BizCLIR

Indonesia’s environment of free-wheeling and often cutthroat capitalism provides a wide variety of techniques for commercial dispute resolution. These run the gamut from time-consuming lawsuits to highly sophisticated arbitrations and mediations to crude intimidation.
The Indonesian government heavily regulates foreign investment, which normally takes the form of an equity joint venture with an Indonesian business partner. Potential investors are often engaged in commercial disputes with joint venture partners, employees, local suppliers or contractors, or government agencies. The key to successful resolution of these disputes often lies with influence with a powerful family or general. Nevertheless, there are a few bright spots of effective and transparent dispute resolution processes.
One such bright spot involved the Women’s Legal Aid Society and their efforts to sue the government in two class actions involving capricious enforcement of local regulations for street vendors and kiosk owners. They did not win the lawsuits, but public awareness of the problems caused local regulations to become more uniform and fairly enforced. The Legal Aid Society did prevail in a third class action for flood damage that was a direct result of incompetent and negligent city planning. There is now a belief that people can sue the government and occasionally receive a fair ruling, particularly in the economic sector.
Generally speaking, people and businesses who are fortunate enough to have connections with the powerful elite avoid the courts. In disputes involving large sums, arbitration in Singapore is often preferred (even by the Indonesian government) as a formal settlement venue.
In smaller cases, contract interpretation and enforcement is capricious and only a few experienced judges in Jakarta are regarded as honest and competent. Corruption and racketeering are common. Another overarching theme is that reform efforts are disorganized and short-lived, and there is often no way to determine who or what agency is leading the reform effort. While there is growing public awareness of the importance of reliable courts and dispute resolution processes, the entrenchment of people at every level of society in the present system will be a formidable obstacle to reform.