RI needs dispute mediation firm

By Stefanus Haryanto

BANDUNG (JP): Recent highly controversial Indonesian Supreme Court's verdicts have tarnished the court's image and discouraged people from taking their disputes to the courts.

The Hanoch Ebe Ohee case is strong evidence of the lack of legal certainty in Indonesia.

Hanoch, from Irian Jaya, was awarded damages of Rp 18 billion (US$7 million) by the Supreme Court but failed to get the money because a letter from Chief Justice Soerjono declared the verdict could not be executed.

Even before this people were reluctant to litigate in Indonesia because it is an expensive, lengthy and complex process. Even if a court rules in favor of the plaintiff there is no absolute guarantee the verdict will be executed accordingly.

In the process of executing a verdict it sometimes happens that a top Supreme Court official will order the execution be suspended.

For business people wanting an efficient and speedy settlement of their disputes, a lengthy and costly litigation process is something to be avoided.

Therefore, alternative dispute resolutions like arbitration and mediation which offer speedy and efficient resolutions are desirable and conform with people's need for less complex dispute settlement mechanisms.

The increasing demand for alternative dispute resolution is evidenced by the number of centers for commercial arbitration and mediation worldwide.

In the U.S. the use of alternative dispute resolution has increased dramatically since 1991 when the U.S. Supreme Court in the case of Gilmer v. Interstate/Johnson Lane Corp, upheld a mandatory arbitration clause in employment contracts.

In addition to arbitration, mediation that is a non-binding, voluntary way of settling disputes is gradually becoming more popular than traditional arbitration where decisions are binding and can be mandatory.

In highly emotional disputes, such as employment and environmental ones, the flexibility of mediation allows for more "creative" solutions and makes it easier for the mediator to diffuse anger and hostility between parties.

In commercial disputes mediation is also desirable because it can settle disputes with no one losing. This type of win-win solution is very appropriate for commercial disputes because the disputing parties will have no hard-feelings about each other and can resume their business relationship as usual.

Businesspeople cannot afford the cost of lengthy and "self- destructive" litigation, especially the social cost of becoming known as "conflict-happy" or litigious.

In Indonesia, although alternative dispute resolution in the form of negotiation, mediation, and arbitration is recognized and incorporated into legislation, it is not very popular.

For example, notwithstanding the provisions of the Act number 22 of 1957 on Settlement of Employment Disputes, which provides for disputing parties to settle their dispute through direct negotiation, mediation by manpower ministry officials or by an ad hoc arbitration, not many employment disputes are settled this way.

This is quite ironic as Indonesians are notoriously non- litigious and friendly people. People's reluctance to settle disputes out-of court through amicable means may reflect their skepticism of the Indonesian justice system. If a Supreme Court verdict can be arbitrarily declared unexecutable what about a voluntary agreement reached by negotiation or mediation.

Accordingly, if one party feels that his or her adversary is not trustworthy, an alternative dispute settlement mechanism is not worth considering.

If this situation persists it may add to the problem of the high cost economy in Indonesia because every commercial dispute, even the simplest one, is settled through lengthy and costly litigation. With economic globalization and greater demand of efficiency in business, it is inevitable that Indonesia's business community will have to consider a center for settling commercial disputes through peaceful and efficient means like mediation or arbitration.

The Indonesian Board of National Arbitration (BANI) was established in 1978 and arbitrates cases on construction, banking, shipping, leasing, and other commercial disputes. As alternative dispute resolution is not only arbitration, it is high time the Indonesian business community considered establishing a Center for Commercial Mediation which is far more flexible and less formal than arbitration.

In the United States there are many centers settling disputes through mediation. Dominic Bencivenga wrote in the New York Law Journal (Dec. 1996), that in 1995, three New York city lawyers experienced in mediation established their rare Boutique Mediation Firm (BMF). The term "boutique mediation" reflects the excellent services of this firm, since the firm provides neutral and professional mediator(s), who conduct mediation services in a fancy office or apartment furnished with computer and other sophisticated equipment.

In their first year of operation they handled close to 100 mediations, which typically take one or two days. They charge US$300 an hour for mediation and a daily rate for mediation training. In addition to commercial disputes their caseload includes wrongful dismissals, partnership disputes, age and race discrimination and sexual harassment cases.

In Indonesia where people are not very satisfied with the existing justice system, the establishment of a Boutique Mediation Firm to give professional services for commercial mediation has good prospects. If the disputing parties believe the firm is run by trustworthy, honest, fair, and creative individuals, there is no doubt they will enjoy the support of the business community.

As a way of beginning, BANI, as the existing alternative dispute resolution institution, may initiate the establishment of a center for commercial mediation, or simply expand its services to include mediation.

An Indonesian center for commercial mediation may also have a positive impact on practices in the courts. If the courts have "competition", they may improve their services in rendering justice to disputing parties.

To conclude, it is high time Indonesia had a center for alternative dispute resolution to compete with the courts and to let "market mechanism" improve the judicial system. In this regard, the growth prospects for a Boutique Mediation Firm in Indonesia are very good.

The writer is a lawyer and ADR specialist based in Bandung.