Client Update: Dispute Resolution April 2016 Wisma GKBI, Level 9, Jl. Jenderal Sudirman No.28, Jakarta 10210, Indonesia Phone (+6221) 574 0088 ● Fax (+6221) 574 0068 ● E-mail: email@example.com ● www.soemath.com MEDIATION NOW COMPULSORY: Progress or a cause for further delays? Overview The Supreme Court issued Regulation 1 of 2016 on Court-Sanctioned Mediation Procedures (SCR 1/2016) on 3 February 2016, thereby repealing Supreme Court Regulation 1 of 2008 (SCR 1/2008). SCR 1/2016 is intended to save the courts and disputing parties’ time and money. Specifically, SCR 1/2016: defines which disputes must be referred to mediation; introduces shorter mediation periods; provides for partial mediation; makes mediation compulsory (unless parties have a valid excuse); and requires that parties act in good faith during mediations (or face sanctions). Key Provisions Relevant disputes SCR 1/2016 provides that most disputes in district or religious courts, including challenges to a default judgment, or from a disputing or third party to the enforcement of a final and binding judgment, be referred to mediation. Disputes not required to be referred to mediation include those which: 1 must be decided within a specified timeframe, including commercial, industrial relations or small claims court disputes, objections to decisions of the Business Competition Supervision Commission (Komisi Pengawas Persaingan Usaha, or KPPU), a Consumer Dispute Settlement Board (Badan Penyelesaian Sengketa Konsumen, or BPSK) or an Information Commission, political party disputes, and annulments of arbitral awards; involve an absent plaintiff or defendant (regardless of whether they have been properly summonsed); involve counterclaims or interventions; involve objections to, or annulments or attestations of, marriage; or have already been the subject of an unsuccessful compulsory mediation. Mediation periods SCR 1/2016 provides that mediations must conclude within 30 business days after the disputing parties agree on the selection of a mediator and the mediator’s costs. 2 The parties must reach such agreement within two business days of the presiding judge issuing a mediation order.3 A mediation may be extended for a further 30 business days (if the parties agree). 4 1 Article 4(2) of SCR 1/2016. 2 Article 24(2) of SCR 1/2016. 3 Article 20(1) of SCR 1/2016. 4 Article 24(3) of SCR 1/2016. Client Update: Dispute Resolution (February 2016) 2 Partial mediation SCR 1/2008 provided that if, during a mediation, parties: settled, the mediator was required to submit a report to the panel of judges.5 Within three days of receiving this report, the panel was required to set a date for a hearing during which the panel would ratify the settlement agreement; 6 or failed to settle, the mediator was again required to submit a report to the panel, 7 after which the court proceedings would re-commence.8 SCR 1/2016 retains these provisions, but further provides that if, during a mediation, parties settle any, but not all, elements of their dispute, the mediator is required to submit a report to the panel of judges, after which court proceedings will re-commence, but only with respect to the outstanding elements of the dispute.9 Compulsory attendance SCR 1/2016 provides that disputing parties must attend mediation, whether or not with legal representation. 10 Parties may attend via video-conference. 11 However, parties are not required to attend mediation if they have a valid excuse, including that: 12 their health precludes them (as evidenced by a doctor’s letter); they are under guardianship; they are domiciled abroad; or they are carrying out “state duties”, or have “professional commitments” or “important work” (these terms are not defined). Good faith SCR 1/2008 required parties to act in good faith in mediations, however good faith was not defined. SCR 1/2016 further regulates how parties are to act in good faith in mediations (sanctioning those who act otherwise), 13 and regards a party as not having acted in good faith if they:14 do not attend a mediation session, after having been twice consecutively and properly summonsed, without having given a valid excuse; are “constantly absent” (this term is not defined), without having given a valid excuse; attend proceedings, but then fail to file or respond to a Case Resume (a document prepared by the parties, which sets out the respective merits of each party’s case and a proposed settlement), regardless of whether a valid excuse has been given; or do not sign a settlement agreement, without having given a valid excuse. If a party is considered to have not acted in good faith, a panel of judges may, after being recommended by the mediator, declare a party’s claim or defence inadmissible (with the proceedings therefore being dismissed) and require that the party pay the 5 Article 27(6) of SCR 1/2016. 6 Article 28(4) of SCR 1/2016. 7 Article 32(1) of SCR 1/2016. 8 Article 32(3) of SCR 1/2016. 9 Article 30(2) of SCR 1/2016. 10 Article 6(1) of SCR 1/2016. 11 Article 6(2) of SCR 1/2016. 12 Article 6(4) of SCR 1/2016. 13 Article 7 of SCR 1/2016. 14 Article 7(2) of SCR 1/2016. Client Update: Dispute Resolution (February 2016) 3 mediation fees. 15 (It is unclear when the judge may declare the claim or defence inadmissible, either at an interlocutory stage or at the conclusion of proceedings.) *** Implementing regulations, which will provide further guidance, are expected. We will continue to monitor the implementation of SCR 1/2016 and will issue further updates on this topic as more information becomes available. Soemadipradja & Taher S&T is one of Indonesia’s leading law firms with a recognised market leading arbitration, dispute resolution and litigation practice. If you would like to discuss any aspect of this update, or have questions regarding litigation or dispute resolution issues, please feel free to contact us. Nira Sari Nazarudin Partner firstname.lastname@example.org Ahmad Djosan Partner email@example.com Erie H. Tobing Senior Associate firstname.lastname@example.org 15 Sub-Articles 22(1) and (2) and Article 23(1) of SCR 1/2016.