Year: 2026
Type: article
Abstract: International trade and foreign investment play a vital role in the economy; however, they often give rise to risks regarding the imbalance of bargaining power between foreign investors and national business entities within investment contracts. This study aims to examine the legal protection afforded to national business entities in international foreign investment contracts under Indonesian law and to formulate a reconstruction of contract law capable of providing balanced protection. Employing a normative legal research method, this study utilizes statutory, conceptual, and comparative approaches to qualitatively analyze various legal materials. The findings indicate that while legal protection for national business entities is grounded in the principles of freedom of contract, good faith, and arbitration law, Indonesia's current legal framework is not sufficiently comprehensive to address contractual power imbalances. Key issues frequently arise regarding clauses concerning choice of law, choice of forum, arbitration, stabilization, and contract termination clauses that potentially disadvantage the party with lesser economic capacity and bargaining power. In conclusion, a reconstruction of international contract law in Indonesia is essential to strike a balance between legal certainty for investors and the protection of national interests. The principle of freedom of contract must be complemented by principles of good faith, fairness, proportionality, and transparency, as well as fair and rational risk allocation. Furthermore, the UNIDROIT Principles can serve as a conceptual reference for drafting more balanced standard contracts without resorting to excessive protectionism.
DOI: 10.63822/cr8kr511
Institution: Universitas Halu Oleo
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W7221069762