RI needs dispute mediation firm
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.
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.