Member Article

New Law on Aviation

In order to keep up with the development of the aviation industry in Indonesia, on 17 December 2008, the House of Representatives passed the Bill on Aviation. This Bill came in force on 12 January 2009 as Law No 1 of 2009 regarding Aviation (“Law 1”).

Law 1 contains implementing provisions for the Convention on International Interests in Mobile Equipment (the “Cape Town Convention”) that was ratified by the Government of the Republic of Indonesia by Presidential Decree No 8 of 2007 on 20 February 2007.

Law 1 provides that the Cape Town Convention is a lex specialis in relation to other laws and regulations in Indonesia with regard to air transportation. Therefore, the Cape Town Convention will supersede any laws and regulations contrary to it. Law 1 recognizes International Rights registered in the International Registry under the Cape Town Convention, even if the underlying agreements to the International Rights are governed under foreign law. International Rights registered in the International Registry prior to the enactment of Law 1 are also recognized, provided that they were registered after ratification of the Cape Town Convention by the Republic of Indonesia i.e. 20 February 2007.

Law 1 further stipulates that the Ministry of Transportation must acknowledge and register an Irrevocable Deregistration and Export Request Authorization (IDERA). Prior to Law 1, in practice the Ministry of Transportation did not acknowledge the IDERA, although the Cape Town Convention was ratified by Indonesia in 2007. The enforceability of the IDERA in Indonesia was therefore questionable.

Other than the Cape Town Convention issues, it is necessary to note that Law 1 also provides the minimum number of aircraft that must be owned by an Indonesian airline. Under Law 1, scheduled Indonesian airlines must own at least 5 aircraft and have in their possession 5 aircraft; non-scheduled airlines must own at least 1 aircraft and have in their possession 2, and cargo airlines must own at least 1 aircraft and have in their possession 2 aircraft. Existing Indonesian airlines should comply with this requirement within 3 years of the enactment of Law 1 i.e. by 12 January 2012. However, subject to the implementing regulations of Law 1, it remains unclear how these provisions will apply to existing Indonesian airlines.

Law 1 also provides protection for aircraft passengers. Under Law 1, aircraft operators are responsible for any loss caused by the delay of a flight unless the operator can prove that the delay was caused by bad weather or technical problems. The burden of proof therefore, lies with the operator. This provision will be further implemented by a regulation of the Minister of Transportation.

For legal certainty purposes, Law 1 provides that the implementing regulations under Law 1 will be promulgated in 2 to 3 years as of the enactment of Law 1.

 

Footnotes: