Arbitration as mechanism to resolve disputes

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.