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Alternative dispute resolution in indonesia

Alternative Dispute Resolution (herein after abbreviated as ADR) is not a strange practice for Indonesian people. It has been well-known by Indonesian tribes and customs before the nation's independence as a united country. The mechanism of musyawarah mufakat—which means reaching a unified agreement through negotiation or mediation—has been used almost in every aspect of community interaction. As an example, for the Minangs tribe in Batusangkar (West Sumatra), conflicts or disputes are more often settled by religious and traditional leaders in their own community. Those who prefer litigation will be perceived negatively and may get social sanction from their community (LP3ES, 2005). Indonesian people, like any other Eastern countries, put more emphasize on the brotherhood and long-term relationships than short-term profits. Furthermore, as most of the Indonesian population are Muslims, Islamic teaching obligates its followers to strengthen their brotherhood (which is known as silaturahim).

This mechanism of musyawarah as the indigenous way of Indonesian people plays a vital role in settling disputes or conflicts among the society members in Indonesia, for both private or public matters. Barnes (2007) states that due the lack of trust on the judiciary, musyawarah has gained acknowledgement from the community since all disputants share ideas in the process.

Although the similar basic nature of mediation, musyawarah derived from Islamic teaching, has been embraced and practiced as the indigenous culture in resolving disputes, the word ‘mediation” itself is not well-known to Indonesian people. They do not realize that they have been practicing mediation all along. It just entered the discourse until its introduction in the law schools' syllabus in the 90's and the issuance of the Law on Arbitration and Alternative Dispute Resolution and Supreme Court regulation on court-annexed mediation. Until then, the legal society and community at large grasp the word ‘mediation' and recognize it as an alternative dispute resolution other than litigation. Mediation, in the form of musyawarah, actually had been used by Indonesian people as part of their traditional custom in resolving disputes. But in the era of Dutch occupation for three and a half centuries, the situation changed, Indonesian people became litigated-mind society. It is hoped that by the introduction of court-annexed mediation, the situation can be reversed again.

This similarity with musyawarah needs to be encouraged in promoting mediation so it will be received by all tribes open handed and without suspicion.   During the last decade mediation has become a significant formal alternative dispute resolution process in Indonesia. A law has been issued to use arbitration and alternative dispute resolution to settle private disputes, although mediation is only regulated in one article (Law No. 30 Year 1999). It has also been practiced in a variety of contexts such as banking, insurance, environment, labour and in the judicial system in the form of court-annexed mediation. A court-annexed mediation model was newly introduced in 2003 by the issuance of Supreme Court Regulation No. 2 Year 2003.  

The era of globalization of communication and education has affected the minds and the ways of Indonesian people in resolving disputes. Juwana (2003) suggests that Indonesia is on the crossroad between the traditional and modern system and between the Asian and Western values. To accommodate this shift, some forms of ADR have been implemented in the Indonesian legal system since 1990's. In 1999, the issuance of Law No. 30 on Arbitration and Alternative Dispute Resolution was intended to provide legal basis for the institutionalization of ADR. Arbitration is final, has legal enforcement/execution and is binding. Final means that the decision by the arbitrator can neither be appealed nor reviewed. If one party does not uphold the agreement, one can ask the District Court to enforce it. Umar (2005) mentions that, ‘prior to that, the relevant regulation was the Law on Arbitration, which was part of the Old Law on Civil Procedures of 1848 enacted during the Dutch colonial administration' (p. 79).

The implementation of Law No. 30 has not been successful because disputants still feel that arbitration is no different from litigation. There is still an adversarial process and the third party decides the verdict which mostly results in one party winning and the other losing. The law also mentions mediation as an alternative in article 6. Other forms of ADR such as negotiation, reconciliation and mediation have been used in the regulations since then to settle disputes in wider fields such as in environment, labour, consumer disputes, insurance and banking.

The legal basis for the Supreme Court to issue its regulation is based on Indonesian civil procedural law which is inherited from the Dutch colonial era. Mills (2006) explains that there are two court procedures governing the local people: the Herziene Indonesisch Reglement (herein after abbreviated as HIR) on the islands of Java and nearby Madura; and the Rechtsreglement Buitengewesten (herein after abbreviated as Rbg) on the other islands.

Under HIR article 130 and Rbg article 154, judges are obliged to try to settle disputes amicably. Without trying to do it, every decision which results from the proceedings will be considered void. However, the articles do not specify how the judges can settle the disputes amicably, which is why the Supreme Court issued the regulation on mediation procedures in court. Although the Supreme Court does not have the authority to make the law, it has the power to draft further regulations to explain the law which provides no detail on the procedures. The scope of the regulation is confined to procedural matters only (The Supreme Court of Indonesia, 2006). Prior to the issuance of the regulation, the Supreme Court issued its Circular Letter No. 1 Year 2002 to ask the judges to make efforts settling the disputes amicably, but it also failed to address the procedures.

The Supreme Court of Indonesia tried to overcome the weaknesses of arbitration by issuing Regulation No. 2 Year 2003 concerning Mediation Procedures in Courts or Court-Annexed Mediation. Mediation is used as an alternative to litigation to avoid adversarial process to reach lasting agreement by considering social and humanitarian aspects. It also aims to overcome the long and expensive nature of litigation process in courts which has led to complaints from disputants and they themselves have the power to control the process and outcome of dispute resolution (IICT, 2005). Parties are given the authority by the mediator to decide what they want in the mediation process (Bagshaw, 2006).

Another benefit is that mediation could overcome the problem of case backlogs in the Supreme Court. Based on its annual report per March 2006, the backlog stood at 13,997 cases (The Supreme Court of Indonesia, 2006, p. 7). This problem cannot be resolved just by increasing the number of judges in the Supreme Court because the rate of cases entering the Supreme Court is far greater than the ability of the Government to increase the number of judges in the Supreme Court. Instead, to overcome this constraint, the effort must be directed to the court of first instance (IICT, 2005).

One of the objectives in establishing court-annexed mediation is to provide the access to justice to the poor and vulnerable parties so they could have a balanced fight for their interests. Unlike in litigation where the decision maker of the dispute is a judge, mediation gives more power for the parties to determine the outcome of a settlement. In western discourse, mediator has to balance the position of the disputants to reach fair settlements. This role of mediator differs from Asian discourse, including Indonesia. Mediators play the function as ‘an advisor' to preserve the traditional values (Lee and Hwee 2009). Mediator can also assume the role of an arbitrator, giving his/her opinion to settle the disputed matter (IICT 2007). Parties expect them to function as the wise guy in the community who is respected and trusted to settle a dispute. Nevertheless, whichever function s/he is playing, in the process of delivering the decision s/he still has to remain neutral by not taking any side. Everybody is getting the chance to convey their interests. By doing so, mediation offers the excluded individuals to speak for themselves freely in conveying their disputes which is mostly difficult in litigation. Furthermore, mediation limits the exclusive rights belonging to particular class, race and gender and prevents them in abusing their power to corrupt the mediation process. Court-annexed mediation then becomes a transforming institution to the existing power relations.

Court-annexed mediation falls under the jurisdiction of the District Court which only handles civil disputes between non Muslims. When parties reach a deed of settlement (known as akta perdamaian), it is automatically final, binding and enforceable. ‘Final' means the settlement cannot be appealed or brought to the Supreme Court. ‘Binding' means the disputants have to obey and enforce it. ‘Enforceable' means the court could rule the execution if one party fails to enforce it. This enforceable power of settlement is known as Berkekuatan Hukum Tetap [and has equal power of enforcement to a judge's decision] (Sutadi, 2003).

In practice, court-annexed mediation is also being carried out by the Religious Court for civil disputes among Muslims. There is one article in the Supreme Court Regulation which allows the procedures to be used in other kind of courts if deemed necessary (article 16). Many private disputes have been settled by mediation in Religious Courts, especially divorce cases.

The deed of settlement resulted from court-annexed mediation is expected to overcome the problem of long, expensive and complicated procedures in the litigation process. Court-annexed mediation only takes 22 days if it is carried out in court or 30 days out of court, whereas based on the Supreme Court Circular Letter No. 6 Year 1992, the litigation process could take up to 6 months. As Juwana describes:

…The long process is usually due to postponement in each of the court hearing for various reasons, such as the judge is taken ill, the defendant or plaintiff asks more time to prepare the written pleadings. However, the delay has in many occasions been used as outright strategy from lawyers in an attempt to slowdown the proceedings (Juwana, 2003, p. 18).

In addition, if the loser is not satisfied, s/he could appeal the decision in the High Court which could take another 6 to 8 months and then go to the Supreme Court. According to Harahap (2004, p. 154), ‘the average time required for the completion of a case from the court of first instance up to the Supreme Court can be between 7 to 12 years'. It is in some parts caused by case backlog. (The Supreme Court of Indonesia, 2003, p. 168).

Notwithstanding the long, expensive and complicated procedures of litigation process, the implementation of the Supreme Court Regulation No. 2 Year 2003 is still far behind expectation. The percentage of successful mediated cases based on this regulation is below 5% (IICT, 2005, p.15) despite the musyawarah (amicable) tradition of Indonesian people.

The Religious Court has its own dispute resolution procedure according to Islamic law which is known as hakam and sulh. Hakam is more similar to arbitration as the third party is deciding the outcome of the dispute (Ali 1999). Rasyid (2008) defines sulh as a compromise way of the parties to settle their dispute by themselves or with the help of a third party. Both hakam and sulh are practiced before the litigation process begins. Most judges prefer and persuade parties to choose sulh as it will keep family harmony and is recommended by Islamic legal sources, Qur'an and Hadits (Ramulyo 1999). The mediators, who are recommended by the Religious Court and appointed by the parties, are mostly retired judges and religious leaders who have Islamic law competency and are well-respected. The procedure and techniques of religious court dispute resolution are different to those used in court-annexed mediation (Ramulyo 1999). However, the settlements produced from the Religious Court mediation process have no enforceable power which can bind the parties. This research aims to critically examine the positive aspects of Islamic dispute resolution which can contribute to the development of family court-annexed mediation. This research will be useful as it is hypothesised that court-annexed mediation would be more likely to be accepted in the religious court, and have execution power, so that more family disputes can be settled amicably, as most population in Indonesia are Muslims.

The literature is split around the preference to use hakam or sulh based on their advantages and disadvantages. Hakam is preferred as it guarantees someone's legal right and conserves justice, however its rigid procedure neglects relevant factors surrounding the dispute (Siregar 2001). Sulh offers a more flexible process but it may sacrifice justice for both parties as compromise could submerge the less powerful person if not being done carefully (Ali 1999). In the context of Indonesian religious courts there are very few numbers of female judges and mediators. Trainings for judges and mediators fail to consider gender issue as there is no subject on this matter in the syllabus (IICT 2005). Most Indonesian people perceive women as being not suitable to be judges or mediators because they are dominantly controlled by emotion which may disturb the process of settling a dispute in a rational way. This situation could worsen the position of women in the patriarchal system that most tribes follow. This thesis will critically examine the position of women as mediators and judges in the family law system in Indonesia and the implications for female disputants, who are typically the most vulnerable parties in a dispute. This research will also critically examine whether or not aspects of hakam or sulh could be incorporated in religious court-annexed mediation to settle family disputes in a culturally acceptable way and also produce just outcomes for all parties.

This thesis endeavours to recognize and collect the Islamic and traditional ways of resolving disputes which have been ignored by the dominant historical discourse.

Indonesians have been using litigation in court to resolve their disputes since it was introduced during the era of Dutch occupation. Nevertheless, recent developments indicate that this mechanism has not been able to achieve its objective to provide a fast, simple and low-cost procedure to settle a dispute. Many people are having difficulty in seeking justice in court, especially vulnerable parties such as the poor and women. Many reasons are contributing to this, such as accusations of corruption, lack of good human resources, a complicated bureaucracy, and a lack of funding. The indigenous people are also finding it difficult to get access to justice in court. Judges fail to pay attention to traditional norms whenever they make decisions or settlements because they are obligated to apply the state laws. Previous research has indicated that the failure to consider indigenous values may have contributed to the low rate of success in the implementation of court decisions or settlements, among other constraints (Indonesian Institute for Conflict Transformation (IICT) 2005). Decisions cannot be enforced because wider stakeholders reject the outcome if they are not in accordance with the norms of the local culture (Lembaga Bantuan Hukum (LBH) Bali 2005). There was a movement to return to the traditional way of resolving disputes in the late 90's as one alternative to overcome the problems in court. Its purpose was to give Indonesian society the right to resolve their private disputes based on their own indigenous mechanisms to create justice. People were encouraged to play a dominant role in settling their disputes without court or state interference. The Dutch government actually acknowledged and endorsed this traditional procedure in its civil procedural laws for local/native people, which is not applied for the Europeans. However, this approach is losing its spirit and is no longer used (Tumpa 2008). The basis of this approach is called musyawarah

In relation to this research, court-annexed mediation in Indonesia should not consider its mediation procedures or stages as the only ‘correct' way in resolving disputes especially because they derived from western values under the Dutch occupation. The court should also pay attention to other alternative mechanisms such as restorative mediation which is still practiced by some customary communities (Simarmata 2006) and hakam or sulh derived from Islamic teachings (Abu Nimer 2000; Othman 2007). These alternatives offer uniqueness and positive aspects which can be modified and combined with current procedure to be more suitable according to the tradition and Islamic teaching in Indonesia. This is particularly relevant to this research to deconstruct the existing structure in court-annexed mediation and provide alternatives, such as traditional and Islamic ways of resolving disputes.

In the context of court-annexed mediation, the behaviour of customary communities in settling family disputes is considered abnormal by the court. This is done by not acknowledging the mechanism of resolving the disputes which contradicts the state law (Sutadi 2003). The settlements produced from customary mediation have no legal enforcement from the state which leads to the transformation from amicable to litigated way of resolving conflicts.

These cultural aspects contributed to factors to be considered by mediators who are working across cultures in order for them to be culturally fluent (Le Baron 2003).

Court-annexed mediation obligates judges to become the mediators in settling private disputes being brought into courts. However, due to the lack of judges (especially in the rural areas), non judges (such as lawyers, academics, community leaders, etc.) have been allowed to become mediators in court. In order to become a mediator in court, these professionals have to undergo 40 hours of mediation training and pass the theory and practical exams held by an institution accredited by the Supreme Court of Indonesia. The Supreme Court also endorses mediation training and practice at the community level to prevent disputants from going to the courts, which may increase the case backlogs.

The constraints which have been hampering the implementation of court-annexed mediation in Indonesia are categorized into two sections: internal factors involve the constraints within the judiciary system and the external factors comprise the constraints outside the system.

As mentioned above, court-annexed mediation is based on a Supreme Court regulation. The implication of this is that only cases that have been registered in the District Court can be mediated and result in a deed of settlement, with final, binding and enforceable power. Sutadi (2004) emphasizes that the judge mediator can only mediate the disputes which have been registered in court. No out-of-court settlements can be enforced and they are only binding to the parties who have agreed on those settlements. This limits the possibility of getting more disputes being settled by mediation in court.

There is one exception to this ruling. Law No. 2 Year 2004 concerning The Industrial Relations Court states that the agreement signed by labours and employer to settle a dispute can be registered and executed by the court (The Supreme Court of Indonesia, 2006). This can only happen because hierarchically the law is higher than the Supreme Court regulation.

Based on article 130 of HIR, the judge has the obligation to settle the disputes amicably, but it is the judge who has become the primary constraint in the implementation of court-annexed mediation. The first reason is because by nature, a judge is not suitable to be a mediator. As Santosa (2004) indicates a judge is used to adjudicating, not facilitating. That is why in practice, the mediation process is no different to litigation when a judge becomes a mediator in most mediated cases. S/he adjudicates and decides the dispute as he is accustomed to doing in a proceeding. No wonder many disputants feel dissatisfied and reject the settlement decided by a judge mediator. In addition parties also have little trust in judges because of their poor reputation.

The second reason is because judges feel that their obligation to perform the role of mediator has added a burden to their job and they do not receive an additional fee when they act as mediators. Parties pay nothing when they choose a judge to be a mediator in their case which is why almost 95 % of civil cases are mediated by judges. Disputants do not want to spend more money to pay the non-judge mediator. To make the matter worse, a judge receives a low monthly wage. As Crouch (2004) concludes it is pressuring them to find additional sources of income, including bribes and they may deliberately ‘collude' with prosecutors to weaken cases.

The third reason why judges are constrained to act as mediators is because the regulation states that mediators have to undergo certification training first by an accredited institution to become a certified mediator in court so some judges are not performing their duties as mediators because they have not been certified. Moreover, some judges also think mediation only benefits judges in the Supreme Courts because it is intended to overcome the case backlog in the Supreme Court. They are hesitant to implement the court-annexed mediation because they see no benefit for them.

The regulation states that the mediation process which takes place in court consumes 23 working days including one day to appoint one mediation by parties and 31 working days if a case is mediated outside the court. This time limit is too short to mediate a case, especially if the case is complicated and many parties are involved or if there is one party who lives outside the town or abroad IICT, 2003). For example, the summoning of parties could take a week because they live in a remote area. Communication and transportation still remain big problems in Indonesia, especially with its vast geographic areas.

In practice, if the mediator sees that there is a possibility to settle a dispute between parties, s/he could ask the presiding judges to extend the time at the end of the mediation process. Presiding judges usually approve this request by extending the mediation by one or two weeks.

Because of the nature of a mediation process and the need to maintain confidentiality and provide a comfortable environment that can encourage disputants to settle amicably, facilities play an important part in the success of court-annexed mediation. Therefore a designated mediation room is desirable with some additional supporting facilities. However, most courts in Indonesia do not have this luxury. (Sutadi, 2004) also indicates that rooms for judges' office are also difficult to find.

In practice, many mediated cases are held in the judge mediator's office where s/he shares the space with three to four other colleagues and therefore the confidentiality of mediation process cannot be maintained (IICT, 2005).

Lawyers play an important part in the success of court-annexed mediation. However, most Indonesian lawyers are against court-annexed mediation because it limits the amount of money they could earn from a consultation fee. Because mediation takes a shorter time (23 or 31 working days) compared to the litigation process (6 months), a lawyer will receive less income if his client chooses mediation. In practice, lawyers persuade their clients not to undergo the mediation by saying that they have big chance to win in the litigation process (IICT, 2005).

Another big problem that has been hampering the implementation of court-annexed mediation is there is no enforceable mechanism to make parties come to the mediation process (IICT, 2005). Although mediation is voluntary by nature, the main reasons why parties do not get involved are because of their lack of understanding of mediation and the negative persuasion from their lawyers. This is happening in the litigation process where a judge could issue a default decision if one party is absent in the proceeding.

In most cases where parties are absent in the mediation process which is compulsory, they just wait for the mediation time to expire so they could move further to litigation. This is of course causing inefficiency in case management and contributing to case backlog.

Until now, many stakeholders have not been aware of the existence, purpose and benefits of court-annexed mediation. Because of funding limitations, the Supreme Court of Indonesia cannot easily disseminate and publish the regulation on mediation, especially because of the vast geographic area of the country. The Supreme Court (2005, p. 19) reports that it has allocated almost US$ 100,000,000 in 2005 for all four court systems which is still inadequate.

Local cultures hamper not only the court-annexed mediation, but also the Indonesian legal system in general. As Indonesia has been under Dutch occupation, its legal system is still based on the Dutch system which contradicts the local culture of Indonesian indigenous people. As Mills (2006) reports the Dutch aimed to unify the law for all Indonesians and it was being followed by the Indonesian government, but some customary laws still apply in the regions.

This unification of law has brought with it many controversies and contradictions with local cultures. As Indonesia consists of thousands of tribes with different customs, languages and laws, it would be impossible to enforce the law without acknowledging the local culture. Many riots have been prevalent in Indonesia due to decisions from the legal apparatus or specifically, from the judiciary, because the decisions do not fulfil the requirement of a just outcome for indigenous people and neglect the customary values (LBH West Java, 2005). This is causing failures to execute court decisions, especially in land disputes, because local people are demonstrating and fighting. These riots have caused many people to lose their lives, relatives and property. Barnes (2007) comments that the Indonesian people and foreigners do not perceive that the courts and legal system timely fair justice.

The same problem occurs in court-annexed mediation. Because the number of judges are limited and their rotation time is rather high, the placement of judges do not address the cultural situations. Judges from one province/tribe are placed in a different area where they do not know and understand the local culture so they fail to pay attention to the customary values. No wonder then many decisions/settlements do not take into account the indigenous culture and result in many contradictions and a lack of support.

In this chapter, I have described the development of court-annexed mediation in Indonesia starting from the history of alternative dispute resolution in Indonesia which is based on musyawarah mufakat—the indigenous way of resolving disputes. I explored the use of mediation in some fields of substantive laws such as environment, labour, banking, insurance, consumer protection and intellectual property.   Some regulations concerning court-annexed mediation were discussed to describe the institution inception to legal discourse in Indonesian judicial system, including the reasons for its establishment. The jurisdiction of court-annexed mediation was described to distinguish the type of cases handled by district and religious courts. Related to this research, I explained specifically the process of mediation in settling family disputes in religious courts. I further illustrated in this chapter how the community resolve disputes using customary mediation, including its strengths and weaknesses compared to court-annexed mediation. As an important part of the court-annexed mediation implementation, I described the training of mediators held by the Supreme Court of Indonesia for judges and lawyers, as well as the community mediators such as academics, NGO workers, tribal and religious leaders. This included the training method, its syllabus and other technical matters.   In the last section of this chapter, I explained the constraints faced by court-annexed mediation, both from internal and external factors. Internal factors included legal constraints, judicial constraints, time limits for mediation and inadequate facilities. External factors included lawyers' and disputants' support, lack of funding and the clash with local culture.

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