Arbitration as mechanism to resolve disputes

Budiono Kusumohamidjojo, Jakarta

"Fairness as justice" is in no way simply the reverse of "justice as fairness" being the theoretical principle embraced by the renowned American legal thinker John Rawls in 1971 in his A Theory of Justice and reconfirmed in 1990.

The other way around, fairness as justice should be conceived as a practical implementation of Rawls' concept. It is the more promising in social environment where legal processes mandated by the state through state courts ineffectively serve the need of the society for justice, as is the case with Indonesia and other countries suffering under a similar situation.

Indonesia is in its eighth year since the monetary crash in 1997 that subsequently dragged the country into a complex crisis which was economic, social and political in character. The subsequent downfall of President Soeharto ushered Indonesia into an era of democratization.

The last eight years, which was supposed to be an era of reform has frequently been described as a "No Order" era.

As the term suggests, "No Order" is indicative of the uncertainty plaguing the country caused by the absence of a reliable legal system hampering the necessary development in productivity of the society. Indonesia badly needs a revolutionary speed to recover and cope with its pressing problems on a national scale. Though the law can be progressive in a sense that it may be responsive to the rapid social change, the law cannot provide revolutionary prescriptions.

Indonesia was not equipped with an adequate normative structure when it had to depart from an order that was complacent in its economic achievements and became compelled to venture beyond new frontiers. Advancing into a decade of Reformasi, Indonesia is becoming more and more in need of a functioning legal structure to cope with the dynamics of its social process.

The society cannot afford to wait for a legal development that is hampered by a heavily bureaucratic process contaminated by widely conflicting vested interests. That is obviously reflected in Indonesia's slow court processes.

It is in this regard that a praxis of the business community may turn out to be a solution to the advantage of the society. The business community has long been familiar with the dispute resolution mechanism, popularly known as arbitration.

Under the current conditions in Indonesia, it may be a strategic solution to overcome the stagnating social process that is becoming more and more prone to anomalies. Indonesia has recognized the benefit of this mechanism, particularly by means of Law No. 30 of 1999, although the spirit of this law is clearly aimed at the business community. Being a mechanism, an arbitration process is constituted by a series of consultations that the arbiter would steer toward a consensus.

The consensus that is achieved embodies a compromise of the disputing parties that they conceive as fair and therefore serves their sense of justice. Instrumental in the arbitration process is its structure of abstracting the interests of the disputing parties up to a level where they can reconcile their conflicting positions, while simultaneously upholding the principle of fairness in the ruling.

Although to date the business community is the main user of arbitration, this mechanism may be of great advantage for other sectors of the society. To propagate the use of arbitration, however, Law No. 30 of 1999 must be enhanced in terms of enlarging its scope. We noted that Article 5 (1) of the law limits the application of alternative dispute settlement to disputes in the field of commerce. Article 5 (2) forecloses the benefit of this law to disputes that cannot be settled amicably by virtue of law.

If this limitation is opened and thus gives way to more legal subjects and matters, arbitration may become very competitive against the slow and inefficient (conventional) court system. The business community prefers to abide by arbitration in cases of disputes indeed because of this comparative advantage.

Though it requires the voluntary subjugation of the disputing parties categorically, arbitration promises a fast and fair solution for the parties as it is presided over and handled by professionals familiar with the respective field of the disputes. The wisdom of the matter lies in the understanding that this method should not be confined to the business realm only.

The next community that can benefit from this method might be the fast world of the consumer. Under present circumstances, you do not go to the court in order to seek justice against your laptop dealer who reneges on his/her guarantee as the resulting costs may cause you to lose more money than the purchase of a second laptop!

It is widely acknowledged, however, that arbitration cannot be applied in criminal cases. To serve that purpose, legal professionals can be helpful by assisting the public with more information on the existence of an alternative dispute settlement mechanism, how it works and how its awards can be implemented.

The House of Representatives should therefore amend Law No. 30 of 1999 to make it applicable to other walks of life to the extent that amicable settlement is viable. In essence, the existing legal system must give way to a mechanism for dispute settlements that can be of advantage to larger segments of the society. The courts are crowded, slow and inefficient anyway, while many people badly need fairness as justice.

The writer is Partner with the Law Firm Soebagjo, Jatim, Djarot, Jakarta.