 October 2025) | This article should be implemented with consideration for the changes in ownership requirements related to the registration process. Business actors can prepare more thorough planning and adjustment regarding the establishment of joint ventures in Indonesia and subsequently for vessel ownership. |
II. Vessel Arrest Updates |
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| 1 | Article 223 paragraph (2) | Further provisions regarding the procedures for vessel arrest at the port as referred to in paragraph (1) shall be regulated by Ministerial Regulation. | Deleted. | Through this amendment, it has been established that there is still no Ministerial regulation specifically addressing the technicalities of vessel arrest. Although the rationale behind such revocation has not been disclosed, the absence of vessel arrest technical regulation could contradict the principle of applicability as stipulated in Law No. 12 of 2011 on the Formation of Legislation, which is practically interpreted that a law must be supplemented by technical regulations. Therefore, there may be some challenges and obstacles in carrying out a vessel arrest without any supporting technical regulations, as it may lead to confusion among the authorities, judiciary official, and also the applicant. Additionally, relying solely on the Shipping Law as the regulation for conducting a vessel arrest, may place significant emphasis on the discretion of the authorities in executing the arrest. |
| 2 | Article 223A | Vessel arrest based on a written court order... | Provisions regarding the vessel arrest by the court in criminal cases and/or civil cases shall be implemented in accordance with the provisions of laws and regulations. | |
| 1 | Article 251 letter e | N/A | The Admiralty Court as referred in Article 250 has the authorities:
e. conducting mediation in the settlement of disputes over maritime labor agreements (Perjanjian kerja laut). |
This new regulation is a breakthrough that addresses and provides legal certainty to various inconsistencies and gaps occurring in the practice of maritime sector. With this regulation in force, it is now clear that the resolution of disputes with crew members based on the Maritime Employment Agreement must first go through mediation at the Admiralty Court. This new regulation aligns with the provisions of the Supreme Court Civil Chamber Circular Letter No. 5 of 2021 (“Supreme Court CL 5/2021”), which essentially states that the Industrial Relations Court has jurisdiction over disputes between crew members and shipowners. Hence, both parties must resolve the dispute through mediation at the Admiralty Court beforehand, and further can be resolved in a final and binding proceeding at the Industrial Relations Court (Pengadilan Hubungan Industrial) if the mediation fails. |
Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.
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