128 DOI: https://doi org/10 21776/ub arenahukum 2023 01601 7 Indonesia
https://arenahukum.ub.ac.id/index.php/arena
EVOLUTION OF DISPUTE RESOLUTION THROUGH ARBITRATION IN INDONESIA DURING COVID-19
Mohammad Saleh
Fakultas Hukum Universitas Airlangga Jl. Airlangga No.4 - 6, Airlangga, Kota Surabaya
Email : mohammadsaleh.ri57@gmail.com
Disubmit: 28-07-2021 | Direview: 08-08-2021 | Diterima: 14-02-2023
Abstract
Settlement of disputes in civil cases is not only resolved by the Court, but also through arbitration and alternative dispute resolution if the disputing parties agreed. The selection of this arbitration must be stated in the clause of the agreement which expressly chooses the arbitration. Civil cases that become the authority of this arbitration are only within the scope of the trade sector. The procedure for settlement through arbitration is different from the court, among others, the trial is closed and flexible, the decision is final and binding, the arbitrator is chosen by the parties and the decision is carried out by the court.
Key words: Arbitration; Arbitration Clause; Dispute Resolution.
Abstrak
Penyelesaian sengketa dalam perkara perdata tidak hanya diselesaikan di pengadilan, tetapi juga melalui Arbitrase dan alternatif penyelesaian sengketa jika para pihak yang bersengketa menyetujui. Pemilihan Arbitrase ini harus dituangkan dalam klausula perjanjian yang secara tegas memilih Arbitrase. Perkara perdata yang menjadi kewenangan Arbitrase ini hanya dalam lingkup bidang Perdagangan. Tata cara penyelesaian melalui Arbitrase berbeda dengan Pengadilan antara lain sidang tertutup dan fleksibel, putusan bersifat final dan mengikat, Arbiter dipilih oleh para pihak dan putusan dilakukan oleh Pengadilan.
Kata kunci: Arbitrase, Penyelesaian Sengketa, Klausul Arbitrase
Introduction
The development of the business world and the development of traffic in the trade sector, both National and International, do not rule out the possibility of disputes between business actors that the dispute needs to be resolved. The dispute resolution process in Indonesia itself can be carried out in two ways, namely: 1
1. Litigation Process in Court 2. Out-of-court proceedings
This statement appears in several legal arrangements in Indonesia, such as Law Number 8 of 2004 concerning Amendment to Law Number 2 of 1986 concerning General Courts in Article 50 states that the District Court has the duty and authority to examine and resolve criminal cases and civil cases at the first level. Futhermore, in the elucidation of Article 3 Paragraph (1) of Law No. 14 of 1970 concerning the Basic Provisions of Judicial Powers, it is stated, among others, that the resolution of cases outside the Court on an amicably basis or through Arbitration is still allowed, however, the Arbitrator’s award only has executive power after obtaining permission or order to be executed (Excecutoir) from the Court. This is also agreed in Law Number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution in its consideration and Article 58 of Law Number 48 of 2009 concerning Judicial Power. Law
1 Susanti Adi Nugroho, Penyelesaian Sengketa Arbitrase dan Penerapan Hukumnya, (Jakarta: Kencana, January 2017), p. 15.
2 Article 61 of Law Number 30 of 1999.
3 Rosita, ‘Alternatif dalam Penyelesaian Sengketa (Litigasi dan Non Litigasi), Al-Bayyinah: Journal of Islamic Law Vol. 6 No.2, (Desember 2017): 100-101.
Number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution in its consideration states that based on the prevailing laws and regulations, civil dispute resolution can not only be submitted to the public court but also open the possibility to be submitted through Arbitration and Alternative Dispute Resolution. Also, Article 58 of Law Number 48 of 2009 concerning Judicial Power states that civil dispute resolution efforts can be carried out outside the State Court through Arbitration or Alternative Dispute Resolution.
Since August 12th, 1999, the Law of the Republic of Indonesia Number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution was enacted, and when this law came into effect the provisions regarding arbitration as referred to in Article 615 to Article 651 of the Civil Procedure Reglemen (Reglemen op de Rechtsvordering, staatblad 1847: 52) and Article 377 of the revised Indonesian Reglemen (Het Herziene Indonesisch Reglemen Staatblad 1941: 44) and Article 705 of the Procedural Reglemen for areas outside Java and Madura (Rechts Reglemen Buitengewesten, Staatblad 1927:
227) are declared invalid.2
Dispute resolution through the Litigation Process produces two possibilities, namely:3 1. If the two parties cannot be reconciled
by executing a deed of an amicable settlement, the Court will decide with a
decision in favor of either party and 2. The losing party may use legal remedies
for appeal, cassation, and judicial review.
The Supreme Court and the Judiciary under it strive to ensure that the disputes they try are sought by achieving amicable settlement between the parties. The reason undelying the statement among others: 4
4 Husseyn Umar, BANI dan Penyelesaian Sengketa, (Jakarta: PT. Fikahati, 2016), p. 37.
5 Susanti Adi Nugroho, Opcit, p. 16.
6 BANI, Peran BANI dalam Perkembangan Arbitrase di Indonesia, 2019, p. 121.
1. The process of resolving disputes outside the court that seeks to produce a win-win solution;
2. Confidentiality of the disputes of the parties is guaranteed;
3. Process delays caused by procedural and administrative can be avoided; and
4. Efforts will be made to maintain a good relationship with those in dispute.
Picture 1. Settlement of Civil Case Chart
Resolution of civil disputes outside the State Court is carried out through Alternative Dispute Resolution, a dispute resolution or difference of opinion institution through a procedure agreed by the parties by means of consultation, negotiation, mediation, conciliation, or expert assessment.5 One of the Alternative Dispute Resolution method is based on a written agreement by the disputing parties called Arbitration. Law Number 30 of 1999 regulates the settlement of disputes or differences of opinion between parties in a
certain legal relationship that has entered into an arbitration agreement which clearly states that all disputes or differences of opinion that arise or that may arise from the legal relationship will be resolved by Arbitration method or through alternative dispute resolution.6
Discussion
A. Arbitration Concept
The term arbitration comes from the
word ‘arbitrare’ (in Latin) which means “the power to resolve a case based on wisdom”.7 According to Subekti, arbitration is the settlement of a dispute by a judge or judges based on the agreement that the parties will obey the decision given by the judge they choose.8 Based on Article 5 of Law Number 30 of 1999, the only disputes which may be settled by arbitration are disputes in the commercial sector concerning rights, which according to the law and regulations, have the force of law and are fully controlled by the parties in dispute. Then the disputes which may not be resolved by arbitration are disputes that cannot be settled amicably under the regulations and the force of law. Evidently, the scope of trade law is the activities, among others: trade, banking, finance, investment, industry, intellectual property rights as stated in Elucidation of Article 66 Letter b. Henceforth for the subject of the arbitration dispute are the person/party who made/related to the Arbitration Agreement. Some characteristics of Settlement by Arbitration:9
1. Confidentiality in a proceeding.
Arbitration hearings are always conducted in a closed room (close door session), this means that the arbitration hearing is not intended for the public, but only
7 Anik Entriani, “Arbitrase Dalam Sistem Hukum Di Indonesia”, AN-NISBAH Journal Vol. 3, No. 2, (April 2017): 79.
8 Subekti, Arbitrase Perdagangan, (Bandung: Bina Cipta, 1992), p. 1.
9 Helmi Kasim, “Arbitrase sebagai Mekanisme Penyelesaian Sengketa Penanaman Modal”, Jurnal Rechts Vinding Vol. 7 No.1, (April 2018): 85.
10 Frans Hendra Winarta, ‘Prinsip Proses Dan Praktik Arbitrase Di Indonesia Yang Perlu Diselaraskan Dengan Kaidah Internasional’, Selisik Journal Vol. 1, No.1, (Juni 2015): 13.
11 Ibid, p. 13.
for the disputing parties or their proxies.
So that the arbitration process cannot be covered by the media (journalists) and cannot be broadcast to the public. In each arbitration proceeding, the Arbitrator will ensure that everyone present is a party or proxy Dalam setiap persidangan arbitrase, In each arbitration proceeding, the Arbitrator will ensure that everyone present is a party or proxy.10
2. Flexibility in procedures/simple procedures. Basically, the process of proceedings in arbitration is subject to a principle known as the principle of freedom of the parties (party autonomy).
Based on this principle, the parties can freely determine the procedure for the arbitration procedure that they want, among others, an agreement on the venue of the trial, how the witness examination process is carried out or the language used in the examination process that is set out in the agreement (Arbitration Clause);11 3. The arbitration award is final and binding.
Arbitration decisions cannot be appealed, cassation or reviewed, as in district court decisions. This provides benefits for business actors in dispute, because they will get a decision that has permanent
legal force without having to undergo a long process (time consuming).12
4. Completion is relatively short. Article 31 paragraph (3) of Law no. 30 of 1999 states that “In the event that the parties have chosen the arbitration procedure to be used in the examination of the dispute, there must be an agreement on the provisions of the period and place for the arbitration to be held and if the time and place of the arbitration is not determined, the arbitrator or arbitral tribunal will determine”. Moreover, Indonesian arbitration not only provides dispute settlement procedure, but also provides dispute prevention procedure that rarely known called binding opinion. Legal basis for application of binding opinion easily found in:
1. The application is submitted by the parties as a form of good faith to resolve different interpretations of the Agreement.
2. Article 52 of Law Number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution:
“Parties to an agreement are entitled to request a binding opinion from an arbitration institution on a particular legal issue in an agreement.” In the elucidation of Article 52 of Law Number 30 of 1999 mentioned
12 Ibid, page 12.
13 BANI, Arbitration Rules and Procedures, 2020, p. 38.
14 Cut Memi, “Penyelesaian Sengketa Kompetensi Absolut antara Arbitrase dan Pengadilan”, Jurnal Yudisial Vol.
10, No.2, (Agustus 2017): 116.
that Even without a dispute, the Arbitration Institution can accept requests submitted by the parties to an agreement, to provide a binding opinion regarding a matter relating to the agreement. For example, regarding the interpretation of provisions that are unclear, additions or changes to provisions relating to the emergence of new conditions and others. By giving an opinion by the Arbitration Institute, both parties are bound by it and one of the parties acting contrary to that opinion will be deemed to have violated the Agreement.13
3. Rules & Procedures of BANI:
“Without a dispute, BANI can accept requests submitted by the Parties in an Agreement to provide a binding opinion regarding any issue relating to the Agreement.”
B. Arbitration Agreement
Settlement of disputes through arbitration is based on an arbitration agreement. The agreement to settle a dispute through Arbitration is contained in a document signed by the parties.14 The provisions regarding the Procedure that apply before the Arbitration Council are regulated in Law Number 30 of 1999 starting from Article 27 to Article 58. H.
Priyatna Abdurrasyid defines an Arbitration
Agreement as an agreement in the form of a continuation of the arbitration contained in a written agreement made by the parties before a dispute arises, or a separate arbitration agreement made by the parties after a dispute arises. 15 As the beginning of the arbitration process, there are several elements that must be met in the arbitration agreement, namely:
1. Made in writing that using Indonesian language, although the parties may choose to use another language, with the consent of the arbitrator or arbitration tribunal as stated in Article 28 of Law Number 30 of 1999;
2. Contains an agreement between the parties to bring a settlement of disputes that will/have occurred to Arbitration;
3. Made before he dispute (Pactum de compromitendo);
4. Made after a dispute (Deed of Composition).16
The arbitration agreement is classified as an additional or accessor agreement which requires the existence of the main agreement before the birth of the arbitration agreement.
However, the principal agreement that is valid/abolished/ends not legally applies/
abolishes/abolishes the arbitration agreement due to the enactment of the separ doctrine which functions to maintain the arbitration authority when the arbitration decides that
15 H. Priyatna Abdurrasyid, Arbitrase dan Alternatif Penyelesaian Sengketa: Suatu Pengantar First Edition, (Jakarta: PT Fikahati Aneska, 2002), p. 82.
16 Muhamad Kholid, “Sharia Arbitration as an Alternative Settlement of Sharia Banking Disputes”, International Journal of Nusantara Islam Vol.6, No. 1 (2018): 76.
17 Rahmadi Indra Tektona, “Arbitrase sebagai Alternatif Solusi Penyelesaian Sengketa Bisnis di Luar Pengadilan”, Pandecta Vol 6, No.1, (Januari 2011): 89.
18 Anik Entriani, Opcit, p. 292.
the principal agreement is void. In relation to the authority of the judiciary, an arbitration agreement which is valid and binding on the parties will have two consequences. First, positive power over/mandatory arbitration to examine and decide on disputes that are the scope of the arbitration agreement. Second, the negative power of the court to examine and decide on the dispute which is the space of the arbitration agreement and the rights of the parties who agree to arbitration for the dispute through the court.
C. Types of Arbitration
In the Indonesian legal system, there are two types of arbitration which are recognized for their existence and authority to examine and decide on disputes that occur between the disputing parties, namely, Ad-Hoc Arbitration or voluntary arbitration and Institutional Arbitration or permanent arbitration.17 Both arbitrations have the authority to adjudicate and decide disputes that occur between the parties to the agreement.18 Ad-hoc arbitration is an arbitration system that is not coordinated by an institution. Ad-Hoc Arbitration (Voluntary Arbitration) is formed specifically/incidentally to examine and decide certain disputes. The formation of an Ad-Hoc Arbitrator will take place after the dispute has occurred. The parties select and determine their arbitrator,
may also request assistance from the Court to appoint an Arbitrator who is not bound by one of the Arbitrator Institutions.19
On the other hand, the Arbitration Institution is an arbitration coordinated by an institution that selected by the disputing
19 Jafar Sidik, Klausula Arbitrase dalam Kontrak Bisnis First Edition, (Bandung: Binara Padaasih, 2016), p. 26.
parties to give an award regarding a dispute, it can also provide an opinion regarding a certain legal relationship in the event that a dispute has not arisen.
Picture 2. Types Arbitration
Some names of Arbitration Institutions in Indonesia are:
1. Indonesian National Arbitration Board (Badan Arbitrase Nasional Indonesia / BANI);
2. Indonesian National Sharia Arbitration Board (Badan Arbitrase Syariah Nasional Indonesia / BASYARNAS);
3. Indonesian Capital Article Arbitration Board (Badan Arbitrase Pasal Modal Indonesia / BAPMI);
4. Indonesian Futures Commodity Arbitration Board (Badan Arbitrase Komoditi Berjangka Indonesia / BAKTI);
5. Indonesian Sports Arbitration Board (Badan Arbitrase Olah Raga Indonesia /
BAORI);
6. Indonesian Construction Dispute Arbitration and Alternative Agency (Badan Arbitrase dan Alternatif Sengketa Konstruksi Indonesia / BADAPSKI);
7. Indonesian Insurance Mediation Board (Badan Mediasi Asuransi Indonesia / BMAI);
8. Indonesian Venture Capital Arbitration Board (Badan Arbitrase Modal Ventura Indonesia / BAVI);
9. Indonesian Pawn and Financing Mediation Board (Badan Mediasi Pembiayaan dan Pegadaian Indonesia / BMPPI).
In international business contracts, it is
common to agree on a settlement forum in International Arbitration, for example, the Singapore International Arbitration Center (SIAC), the Regional Center for Arbitration Kuala Lumpur, The Korean Commercial Arbitration Board, and others.
D. Specimen of Arbitration Clause of BANI
“All disputes arising from this agreement will be resolved and decided by the Indonesian National Arbitration Board (BANI) according to the BANI Arbitration rules and procedures, the awards of which are binding on both parties to the dispute as an award in the first and final stage.”20
In general, the dispute settlement clause is formulated by way of deliberation, settlement through court, or arbitration. If the contract chooses a settlement by arbitration, the court is not authorized to try it. Arbitration is a way of resolving a civil dispute outside the general court based on an arbitration agreement made in writing by the disputing parties. All examination of disputes by the Arbitrator or Arbitral Tribunal is conducted behind closed doors.21 This closed examination deviates from the provisions of the Civil Procedure in force at the District Court which in principle are open to the public, and this shows the confidential nature of the arbitration settlement. But, it is possible that this method is preferred by the disputing entrepreneurs because it is not published in public. The disputing parties have
20 Jafar Sidik, Klausula Arbitrase dalam Kontrak Bisnis First Edition, (Bandung: Binara Padaasih, 2016), p. 80.
21 V. Harlen Sinaga, SH., MH, Memahami Arbitrase dengan Praktek BANI dan Pembatalan Putusan Arbitrase, (Jakarta: Fikahati Aneska, 2018), page 21.
the same rights and opportunities in expressing their respective opinions so that the principle of audi et alteram partem is still implemented.
E. Law of Procedure on Arbitration Before the Arbitration Tribunal, the Applicant notifies the Respondent in advance that the terms of Arbitration between the two parties will be enforced. After that the Claimant submitting an Application to BANI in writing, enclosing a contract containing the Arbitration Clause or Arbitration Agreement, the Application in Indonesian, the Application is forwarded to the Respondent to respond within a maximum period of 14 days.
According to Article 29 of Law Number 30 of 1999, the parties in dispute can be empowered.
Respondent responds within 14 days and simultaneously selects Arbitrator. By BANI, the Respondent’s response was conveyed back to the Petitioner at the same time with an order to attend the Arbitration Session. Both Arbitrators that chosen by the parties shall elect the Third Arbitrator as Chairman of the Arbitrator Council. If the Respondent does not appoint an Arbitrator, the Arbitrator who has been appointed by the Petitioner will act as the Sole Arbitrator. Which then, between the parties and the appointed Arbitrator, a Civil Agreement occurs, namely:
- Arbitrators must work honestly and fairly;
- The parties must accept the award in a final and binding manner.
During the Arbitration Tribunal, examination of disputes must be submitted in writing, oral examination can be carried out if the parties agree or deemed necessary by the Arbitrator/Arbitral Tribunal. If in the first trial, the Petitioner is not present, the petition is null and void. If the Respondent is not present, within 14 days will be summoned once again and if the Respondent is still absent, can be decided by Verstek/outside of the Respondent’s presence and the Petition is granted in full unless the claim is groundless or not based on the law. The Arbitration tribunal must be held in closed trial. For the reconsideration, submitted in the first answer or at least during the First trial. Prior to examination of written evidence, there is Replik – Duplik session.
Third parties outside the arbitration agreement may participate and join the proceedings for the resolution of disputes by arbitration if any element of related interest is found and their participation is agreed to by the parties in dispute and by the arbitrator or arbitration panel examining the dispute (decided in an incidental decision / interlocutory decision). Third parties that are not bound by an agreement with an arbitration clause, if they are included as parties in the arbitration dispute concerned, the Arbitration Council or Arbitrator is obliged to issue interlocutory decisions regarding absolute competence, whether an exception is submitted or an exception is not.
In order to strengthen the arguments in the Petitioners’ petition for Arbitration and the
Respondent’s rebuttal, the parties may present witnesses and expert testimony, during the trial. Before witnesses and expert statements are presented, they must first submit their CV and Affidavit. The affidavit contains the reasons why the one was presented as a witness and expert, as well as a list of questions and answers known to him. The tribunal will study the CV and Affidavit concerned, then determine whether the person is eligible to be a witness or expert in the trial. Examination of disputes in arbitration must be submitted in writing. If there is an agreement between the parties, it can be done verbally. Expert witness examination can be oral if deemed necessary by the Arbitrator / Panel, other than in writing.
Examination of witnesses and expert witnesses before the Arbitrator / Panel is conducted according to the provisions of the Civil Procedure Code. When the parties already deliver the whole disputes, the arbitrators or the arbitration tribunal give the consideration and conclusion. Regarding to Article 55 of Law Number 30 of 1999, after the examination of the dispute has been completed, it will be closed and a hearing date will be foxed for the arbitration award to be rendered.
If one of the parties make a request, the arbitrator or arbitration panel may form a provisional award or other interlocutory decision on how to organize the examination of the dispute, including awarding a security attachment, ordering the deposit of goods with third parties, or the sale of perishable goods.
The period for implementing the provisional
award or other interlocutory decision will not be counted in the period of dispute examination.
In the event that the amicable effort is reached, the Arbitrator will make a final deed of amicable settlement which binds the parties and orders the parties to comply with the terms of the amicable settlement.22 Some essential things about arbitration awards are:
1. The award of the Arbitration Board is a final award that has permanent legal force (inkracht van gewijsde) and is binding on the parties.;
2. Within a maximum period of 30 days from the date, the award is pronounced the original sheet or an authentic copy of the arbitration award is submitted and registered by the Arbitrator or his proxy to the Clerk of the District Court. If it is not fulfilled it will result in the arbitration award being unable to be enforced;
3. In the event that the parties do not implement the Arbitration award voluntarily, the award shall be implemented based on the order of the Head of the District Court at the request of one of the parties to the dispute;
4. The execution of the Award by the Head of the District Court is carried out in accordance with the provisions of the implementation of awards in civil cases where the awards have permanent
22 BANI, Indonesian National Arbitration Rules and Procedures, 2020.
23 Panusunan Harahap, “Eksekutabilitas Putusan Arbitrase oleh Lembaga Peradilan”, Jurnal Hukum dan Peradilan Vol. 7, No.1, (Maret 2018): 133.
24 Gatot P. Soemartono and Suyud Margono, Arbitrase Mediasi dan Negosiasi, (Tangerang Selatan: Universitas Terbuka, 2017), p. 19.
legal force. In the award, a period of time is determined for the award to be implemented.23
As it stated in Article 54 of Law Number 30 of 1999, arbitration awards must contain:
a. the heading “DEMI KEADILAN
BERDASARKAN KETUHANAN
YANG MAHA ESA” (In the Name of Justice, Based on Belief in God Almighty);
b. full names and addresses of the parties;
c. a short description of the dispute;
d. the arguments of the parties;
e. full names and addresses of the arbitrators;
f. the considerations and conclusions of the arbitrator or arbitration tribunal regarding the whole dispute;
g. the opinion of each arbitrator, if any differences of opinion arise within the arbitration panel;
h. the award;
i. the place and date of the award; and j. the signature of the arbitrator or arbitration
panel.
In general, the method of resolving civil disputes in business activities is carried out with an amicable solution, in which both parties discuss ways to resolve their disputes. An amicable solution is essentially a negotiation between the parties, which, if it yields results, will make them bound to the outcome of the settlement. 24 Legal basis for
arbitrator to decide an award based on:
1. The provisions of the law or justice and fairness (ex aequo et bono). The parties are entitled to determine the applicable law to resolve any disputes which may arise or which have arisen among the parties. So that, ex aequo et bono can only be applied if both parties agree. (Article 56 of Law Number 30 of 1999 and Article 16 Number 3 of BANI Arbitration Rules and Procedures)
2. If they do not agree, the Arbitrator shall decide based on material law (elucidation of Article 56 of Law Number 30 of 1999).
After the Arbitration Tribunal, within a maximum period of 14 days after the verdict is received, the parties can submit an application to the Arbitrator/Arbitrator Tribunal to make administrative corrections without changing the substance of the award.
Then the award is registered at the District Court at the Respondent’s domicile within 30 days after the award is made. If the parties do not voluntarily implement the award, it will be carried out at the order of the Chairman of the District Court where the Respondent is domiciled at the Applicant’s request. Speaking of the court fee, based on Article 77 of Law 30/1999 in conjunction with Article 38 of BANI RULES, will be charged on the losing party. If the Application is partially granted, fees are charged proportionately. In terms of the awards based on amicable settlement or ex
25 Karen Mills, Iswahjudi A. Karim And Margaret Rose, Indonesia: DELOS Guide To Arbitration Places (GAP), https://delosdr.org/wp-content/uploads/2018/06/Delos-GAP-1st-edn-Indonesia.pdf?pdf=GAP1-Indonesia, accessed 30 June 2021.
aequo et bono, each bear half portion of the court fees.
F. Execution and cancellation of Arbitration award
As previously explained, the arbitral award is final and binding. This means that the arbitral award has been closed for legal remedies and has bound the parties to voluntarily implement the arbitration decision. In the event that the parties do not implement the arbitration award voluntarily, the award shall be implemented based on the order of the Head of the District Court at the request of one of the parties to the dispute as stated in Article 61 of Law Number 30 of 1999. Although it is generally considered that arbitration should be confidential, the Arbitration Law does not expressly provide for a very high degree of confidentiality. Parties wishing a broader degree of confidentiality will need to provide for this in their agreement to arbitrate. However, that awards must be registered with the court to be enforceable and once an award is so registered it can no longer be fully confidential.25 The order for the implementation of the arbitration award by the chairman of the District Court is given no later than 30 (thirty) days after the application for execution is registered with the Chairman of the District Court. The Chief Justice of the District Court, before giving an execution order, is given the right to first examine whether the arbitral award has been taken in an appropriate process, where:
1. The arbitrator or arbitral tribunal that examines and decides the case has been appointed by the parties in accordance with their will; and
2. The case submitted for settlement by the arbitrator or arbitral tribunal is a case which according to law can be resolved by arbitration, and
3. The decision handed down does not conflict with decency and public order. 26
The implementation of the award is carried out in accordance with the provisions of the implementation of the awards in civil cases where the awards have permanent legal force. The authority to handle issues of recognition and implementation of International Arbitration awards is the Central Jakarta District Court and if it concerns the Republic of Indonesia as a party to the dispute, it can only be implemented after obtaining the executor from the Supreme Court. The Chairman of the District Court, before giving an implementation order, first verifies whether the arbitration award meets the provisions of Article 4 (an agreement signed by both parties for settlement through arbitration) and Article 5 (only disputes in the field of trade and regarding rights fully controlled by the parties in dispute) and does not contradict Decency and Public Order (Article 62 Paragraph 2 of Law 30/1999)
For International Arbitration Awards, as specified by Article 66 of Law 30 of 1999,
26 Gunawan Widjaja dan Ahmad Yani, Hukum Arbitrase, (Jakarta: PT Raja Grafindo Persada, 2000), page 97.
27 Hikmah Mutiara, “Pengakuan dan Pelaksanaan Putusan Arbitrase Asing di Indonesia”, International Law Journal Vol. 5, No. 2, (2008): 325.
International Arbitration Awards will only be recognized and may be enforced in the jurisdiction of the Republic of Indonesia if they fulfill the following criteria:27
a. International Arbitration Award is rendered by an arbitrator or arbitration panel in a country which is bound to the Republic of Indonesia by a bilateral or multilateral treaty on the recognition and enforcement of International Arbitration Awards;
b. International Arbitration Awards are limited to awards which are included within the scope of commercial law under Indonesian law;
c. International Arbitration Awards which may only be enforced in Indonesia, are limited to those which do not conflict with public order;
d. International Arbitration Award may be enforced in Indonesia after obtaining a writ of execution from the Chairman of the Central Jakarta District Court; and e. International Arbitration Awards
contemplated in item a, which involve the State of the Republic of Indonesia as one of the parties to the dispute, may only be enforced after obtaining an exequatur from the Supreme Court of the Republic of Indonesia, which will then delegate it to the Central Jakarta District Court.
The Arbitration Award which has been affixed with the order of the Head of the District
Court shall be implemented in accordance with the provisions of the implementation of the award in a civil case where the award has permanent legal force. The court that has the authority to handle matters with respect to the recognition and enforcement of International Arbitration Awards is Central Jakarta District Court.28 International Arbitration Award is an award determined by an Arbitration Institution or Individual Arbitrator outside the jurisdiction of the Republic of Indonesia or an award by an Arbitration Institution or Individual Arbitrator which according to the provisions of the Law of the Republic of Indonesia is deemed an International Arbitration Award.29
According to Article 67 of Law Number 30 of 1999, An application to enforce an International Arbitration Award may be submitted after the award has been delivered to the Clerk of the Central Jakarta District Court and registered there by the arbitrator or his/her/its proxy. The submission of the application for enforcement contemplated in paragraph (1) must be forwarded together with:
a. the original text or an authentic copy of the International Arbitration Award in accordance with the provisions on authentication of foreign documents and an official Indonesian translation of the text;
b. the original text or an authentic copy of the agreement that is the basis for the International Arbitration Award,
28 Article 65 of Law Number 30 of 1999.
29 Article 1 (9) of Law Number 30 of 1999.
in accordance with the provisions on authentication of foreign documents and an official Indonesian translation of the text; and
c. a statement from the diplomatic representative of the Republic of Indonesia in the country where the International Arbitration Award was rendered, stating that the claimant’s country is bound to the Republic of Indonesia by bilateral or multilateral treaty on the recognition and execution of International Arbitration Awards.
On the decision of the Chairman of the Central Jakarta District Court which recognizes and implements the International Arbitration Award, no appeal or cassation can be submitted. If the decision of the Chairman of the Central Jakarta District Court refuses to recognize and enforce an International Arbitration Award, an appeal may be filed.
The Supreme Court considers and decides on each cassation application within a maximum period of 90 days after the Supreme Court receives the cassation request. Regarding the International Arbitration Award involving the Republic of Indonesia as one of the parties to the dispute, it can only be implemented after obtaining an exequatur from the Supreme Court of the Republic of Indonesia which is then delegated to the Central Jakarta District Court. To complement the Arbitration Rules and Procedures, BANI since May 28th , 2020, the BANI Management has issued the Rules
and Procedures for Electronic Arbitration.
Regarding the Arbitration Award, the parties can submit a request for annulment if the award is suspected to contain the following elements:
a. Letters/documents submitted during the examination, after the award is passed, are recognized as false or declared false.
b. After the award was taken, the opponent had found a decisive document that was hidden by the opponent.
c. The award was taken based on the deception carried out by one of the parties in the dispute examination.30
An application for cancellation is submitted to the District Court and if anyone is not satisfied, an appeal can be submitted to the Supreme Court.31
G. Hybrid Arbitration
To cover the shortcomings of the existing alternative dispute settlements, a new method in the form of hybrid arbitration was developed. The combination of the three Alternative Dispute Settlement combines the existing advantages. This hybrid process is generally used for special situations where the parties believe that dispute resolution requires a mediator who is able to play two roles. 32 Hybrid Arbitration can be done by combining the Arbitration process by:
1. Negotiations between the parties;
30 Article 70 of Law 30 of 1999
31 Tri Ariprabowo dan R. Nazriyah, “Pembatalan Putusan Arbitrase oleh Pengadilan dala Putusan Mahkamah Konstitusi Nomor 15/PUU-XII/2014”, Jurnal Konstitusi Vol. 14, No.4, (Desember 2017): 704.
32 N. Krisnawenda, Hybrid Arbitration in BANI, Indonesia Abitration-Quartely Newsletter No.3/2008, BANI Arbitration Centre, p. 7.
2. Mediation by involving a mediator. The parties can choose:
- Panel mediator (Arbitrator) who examines the case, or;
- Mediator who is not a panel (Arbitrator) who is examining the case
3. Conciliation involving the conciliator (The process is similar to mediation).
By combinig various Alternative Dispute Settlement with Arbitration, this hybrid method bring in some of advantages for the parties, among others:
1. The relationship between the parties is maintained;
2. The agreement reached is constructive;
3. Utilizing an expert intermediary (facilitator);
4. The results of the agreement can be stated in an enforceable decision;
5. Faster and more efficient processing;
6. Flexible procedures.
H. Electronic Arbitration
Unexpectedly, the emergence of the Corona virus on March 2020 in Indonesia, began to spread progressively and caused many victims to be infected and died. This condition forced the Government to take an action, which was then issued by the Decree of the Head of the National Disaster Management Agency Number 9.A. The year 2020 which stipulates
the status of a certain state of emergency for a disease outbreak due to the corona virus in Indonesia which is valid for 32 days from January 28th , 2020 to February 28th , 2020.
Shortly after the status of a certain state of emergency for an outbreak of a disease caused by the Corona virus in Indonesia was extended for 91 days from February 29th , 2020 to May 29th , 2020, as can be seen in the Decree of the Head of BNPB Number 13.A. In 2020. The determination of this status was also followed by the Presidential Decree Number 11 of 2020 concerning the Determination of the Corona Virus Disease 2019 (Covid-19) Public Health Emergency which stated that non-natural disasters caused by the spread of Corona Virus Disease 2019 (Covid-19) as national disaster.
The emergence of circumstances and conditions like this has caused BANI as the Indonesian Arbitration Institution to temporarily suspend the trial process at BANI during the Covid-19 Pandemic Period as outlined in the Decree of the BANI Management Board Number: 20.007/1I1/
SK-BANI/HU dated March 23rd , 2020 Subsequently, it was initiated to establish a new trial procedure as a form of response to the occurrence of a disaster emergency and other special circumstances as well as the demands of the times that require a more effective and efficient electronic case administration and arbitration trial, namely the Regulations and Procedures for the Implementation of
33 The Supreme Court, Kapita Selecta on Arbitration, equipped with a final and binding decision of the Supreme Court of the Republic of Indonesia and BANI (Indonesian National Arbitration Board), 2011, page 129.
34 UNCTAD, Dispute Settlement, International Commercial Arbitration: 5.9 Electronic Arbitration, https://
unctad.org/system/files/official-document/edmmisc232add20_en.pdf, accessed 6 July 2021.
Electronic Arbitration in Letters. Decision Number: 20.015/V/SK-BANI/HU. The development of the internet has enabled online dispute resolution. Online dispute resolution greatly reduces expensive litigation costs, especially in business disputes between business people from different countries, also in the framework of electronic commerce which is more fluid, business people can be anywhere, online dispute resolution will be something promising.33 Holding trials using the rules and procedures of electronic arbitration will deemed to be carried out at the place of the Indonesian National Arbitration Board, Jakarta, or at the BANI Representative Office where the trial is held.
An electronic Arbitration procedure, although having to be organize in a particular way because of the use of the technology, is nonetheless still subject to the principles that traditionally govern any arbitration case.34 This rules and procedures for the administration of arbitration electronically can be used if according to a disaster emergency and special circumstances occur when:
a. a party wishes to submit a request for arbitration;
b. an arbitral trial will be held or an arbitral hearing is currently underway.
In this event, definition of a state of disaster emergency which makes it impossible to carry out an arbitration normally, include disaster emergencies, both natural disasters, and
non-natural disasters, including epidemics, pandemics, major floods, national emergencies, riots, rebellions, combat readiness, warfare, sabotage, or demonstrations whose existence is declared by an agency authorized.
Futhermore, conditions that include special condition are conditions where:
a. the party who wishes to submit a request for arbitration; or
b. one or both parties or one or more of the Arbitrators are outside the region or abroad who are having difficulties in being able to come to the BANI secretariat or the venue for Arbitration proceedings due to a disaster emergency as provided for in paragraphs 2 and 3 above and or there are other special circumstances in which it is impossible for the applicant for the Arbitration or the parties to be present at the BANI secretariat or the venue for the Arbitration hearing. Included in this special situation are, among others, sickness; there is a prohibition from health officials including doctors or other authorized officials who prohibit him from traveling or other circumstances that do not allow him to travel.35
If the parties agree and carried out in good faith based on a cooperative and non-confrontational manner, the rules and procedures for electronic arbitration will be administered and going to be held or are being
35 Article 1 Surat Keputusan Nomor: 20.015/V/SK-BANI/HU 36 Article 4 Surat Keputusan Nomor: 20.015/V/SK-BANI/HU 37 Article 6 Surat Keputusan Nomor: 20.015/V/SK-BANI/HU
implemented. After the parties agree to to apply the rules and procedures for electronic arbitration, the trial may be conducted using internet-based telecommunication facilities including but not limited to video-conference teleconferences or virtual conferences using platforms agreed by the parties.36 For this electronic arbitration, element of confidentiality of the trial indicated by the agreement of the parties to not record proceedings, considering that the Arbitration trial is held behind closed doors. Later on, the party who can attend and participate in the proceedings according to the rules and procedures for electronic arbitration is the principal and his proxy.
Deposit for the administration of the trial electronically is paid before the trial is held. Alson, three days before the electronic arbitration trial, the parties are required to carry out technical preparations for the trial.
The technical implementation of the trial that includes preparation and checking of the platform equipment to be used, shall be carried out by the parties and the secretary of the Arbitration Council.37 The Chairperson of the Arbitration Tribunal/Sole Arbitrator shall lead the trial and providing equal opportunities to the parties. The parties are obliged to carry out the trial in an orderly manner with due observance of the court order. During the electronic proceedings, it is still possible to hold a mediation process. But, if the mediation
process does not reach an amicable agreement, the Arbitration process can be continued.38 Related to Evidence and/or documents that the parties wish to submit can be sent via email in Pdf format or submitted physically.39
As the usual trial, the statements of witnesses and experts must be preceded by taking an oath/promise. The examination of witnesses and experts is carried out with due observance of the Civil Procedure Code in Indonesia in accordance with Article 37 paragraph 3 of Law Number 30 of 1999.40 After the Arbitrator established the award, the Arbitrator pronounced it electronically.
The Award pronouncement has been legally implemented by submitting an electronic copy of the decision to the parties, via electronic media, with due observance of Article 58 of Law Number 30 of 1999 in conjunction with Article 35 of BANI Rules and Procedures.41 If there is any additional costs incurred for holding the trial electronically are borne by the parties equally.42
CONCLUSION
1. The disputing parties should choose the right arbitrator according to their
38 Article 7 Surat Keputusan Nomor: 20.015/V/SK-BANI/HU 39 Article 8 Surat Keputusan Nomor: 20.015/V/SK-BANI/HU 40 Article 9 Surat Keputusan Nomor: 20.015/V/SK-BANI/HU 41 Article 10 Surat Keputusan Nomor: 20.015/V/SK-BANI/HU 42 Article 11 Surat Keputusan Nomor: 20.015/V/SK-BANI/HU
expertise because the arbitrator is chosen by each disputing party.
2. Appointment of Arbitrators by the Arbitration Institution should be selected from people who have sufficient experience in their fields according to their education so that the Arbitrators are expected to be professional and have expertise in their sectors.
3. In the practice of Arbitration in Indonesia, the cancellation of theArbitration decision is often requested to the District Court based on Article 70 of the Law of Arbitration and Alternative Dispute Resolution. If the reason for the cancellation does not comply with Article 70, the Petitioner for Cancellation should not file for cancellation because it is only a way for the dissatisfied party to delay the implementation of the Arbitration award.
4. In an emergency, the parties agreeing and submitting the application may hold online arbitration provided that it is not necessary to make the trial open to the public.
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