ARBITRATION IN INDONESIAN LEGAL SYSTEM

The process of settlement of legal disputes in Indonesia in addition to knowing their settlement through the conventional justice system (courts) also recognize the existence of a settlement through alternative dispute resolution (ADR). It began to be known officially since the enactment of Act No. 30 of 1999 on Arbitration and Alternative Dispute Resolution. This paper will discuss matters related to the setting arbitration under the applicable law is currently in Indonesia.

Under the title of Act No. 30 of 1999, namely Arbitration and Alternative Dispute Resolution, looks arbitration is part of its own and is not an alternative dispute resolution. It is also seen in the preamble of the law which states “… in addition to the settlement of civil disputes can be submitted to general courts also open the possibility raised by arbitration and alternative dispute resolution.”

Seeing the sentence construction used in Act No. 30 of 1999, it appears that the law distinguishes dispute settlement process based on two processes, namely through litigation and not through litigation. Arbitration is distinguished by alternative dispute resolution other woods such as consultation, negotiation, mediation, conciliation or expert judgment based method of settlement because arbitration have provisions, how, and the terms of its own for the application of the formalities.

Article 1, point 1 of Act No. 30 of 1999 it has given the notion of arbitration is the way the settlement of civil disputes outside the courts of general jurisdiction based on the arbitration agreement made in writing by the parties to the dispute. However, given the understanding that not describe the sense of arbitration as a whole.

Based on the understanding of arbitration, it should be emphasized the main condition of the occurrence of an arbitration is the agreement of the parties to resolve disputes through arbitration mechanism. That is, the agreement can be born before the dispute or after the dispute. If arbitration is run in the absence of an arbitration agreement between the parties to the dispute, then it is not arbitration.

With the existence of the arbitration agreement, the District Court was not authorized to adjudicate disputes between the parties. Implementation of the arbitration agreement does not bring up the subject the implementation of the agreement, but the problem is how and what institutions are authorized to settle disputes between parties promised. Arbitration agreement must qualify that agreement on the arbitration agreement must be made in a written agreement signed by the parties.

The arbitration agreement is often also referred to as an arbitration clause that is in the basic treaty bodies. This can be interpreted a principal agreement followed or complemented by agreement on the implementation of the arbitration. The arbitration clause in the agreement laid the principal so-called accessory agreement. Its existence only in addition to the principal agreement, so it does not affect the fulfillment of the principal agreement. Without the principal agreement, this arbitration agreement can not stand alone, because of a dispute or disagreement arising from the principal agreement.

Arise a consequence of the nature of the arbitration agreement is an agreement accessory. By the nature of its accessories, an arbitration agreement will not remove because of the expiration or cancellation of the principal agreement. In addition, the arbitration agreement will not be deleted by the death circumstances of the parties, the bankruptcy of one party, the insolvency of either party, inheritance, and transfer the agreement to a third party with the consent of parties to the arbitration agreement.

Broadly speaking, the arbitration procedure can be divided into three stages as follows.

1. The procedure before the hearings. Dispute resolution through arbitration, beginning with the procedure before the hearings which consists of several stages as follows
2. The procedure at the time of the hearing. Arbiter has a position as a judge based on the agreement of the parties to the dispute appointment. This designation by the parties authorize the arbitrator to decide based on the facts given to him. At the time of the arbitration process takes place the third party or the other party (the public) are not allowed to be present in the process. This is a reflection of the nature of arbitration maintain the confidentiality of the parties to the dispute.
3. Implementation of the decision. In implementing the arbitration decision no implementation procedure that must be taken. Under Article 59 of Act No. 30 of 1999, the procedures for the implementation of the key points in the decision depends on the registration had been in court or not.

Lihat Juga : Konsultasi Hukum

Advantages of arbitration compared with the regular litigation process as follows :

1. Confidential. It means that the confidentiality of the parties to the dispute in the arbitration will be maintained, so that the negative effects arising from the involvement of the parties to a dispute do not undermine the credibility of the parties. It is associated with the name of either of the parties which currently is one of the company’s assets that must be protected.
   Contamination of the good name of a party can cause a great loss for the party. The good name of a party will usually be polluted if the party is experiencing a dispute that is known by the public. In the litigation process known as the principle open to the public, meaning that anyone can watch the proceedings are ongoing. This certainly would be bad for a person who suffers disputes and settlement of disputes through litigation and trial process exposed to the public. By itself the value of public confidence in him will be reduced
   Through arbitration, the parties maintained confidential. In contrast to the general courts, arbitrators are not required to deliver its verdict openly. Not only in the delivery of the judgment, pursuant to Article 27 of Act No. 30 of 1999 says that: “All of the dispute by the arbitrator or the arbitral tribunal conducted behind closed doors.” Thus, the value of the confidentiality of the parties will be preserved.
2. The fee for arbitration is cheaper than the cost of litigation and the settlement of disputes more quickly. Opinions about the cost of this is still being debated, it is not always cost for arbitration is cheaper than the cost of litigation. For example in case of a dispute between businessmen from Indonesia with businessmen from Vietnam and they agreed to appoint the arbitrator who is in New York to resolve disputes in Singapore. Then it needs to be calculated how much should be spent for registration of the case, the arbitrator accommodation costs, costs of accommodation of the parties, the fees for the arbitrator and expert witness fees if used. Of course the parties will expend considerable cost to arbitration.
   On the other hand, for an entrepreneur who needs legal certainty in disputes concerning its business, the cost is nothing compared it to be a lingering finish of the court having to wait for the order of his case to trial and he could not continue the business. For them the sooner the problem of dispute is completed and legal power, the sooner to back trying to gain an advantage, so in general the cost will be cheaper.
   Settlement of disputes in arbitration quicker than litigation because the arbitration the parties do not have to wait for his case to trial. The parties can directly choose arbitrators to resolve their disputes, and thus no waiting time as in litigation. In addition, the dispute settlement can be done at any time by agreement of the parties so it is possible in one week inspection process is done several times a dispute. This differs from the process of litigation. In the litigation, the judges not only examine the case, so that in one week the case will most likely only be checked once. In other words, delays are procedural and administrative nature can be avoided.
3. The parties can select the arbitrator based his belief has the knowledge, experience, and an adequate background on the issues in dispute. Litigation In the process, the parties could not choose the judge who will decide the dispute but has been determined by the Chairman of the Court based its adoption.
   The downside of such designation is limited to the ability to judge the legal knowledge while others only mastered knowledge in general. With arbitration, the parties may choose arbitrators who are mastering the field or knowledge that is being disputed, so that a more comprehensive and professional judgment.
4. The parties may determine the choice of law to resolve disputes, processes, and the place of the arbitration. This excess is felt by those who felt it would suffer discrimination when the dispute in the legal position of the counterparties.

Lihat Juga : Auditor Hukum

However, there are some disadvantages of arbitration proceedings in Indonesia, namely:

1. Under Article 1 point 1 jo. Article 5 of Act No. 30 of 1999, the dispute can be resolved through arbitration is limited to civil disputes, particularly regarding trade and the rights under the laws and regulations are fully controlled by the parties to the dispute. Thus not all cases can be resolved through arbitration. Although there are cases such as civil disputes, not necessarily also be resolved by arbitration.
2. Although the ruling is final and binding arbitration, the arbitration process still requires a district court to carry out the execution process.
3. Execution of foreign arbitration may be hampered due to the principle of nationality and the principle of reciprocity. Nationality principle states that in order to determine and assess whether an arbitration decision can be qualified as a foreign award, must be tested in accordance with the legal provisions of Indonesia.
   According to the principle of reciprocity is not all foreign award can be recognized (Recognize) and execution (enforcement). Foreign arbitral awards are recognized and can be exercised only limited to decisions taken in foreign countries that have bilateral ties with Indonesia and countries associated with the international conventions.
   The existence of the principle of reciprocity nationality and this causes lack of legal certainty for arbitration disputes decided by foreigners who do not meet the requirements of both these principles.

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