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Legal Updates | New Body Set Up to Resolve Disputes in Indonesia’s Construction Sector

Construction Arbitration:

On 22nd September 2015, the Indonesian Centre for Arbitration and Alternative Dispute Resolution for Construction (BADAPSKI) held its first seminar to announce its existence as a dispute resolution body in the field of construction. BADAPSKI was established by the Minister of Public Works on 19th August 2014 pursuant to Law No. 18 Year 1999 regarding Construction Services (7th May 1999) (“Law 18/1999”), which requires that the Ministry of Public Works encourage the use of arbitration, mediation and expert appraisals to settle disputes in the construction sector. The arbitration procedures used by BADAPSKI are based on the BADAPSKI Arbitration Rules, which include the general arbitration rules under Law No. 30 Year 1999 regarding Arbitration and Alternative Dispute Resolution (12th August 1999) (the “Arbitration Law”).

The purpose of BADAPSKI is to become the choice of dispute resolution to settle Indonesian construction disputes, both domestically and internationally, to perform such services quickly and inexpensively, and to achieve legal certainty while maintaining good relations between the parties. One goal of the Government of Indonesia (the “GOI”) is to ensure that construction disputes do not impede infrastructure development.

New Mediation Rule:

A recent dispute resolution development is the issuance of a new mediation rule by the Indonesian Supreme Court, pursuant to Supreme Court Regulation No. 1 of 2016 (4th February 2016) (“SC Reg 1”). SC Reg 1 contains a different time period for the mediation process than its predecessor. Previously the time period for the mediation process was 40 business days, which could be extended for 14 business days, whereas SC 1 provides for a mediation process of 30 business days, which can be extended for another 30 business days.

SSEK - 17th may 2016

icone share

Indonesia Property Snapshot – Construction

Contribution to GDP: 10% (2016)
Number of Contractors: 77,000 (2015)
Number Employed in the Sector: 7 million (2016)
Standardised Qualification: ASEAN Chartered Professional Engineer (ACPE) certificate and the National Construction Services Development Board (LPJKN) certification.
Relevant Law: Presidential Regulation No. 39 of 2014 on the Negative Investment List reserves low-technology and low-risk construction services for local SMEs and cooperatives. Foreign companies can establish representative offices in Indonesia and execute complex and high-technology projects in partnership with local companies, Minister of Public Works Regulation No. 10/PRT/M/2014 provides the guidelines.