(The Jakarta Post, 23 May 2007)
Maralda H. Kairupan, Jakarta
A lot of attention is being paid in Indonesia at the moment to how business dispute resolution processes can be improved. This attention has arisen from the growing complexity of modern commercial society and the laws that govern it.
The present groundswell of interest shows the need for business dispute resolution mechanisms to keep pace with the times. This interest is largely the product of the ongoing concern of business and law practitioners, academics and governments that disputes be resolved through effective means, for the benefit of the disputants and society at large.
Traditional court settlements, the litigation process, cannot always meet contemporary dispute resolution requirements in a timely, cost-effective and satisfying way. With the increase in litigation costs and court congestion, business entities are increasingly turning to alternative dispute resolution (ADR) to resolve their disputes.
While ADR denotes a variety of techniques to resolve disputes outside the courtroom, the following methods typically fall under the label ADR: negotiation, mediation, conciliation and arbitration. Although each of these ADR methods has its own characteristics, they generally enable parties to resolve disputes in a confidential setting, among other things. They also help to establish deadlines and procedural rules governing the proceedings, select presiding officials and neutral parties and maintain ongoing business and personal relationships.
The government has already issued Law No. 30/ 1999 concerning Arbitration and Alternative Dispute Resolution (the Arbitration Law). This law is meant to stimulate disputants to settle their disputes through ADR institutions such as the Indonesian National Board of Arbitration (BANI), leaving aside the litigation process.
On top of this, the Supreme Court issued a 2002 ruling concerning court-annexed mediation procedures, in order to solve courts' huge case backlog. This led to the establishment of mediation institutions such as the Indonesian Mediation Center (PMN) and the Indonesian Institute for Conflict Transformation (IICT).
The Arbitration Law mentions some forms of ADR. Although the law does not provide clear definitions of each form, a study of the literature can clear up what most of them are.
Negotiation is the most common ADR method, and is, by definition, voluntary and non-binding. Negotiation is generally conducted by the involved parties, and sometimes their attorneys as well. While negotiation generally does not involve the intervention of third-party presiding officials, independent third-parties can aid settlement negotiation by helping participants focus on what caused the dispute and how it can be remedied, rather than assigning blame.
Mediation is a non-binding structured process in which the mediator helps the participants reach a negotiated settlement. Mediators can use various techniques to help the parties reach a settlement, but they do not have the power to reach a decision themselves.
Conciliation is similar to mediation, and many people use the two words interchangeably. There is no agreed terminology. But a conciliator does take a more proactive role than a mediator, giving his or her own opinion from time to time and at the end, if no agreement has been reached, indicating how a court would likely decide.
Arbitration entails different views of two different schools: one who says that arbitration is not a form of ADR due its adjudicative nature, and one who says that arbitration is a form of ADR given its out of court nature. For the purpose of this discussion, arbitration will be regarded as a form of ADR.
Arbitration is perhaps the most well-known ADR technique and generally denotes the submission of a dispute to an arbitrator or arbitration tribunal. The end point of the process is a binding resolution after a hearing in which each side presents evidence and arguments with the help of legal counsel. In this way, arbitration differs from mediation and other structured settlement techniques, which are far less adversarial.
There is one other form of ADR which can be efficient: so-called mini trials. Literature studies describe the simplicity of this method.
There is no set definition of a mini trial. A a mini trial involves a structured settlement process in which each side of a dispute presents abbreviated summaries of its cases to the major decision-makers for the parties who have authority to settle the dispute. The summaries contain explicit data about the legal basis and the merits of each case.
The process normally follows more relaxed rules for research and case presentation than might be found in a court and the parties usually agree on a specified limited time period for presentations and arguments. The mini-trial is confidential and is typically scheduled after an opportunity for limited research.
The proceedings consist of each disputant's presentation of a summary of the evidence and testimony that they would produce at a trial, as well as arguments by counsel.
A neutral party or a judge supervises each mini-trial. That individual is responsible for explaining and maintaining an orderly process of case presentation and may give an advisory opinion regarding settlements. That last role they perform if asked, rather than automatically offering detailed solutions for the parties to consider. The third party may also provide mediation services upon request.
The rationale behind mini trials is the assumption that if decision-makers are fully informed about the merits of their cases and that of the opposing parties, they will be better prepared to successfully engage in settlement discussions.
By involving disputants early on, mini trials promote settlements and have the added advantage of preserving business relationships that would otherwise be weakened by litigation. Furthermore, if a settlement is reached, mini trials also reduce litigation costs.
Clearly, courtroom settlements in Indonesia are being avoided by modern commercial society because of the judicial system's failure to fulfill the need to resolve disputes in a timely, cost-effective and satisfying way. On top of this of course are also concerns about corruption and the operation of the so-called "judicial mafia" in the nation's courts.
Disputants can expect a more positive result going through ADR than through regular courts. Establishing more ADR institutions would be an excellent move to support businesses in settling disagreements.
Mini trials are regarded as being effective in a number of ways. However, there are as yet no laws concerning the application of mini trials in Indonesia, nor has there been the establishment of mini trial institutions.
The writer is a member of the Chartered Institute of Arbitrators. He can be contacted at maralda.kairupan@googlemail.com.
