Litigation in Indonesia: A Quick Look at the Settlement Process

In the context of litigation in Indonesia, are there any rules governing the settlement process? Can parties keep settlement discussions confidential from the court?

The presiding judge is mandated to oblige the parties involved in a case to undergo a settlement procedure (i.e., mediation) prior to the case examination. Should the attempt at settlement prove unsuccessful, the case examination will proceed accordingly. Conversely, if the settlement results in a mutually agreeable resolution, it must be formalized in writing and endorsed by all parties involved.

In Indonesia, court-annexed mediation procedures are governed by Supreme Court Regulation No. 1 of 2016, also known as PERMA 1/2016. This regulation stipulates that any statements or admissions made during mediation are inadmissible as evidence in subsequent court proceedings arising from the same dispute if no settlement is reached.

Moreover, the records maintained by the mediator concerning the mediation process must be expunged upon its conclusion. Additionally, the mediator cannot be compelled to provide testimony as a witness in any related court proceeding. This framework promotes transparent communication and the exploration of settlement avenues without compromising a party’s litigation strategy if mediation fails.

PERMA 1/2016 also governs extrajudicial settlements, offering a legal framework that ensures certainty for disputing parties. This alternative dispute resolution mechanism allows parties to resolve their disputes outside of court through a settlement agreement. Subsequently, the settlement agreement can be presented to the relevant court for formalization through a deed of settlement. It should be noted that PERMA 1/2016 does not address the application of confidentiality principles to extrajudicial settlement processes.

Excerpted from Lexology Panoramic: Dispute Resolution 2024, published by Law Business Research.

Find the Indonesia chapter of Lexology Panoramic: Dispute Resolution 2024 here.

Further reading:

Complex Commercial Litigation – Indonesia

Litigation in Indonesia: Challenging the Court’s Jurisdiction

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