Definition of Arbitration
The word “arbitration” is derived from a foreign language is “arbitrare”. Arbitration is also known as or other terms that have the same meaning, such as refereeing or arbitrage (Netherlands), arbitration (UK), arbitrage or schiedsruch (Germany), arbitrage (French) which means the power to get things done according to policy. Arbitration in Indonesia known as “refereeing” is more clearly seen in the Law No. 1 In 1950, the event in mengaturtentang appeal against the decisions of the referee, thus overcoming a designated person is to referee the dispute, or commonly called “arbitrator”.
According to Article 1 number 1 of Law No.30 of 1999, arbitration is the way of settlement of a civil disputes outside the public court based on an arbitration agreement is made in writing by the parties in dispute.
Basically, arbitration can be either in two forms, namely:
- Factum de compromitendo the arbitration clause contained in suatau written agreement made by parties before the dispute arose.
- Deed of compromise that is a separate arbitration agreement the parties made after the dispute arises.
Before the arbitration law applies, the provisions of arbitration set forth in Article 615 s / d 651 Reglemen Civil Code (RV). In addition, the explanation of article 3 paragraph 1 of Law No.14 Year 1970 concerning the Principles of Judicial Power states that the settlement out of court on the basis of the peace or by the referee (arbitration) still allowed.
TYPES OF ARBITRATION
Arbitration award may be temporary (ad-hoc) or arbitration through a permanent entity (institution). Ad-hoc arbitration conducted under the rules intentionally in the form for the purpose of arbitration, such as Act No.30 of 1999 on Arbitration and Alternative Dispute Resolution. In general, ad-hoc arbitration under this agreement is determined to mention the appointment of the arbitration tribunal and the implementation procedures agreed by the parties.
Arbitral institutions, is a permanent institution which is managed by various agencies arbitration under the rules that they set themselves. We have known many arbitration rules issued by the arbitration bodies such as the Indonesian National Arbitration Board (BANI), as well as international such as The Rules of Arbitration of the International Chamber of Commerce (ICC) in Paris, the Arbitration Rules of the International Center for Settlement of Investment Disputes (ICSID) in Washington. These agencies have rules and arbitration system of its own.
SCOPE OF ARBITRATION
Object of the arbitration agreement (dispute will be settled out of court through arbitration and the institution or agency other alternative dispute resolution) according to Article 5 paragraph 1 Law No. 30 of 1999 ( “Arbitration Act”) is a dispute on trade and related rights according to law and legislation fully controlled by the parties involved.
The activities in the field of trade include: commerce, banking, finance, investment, industrial and intellectual property rights. Meanwhile, Article 5 (2) Arbitration Act provides that the negative formulation of disputes which can not be settled through arbitration is a dispute which, according to the laws and regulations can not be held peace as stipulated in the Civil Code Book III KUH-eighteenth chapter of Article 1851 s / d 1854.
SETTLEMENT OF DISPUTES THROUGH ARBITRATION
A. Trade Dispute
Disputes or disputes in trade activities is something that is not expected to happen, because it would harm the parties to the dispute. Therefore, the possibility of trade disputes should be minimized or avoided, though sometimes the dispute can not be avoided because of misunderstandings, and any violation by either party, or arising in the opposite interest. Understand the difference, disagreement, conflict or dispute can not be allowed to drag on and must be resolved satisfactorily for all parties. Although each community has its own way to settle the dispute, but the development of the business world that is growing at a universal and global begin to recognize other forms of dispute resolution is homogeneous, “profitable” and provide a sense of “security” and justice for all parties .
One alternative that can be taken in the event of a dispute is to use arbitration as a private court, arbitration can be the best solution of the disputes that occurred, because the resolution of disputes through the judicial referee (arbitration) have significance compared with the official court as proposed by the HMN Purwosutjipto , among others:
- Dispute resolution can be implemented quickly.
- The referee made up of people expert in the field sengketakan obtained, which is expected to be able to make decisions that satisfy all parties.
- Decisions will be more in accordance with the feeling of justice of the parties.
- Judicial decision of the referee kept secret, so that the public does not know about the weaknesses of the respective companies. Confidential nature of the refereeing decisions this is desired by the entrepreneurs.
If the parties have chosen the settlement of disputes through arbitration either in writing in the contract or outside the contract, which expressly authorizes the arbitrator to decide on the final level, then this binds them as law civil principles in accordance with stipulated in article 133 KUH civil.
Thus the parties to the dispute decide on how the settlement of disputes between them by lifting an arbitrator or more, which acts as a mediator (arbitrator) and has the power to decide (arbitrator power) according to discretion.
In resolving disputes in practice the arbitrators to decide as good people, according to the circumstances and compliance. This is in accordance with the general principles of contract in law, which must be implemented in good faith in accordance with the provisions of article KUH civil. The arbitrator is given power to give decisions in accordance with justice, the decision must be in accordance with existing regulations, they are also bound to give reasons for their decisions and consider the legal regulations.
Examination of arbitration may engage third parties outside the agreement in the dispute resolution process provided that there are elements related interests, their participation was agreed by the parties in dispute, and also approved by the arbitrator or a panel that examined the besangkutan dispute (Article 30). The party was free to determine the arbitration will be used as long as not contrary to law.
Award to be made according to applicable laws, unless the arbitration clause or agreement has been given the power to (the) arbitrators to decide according to the policy (ex aequo et bonu) (art. 631 RV). In this case the decision is taken to mention the names and residence of the parties following his verdict, which is accompanied by reasons and rationale used (the) arbitrators in the decision, the date of the decision taken, and the place where the decision is taken, the ditnda signed by (the) arbitrators. In the case of an arbitrator refused to sign the decision, this should be included in such decisions, so that the same decision power with the decision, signed by all arbitrators. (Article 633 Article 632 RV jo)
The reference date and place of the decision is important, because it accounted for fourteen days from the time a verdict was issued, the decision shall be registered in the office of the local Court Clerk, the place where the award has been made (Article 634 paragraph (1) RV). The award can only be executed, if it has obtained orders from the Chief District Court where the decision was filed, which form inclusion Irah-Irah “FOR THE SAKE OF JUSTICE UNDER THE ONE ALMIGHTY GOD” at the top of the original award. The next award which has been obtained Irah-Irah “FOR THE SAKE OF JUSTICE UNDER THE ONE ALMIGHTY GOD” can be carried out according to normal procedures applicable to the implementation of a court decision (art. 639 RV).
According to the provisions of Article 641 paragraph (1) RV, to award the main dispute value of more than 500 dollars it is possible to appeal to the Supreme Court. Furthermore, in Article 15 of Law No. 1 / 1950 concerning the composition, powers, and the Way of the Supreme Court court also determined that Indonesia is only the decision of the principal disagreements that have more value than 25,000 dollars which can be requested only appeal to the Supreme Court. Although according to the stipulation, the award can be requested appeal, the provisions of article 642 RV. Clearly states that there is no appeal or review may be filed against an arbitral award, even though the parties have so memperjanjian in their agreement. Can be added here that the possibility to request an appeal, as noted above, can be ruled out by the parties with the will expressly include in the arbitration clause or agreement that they made it (Article 641 paragraph (1) RV)
IMPLEMENTATION OF ARBITRATION DECISION
Enforcement of the award is divided into two national award and the award of foreign (international). National award is the award both ad-hoc or institutional, which was decided in the territory of the Republic of Indonesia. Meanwhile, a foreign award is an award that was decided in foreign countries.
1. National Arbitration Decision
Implementation of the national award are set forth in Article 59-64 of Law No.30 of 1999. Basically, the parties should implement the decision voluntarily. In order for the award may be forced to implement, the decision shall be submitted and registered with the court secretariat, by registering and submit the original or authentic copy of the national award by the arbitrators or their proxies to the court clerk, within 30 (thirty) days after the decision arbitase pronounced. National Arbitration Decision is an independent, final and binding.
National Arbitration Decision is an independent, final and binding (such as the decision which has permanent legal kekeuatan) so that the Chairman of the District Court may not examine the reasons or considerations of the national award. The authority has examined the Chief District Court, limited to a formal examination of the national award imposed by an arbitrator or arbitration tribunal. According to Article 62 of Law No.30 of 1999 before giving the command execution, Chairman of the Court first examined whether the award meets Article 4 and Article 5 (specifically for international arbitrations). If you do not meet it, the Chief District Court may refuse an application for arbitration and the refusal was not there any legal effort.
2. Foreign Arbitration Decisions (International)
Initially, enforcement of foreign arbitral award in Indonesia based on the provisions of the Geneva Conventions in 1927, and the Dutch government which is the state convention participants stated that the Convention applies in the territory of Indonesia. On June 10, 1958 in New York signed the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Indonesia has mengaksesi the New York Convention by Presidential Decree No. 34 Year 1981 on August 5, 1981 and listed on the UN Secretary on October 7, 1981. On March 1, 1990 the Supreme Court issued a Supreme Court Rule No. 1 of 1990 on the Implementation Procedures for Foreign arbitration decision with respect to the legalization of the New York Convention of 1958. With these perma barriers to the implementation of a foreign award in Indonesia should be able to overcome. But in practice the difficulties are still encountered in the execution of foreign arbitral award.
Abolishment of ARBITRATION AGREEMENT
Arbitration agreement is declared null, if the dispute resolution process events occur:
- One of the parties dies.
- One of the parties went bankrupt, Novasi (renewal debt), and insolvency.
- Abolishment of burdensome requirements subject.
- Implementation dialihtugaskan arbitration agreements with third parties with the consent of the parties to the arbitration agreement.
- Expiration or cancellation of the main agreement.