THE DEVELOPMENT OF ALTERNATIVE DISPUTE RESOLUTION IN THE INDONESIAN LEGAL SYSTEM. Takdir Rahmadi

Transcription

1 THE DEVELOPMENT OF ALTERNATIVE DISPUTE RESOLUTION IN THE INDONESIAN LEGAL SYSTEM 1. Introduction. Takdir Rahmadi Justice of the Supreme Court of the Republic of Indonesia Although the term alternative dispute resolution is firstly adopted in the Indonesian Statutory regime since the enactment of the Act number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution, the notion of arbitration has been known in the history of Indonesian law since 1847 where the Dutch administration promulgated the law of civil procedure (Reglement de Rechtsvordering, Stb 1847; 52). 1 Article 615 to 651 the Dutch law of civil procedure establishes the procedure of using arbitration for resolving civil disputes. When Indonesia proclaimed its independence in 1945, it declared through its Constitution of 1945 that all laws enacted by the Dutch administration are in force until the Indonesian Government enacts a new act to replace the previous one. Therefore, the Dutch civil law procedure where arbitration was provided was in force until the enactment of the Act number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution. From the title of the Act number 30 of 1999, we may conclude that arbitration is not considered as one of types or forms of alternative dispute resolution. A number of literatures mention that the term alternative dispute resolution embraces all types or forms of dispute resolution other than court or litigation such as arbitration, mediation/conciliation, fact finding, expert opinion, and negotiation. Some other literatures, however, hold that the term includes all types of dispute resolution other than court and arbitration. Thus, the Indonesian law maker viewed that arbitration as a distinguished from alternative dispute resolution. The Act number 30 of 1999 mentions some types of alternative dispute resolution: negotiation, expert opinion and mediation. 2 Regardless of the academic debate concerning the scope of the term of alternative dispute resolution, this paper will discuss the development of alternative dispute resolution, especially arbitration and mediation in the Indonesian legal system. It will examine the provisions of the Act number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution. It also describes development of arbitration organizations or centers in Indonesia. This paper further discusses the development of out of court mediation under various statutory regimes and the court-annexed mediation program by the Supreme Court of Indonesia. It will highlight the growth of mediation organizations or centers that practice mediation services in Indonesia. 2. Arbitration Under the Act number 30 of 199 concerning Arbitration and Alternative Dispute Resolution, the use of arbitration must be based upon a written agreement by parties. In case arbitration agreement is based upon letters, , telegram, facsimile, these shall be accompanied with proof of acceptance by parties. Disputes that can be submitted to arbitration are those occur in the commercial or business sector and those are related to interests or rights that according to laws are fully under control of parties. Someone who is appointed as an arbiter has to meet the 1 Article 615 to 651 Reglement de Rechtsvordering (Stb 1847; 52) has been nullified with the Act number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution. 2 The Act number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution, article and article 6 (3).

2 following criteria: having a legal capacity to carry out legal acts, minimum age 34 year old, having no family or marital relations with parties, having no financial interests or other interests relating to arbiter s decision, and having experience in his or field of expertise at least 15 years. 3 The Act provides that when parties have made arbitration agreement, any court has no jurisdiction to hear matters under contract concerned except on the matters that are mentioned in the Act. 4 Parties may choose ad hoc arbiters orsubmit their disputes to national or international arbitration institutions. 5 Parties in disputes may appoint arbiters on ad hoc basis orapply for arbitration services through arbitration center or bodies. In Indonesia there has been reputable arbitration bodies such as the Indonesian National Arbitration Body (BANI), the National Shariah Arbitration Body (Basyarnas), and the Indonesian Capital Market Arbitration Body (BAPMI). These three arbitration bodies are based in Jakarta. When a dispute occurs, a petitioner or claimant must send a letter, or a telegram, or facsimile to the other party or respondent in an arbitration agreement and inform that conditions of the arbitration clause prevail. The letter shall contain clearly the following things: names and addresses of the parties, reference to arbitration article or clause, matters in dispute, claims, and the number of arbiters. In case parties are willing to use arbitration after a dispute occurs, arbitration agreement shall be made in a written form and signed by parties. Arbitration agreement can also be made by a public notary. A written arbitration agreement shall contain the following things: disputed issues, complete names and addresses of parties, names and addresses of arbiter or arbiters, place of arbiter panel make their decisions, name of secretary, duration of arbitration process, arbiters statement of acceptance, and statement of parties to bear the cost of arbitration. A written arbitration agreement that does not contain such elements is null and void. A written arbitration agreement is not null and void due to death of one of parties,one of parties in bankrupt status, insolvency of one of parties, heirs, prevalence of conditions of abolishing main agreement, implementation of a main contract transferred to the other party with the consent of parties in a main contract, the end or null of main contract. In case where parties disagree on selection of arbiters or they do not make a rule concerning selection, one party can request a chief judge of a court of first instance where its jurisdiction include the domicile of a respondent in order to appoint a single arbiter or a panel of arbiters. In case where parties have agreed with the use of a single arbiter but after fourteen days they can have agreement on selection a single arbiter, one of the parties can request a chief judge of court of first instance to appoint a single arbiter. The chief judge appoints a single arbiter by taking into account names proposed by arbiter organization or arbitration center. Assignment of two arbiters by parties provides the two arbiters with the power to appoint the third arbiter who will acts as a chairperson of a panel of arbiters. In case appointed arbiters by parties cannot select the third arbiter until 14 days, one of parties may request a chief judge of first instance court to appoint a third arbiter. Parties have no power to reject an appointed arbiter by a chief judge. If within 30 days after one party appoints an arbiter while the other party does not appoint other arbiter, the appointed arbiter will act as a single arbiter whose decisions binds all parties. Appointed arbiters have the right to reject or to accept the appointment. Rejection or acceptance shall be informed in written to parties within 14 days maximum since the date of 3 Ibid, article Ibid, article 11 paragraph 2 states: any court shall refuse to hear matters that have been decided by arbitration except on specific issues that are mentioned in the Act. Article 70 of the Act states that arbiters decision may be nullified by a court if there are forgery or use of false documents. Article 70 of the Act will be discussed further in the latest part of arbitration. 5 Ibid, article 24.

3 appointment. With the written appointment of an arbiter or arbiters by parties and with acceptance of the appointment by an arbiter or arbiters, a contract has been made. With the acceptance of appointment, an arbiter or arbiters are bound to deliver a fair and just decision and one in accordance with laws. On other hand, parties are committed to accept arbiter s decision as final and binding one. An appointed arbiter or arbiters who have accepted the appointment cannot resign from their position as arbiters unless they get written approval from parties. In performing his or her duties as arbiters, one cannot be sued unless it can be proven that one has acted with bad faith. Parties have the right to deny an arbiter if there is adequate reason based upon authentic evidence that could create doubts that an arbiter can perform his or her tasks fairly and justly in delivering decisions. Denial toward an arbiter can also be based upon evidence that he or she has family, financial and working relations with one of the parties or with one of legal counsels of parties in a dispute. Denial toward an arbiter appointed by chief judge has to be addressed to the chief judge. Denial toward a single arbiter has to be addressed to him or herself, while denial toward a member of panel arbiters has to be submitted to the panel. An arbiter who is not appointed by chief judge can only be denied on the basis of causes that are discovered after his or her appointment. An arbiter who is appointed by chief judge can only be deniedon the basis of causes that are discovered by one of parties after acceptance of written appointment by chief judge. A party who has objection toward an arbiter appointed by the other party has to submit its objection to the other party within 14 days since appointment. In a case of causes mentioned by article 22 paragraph 1 and 2 are discovered later, denial has to be submitted within 14 days since denying party discovers a basis for denying. 6 Denying and reasons for it have to be applied in written form to the other party and to arbiters. In case denying complain is agreed by the other party, arbiter must resign and new arbiter has to be appointed according to procedure established in the Act. In case, denial is rejected by the other party and a denied arbiteris not willing to resign, one of parties can submit the matter to chief judge of first instance who will deliver a binding and final decision. This decision cannot be challenged. In case chief judge decide that the denial has a legal basis, a new arbiter has to be appointed. In case denial is rejected by chief judges, the arbiter continues his or her duties. Where an arbiter passes away, his or her authority cannot be nullified. His or her authority will be continued his or her successor who is appointed according to the procedure of the Act. An arbiter, however, can be discharged from its duties as arbiter when he or she is not impartial or has acted improperly. Such a conduct has to be proven through court. In case an arbiter passes away or is seriously ill so that he or she cannot perform his or her duties, a new arbiter has to be appointed. In case a single arbiter or a chair of panel is replaced, hearing of the case needs to be repeated The Procedure of Hearing. Hearing of arbitration process is conducted in close sessions. Language used is Indonesia language. Parties, however, with approval of arbiters, can use other language. Arbiters can ask parties to translate the documents into a particular language. The hearing of arbitration must be in writing. The oral hearing can be held if parties agree on it and considered as being necessary by arbiters. 7 Parties can be represented by their legal counsels with letters of authorization. 6 Article 22 paragraph 1 and 2 of the Act number 30 of 1999 is concerned with the right of parties to deny an arbiter or arbiters on the basis that an arbiter or arbiters have family, financial or working relations with one of party in a dispute. 7 The Act number 30 of 2009, article 36 paragraph 1.

4 Other party which is not a party in the contract concerned may intervene the process where its interest is also involved and such intervention has to be agreed upon by disputants and approved by arbiters. Parties in the agreement are free to determine rules of hearing process in so far they are not against or in violation of the Act. Where parties themselves do not make the rules of hearing, and while an arbiter or arbiters are appointed in accordance with article 12, 13 and 14 of the Act, the process of hearing will be conducted in accordance with the rules of the Act. 8 If parties appoint arbiters according to the provision of article 12, 13 and 14 of the Act, they have to agree on duration and place of arbitration. In case parties submit their disputes to the institutions of arbitration, the hearing process has to follow the procedures established the institution concerned. When they do not make agreement on these matters, arbiters will make decisions on the matters. Upon request of one of parties, arbiters can make an interlocutory decision including confiscation, order to place goods to the third party or to sell easily broken goods. Arbiters can extend duration of arbitration process due to the following reasons: one of party requests a particular issue to be reviewed, as a result of an interlocutory decision, considered as being necessary by arbiters.arbiters can hear testimony of witnesses in other place. Examination of witnesses and experts before arbiters has to be conducted according to the civil procedural law. Arbiters also have the power to hold sessions in a place of disputed objects and parties have to be present in the place. Within period of time decided by arbiters, an applicant has to submit its claims to arbiters. The claim document shall contain at least the following things: complete names and addresses or residence of parties, brief description of disputed matters, attached proof, andclaims or usually called as petitum. After receive a claim document, a chair of arbitration panel will submit a copy of it to respondent together with an order to respond it within 14 days at maximum since it is received. After receiving a respond from the respondent, arbiters submit the copy of respond to the petitioner and then order the parties to be present before sessions that will be held within 14 days at maximum since the order is issued. In case a respondent after 14 days does not give respond to the claim document, it has to be called upon again in accordance with article 40 paragraph 2 of the Act.In its respond or at least in the first session, a respondent can file a counterclaim. The decision on a counterclaim has to be delivered together with a claim, When a petitioner is not present in a session designated by arbiters after it has been called upon properly, arbiter may dismiss the claim by the petitioner and arbiters are viewed as having accomplished their duties. 9 When a respondent is not present in a session designated by arbiters after it has to be called upon properly, arbiters may call upon once again the respondent in order to be present in a designated session. When the respondent within maximum of 10 days after it receives the second call, it is not present without in a designated session without any valid reason, the hearing will be continued without its presence and claims by the petitioner must be fully granted except such claims are legally baseless Article 12 is about qualification of a an arbiter or arbiters. See also note number 2. Article 13 is concerned with the appointment of arbiters by chief judge in case parties cannot reach agreement on appointment of arbiters. Article 14 is concerned with appointment of a single arbiter by parties and by a chief judge of a court of first instance in case parties themselves cannot reach agreement on appointment of a single arbiter. These issues have been discussed in previous paragraph of this paper. 9 The Act, article The Act, article 44 paragraph 2.

5 When parties are present in a designated session, arbiters have to make efforts to settle the dispute first. In case, settlement efforts are successful, arbiters make a settlement note which has a final and bindingstatus to the parties.when settlement efforts are unsuccessful, hearing of the case is continued and the parties are given the last opportunity to explain in writing their position and submit necessary evidence in order to strengthen their views. Arbiters can ask additional explanation in writing and other evidence. Before a respondent gives its respond, a petitioner may withdraw its claim through arbitration.when a respondent has given its respond, changes of a claim document can only be done with the consent of respondent and as far as the changes relate to facts only and not concerned with legal basis of claims. The hearing has to be conducted within 180 days at maximum since the establishment of arbiters. The duration can be extended. Upon order of arbiters or at request by parties, witnesses and expert witnesses can be called upon and heard their testimonies. The cost of witnesses and expert witnesses shall be borne by requesting party. Arbiters give parties the opportunities to respond in writing to witnesses or experts testimonies. A secretary has to prepare a process note of arbitration sessions. Parties have the right to choose laws that they want to apply to their case. 11 Arbiters decision is final and binding to parties. 12 It cannot be challenged with whatever legal remedies. Arbiters decision must be based upon laws, justice and reasonableness. 13 The wordings of arbiters decision: For Justice based upon a Single God Almighty has to be put in the head of Arbiters written decision. It must contains the following elements: complete names and residences of parties, description of dispute, names and residences of arbiters, judgment and conclusions by a panel of arbiters concerning the whole of a dispute, opinions of each arbiters when there is a dissenting opinions, content of judgment, place and date of a decision, and signatures of arbiters. If one of arbiters does not sign a decision due to illness or death, this does not degrade validity of the decision. Reason for lack of signature of an arbiter has to be explained in the decision. A decision has to provide a date of the decision that has to be executed. Within 14 days at maximum, parties may still have the power to ask for administrative correction or addition or reduction of a decision to the panel of arbiters The Execution. Within 30 days at maximum since the date of a decision is delivered, original copy or authentic copy of a decision is submitted to and registered by arbiters or their legal representatives to the registrar of the court of first instance where its jurisdiction includes the domicile of respondent. Such registration is fulfilled with making note and signature on the last part or at the margin of the decision by the registrar. Arbiters and their legal representatives are obliged to submit the decision and original copy of their appointment as well as authentic copy of the decision to the registrar. If this procedure is not fulfilled, the decision cannot be executed. All cost of registration must be borne by parties. In case, arbiters decision is not executed voluntarily by the losing party, upon the winning party s request, the execution can be carried out by chief judge of the court of first instance where its jurisdiction includes the domicile of respondent. Execution has to be carried out within 30 days at maximum after request for execution is registered in the registrar of the court of first instance. Before the chief judge orders the execution, he or she has to make sure that the decision of arbiters has met 11 The Act, article 56 paragraph The Act, article The Act, article 56 paragraph The Act, article 58.

6 provisions of article 4 and 5 of the Act and not in contravention of public order. 15 A chief judge has the power to refuse or reject execution of a decision that has not met the provision of article 4 and 5 of the Act and the chief judge s decision cannot be challenged with any legal remedies The Execution of an International Arbitration. Registration and execution of a decision by an international arbitration are under the power of the Court of First Instance of Central Jakarta. Adecision by an international arbitration institute or body can only be executed in Indonesia if it meet the following conditions: it is delivered by arbiters in a state which has a bilateral or multilateral agreement with Indonesia concerning recognition of arbitration; it is concerned with matters that in accordance with the Indonesian laws fall under scope of commercial laws; it is not the one that against public order; it can be executed after legalization by the chief judge of the Court of First Instance of Central Jakarta; in case Indonesian state is a party in the arbitration, the decision can only be executed after receiving legalization by the Supreme Court of the Republic of Indonesia which then delegate to the court of first instance of Central Jakarta. 17 The application for execution of an international arbitration s decision is carried out after the decision is registered in the registrar office of the court of first instance of Central Jakarta by arbiters or their legal representatives. The application for execution has to be accompanied with the following documents: (1) original copy of a decision or an authentic copy of it and the Indonesian version of it; (2) original copy of the arbitration agreement and its official version in Indonesian language and a letter from the Indonesian embassy that explain that the state where arbiters have delivered their decision has a bilateral or multilateral agreements with Indonesia concerning the execution of an international arbiters decision. The decision of the chief judge of the court of first instance of Central Jakarta which recognize and execute an international arbiter s decision cannot be challenged through appeal or cassation. However, the decision of the chief judge of the court of first instance of Central Jakarta which refuses to execute an international arbiter s decision can be challenged through cassation to the Supreme Court of Indonesia. The Supreme Court has to deliver its decision within 90 day at maximum after it receives cassation from a party concerned. The Supreme Court s decision is final and binding Repealing of Arbiters decision The Act number 30 of 1999 still provides one of parties with the right to bring a lawsuit before the court in order to repeal or nullify arbiters decisions with regard to forgery or false documents used in arbitration process. 18 The Application of repealing or revoke arbiters decision has to be filed to the court of first instance. If the court delivers a decision in favor of the plaintiff, it must declare if all or parts of arbiters decision are repealed. The decision of the court of first instance can be challenged through cassation. The Supreme Court, however, often reject lawsuits for repealing arbiters decision where such lawsuits are not supported with hard evidence in the form of a final and binding court s decisionthrough which it proves that arbiters have made their decision based upon forgery or false documents. 15 The Act, article 62 paragraph Article 4 of the Act provides that the use of arbitration by parties must be based on arbitration clause or arbitration agreement. Article 5 provides that arbitration is used for resolving disputes in the field of private law or in matters that according to law are fully under the control of parties. 17 The Act, article Elucidation of article 70 provides that a lawsuit for repealing has to be accompanied with a hard evidence which is a final and binding court s decision.

7 3. Mediation Mediation is a way of resolving disputes through consensual methods with the assistance of a third impartial party (s) who has no power to impose solution.mediation is firstly established in the Act number 22 of 1957 concerning Labor Disputes. The term of mediation becomesmore well known as a consensual way to resolve disputes where environmental disputes began to riseascommon phenomena in Indonesia in 1980s. Two environmental law seminars had been held. One was in Faculty of Law Padjadjaran University in Bandung in 1987 and the other one was held in Faculty of Law, Gadjahmada University in Yogyakarta in In the two seminars, Canadian speakers had presented their papers concerning the experiences of using mediation to resolve environmental disputes in the North America. The Indonesian participants in the two seminars, who most of them were law professors or lectures, the officials of the Ministry of the Environment and activists of Non-Governmental Organizations, were interested in the development of environmental mediation because they believed that it was a type of dispute resolutions that could reconcile the two conflicting interests: the growth of economic activities and environmental protection. In addition, they also viewed that the characteristics of mediation was similar to the traditional decision making processes held by most indigenous or adat communities in Indonesia: musyawarahuntukmufakat or deliberation to reach consensus. The Adat communities have their own dispute forums where consensual mechanisms are used to resolve disputesamong members of the adat communities.therefore, when the Government in 1996 decided to promulgate a new environmental actthat would replace the Act number 4 of 1982, the discussionsrose among the Indonesian environmental lawyers concerning the need of adopting mediation in the coming act Mediation in Environmental Disputes Environmental mediation is established under the Environmental Act number 27 of It provides that environmental disputes can be resolved through litigation and settlement out of court mechanisms.one of settlement out court mechanisms is mediation where disputants with the help of an impartial party (s), who has no power to impose solution, try to reach an agreement on monetary compensation and environmental rehabilitation or remedial as a result of environmental pollution or degradation. The Environmental Act number 32 of 2009 which replaces the Environmental Act number 27 of 1997, still adopts mediation as a way of resolving environmental disputes. Mediation under the Environmental Act of 2009 is used by disputants to reach settlement on the following issues: monetary compensation, environmental rehabilitation or remedial, and preventive measures. However, the use of mediation for environmental disputes is voluntary or optional. The Environmental Act also provides that settlement of environmental disputes through mediation does not necessarily stop criminal proceeding against the perpetrator of environmental crime. Thus, for example, a corporation 19 Geoffrey Grenville Wood, a Canadian speaker presented his paper entitled: Environmental Dispute Resolution: Canadian Approaches and Trends, which discusses experiences of the North American in using mediation for resolving environmental disputes, see Environmental Law in Indonesia and Canada Present Approaches and Trends, Proceedings of Workshop held at Padjadjaran University, Bandung, Indonesia, July, 1985, David VanderZwaag, Stephen J. Mills, Barbara Patton (eds), Environmental Management Development in Indonesia (EMDI).

8 has polluted a river that damage fish ponds managed by fish farmers, the corporation may bear criminal and civil liabilities. Civil liability may be resolved through out court of settlement. The acts concerning natural resources also provide mediation as out of court methods for resolving disputes over uses of natural resources.the Forestry Act of 1999 provides that mediation can be used for resolving disputes over forest uses. The Water Act of 2004 also established that disputes over water uses can be resolved through alternative dispute resolutions. Like the use of mediation under the Environmental Act of 2009, the uses of alternatives disputes resolution under the Forestry Act and the Water Act is voluntary in nature. The notion of voluntary use means that alternative disputes resolution or mediation in particularly can take place if disputants agree to use it. The Environmental Act, the Forestry Act and the Water Act do not provide how parties choose mediator and how the procedure of mediation should work. The Acts leaves the matter to parties in disputes and to mediators. The Acts only establishes that disputes fall under the scope of them can be resolved through methods of out court. With regard to this fact, the role of lawyers parties in encouraging their clients to pursue mediation is determinant factor Mediation for Disputes between Consumers and Producers. The Act number 8 of 1999 provides that disputes between consumers and producers of good and services can be resolved through out of court mechanisms. Mediation is one of out of court mechanisms that is mentioned in the Act number 8 of 1999, known as the Act concerning Consumer Protection. Article 47 of the Act states that mediation is used by parties for achieveng agremeent on monetary compensation and preventive measures. The Consumer-Producer Tribunal established by the government has a function as mediator in consumer producers disputes. The use of mediation is on voluntary basis or optional. When parties agree to pursue mediation performed by the Consumer-Producer Tribunal, a court proceeding can only begin if one of or parties declares that mediation has failed to reach settlement Mediation for Resolving Disputes relate to Human Right Abuses. Under the Indonesia legal system, violation of human rights implies two aspects of law: criminal and private or civil aspects. Under the Act number 39 of 1999 Concerning Human Rights issues of human rights in private law may be resolved through consensual mechanisms. The parties are victims and suspected perpetrators of human rights abuses. The use of consensual methods for resolving disputes in relation to human rights is also voluntary in nature. It is the Human Right Commission established by the government which plays a role as a mediator and also conducts investigation in the alleged human rights violation Mediation in Labor Disputes. The Act number 2 of 2004 concerning Industrial Disputes legislates the use of mediation as one of dispute settlement methods. Mediation is used for resolving issues relate to labor rights, interests, disputes between labor organizations.under the Act number 2 of 2004, the use of mediation in labor relation is compulsory if disputants do not choose arbitration. The Act also provides that court proceeding can only begin if lawsuit is accompanied with a document that mentions that mediation has been used but it fails to bring about agreement or settlement. The document is issued by the Ministry of the Worker. Minister of Workers appoints officials of the Ministry of Workers to perform mediator in the labor disputes Mediation for Resolving Commercial or Business Disputes

9 The Act number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution also provides that parties in a business or commercial contract may choose alternatives disputes resolution for resolving disputes. The Act also identifies mediation as one of alternative dispute resolution. It provides that the use of mediation must be based upon written agreement. Thus, the use of mediation under the Act is also voluntary in nature. The Act distinguishes noninstitutional mediator and institutional mediator. Non-institutional mediation shall take place within fourteen days at maximum. After this non-institutional mediation fails to bring any agreement, parties can asks assistance from an arbitration institution or an alternative dispute resolution institution to appoint a mediator. Within maximum 30 days, an institutionalized mediator is expected to bring about settlement agreement (article 6 paragraph 6). In case an institutionalized mediation also fails to bring about settlement, parties may submit their dispute to an institutionalized arbitration to be decided by arbiters. Thus, the Act number 30 of 1999 allows mediation to be combined with arbitration Mediation in Banking Disputes Mediation for banking disputes was firstly introduced by Central Bank of Indonesia in 2006 based upon its policy not under statutory regime. The Central Bank of Indonesia strongly encourages banks and their customers to use mediation when they enter a dispute over bank services. The Central Bank has identified criteria of disputes suitable mediation. These are disputes arising from financial transactions, disputes relate to amount of money to maximum of five hundred thousand rupiah, a customer file written application to banking mediation institution under the Central Bank of Indonesia. Since the establishment of Financial Authority, mediation functions are performed by the Financial Authority Mediation for Resolving Disputes over Insurance Claims The Indonesian Association of General Insurance, the Indonesian Association of Social Insurance and the Indonesian Association of Life Insurance have agreed with the use of mediation as first effort to resolve dispute over insurance claims. The three associations strongly recommend their members to persuade their customers to pursue mediation firstly when disputes between insurance companies and their customers. This policy is not based upon statutory or regulatory mandate, but internal policy of the Association. The use of mediation is voluntary in nature. The policy does not specifically mention to which mediation office parties in insurance claim disputes have to go for help. Thus, the policy of the Associations provides market opportunity for private mediators Mediation for Resolving Disputes over Land ownership. Article 23 c the Presidential Decree number 10 of 2006 concerning National Land Agency provides, the Deputy of the Head of National Land Agency in charged of Dispute Management with the power to resolve conflicts over land through mediation. In the past consensual mechanisms for resolving disputes over land actually have been used, but it is under the Presidential Decree that mediation is explicitly mentioned. No regulation or rules established by the Head of Land Agency about how mediation in land disputes should be conducted. The National Land Agency, however, has sent their employees to attend mediation training courses Mediation for Resolving Disputes between Medical Professionals and their Clients. Article 29 the Act number 39 of 2009 concerning Health provides that in case medical professionals have been alleged to have committed negligence in doing their medical duties, such a case has to be resolved through mediation. Most legal academia or legal professionals

10 hold mediation can only be used to resolve aspect of private law not criminal law. Article 59 of the Act number 44 of 2009 concerning Hospitals commands every governor to establish a Supervision Body for Hospitals. One of the tasks of this Body is to conduct mediation for resolving disputes between medical professionals or hospitals and their clients. Members of the Supervision Body are recruited from representatives of the government, the associations of Hospitals and communities leaders Court-Annexed Mediation Program. The Supreme Court has promulgated court-annexed mediation since 2003 through the Supreme Court Rule number 2 of 2003 which then was replaced by the Supreme Court Rule number 1 of Unlike most statutes which provide that the use of mediation is voluntary in nature, the court-annexed mediation is compulsory before a case is tried. The compulsory nature of court-annexed mediation derives from the provisions of the Indonesian Civil Law Procedure which commands hearing judges to make efforts to settle a case first before they begin a court trial. The court-annexed mediation allows judges and non-judges to be mediators. However, the success rate of the court-annexed mediation is only about 5 percent of annual total cases filed to the courts across the country.the court-annexed mediation also provides every court with the power to incorporate a settlement through out of court mediationinto its decision upon the request by parties concerned. Judges, however, have the power to reviewconditions in a mediated settlement in order to make sure that they are not in contravention with lawsor do not damage the third party s interest while the third part is not a party in the mediated settlement. The legal status of settlement by out of court mediation is a contract. With incorporation it into a court s decision, its legal status is the same as a court decision so that when one of parties is not willing to execute conditions in the settlement agreement, the court concerned will carry out the execution. 4. The Growth of Mediation Centers or Bodies. Since a number of statutes contain the provisions or rules relate to the use of mediation and also the Supreme Court has promulgated a court-annexed mediation, interestswithin legal and non-legal professionalsin learning mediation skills also have been growing. As a result of this, the pioneers of mediation practice have established mediation centers or bodies.the Indonesian Institute for Conflict Transformation (IICT), the National Mediation Center (PMN), and the Indonesian Mediation Body (BaMI), Madyasta Dispute Resolution (MDR), Indonesian Mediation Center (IMC), and Impartial Mediation Network (IMN) are some of them.some of these center or bodies provide trainings for mediator skills as well as services in mediating disputes and some others only focus on providing services in mediation disputes.some law schools also develop syllabus on ADR in general and arbitration and mediation in particular as well asoffer mediation skills as optional subject to law students. The Indonesian Bar Association also makes alternative dispute resolution as a subject in the trainings for lawyer candidates.

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