Indonesian Arbitration Law

Indonesian Arbitration Law

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Arbitration

The terms and provisions governing arbitration are provided in Law no. 30/1999 on Arbitration and Alternative Dispute Resolution (ADR Law). This Law replaces the former provisions of arbitration stipulated under articles 615 to 651 of of Rv, Article 377 of HIR and article 705 of Rbg. The ADR law also governs the means by which national (or domestic) and international (or foreign) arbitral awards may be recognized and enforced in Indonesia.

Arbitration according to Law no. 30/1999 shall means of settlement of certain civil disputes out of the court that is based on arbitration agreement made out in writing by parties in dispute. Based on this definition it also can be conclude that arbitration are:

  1. a form of agreement

  2. arbitration Agreement shall made in the written form

  3. Arbitration agreement is an agreement to settle any disputes in which conduct out of the court.

The existence of a valid arbitration clause in an agreement precludes the right of the parties to submit the dispute to the district court. Furthermore, the district court is obliged to reject as inadmissible any action brought in a matter that is subject to an arbitration agreement, except in situation stipulated in ADR law. This would include the appointment of an arbitrator in the event that the parties fail to reach an agreement on the appointment, or where there is an agreement concerning the appointment of the arbitrator. Arbitration processes are usually conducted in Indonesian, unless the arbitral tribunal agrees to choose another language. All evidence and documents must be submitted in the chosen language.

Chapter II of the ADR Law provides that “disputes or different opinion that are not of a criminal nature may be resolve by the parties through alternative dispute resolution based on their good faith, by waiving such resolution by litigation in the district court”.

Disputing parties are required to have a direct meeting within 14 days of their waiver, with the outcome set out in a written agreement. If direct attempt to resolve the dispute fails, the parties may, by written agreement, appoint an advisor or mediator to assist them in reaching a resolution. If, however, a reconciliation is not reached, the parties may then request an arbitrator or ADR institution to appoint a mediator, who will then commence mediation within seven days. ADR Law specifies that any mediation process should be settled within 30 days.

Writing and registered in the district court.

The procedural of mediation as prescribed in Indonesia’s ADR Law are more flexible and give the parties more autonomy than the procedures of arbitration. A mediation settlement has to be recorded in writing and registered in the district court. Such agreement is final and binding on the parties and must be implemented in good faith.

General Procedures

Chapter IV of the ADR law sets out the procedures for an arbitral tribunal, but provides that “the parties are free to determine in an explicit written agreement, the arbitration procedures to be applied in hearing the dispute provided that these are not [sic] contrary to any provisions of ADR Law. There is also provision for arbitration to be conducted by certain national or international arbitration institution if the parties so agree. In this circumstance, the rules and procedures of such institutions would apply, unless otherwise agreed by the parties.

Disputing parties do not have existence flexibility, however, and there is limited authority to modify the rules provided under ADR Law. The petitioner should submit a statement of claim to the arbitral tribunal. Upon submission of the claim, it will be delivered to the respondent with the notice that response; the petitioner will then given the opportunity to respond. This counterclaim should be examine and adjudicated by the arbitral tribunal jointly with the merit of the case.

Following the acceptance of the response, the arbitral tribunal will summon the disputing parties to attend an arbitration hearing within 14 days from the issuance of the summons. If the respondent fails to attend, the arbitral tribunal will deliver another summons. If the respondent still fails to appear before the arbitral tribunal, the examination of the case will continue without the attendance of the respondent. At further session, the parties may present various document as evidence to substantiate their arguments Under the ADR Law, the Whole process should take a maximum of 180 days.

An arbitral tribunal will always contain an uneven number of arbitrators. Indonesia’s ADR Law states if the parties only appoint two arbitrators to the tribunal, this will be taken as an authority for the arbitrators to appoint a third to chair the tribunal. A decision may be reached by a majority ruling of the arbitral tribunal. The ADR Law is specific regarding the form and content of an award.

An Arbitration must contain:

  1. a heading containing the words ‘for the sake of justice based on the God Almighty”;

  2. the full names and addresses of the disputing parties;

  3. a brief description of the matter dispute;

  4. the respective positions of each of the parties;

  5. the full names and addresses of the arbitrators;

  6. the considerations and conclusions of the tribunal concerning the dispute as a whole;

  7. the opinion of each arbitrator in the event that the award is not unanimous

  8. the order of the award,

  9. the places and date of the award, and

  10. the signatures of the tribunal.

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