“Mediation process should conduct by the agreement of both parties, and if the agreement has been reached, it is final and binding for both parties to be carried out with good faith.”
In general, mediation is a part of Alternative Dispute Resolution (“ADR”) which divided into 2 (two) types namely mediation inside the court and outside court. Mediation outside the court is regulated based Law No. 30 of 1999 regarding Arbitration and Alternative Dispute Resolution (“Law No. 30/1999”). Meanwhile, mediation inside the court is regulated further according to Supreme Court Regulation No. 1 of 2016 regarding Mediation Procedure in Courts (“SC Regulation No. 1/2016”).
In this article, we will convey below for the importance of mediation process in regard to dispute resolution.
Definition of Mediation
According to Law No. 30/1999, it is stated that ADR is defined as dispute resolution institutions through procedures which agreed upon by the parties. There are types of dispute resolution namely settlements outside the court such as consultation, negotiation, mediation, conciliation, or expert judgment. However, Law No. 30/1999 did not explain further for the definition of mediation outside the court.
However, the definition of mediation inside the court is explain on SC Regulation No. 1/2016, that mediation is a way of resolving disputes through a negotiation process to obtain an agreement between the parties assisted by a Mediator. The Mediator should be a Judge or other party whom has a Mediator Certificate to assist the parties in the negotiation process to resolve disputes without deciding or forcing a settlement.
Mediation outside the court can be conduct if the dispute between both parties cannot be resolved by negotiation process. According to both regulations mentioned above, mediation inside the court and outside the court has the same purpose which to resolve disputes between both parties and assisted by a mediator to make a peace agreement.
The Mediation Process in Dispute Resolution
1. Mediation Process Outside the Court
Before submitting the dispute to the court, both parties can resolve the dispute in good faith in accordance to the agreement of both parties. According to Article 6 (2) of Law No. 30/1999, the dispute can be resolve in a direct meeting by the parties for maximum period of 14 (fourteen) days and the results are set forth in a written agreement. In regard that the dispute is not resolve, the dispute should be resolve through the assistance of one or more expert advisors or through a mediator by the written agreement of the parties as stipulated in Article 6 (3) of Law No. 30/1999.
Furthermore, if the parties fail to reach a resolve for the dispute with assistance from one or more advisors or mediator are fail to meet up the parties within maximum period of 14 (fourteen) days, then the parties can contact an arbitration institution or an ADR institution to appoint a mediator. Based on Article 6 (5) of Law No. 30/1999, after the appointment of mediator by the arbitration institution or ADR institution, then the mediation process should be started within a period of 7 (seven) days.
The dispute resolution through a mediator is confidential and must reach an agreement no later than 30 (thirty) days in a written agreement which signed by both parties. The written agreement is final and binding to both parties which should be implemented in good faith. It also should be registered to the Civil Court for maximum period of 30 (thirty) days after signed by both parties according to Article 6 (7) of Law No. 30/1999. The written agreement should be conduct by both parties in 30 (thirty) days after registered.
Law No. 30/199 stated that the both parties can appoint mediator to resolve the dispute by the agreement of both parties if the dispute cannot be solved through the discussion and/or negotiation of both parties. The mediation outside the court could be conduct with the assistance of mediator from the institution outside the court.
2. Mediation Process Inside the Court
Previously, mediation was only carried out outside the court but along with the times, the implementation of mediation is included in the settlement of disputes in the court. This process arises in accordance of civil law which requires effort to resolve the dispute in peace. Under Article 3 (1) of SC Regulation No. 1/2016, every Judge, Mediator, and other parties involved are obliged to follow the procedure of dispute resolution through mediation. It is explained further that the parties that did not conduct mediation has violated regulation concerning mediation in the court.
In Article 4 (1), all civil disputes which submitted to court including cases of resistance (verzet) to verstek decisions and resistance to litigants (partij verzet) and third parties (derden verzet) against the implementation of decisions that have permanent legal force, must first seek settlement through mediation process unless otherwise specified under SC Regulation No. 1/2016. Therefore, both parties must attend the mediation in person with or without being accompanied by a lawyer.
According to Article 27 of SC Regulation No. 1/2016, in a condition that the mediation process has reached an agreement between the plaintiff and the defendant, then both parties are assisted by the mediator to draft a written agreement in the Settlement Agreement which signed by both parties and the Mediator. Furthermore, both parties through the mediator can submit the Settlement Agreement to the Case Examining Judge to set a Deed of Conciliation. The Mediator are obliged to report the outcome of mediation process by attaching the Settlement Agreement.
Based on the brief explanation regarding out-of-court and in-court mediation, there is not much difference between those two processes. However, it can be concluded that the mediation in court is still required to be carried out against disputing parties in the court which it is different from the process of mediation outside the court. Mediation in court must be in the form of a Peace Agreement along with the Deed of Conciliation but mediation outside the court can only be in the form of a written agreement between both parties.
Electronic Mediation in Courts
Along with the times, the Court also updated it process which can be conducted through electronic device. In accordance to Supreme Court Regulation No. 3 of 2022 regarding Electronic Mediation in Court (“SC Regulation No. 3/2022”) it is explained in Article 1 that Electronic Mediation in Court is a method of dispute resolution through a negotiation process to obtain an agreement of the parties which assisted by a mediation and carried out with the support of information and communication technologies.
The process of Electronic Mediation in Court should be conduct by the consent of both parties by prioritizing an effective and also confidential. According to Article 6 of SC Regulation No. 3/2022, in the event that both parties agreed, then the Case Examining Judge shall submit an Electronic Mediation approval form to be signed by both parties and/or their attorneys. In the implementation of its process, the Mediator must carry out a mediation process which is held virtually based on the application that agreed upon by the parties.
According to Article 23 of SC Regulation No. 3/2022, the Mediator shall submit a statement whether the mediation process is successful/unsuccessful to the panel of examiners electronically through the Court Information System. In a condition that the mediation process is successful then with the assistance of the Mediator could conduct a draft of Settlement Agreement through electronic device and can be signed by both parties with Electronic Signature as stipulated in Article 24 of SC Regulation No. 3/2022.
Based on the explanation above, it can be concluded that mediation as a form of dispute resolution can take the form of mediation outside the court and in court. These two forms of mediation have differences but do not change the original purpose of dispute resolution, namely as a form of peaceful settlement of dispute between both parties. The result of the agreement arising from the mediation process are final and binding for both parties that should be implemented in the good faith of both parties. The mediation process also keeps up with development of times by can be conduct through electronic devise without setting aside previous regulation which has been stipulated.
Author: Naomi Catherine Felencia
Gaffar & Co. is an Indonesian Boutique Law Firm specializing in commercial law, including Dispute Resolution and Commercial Litigation.
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