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The main alternative dispute resolution (ADR) methods in Indonesia are mediation, adjudication and conciliation, with mediation being the most popular. Most Indonesian parties attempt to settle disputes amicably through discussion and negotiation without a particular ADR framework. ADR is commonly used in sectors such as construction and mining. Construction disputes are often settled through adjudication, but there is currently no formal adjudication mechanism or regulation in Indonesia.
Requirements for ADR
Court-annexed mediation is mandatory at the start of court proceedings, where each court maintains a list of approved mediators to be appointed if the parties do not appoint one. Mediation held in the court premises using a mediator provided by the court is free, where the mediator is typically another judge not sitting in the case concerned. The procedure for court-annexed mediation follows the procedure set out in Supreme Court Regulation No. 1 of 2016 on Mediation in Court Procedure.
Article 45 of the Arbitration Law requires arbitrators to attempt an amicable settlement of the parties’ dispute at the beginning of the arbitration. However, the Arbitration Law does not further specify the procedure or time limit for such amicable settlement. This is usually at the discretion of the arbitrator and the willingness of the parties to settle the dispute amicably. Mediation is also encouraged before resorting to litigation or arbitration, although there is no mechanism to compel mediation during the proceedings.
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:
Dispute Resolution Indonesia – Arbitration Agreements
SSEK Partner Mahareksha Dillon to Speak at 6th ICC Indonesia Arbitration Day
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