Introduction to Arbitration
MBA 2013, Freeport Class
Arbitration is one form of Alternative Dispute Resolution (ADR), ADR (Alternative Dispute Resolution) is a commonly used term for settling disputes by mutual agreement. ADR in its wider sense includes both arbitration (as an alternative to ordinary court proceedings) as well as mediation or conciliation of disputes (in all its variations). According to one English definition: “ADR is any method of resolving an issue susceptible to normal legal process by agreement rather than by imposed binding decision.” It is means to end disputes which provide parties to a controversy with a choice other than litigation. Conciliation/mediation undoubtedly constitutes the very oldest form of
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30 of 1999 explained that, "Arbitration Agreement is an agreement in the form of an arbitration clause contained in a written agreement made by the parties before the dispute arises, or a separate arbitration agreement made by the parties after the dispute arises". Unlike litigation, Arbitration takes place out of court where the two sides select an impartial third party, known as an arbitrator; agree in advance to comply with the arbitrator's award; and then participate in a hearing at which both sides can present evidence and testimony. The arbitrator reviews the evidence in the case and imposes a decision that is legally binding for both sides and enforceable, this decision is usually final, and courts rarely reexamine it. Article 30 of Indonesian Law 30 of 1999 on Arbitration stated that the District Court was not competent to adjudicate the parties' dispute that has been bound in the arbitration agreement. This means that any agreements have included an arbitration clause or an arbitration agreement made by the parties to abolish the authority of state courts to resolve any disputes arising from the agreement containing the arbitration clause.
Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. The use of arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment