Commercial arbitration in Indonesia

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.