Do Contracts in Indonesia Have to Be in Indonesian? The Dual-Language Rule Explained (2026)

Short answer: Yes. Under Article 31 of Law No. 24 of 2009, any contract involving an Indonesian party must be drawn up in the Indonesian language — and, where a foreign party is involved, also in English or the foreign party's language. An English-only contract has been declared null and void by Indonesian courts (the Nine AM case), and although Supreme Court Circular Letter No. 3 of 2023 has softened that risk, relying on it is playing defense. The safe path is a signed bilingual version.

Almost every foreign company operating in Indonesia signs contracts in English — loan agreements, shareholder agreements, supply and distribution deals, service contracts, NDAs. Their local counterparty is comfortable in English, English is the language of the negotiation, and drafting a second version feels like pointless cost. Then a dispute arises, the contract lands in an Indonesian court, and the other side argues the whole thing is void because it was never written in Indonesian.

This is one of the most under-appreciated legal traps in Indonesia, and one that incorporation and visa agents almost never warn you about. Here is what the law actually requires, what the courts have done with it, and how to structure your contracts so language never becomes the argument that sinks your deal.

What does the law actually require?

The rule comes from Article 31 of Law No. 24 of 2009 on the National Flag, Language, Emblem, and National Anthem ("Law 24/2009"), the statute that made Bahasa Indonesia mandatory in a range of official settings.

• Article 31(1): the Indonesian language must be used in any memorandum of understanding or agreement that involves state institutions, Indonesian government agencies, Indonesian private entities, or Indonesian citizens.
• Article 31(2): where the agreement involves a foreign party, it is also written in the national language of the foreign party and/or in English.

Read together, these create a dual-language rule for cross-border contracts: an agreement with an Indonesian party on one side and a foreigner on the other should exist in Indonesian and in the foreign language. The Indonesian version is not optional; the foreign-language version is expressly permitted so the foreign party can understand what it signs.

The catch — and the source of a decade of litigation — is that Law 24/2009 states the obligation but prescribes no sanction. It does not say what happens to a contract that breaches Article 31. That silence left the consequence to the courts, and the courts delivered a nasty surprise.

The case that scared everyone: Nine AM Ltd v PT Bangun Karya Pratama Lestari

In 2013 the West Jakarta District Court (Decision No. 451/PDT.G/2012/PN.JKT.BAR, dated 20 June 2013) considered a USD 4.4 million loan agreement between an Indonesian borrower, PT Bangun Karya Pratama Lestari, and a U.S. lender, Nine AM Ltd. The agreement was written in English only. When the borrower fell into dispute, it argued that the contract violated Article 31(1) because no Indonesian version existed.

The court agreed — and went further than anyone expected. It held that a contract breaching the mandatory language requirement lacks a "lawful cause" under Article 1320 of the Indonesian Civil Code (the provision setting the conditions for a valid contract). Without lawful cause, the agreement was null and void from the outset (batal demi hukum) — treated as if it had never existed. The lender lost the contractual basis to recover its own loan.

Critically for foreign companies: the decision was upheld on appeal by the DKI Jakarta High Court and affirmed by the Supreme Court on cassation (Decision No. 601 K/Pdt/2015, dated 31 August 2015). Three levels of court confirmed that an English-only contract with an Indonesian party could be voided for want of an Indonesian version. That is the precedent that has hung over English-language contracting in Indonesia ever since.

What changed with Presidential Regulation No. 63 of 2019?

Law 24/2009 required an implementing regulation to spell out the details — but the government took ten years to issue it. It finally arrived as Presidential Regulation No. 63 of 2019 on the Use of the Indonesian Language ("Perpres 63/2019").

Its key provision, Article 26, clarified the mechanics of dual-language contracts:

• Agreements involving a foreign party are written in Indonesian and in the foreign party's national language and/or English (Article 26(2)).
• The foreign-language version functions as an *equivalent (padanan) or translation* of the Indonesian text, to align the parties' understanding (Article 26(3)).
• Where the two versions differ, the parties may agree in the contract which language prevails (Article 26(4)).

This was a meaningful improvement: it confirmed that a prevailing-language clause is valid, so you can agree that English governs interpretation even though an Indonesian version exists. But Perpres 63/2019 still did not state the consequence of failing to prepare an Indonesian version, and — importantly — it did not specify when the Indonesian version has to exist (at signing, or later). Those gaps kept the Nine AM risk alive.

Has the Supreme Court softened the void risk? (SEMA 3/2023)

Yes — but through soft law, not a change to the statute. Supreme Court Circular Letter No. 3 of 2023 ("SEMA 3/2023") gave judges a formal interpretation: where an Indonesian party enters a foreign-language contract without an Indonesian translation, the absence of the translation alone cannot be used as a ground to annul the contract — unless bad faith is proven.

In plain terms, SEMA 3/2023 tells judges not to reflexively void an English-only contract the way the Nine AM court did. It swings the pendulum back toward enforceability and protects a good-faith foreign lender or supplier from a counterparty trying to escape its obligations on a technicality.

Two cautions keep this from being a green light, and this is where a law firm's read differs from an agent's:

1. A SEMA is a circular letter, not legislation. It is internal judicial guidance from the Supreme Court to lower courts. It does not repeal Article 31 of Law 24/2009, and it does not formally overrule the Nine AM line of cassation authority. A first-instance judge who ignores it is not breaking a statute. 2. The "bad faith" exception is undefined and litigable. SEMA 3/2023 does not define bad faith. A counterparty will argue that you insisted on English-only precisely to disadvantage them — turning a language question into a factual fight you did not need to have.

Comparison: how your drafting choice maps to risk

What this means for you

• You cannot contract out of the language rule by choosing foreign governing law. If an Indonesian party is involved and the contract may be enforced in Indonesia, choosing Singapore or New York law does not remove the Article 31 obligation. Indonesian courts apply Indonesian mandatory rules regardless of the governing-law clause.
• A prevailing-language clause is your friend — use it deliberately. Agree that English (or Indonesian) prevails, and make sure the two versions actually match. A mistranslated Indonesian version that is stated to prevail can bind you to terms you never negotiated.
• SEMA 3/2023 lowered the temperature, but do not build your contracts on it. It is a reason to be less afraid of legacy English-only contracts, not a licence to skip the Indonesian version on new deals.
• The cheapest fix is doing it right the first time. A proper bilingual execution costs a fraction of one voided-contract dispute.

Common mistakes we see foreign companies make

• Assuming "English is fine because everyone speaks it." Comprehension is not the legal test; Article 31 is. Comfort in English is exactly what lulls foreign companies into non-compliance.
• Treating the Indonesian version as a rubber-stamp translation. Firms rush a machine or junior translation, never reconcile it against the English, then discover the two versions say different things — and the Indonesian one is stated to prevail.
• Believing a foreign governing-law or arbitration clause immunises them. It does not displace Indonesian mandatory language law where an Indonesian party and Indonesian enforcement are in play.
• Signing the English version and never getting around to the Indonesian one. "We'll translate it later" quietly becomes "we never did," leaving the Nine AM argument available to a counterparty for the life of the deal.
• Copying a template with no prevailing-language clause. When the versions inevitably diverge, there is no agreed tie-breaker and both sides litigate meaning.

Key takeaways

• Indonesian is mandatory for contracts involving an Indonesian party — Article 31(1), Law 24/2009. Where a foreigner is involved, a foreign-language version is also required — Article 31(2).
• English-only contracts have been voided for lack of lawful cause — Nine AM Ltd v PT Bangun Karya Pratama Lestari, upheld to Supreme Court cassation No. 601 K/Pdt/2015.
• Perpres 63/2019 (Article 26) confirms dual-language contracts and allows a prevailing-language clause, but does not fix the timing or the sanction.
• SEMA 3/2023 directs judges not to annul a foreign-language contract for missing translation alone, unless bad faith is shown — helpful, but soft law, not a repeal.
• Best practice: execute a bilingual contract simultaneously with a clear prevailing-language clause and reconciled texts.

Frequently asked questions

Do contracts in Indonesia have to be in Indonesian? Yes. Article 31(1) of Law No. 24 of 2009 requires the Indonesian language in any agreement involving an Indonesian state institution, government agency, private entity, or citizen. Where a foreign party is involved, Article 31(2) requires the agreement to also be in English or the foreign party's language, creating a dual-language obligation.

Is an English-only contract valid in Indonesia? It is at risk. In Nine AM Ltd v PT Bangun Karya Pratama Lestari, Indonesian courts up to the Supreme Court (Decision No. 601 K/Pdt/2015) declared an English-only loan agreement null and void for breaching the language law. Supreme Court Circular Letter No. 3 of 2023 has since discouraged automatic annulment absent bad faith, but the safest course remains a signed Indonesian version.

Which language prevails if the Indonesian and English versions differ? Whichever language the parties agree prevails. Article 26(4) of Presidential Regulation No. 63 of 2019 lets the parties choose, in the contract, the version that governs in the event of inconsistency. If you make one version prevail, ensure it is accurate — you will be bound by its terms.

Does the Indonesian language requirement apply if we choose foreign governing law? Generally yes. The obligation in Article 31 of Law 24/2009 attaches because an Indonesian party is involved, independent of the governing-law clause. If the contract may be enforced before an Indonesian court, choosing foreign law does not remove the language requirement.

When must the Indonesian version be signed — at the same time as the English version? The regulations do not fix the timing. Perpres 63/2019 does not state when the Indonesian version must exist, and market practice sometimes signs the English version first with the Indonesian version to follow. The lowest-risk approach is to execute both versions simultaneously; if you cannot, commit to a firm deadline for the Indonesian text in the contract.

This article is general information current as of July 2026, not legal advice. Indonesian language and contract regulations change and apply differently to each situation. Confirm your specific position with a licensed advisor before acting — we're happy to help.