Alternative dispute resolution ("ADR") has been long recognised and practiced in Indonesia. The promulgation of the Indonesian Arbitration Law has encouraged the business community to increase the use of arbitration over other dispute resolution options. The legislative framework and the growing trend towards arbitration as an ADR option has resulted in the development of reliable and professional arbitration firms in Indonesia. Recent developments concerning the importance of ADR, particularly to ensure the existence of solid procedure to assist the debt restructuring process, was clearly mentioned by the Chairman of the Indonesian Supreme Court in his keynote speech in the webinar on the international dialogue in commemoration of the 75th anniversary of the Indonesian Supreme Court held on 27 August 2020.
In this article, we examine the framework of arbitration in Indonesia with reference to the:
1. applicable legislation;
2. timeframe for arbitration;
3. involvement of the courts;
4. types of disputes that may be resolved by arbitration; and
5. arbitration institutions within Indonesia.
Since the mid-nineteenth century, Indonesia has acknowledged ADR as a means to resolve businessrelated disputes. These ADR methods were regulated under several provisions of the Dutch code of civil procedure or other regulations (Reglement op de Rechtsvordering, also known as "RV") which were implemented in Indonesia. Some of those regulations were still in force until the enactment of Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution ("Law No. 30/1999").
Prior to the enactment of Law No. 30/1999, Indonesia had already ratified important conventions related to arbitration. Indonesia is a signatory to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention"), which was ratified in 1981. Indonesia is also a signatory to the International Centre for the Settlement of Investment Disputes ("ICSID") Convention and ratified it in 1968. Many essential provisions under those conventions were incorporated into Law No. 30/1999.
Timeframe for Arbitration in Indonesia
Law No. 30/1999 was formed with the consideration that arbitration has advantages compared to litigation, such as the avoidance of any delays which are caused by procedural and administrative matters. Thus, arbitration is expected to settle the case more quickly.
To preserve this advantage, Law No. 30/1999 has prescribed a timeframe for the arbitration process – it must conclude within 180 days after the formation of the arbitral tribunal. Such timeframe may be waived upon agreement of all parties depending on the complexity of the case and the discretion of the arbitral tribunal.
Involvement of the Courts in Arbitration
Under Law No. 30/1999, the courts have no jurisdiction to examine a matter which involves an arbitration agreement. This clearly establishes that the sanctity of the arbitration agreement shall be honoured not only by the parties, but also by the courts.
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