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 congestion, promote quicker resolutions, and foster amicable settlements between par- ties. The Indonesian legal framework actively supports ADR methods, particularly mediation, arbitration, and conciliation, which are common- ly used across various sectors, including com- mercial, civil, and labour disputes. This includes mediation (court-mandated or otherwise), arbi- tration, 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 Regu- lation No 1 of 2016 on Mediation Procedures in Court, judges are required to order media- tion before the case proceeds to trial. There are indirect consequences for parties who do not engage in good faith during court-ordered mediation, although there is no strict penalty for outright refusal. 12.3 ADR Institutions The BANI Arbitration Centre is the leading institu- tion for arbitration in Indonesia and has a strong reputation for handling domestic commercial disputes. It provides a structured framework for arbitration, offering standardised procedures and experienced arbitrators. It is respected for its impartiality and expertise in complex com- mercial matters.
Indonesia also has specialised ADR institutions for sectors such as labour, financial services, and consumer disputes. This includes the fol- lowing. • The Financial Services Authority ( Otoritas Jasa Keuangan or OJK) which promotes ADR for resolving financial sector disputes. • The Consumer Dispute Settlement Agency ( Badan Penyelesaian Sengketa Konsumen or BPSK) which handles consumer-related disputes and provides mediation and arbitra- tion services. 13. Arbitration 13.1 Laws Regarding the Conduct of Arbitration In Indonesia, arbitration and the enforcement of arbitral awards are governed by Law No 30 of 1999 (the “Arbitration Law”). In addition, a recent Supreme Court Regulation, Supreme Court Reg- ulation 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 arbitration proceed- ings and sets out the procedures for recognising and enforcing both domestic and international 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 Indonesia, provided they meet the requirements under the New York Convention and the Arbitration Law.
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