Commercial arbitration in Indonesia

Frans H. Winarta, Jakarta

The battle to eradicate corruption is extremely difficult; it is like the battle to combat "evil". As a consequence, the government needs to address the problem seriously. Indonesia, as a developing country, has to learn from the experiences of other countries in effectively combating corruption. This is because other countries have clearly been able to reduce the incidence of corruption.

The Indonesian government is currently committed to eradicating corruption through various legal means. Nonetheless, it has not been successful in dealing with this acute problem, and the results of the government's campaign against corruption to date have been far from the people's expectations. The lack of social control and poor law enforcement also make corruption difficult to cope with.

Moreover, the courts as forums for seeking justice have become marketplaces for the buying and selling of judgments. But, corruption does not only affect the courts but also other legal or law enforcement institutions, such as the prosecution service and the police. Corruption in the courts is referred to as "judicial corruption". Overall, corruption is now widespread in our courts and law enforcement institutions.

Justice and court decisions can be bought. Ironically, the courts are supposed to be places where people can seek and obtain justice.

Corruption does not only occur within the courts of law but also with every legal and law enforcement institution, such as the prosecution service and police. This proves that corruption has spread throughout the legal infrastructure.

If we look to our legal and judicial systems, it is clear that judicial corruption will be difficult to eradicate. Because of the bad image of our judicial system, it will be very difficult for our courts to win the trust of society.

In overcoming the above problem, there is a "new trend" being availed of by international business players, namely, turning to arbitration rather than utilizing the courts as dispute- settlement forums.

Arbitration is popular as it has more advantages compared to going through the courts. The advantages of settling a dispute through arbitration include less time-consuming process, the fact that the parties and the arbitrators want to achieve a win-win solution, the process accords with business values, and the decision is final and binding upon the disputing parties.

Clearly, these advantages are not possessed by the Indonesian courts. It is generally known that court processes are more time- consuming as they entail a number of levels -- district court, high court (on appeal level), the Supreme Court (on final level). Moreover, the credibility of the Indonesian courts are often questioned by foreign litigants.

Based on this, dispute settlement through arbitration is really needed, especially by business players, as a less time- consuming dispute settlement process is preferably for them. The existence of corruption in our judicial institutions means that arbitration provides "a new place" for the parties in dispute to seek justice.

Arbitration as a means of dispute settlement is governed by the Arbitration Law (Number 30 of 1999). However, there is still an impediment or barrier in Indonesia as regards arbitration as the approval of the Central Jakarta District Court is required for the execution of a decision.

Problems in executing international arbitration awards often arise if the case is connected to an ongoing criminal or civil case in Indonesia. The fact that various interested parties have filed civil or criminal suits often prevents the execution of international arbitration awards. In short, the execution of international arbitration awards require a high level of integrity and effort from the legal authorities and other relevant parties.

Nevertheless, arbitration is a preferable and better method of settlement compared to legal proceedings, and one way to get around the problem of judicial corruption.

The writer is an attorney based in Jakarta.