Arbitration is a way to settle a civil dispute outside the general court based on an arbitration agreement made in writing by the parties to the dispute (based on article 1 paragraph (1) of Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution. As for when Law No. 30 of 1999, the provisions regarding arbitration as regulated in articles 615 to 651 Rv, Article 377 HIR, and Article 705 Rbg no longer apply. The existence of Law No. 30 of 1999 has tried to accommodate all aspects of arbitration both in terms of law and its substance with both national and international scope.

In Indonesia itself, interest in resolving disputes through arbitration has increased since the promulgation of Law No. 30 of 1999. As for several things that are the advantage of Arbitration compared to settling disputes through litigation are: 1) The hearing is closed to the public; 2) The process is fast (a maximum of six months); 3) The decision is final and cannot be compared or appeal; 4) Arbitrators are chosen by the parties, experts in the disputed field, and have high integrity or morals; 5) Although the formal costs are more expensive than court costs, there are no ‘other costs’; to 6) Specifically in Indonesia, the parties can present their case before the Arbitration Tribunal and the Arbitration Council can immediately request clarification by the parties. In the international scope, Indonesia and parties from Indonesia also often resolve disputes through arbitration. Some examples of cases are: 1) Disputes between Cemex Asia Holdings and Indonesia which were resolved through the International Center for Settlement of Investment Dispute (ICSID) from 2004 to 2007; 2) The dispute between Pertamina and Commerz Asia Emerald which was settled through Singapore International Arbitration Center (SIAC), Singapore in 2008; 3) Dispute related to Century Bank in which two shareholders sued the Government of Indonesia namely Rafat Ali Rizvi and Hesham Al Warraq which were resolved through ICSID, Singapore; to 4) Disputes between Newmont and the Indonesian Government which were resolved at ICSID, Washington DC.

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As it develops, the resolution of disputes through arbitration encounters several problems. The main problem is related to the implementation or execution of the arbitral award. Within the international scope, international arbitration decisions can be recognized and implemented in Indonesia if they are not in conflict with public order, have been obtained by the Chairperson of the Central Jakarta District Court, and if one of the parties to the dispute is the Republic of Indonesia, then it can only be carried out after there is an equipuator from Supreme Court – RI. The problem is, courts in Indonesia are often “branded” reluctant to carry out the implementation of international arbitration awards on the grounds that the decisions are contrary to public order. Another problem, in the national scope of the implementation of the arbitration award is also often hampered due to the lack of ability and knowledge of Indonesian arbitrators which results in the delay of the arbitration award.