Business players support mediating institution

Fitri Wulandari, The Jakarta Post, Jakarta

Business players say the establishment of an independent mediation center could provide an alternative means of settlement for commercial disputes amid the country's murky legal system.

"We supports this kind of mediating institution. In principle, Pertamina prefers to settle commercial disputes through mediation," Simson Panjaitan, a legal counsel for state oil and gas company Pertamina told The Jakarta Post on Friday.

Simson said compared to litigation and arbitration, settling commercial dispute through mediation had more advantages.

"It's fast, less expensive and reliable. In litigation or arbitration, there is always a loser and a winner. Mediation provides a win-win solution that satisfies both parties," he said.

Although a bit skeptical about the center's future, chairman of the Indonesian Employers Association (Apindo) Sofjan Wanandi said the center could help businessmen who were apprehensive about the country's judicial system.

"Well ... let's give it a try. Why not have a mediation center. Then, we won't have to go to court," he said.

Simson and Sofjan were both commenting on the establishment of the National Mediation Center (PMN), an independent institution that is to provide mediation services to businessmen to settle commercial disputes.

In a press conference on Thursday, PMN executives said the agency was equipped with professional mediators from former judges of the supreme court, law practitioners to respected individuals. Most of them were formerly mediators with the Jakarta Initiative Task Force (JITF).

Simson said to make PMN successful, it should be backed up by experts who can make the institution a reliable mediator.

"The mediators should be reliable, capable and understand the cases. They have to be able to maintain the mediation process so that it comes out with satisfying results," he said.

Sofjan, however, is skeptical that such a mediation center could be successful. Particularly, as mediation does not seem so popular among Indonesian businessmen.

"It may work for foreign businesses. But for local businessmen, some of them prefer to turn to close colleagues who know the disputed parties to help mediate their disputes," Sofjan said.

"Besides, it depends on the goodwill of the disputing parties. So, it may not be successful," he added.

Sofjan further added, it may work for small cases but not big cases such as ones involving huge debts.

"Usually, they prefer to go to court or even hire thugs to force creditors to pay their debt," he said.

Meanwhile, Simson said Pertamina was now looking at settling its prolonged dispute with independent power producer Karaha Bodas Company (KBC) through mediation.

The dispute started when former president Soeharto suspended 27 power projects owned by independent power producers, including KBC in 1998 as part of an agreement with the International Monetary Fund (IMF).

Following the suspension, KBC filed a lawsuit against Pertamina, seeking a staggering US$261 million in compensation.

Since then Pertamina has been mired in a protracted court dispute with KBC.

I-box: How will the NMC work?

1. Pre-mediation - One of the disputing parties registers with the NMC - The party then appoints a mediator from the NMC roster - The mediator will conduct a meeting with all parties to explain the role of mediators, procedures and cost.

2. Negotiation - The mediator meets with each party in separate meetings to gather initial information - Mediators and disputed parties meet to define their problems, interests, and needs. - Mediators assist parties to develop their own solution to the problem - They negotiate an agreement based on alternative solutions proposed by the mediator

3. Final stage - Once they reach a consensus, they will sign a memorandum of understanding that binds all parties. - In a case where parties cannot reach an agreement, they then submit a resignation letter explaining the reasons for abandoning the process.