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:
i. a form of agreement
ii. arbitration Agreement shall made in the written form
iii. Arbitration agreement is an agreement to settle any disputes in which conduct out of the court.
i. a form of agreement
ii. arbitration Agreement shall made in the written form
iii. 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 n 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.
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.
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:
i. a heading containing the words ‘for the sake of justice based on the God Almighty”;
ii. the full names and addresses of the disputing parties;
iii. a brief description of the matter dispute;
iv. the respective positions of each of the parties;
v. the full names and addresses of the arbitrators;
vi. the considerations and conclusions of the tribunal concerning the dispute as a whole;
vii. the opinion of each arbitrator in the event that the award is not unanimous
viii. the order of the award,
ix. the places and date of the award, and
x. the signatures of the tribunal.
However; ADR Law regulates that an arbitration award can be set aside on the grounds that:
i. documents are found to be falsified or forged;
ii. any significant document which may have affected the award was discovered after it was rendered, or
iii. the award was rendered was as result of fraudulent action by the opposing party
a petition for annulment of arbitral award should be submitted to the chairman of the district court. If the petition is granted by the chairman, the opposing party will be allowed to lodge an appeal with the Supreme Court.
The court’s assistance may also be requested if the arbitrator grants a provisional award or interim relief in arbitration proceeding. The court maintain a supportive role for the enforcement of an arbitral award in the event that for domestic awards allow the appropriate district court to directly issue an order for enforcement if the losing party does not satisfy the award after being duly summoned and requested by the court.
The Arbitrator
Arbitrator is a referee in a dispute settlement. Hence, the existence of credible arbitrator is one of the significant factors to result a good resolution in dispute settlement. Law of arbitration govern some requirements that have to be met by the arbitrator. The requirements for an arbitrator are:
i. being capable of undertaking legal actions;
ii. being 35 years old at the minimum;
iii. having no relations by blood or marriage to the second degree with one party in dispute;
iv. having no financial interests or other interests in decisions of arbitration; and
v. Having experience and actively mastering the field for at least of 15 years.
Furthermore, the Law also stipulates some professions that not allow becoming an arbitrator such as Judges, prosecutors, secretaries and other officials of court can not be appointed or assigned to become an arbitrator. These provisions tend to prevent any conflict of interest by the arbitrator in handling the disputes.
The Right to Deny
Right to deny is something known in arbitration procedure. Right to deny or deny indictment means as a right from disputing parties to reject one or more arbitrator in which in the basis of valid evidences, exist any doubtful reason in giving their judgment. A denial indictment or right to deny against an arbitrator can also be filed if the arbitrator is proven to have family, financial or working relations with one party or proxy. The denial indictment shall be in writing, to both the other party and the relevant arbitrator by mentioning reasons for the charge.
If the filing against arbitrator accepted by the other parties the relevant arbitrator shall resign and replaced with the new arbitrator. But if the denial indictment does not accepted, in this matter prevail stipulation as follow:
i. the relevant arbitrator shall resign and replace by the successor according to provision stipulated in Arbitration Law
ii. In the event of the relevant arbitrator being not ready to resign, the interested party can file a claim to the Chairman of the Public Court whose decision binds the two parties, and a rejoinder can not be filed.
iii. In the event of the Chairman of the Public Court deciding that the indictment being reasonable, a substitute arbitrator shall be appointed by the procedure effective for the appointment of the arbitrator replaced;
iv. In the event of the Chairman of the Public Court rejecting the denial indictment, the arbitrator shall continue to execute tasks.
Foreign Arbitral Award
Indonesia is a party to the New York convention on the Recognition and Enforcement on foreign Arbitral Award, which was ratified by Indonesia on August 5 1981 under Presidential decree No. 34 of 1981.
However, this is subject to two reservations:
i. arbitration awards that can be executed in Indonesia must relate to commercial disputes, and
ii. recognition of awards shall only be applied on the basis of reciprocity, i.e., rendered in a country that also a party of the conventions.
As state on section (i) that arbitration awards that can be executed in Indonesia must relate to commercial disputes. Hence, it is essential to know what are the commercial disputes intended by its section. In accordance to arbitration Law, it also stipulated on article 5 that arbitration shall only be disputes in the field of trade and concerning rights which according to the laws in force are fully controlled by parties in dispute.
There is no further explanation concerning commercial or trade dispute on its article, but in the explanation on article sixty six it stated that the scope of trade or commercial law are as follow:
i. commercial
ii. banking
iii.finance
iv.investment
v. industry
vi.intellectual Property Right
In response to an application for enforcement of foreign arbitral award, the court is obliged to grant an exequatur in accordance with procedural law, unless:
i. the place of arbitration was in country that is the party to a bilateral or multilateral treaty with Indonesia that provides for reciprocal recognition and enforcement of international arbitration awards
ii. the award concern a matter that falls within commercial law under Indonesia’s legal system
iii. an exequatur is first obtained from district court of Central Jakarta
If one of the parties to arbitration is the Republic on Indonesia, the exequatur must in the first instance be held in the Supreme Court, which will delegate the case to the relevant district court for enforcement.
The ADR Law vests the district court of central Jakarta with the jurisdiction to issue an exequatur on arbitral awards. An exequatur on foreign arbitral awards is comparable to a court judgment: Once settled, it cannot be raised again. After obtaining a ruling a writ of the enforcement may be applied for if the losing party does not voluntarily fulfill its obligation.
