IIFC Draft Bill to Establish a New Legal Enclave

The Government, together with Commission XI of the House of Representatives (DPR), has commenced deliberations on the Draft Bill on the Indonesia International Financial Centre ("IIFC"). The bill proposes the establishment of a specialized court with exclusive jurisdiction to hear and adjudicate business disputes arising within the designated financial centre.

“Under a common law system, the focus of advocates and other legal professionals will shift toward the authority of judicial precedents and a more rigorous approach to contractual interpretation. Accordingly, the legal profession must be capable of operating in accordance with international best practices,” said Misbakhun, Chair of Commission XI of the DPR.

As a lex specialis, the IIFC Draft Bill would introduce numerous exemptions from Indonesia's generally applicable laws. For example, financial institutions operating within the IIFC would not fall under the supervisory jurisdiction of the Financial Services Authority (“OJK”), but instead would be regulated by the financial centre's own governing authority. The proposed framework is expected to create new market opportunities while simultaneously presenting challenges for domestic law firms, which will need to compete against global standards of legal expertise within this new legal enclave.