INDONESIA Law and Practice Contributed by: Nico Angelo Putra Mooduto, Mahareksha Singh Dillon, Talitha Amanda Ekadhani and Bagas Ananta, SSEK Law Firm
12. Alternative Dispute Resolution (ADR) 12.1 Views of ADR Within the Country In Indonesia, ADR is increasingly encouraged and respected, especially as a means to relieve court con- gestion, promote quicker resolutions, and foster ami- cable settlements between parties. The Indonesian legal framework actively supports ADR methods, par- ticularly mediation, arbitration, and conciliation, which are commonly used across various sectors, including commercial, civil, and labour disputes. This includes mediation (court-mandated or otherwise), arbitration, conciliation, and negotiation. 12.2 ADR Within the Legal System The Indonesian legal system actively promotes ADR, especially mediation, as an essential part of the civil litigation process. Mediation is mandatory at the initial stage of most civil cases. Under Supreme Court Regulation No 1 of 2016 on Mediation Procedures in Court, judges are required to order mediation before the case proceeds to trial. There are indirect consequences for parties who do not engage in good faith during court-ordered media- tion, although there is no strict penalty for outright refusal. 12.3 ADR Institutions The BANI Arbitration Centre is the leading institution for arbitration in Indonesia and has a strong reputation for handling domestic commercial disputes. It pro- vides a structured framework for arbitration, offering standardised procedures and experienced arbitrators. It is respected for its impartiality and expertise in com- plex commercial matters. The BANI Arbitration Centre has updated its arbitra- tion rules to include provisions for virtual hearings, electronic submissions, and expedited procedures for lower-value disputes, aligning with global arbitration practice. Indonesia also has specialised ADR institutions for sectors such as labour, financial services, and con- sumer disputes. This includes the following.
• The Financial Services Authority ( Otoritas Jasa Keuangan or OJK) which promotes ADR for resolv- ing financial sector disputes. OJK operates the Alternative Dispute Resolution Institution for the Financial Services Sector (LAPS SJK), established in 2020. • The Consumer Dispute Settlement Agency ( Badan Penyelesaian Sengketa Konsumen or BPSK) which handles consumer-related disputes and provides mediation and arbitration services.
13. Arbitration 13.1 Laws Regarding the Conduct of Arbitration
In Indonesia, arbitration and the enforcement of arbi- tral awards are governed by Law No 30 of 1999 (the “Arbitration Law”). In addition, a recent Supreme Court Regulation, Supreme Court Regulation No 3 of 2023 was issued to regulate the arbitration procedure in greater detail (“PERMA 3/2023”). PERMA 3/2023 establishes the legal framework for conducting arbi- tration proceedings and sets out the procedures for recognising and enforcing both domestic and interna- tional arbitral awards. Indonesia is also a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). International awards are therefore enforceable in Indo- nesia, provided they meet the requirements under the New York Convention and the Arbitration Law. 13.2 Subject Matters Not Referred to Arbitration Certain subject matters cannot be resolved through arbitration due to their public interest nature or legal restrictions. The Arbitration Law specifies that only disputes involving commercial interests can be referred to arbitration. The following subject matters are generally not arbitrable: • criminal matters; • family law matters; • bankruptcy and insolvency; • administrative and public law disputes; and
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