Use of Dispute Avoidance and Adjudication Boards

Abstract

Article 88 of Law No. 2 of the Republic of Indonesia in 2017, concerning construction services, suggested three stages of dispute resolution: (1) mediation, (2) conciliation, in which both could be replaced by the appointment of a dewan sengketa (DS), and (3) in the event that one party is dissatisfied with the decision, the final stage is arbitration, with no more litigation. During a study using data from the Indonesian Supreme Court's website, it was found that the litigation process, starting from district court and proceeding to high court, supreme court, and then judicial review, is without any restrictions or limitations on the number of iterations of this process, provided that new evidence has been found. Although, based on best practices, arbitration decisions should be final and binding , the study showed that they could still be challenged in Indonesian courts; therefore, both the litigation process and arbitration are becoming less certain. A study in August 2017 showed that reluctance to use dispute boards (DBs) was because of a lack of acknowledgement of DBs, no law shelter, and high costs; a recent study in January 2020, after the Law No. 2/2017 was in force, showed that the reasons for reluctance to use DBs changed to a lack of trusted and respected people, lack of acknowledgement of DBs, and high costs. It is proven that the issuance of the law as well as dissemination and training by the government have had a positive impact on using DBs. Pilot projects on using a dewan sengketa, a modification of a dispute board involving the national auditor, who was given the authority to provide advice to influence a decision based on Presidential Decree No. 192/2014, showing an innovation by the author to accommodate expectations from both parties to resolve potential dispute before it escalates and still being aligned with the Indonesian law and regulation, certainly need the government's support. The DS has two functions: to issue a final and binding decision or to issue a recommendation; the latter is more appropriate in Indonesian culture. To ensure independence, fairness, and transparency in the decision or recommendation being issued, it is mandatory that DS members be trusted and respected people.