Arbitration of Business Disputes within the Asian Economic

Community: Context Indonesia and Malaysia

Rahayu Hartini

Universitas Muhammdiyah, Malang, Indonesia

Keyword: Arbitration, Implementation, Prospect, ASEAN Economic Community.

Abstract: Settlement of business disputes by arbitration is the most popular choice for business people,

especially in the current MEA era. The focus of the study are: 1.How to process business disputes

arbitrarily in Indonesia and Malaysia. 2.How are the prospects related to dispute resolution

demands in the era of the ASEAN Economic Community. With the normative juridical approach,

the authors find that in the ASEAN region there are several arbitration institutions that deal with

arbitration issues including the Indonesian National Arbitration Board in Indonesia and the Kuala

Lumpur Arbitration Center in Malaysia. The author proposes the results of the research as follows,

there are some differences and similarities in the process of dispute resolution through arbitration

between the State of Indonesia and Malaysia from several aspects including aspects: regulation,

trial process, decision strength, time and cost. And from the two countries that have the prospect

of arbitration settlement in the era of MEA is arbitration in Indonesia by having several advantages

in the arbitration settlement process, namely the period and cost of the arbitration process. In

conclusion, that the arbitration process in the State of Indonesia has good prospects compared to

the Malaysian State, so that it can be used as an example to equalize the arbitration process in the

ASEAN region even though countries in ASEAN have different legal systems.

1 INTRODUCTION

Within the scope of The Association of Southeast

Asian Nations (ASEAN) there is an agreement that

frees its members to trade freely within the ASEAN

region called the ASEAN Economic Community

(MEA). The MEA was initiated from a joint

agreement at the Summit held in Kuala Lumpur,

Malaysia which resulted in a shared vision of the

Southeast Asian countries (ASEAN Vision 2020).

That is, making the Southeast Asia region as a

prosperous region with development and economic

development equally in each member country. At the

Malaysian Summit resulted in a new consensus,

which in consensus contains about the declaration of

Cebu. With the signing of the Cebu Declaration,

consensus decisions from year to year become a

concrete step to make ASEAN a free trade area

covering all components of economic activity.

Starting from goods, labor (skilled), investment,

capital, to services. In the course of trade activities not

only talk about the advantages, disadvantages and

business strategies that businesspeople have to deal

with, but also about the legal aspects of a dispute. If

there is a trade dispute there are two ways to resolve

the issue, namely dispute settlement with litigation or

with non-litigation. Litigation is a process of dispute

resolution in court, while non-litigation is an out-of-

court dispute settlement. Traffickers tend to opt for

non-litigation adhesive settlement routes due to fast

and efficient non-litigation settlement. In addition,

the settlement of cases outside the court is

acknowledged in Indonesian legislation. There are

two kinds of ways to resolve disputes that have been

implemented, namely through litigation and non-

litigation. One of the non-litigation pathways is the

arbitration process. In Indonesia, as a legal state, there

has long been an arbitration process that can be seen

based on the legal system regarding arbitration

(Harahap, 2001).

Several other previous studies related to

arbitration are: 1) Investment Arbitration Bagi

Negara Berkembang Dan Terbelakang (Sefriani,

2013, Yustisia, Vol.2.No 2, Mei-Agustus 2013).The

1118

Hartini, R.

Arbitration of Business Disputes within the Asian Economic Community: Context Indonesia and Malaysia.

DOI: 10.5220/0009923611181125

In Proceedings of the 1st International Conference on Recent Innovations (ICRI 2018), pages 1118-1125

ISBN: 978-989-758-458-9

main problem statements in this research is what

factors cause almost no developing countries and last

developing countries win before the investment

arbitration. 2).UUK Dan PKPU) No 37 Th 2004

Mengesampingkan Berlakunya Asas Pacta Sunt

Servanda Dalam Penyelesaian Sengketa Kepailitan

(Rahayu Hartini, 2015, Yustisia, Vol 2 .No.2). This

study was to formulate a concept of return policies /

principles of the law of "pacta sunt servanda" in Law

No. 37 Year 2004 regarding Bankruptcy in

bankruptcy to resolve disputes arbitration clause.

3). Fair And Equitable Treatment Standard In

Nternational Investment Agreements (Sefriani, 2018,

Yustisia, Vol 7, No.1). In the last five years, the

number of investors who suit against host state in the

international arbitration forum increased

significantly. Almost all lawsuits used fair and

equitable treatment (fet) standard which has been

violated by the host state. most of international

investment agreements including those that were

made by indonesia contain fet standard clauses.

4).Legal Approaches To Online Arbitration:

Opportunities And Challenges In Indonesia, (

Agustina Fitrianingrum

)

, Rina Shahriyani Shahrullah,

Elza Syarief, 2016, Mimbar Hukum, Vol 28 No.2).

This research provides arguments and evidences that

the relevant Indonesian national laws support the use

of online arbitration. 5).Modern Arbitration

Legislation’: A Comparison Between Australian And

Indonesian Laws (Rina Shahriyani Shahrullah, 2012,

Media Hukum, Vol 24, No 2). This research analyzes

Law No. 30 of 1999 of Indonesia to ascertain whether

this Indonesian law constitutes modern arbitration

legislation in the context of international commercial

arbitration. Law No. 30 of 1999 will be compared

with the International Arbitration Act 1974 (Cth) and

the International Arbitration Amendment Act 2010

(Cth) of Australia. 6).Public Policy Violation Under

New York Convention (Michelle Ayu Chinta Kristy,

Zhengzheng Jing, 2015, Media Hukum, Vol 5 No 1).

This article would firstly provide a comparative study

of the court’s interpretation towards public policy as

mentioned under Article V (2) b of the New York

Convention between non-arbitration-friendly-law

Indonesia and arbitration-friendly-law China.7).

Akibat Pemilihan Forum Dalam Kontrak Yang

Memuat Klausa Arbitrase (Bambang Sutiyoso, 2012,

Mimbar Hukum, Vol 24 No.1). In practice, deviation

where courts may ignore the arbitration clause, the

parties' good faith and consistency of the court play a

significant role to further develop the arbitration

process.

One way of solving non-litigation disputes is

through an arbitration process. Excess arbitration

from the side of procedural law there is flexibility that

remains within the legal corridor. On the other hand,

arbitrators possessing both legal and technical

knowledge, as well as the timeliness of the trial,

become the surplus arbitration itself so that the trial

can proceed effectively. In addition, the continuation

of business relations between the parties is also

considered. Even did not close the possibility of good

relations and cooperation can still continue. Dispute

resolution outside the court is closed to the public

(close door session) so that the confidentiality of the

parties is guaranteed, then the proceedings are faster

and more efficient and the decisions given are win-

win solutions. The process of settling disputes outside

this court avoids delays caused by administrative

procedures as well as proceedings in general courts.

Dispute resolution outside the court is called the

Alternative Dispute Resolution (Pamolango, 2015).

BANI is the founder of the Asia Pacific Regional

Arbitration Group (APRAG) consisting of 42

arbitration agencies from various countries in Asia

Pacific, according to data of dispute settlement by

business actors through arbitration institutions

continue to increase from year to year. Data BANI

Arbitration Center said, cases registered in BANI in

the period 2007-2016 as many as 728 cases. This

number increased to 238% compared to 1997-2006

with 215 cases registered. Previously, in the period

1987-1996 there were 56 registered cases.

Arbitration is the choice of business actors to

resolve the problem without going through a judicial

institution that is often long because of the appeal

process, cassation, and review. In addition, the

arbitration has principles such as efficiency,

accessibility, protection of the rights of the parties,

final and binding, fair and just, and in accordance

with the sence of justice from the community, thus,

the element of "deterrant" of the offender will be

guaranteed, and disputes, will be prevented (Fuady,

2000). Indonesia has also ratified the Convention on

the Recognition and Enforcement of the Foreign

Arbitration Awards (New York Arbitration

Convention), which is widely known as the New

York Convention, on August 5, 1981 by Presidential

Decree No. 34 of 1981 and announced in State

Gazette Number 40 of 1981 and officially registered

on October 7, 1981.

The State of Malaysia also uses arbitration as an

alternative to litigation in resolving legal disputes.

The Malaysia arbitration institution based in Kuala

Lumpur is known as Kuala Lumpur Regional Center

for Arbitration (KLRCA). KLRCA also spurred the

growth of international arbitration in Malaysia which

many became the choice of international embezzlers

Arbitration of Business Disputes within the Asian Economic Community: Context Indonesia and Malaysia

1119

to solve their case or dispute. KLRCA has

experienced stable workload increase every year.

Prior to 2010, the number of cases enrolled in the

KLRCA was between ten and 20 cases per year. In

2012, KLRCA registered 85 new cases; in 2013, the

proposed annual case increased to 156 and in the third

quarter of 2014, the center has received 226 cases.

According to KLRCA statistics, nearly 20% of

arbitration cases in 2013 are international, increasing

from previous years.

2 METHOD

According to Peter Mahmud Marzuki (2008),

formulating legal research as a process to find a rule

of law, legal principles, and legal doctrines in order

to answer the legal issues faced. In this study the

author analyzes the dispute resolution arbitrarily in

the ASEAN economic community (MEA) in the

context of Indonesia and Malaysia. This research is a

normative juridical nature, namely seeing law as

human behavior in society (Sunaryo 2012). By

applying the approach method through statue

approach, comparative approach, historocal

approach, canseptual approach and case approach.

Data Source: using 3 types of legal material,

namely: primary, secondary and tertiary. a) Primary

legal material, which consists of legislation, official

records/minutes in the making of legislation and

decisions of judges. Primary huku materials

include:Law No. 1 of 1970 concerning Basic

Provisions of the Judicial Authority, Law No. 30 of

1999 concerning Arbitration and Alternative Dispute

Settlement, Presidential Decree No. 34 of 1981, 2017,

Malaysia Arbitration Rules, Malaysian Arbitration

Act. b).Secondary: in the form of legal books, legal

journals, legal writing/views of legal experts

contained in the mass media that are relevant to the

subject matter of writing this law. c).Tertiary:

encyclopedia, dictionary, glossary and other

ingredients.

Legal Material Collection Techniques: conducted

by means of Study: Documents, Literature and

Internet studies. A). Document Study: it is the

collection of data that is owned by the parties

involved and the search for legislation in matters

relating to the research process. B). Literature Study:

by searching and searching library materials from

various literature or books or journals.c). Internet

study: by searching and searching for materials

through the internet or website to complete other legal

materials.

Technical Analysis of Legal Material. Analysis is

done by analyzing problems with qualitative legal

concepts and materials. Qualitative research method

is a way / more effort to find aspects of understanding

deeply in a problem. Qualitative research is a research

that is descriptive in nature, tends to use analysis and

emphasizes the process of meaning.

3 FINDINGS AND DISCUSSION

3.1 Business Dispute Settlement

Process through Arbitration in the

Era of ASEAN Economic

Community in Indonesia and

Malaysia

In resolving business disputes there are two types of

dispute resolution methods that have been applied in

Indonesia, namely through litigation and non-

litigation. Litigation is a dispute resolution process in

a court, where all parties to a dispute face each other

to defend their rights before a court. The end result of

a dispute resolution through litigation is a decision

stating a win-lose solution (Amriani, 2012).

Definition of Litigas itself is a lawsuit over a conflict

that is ritualized to replace the actual conflict, where

the parties give to a decision making two conflicting

choices (Margono, 2012). This litigation pathway

procedure is more formal (very formalistic) and very

technical (very technical). As J. David Reitzel said

"there is a long wait for litigants to get trial", let alone

to get a decision that has a permanent legal force, to

settle it in just one judicial institution, must wait in

line. This condition causes people to look for other

alternatives, namely the settlement of disputes outside

the formal justice process. Dispute resolution outside

the formal justice process is what is called

"Alternative Dispute Resolution" or ADR (Harahap,

2009).

Whereas dispute resolution through non-litigation

has been known as an alternative dispute resolution,

which is explained in Article 1 number (10) of Law

Number 30 of 1999 concerning Arbitration and APS,

which reads as follows: "Alternative Dispute

Settlement is a dispute resolution or dissenting

institution through a procedure agreed upon by the

parties, namely the settlement of disputes outside the

court by means of consultation, mediation,

conciliation, or expert judgment.".

One way to resolve disputes in a non-litigation

manner is through an arbitration process. Excess

arbitration from the side of the procedural law there

ICRI 2018 - International Conference Recent Innovation

1120

is flexibility that remains in the corridor of the law.

On the other hand, arbitrators who have knowledge of

both legal and technical aspects, as well as the

timeliness of the trial, become an advantage of the

arbitration itself so that the trial can proceed

effectively. In addition, continued business relations

between the parties are also considered. Not even

close the possibility of good relations and cooperation

can continue. The role of arbitration as an effort to

resolve international-scale trade disputes began at the

end of the 18th century, which was marked by the

birth of the Jay Treaty on November 19, 1794. This

agreement took place between the United States and

Britain. With this agreement, there are procedures for

fundamental changes regarding settlement of

international trade disputes. If prior to this agreement

trade disputes were carried out through diplomatic

channels, then changed the way the characters

became international arbitrations. The old solution is

often disappointing. Settlement tends to be influenced

by political interests (Harahap, 1997).

The word arbitration is derived from the words

arbitrare (Latin), arbitrage (Dutch), arbitration

(English), schiedspruch (German), and arbitrage

(French), which means the power to settle a matter

according to wisdom or peace by the arbitrator or

referee. the understanding of arbitration according to

Subekti is the means of resolving a particular judge

who is not related to various formalities, is quick and

gives a decision, because in the last instance and

binding, that is easy to implement because it will be

obeyed by the parties (Gautama, 1976). Arbitration is

the settlement of a dispute (case) by a person or some

referee (arbitrator) who is jointly appointed by the

parties who are litigating not through the court. Based

on the opinion of the two experts, it can be concluded

that the notion of arbitration, namely: the settlement

process between the parties that entered into an

agreement to show someone or more as an arbitrator

in deciding a case whose nature is final and binding

(Subekti. 1980).

Acording Priyatna Abdulrrasyid "Arbitration is an

alternative mechanism for dispute resolution which is

a form of legal action recognized by law in which one

party or more surrenders, disagreement, disagreement

with one other party or more to one person

(Arbitrator) or more (arbiter-majlis) professional

experts, who will act as judges or private judiciary

who will apply the procedures for the law of peace

that has been jointly agreed by the parties to arrive at

a final and binding decision" (Abdulrasyid). Then

HMN Poerwosujtipto uses the term arbitration for

arbitration which is defined as a peace court, where

the parties agree that their disputes about personal

rights that they can control are fully examined and

tried by impartial judges appointed by their own

parties and the decisions are binding on both parties

party (Poerwosutjipto, 1992).

3.2 Arbitration in Indonesia

In Indonesia the interest to settle disputes through

arbitration began to develop in line with the

enactment of Law No. 30 of 1999 on Arbitration and

Alternative Dispute Resolution (APS). One of the

institutions authorized to settle the case through

arbitration is BANI with SK no.

SKEP/152/DPH/1997 dated 30 November 1997 and

managed and supervised by the Board and Advisory

Board consisting of public figures from the business

sector. In the period 2007-2016 BANI successfully

completed 782 cases. BANI is domiciled in Jakarta

and has representatives in several major cities in

Indonesia, namely Surabaya, Bandung, Medan,

Denpasar, Palembang, Pontianak and

Jambi(“PDF.pdf,” n.d.). In the provisions of Article

66 of Law No. 30 of 1999 on Arbitration and

Alternative Dispute Resolution (APS), it can be

determined the scope /subject matter which can be

settled through arbitration namely

(“arbitrationindonesia.pdf,” n.d.): Commerce;

Banking; Finance, Investment; Industry and;

Intellectual Property Rights (HAKI). The Arbitration

Mechanism in Indonesia is as follows.

Registration. Registration and submission of

arbitration applications by parties initiating the

applicant's arbitration process. Request for

Arbitration. (Notice of Arbitration) Application for

Arbitration must include (Poerwosutjipto, 1992): a)

Name and address of the parties; b) Clause or

Arbitration Agreement; c) Information about the facts

and the legal basis for the Arbitration Application; d)

Details of the problem; and e) Claims and / or value

of demands requested (Statement of Claim). Besides

that the applicant must attach to the application an

authentic copy of the agreements related to the

dispute concerned and can also attach other

documents that the Applicant deems relevant. If

additional documents or other evidence is intended to

be submitted later, the Applicant must confirm this in

the Application (Poerwosutjipto, 1992).

Arbitrator Appointment. In Article 8 letter f

of Law No. 30 of 1999 concerning Arbitration and

Alternative Dispute Settlement (APS). Determination

of the number of arbitrators is not regulated but the

applicant can submit a proposal regarding the desired

number of arbitrators in an odd number. And in the

Arbitration of Business Disputes within the Asian Economic Community: Context Indonesia and Malaysia

1121

BANI regulation the number of arbitrators is

regulated as much as 1 (one) or 3 (three) arbitrators.

Respondent's response. In this case the

respondent must submit an answer within 30 (thirty)

days to deliver an answer or appoint an arbitrator by

including clear and valid reasons. The maximum

extension of this time is 14 days. And the answers

submitted must be in writing (Poerwosutjipto, 1992).

Counter Claim. The Respondent intends to file

a counterclaim (reconciliation), then the claim can

also be included along with the submission of the

Answer Letter. This counter-claim can also be

submitted no later than the first trial. However, under

certain conditions, the Respondent may file a

counterclaim on a date by providing reasonable

guarantees. Of course, this is also done with the

authority and policy of the Assembly. And the

procedure is like a request from the beginning.

Examination Session. The process of arbitration

examination must be conducted in a closed manner

using Indonesian language, must be made in writing

and hear the information of the parties and the final

decision is at the latest set within 30 (thirty) days after

the closing of the trial. Before giving a final decision,

the Assembly or arbitrator also has the right to give

preliminary decisions or partial decisions. However,

if it is deemed necessary to extend the time to

determine the final decision according to the

consideration of the Assembly or arbitrator, then the

final decision can be set at a later date.

Article 28 Undang-Undang No.30 Tahun 1999

tentang Arbitrase dan Alternatif Penyelesaian

Sengketa (APS), The Assembly or arbitrator may

consider using a foreign language in accordance with

the agreement if there are parties or even foreign

arbitrators who cannot use Indonesian, or the part of

the transaction that is the cause of the dispute is

carried out in a foreign language (other than

Indonesia).

In Law No. 30 of 1999 concerning Arbitration

and Alternative Dispute Settlement (APS) article 48

paragraph (1) which reads "The examination of the

dispute must be completed within a maximum of 180

(one hundred and eighty) days after the arbitrator or

the arbitral tribunal is formed" . But within this time

period the examination period can be extended with

the following factors: a) One party submits a special

application, b) It is the result of the stipulation of a

provisional decision or other interlocutory decision,

c) Considered necessary by the Assembly or

arbitrator.

The place of the arbitral tribunal has been

determined by the arbitrator or the arbitral tribunal,

but if agreed by all parties where the arbitral

proceedings may change and the Arbitrator or the

arbitral tribunal may hear witness testimony or hold a

meeting deemed necessary at a particular place

outside the place of arbitration. In Article 60 of Law

No. 30 of 1999 concerning Arbitration and

Alternative Dispute Settlement (APS) it has been

determined that the arbitration award is final and has

permanent legal force and is binding on the parties.

3.3 Arbitration in Malaysia

In the State of Malaysia the arbitration is governed

by the rules, Arbitration Rules 2017 and the

Malaysian Arbitration Act. With the shading

institution is Kuala Lumpur Regional Center for

Arbitration (KLRCA). The KLRCA/AIAC is

independent in resolving the arbitration case. The

agency in 2016 has resolved the case of 522 cases

with details as follows(“PDF.pdf,” n.d.):

a. 61% of all arbitration are disputes from the

construction sector and other related sectors; b. 60%

of all mediations are disputes from the construction

sector and related sectors; c. 84% of appointments are

for adjudication; d. 50% increase in ADNDR (Asian

Domain Name Dispute Resolution) cases compared

to 2015; e. 71% of all arbitration matters governed

under KRLCA regulations (KLRCA 2013 arbitration

rules and KLRCA quick arbitration rules); f. Total

416 pledges made by KLRCA for all disputes;

g.134% increase in cases of adjudication compared to

2015;h. Total RM1, 537,979,679.80 amount of funds

in disputes for adjudication; i. Total

USD295.470.992, 84 and RM468, 209,113.39

amounts in arbitration dispute.

In the preliminary section of Arbitration Rules

2017 rules explained that the subject matter that can

be resolved through the arbitration body is all the

subject of the dispute whose parties have agreed to

settle the existing case of arbitration institution unless

the case is contrary to public policy.

The appointment of the Arbitrator, that the party

completing the free arbitration determines the

arbitrator's amount for a period of 30 (thirty) days. If

the parties fail to determine the number of arbitrators

then the KLRCA determines it and if the KLRCA

appoints a single arbitrator, an arbitrator or

emergency arbitrator shall be in compliance with the

rules. The KLRCA determines the number of

arbitrators by determining(“PDF.pdf,” n.d.): a) In the

case of an international arbitration, it consists of three

arbiters, b) In the case of a domestic arbitration, it

consists of a single arbitrator.

Regarding the proceedings, that a sole arbitrator

or arbitral assembly shall announce the proceedings

ICRI 2018 - International Conference Recent Innovation

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to be held in private. Submission of the trial must be

closed and the date of the hearing must be submitted

in writing to the parties. The arbitrator gives 3 (three)

months for technical review. The deadline starts

running since the arbitrator announces a closed

session. The deadline may be extended by the

arbitrator with the consent of the parties and after

consultation with the KLRCA chairman. The

Chairman of the KLRCA may influence the

arbitration decision against the perceived

irregularities regarding the form of rewards and errors

in interest and cost calculations.(“PDF.pdf,” n.d.) But

if it is deemed appropriate the chairman of KLRCA

shall notify the arbitrator in writing that the technical

review has been completed. The Parties undertake to

execute the verdict immediately without delay, and

irrevocably waive their right to any review or other

appeal to the Court or other judicial authorities.

Verdicts may be lawful, and the parties agree that the

award shall be final and binding on the parties from

the date on which the verdict is signed. The term of

dispute settlement at KLRCA is settled with a term

agreed by the parties, but KLRCA offers a fast-track

arbitration process with a maximum of 160 (one

hundred and sixty) days settlement.(“PDF.pdf,” n.d.)

Arbitration shall be conducted at the arbitrator's

place, if it does not agree to it, then the place of

arbitration may be exercised in the choice of the

parties by determining by observing the

circumstances and according to the

objectives.(“PDF.pdf,” n.d.)

The arbitration mechanism in Malaysia is as

follows Registration. The applicant submits a written

application accompanied by: a) A copy of the

arbitration clause in writing. b) A copy of the contract

documentation in which the arbitration clause exists

or in connection with which the arbitration arises. c)

a copy of the notice of arbitration accompanied by a

confirmation that it has been or is being served on all

other parties by one or more means to be identified in

the confirmation. d) Pay registration fees.

When the applicant submits an initial application

with all complete documentation is considered the

date on which the arbitration has begun.

Arbitrator Appointment. The party completing

the arbitration is free to determine the number of

arbitrators with a period of 30 (thirty) days. If the

parties fail to determine the number of arbitrators, the

KLRCA party determines it and if the KLRCA

appoints a single arbitrator, the arbitration member or

emergency arbitrator must comply with the

regulations. KLRCA determines the number of

arbitrators by determining:a).In the case of

international arbitration, consists of three arbitrators,

b).In the case of domestic arbitration, it consists of

one single arbitrator.

Trial Process. Single arbitrators or arbitrator

assemblies must announce the trial is held in a closed

manner. Submission of hearings must be closed and

the date of trial must be submitted in writing to the

parties. The arbitrator gives 3 (three) months for

technical review. The deadline starts running since

the arbitrator announces a closed trial. The deadline

can be extended by the arbitrator with the agreement

of the parties and after consultation with the head of

the KLRCA. The Chair of the KLRCA may impose

arbitration decisions on perceived irregularities

regarding forms of awards and errors in the

calculation of interest and fees. But if it is deemed

appropriate the KLRCA chairman must notify the

arbitrator in writing that the technical review has been

completed.

The parties undertake to carry out the decision

immediately without delay, and irrevocably waive

their right to all forms of appellate review or another

route to the Court or other judicial authorities.

Decisions can be made legally, and the parties agree

that the decision is final and binding on the parties

from the date the decision is signed.

The time period for dispute resolution at KLRCA

is settled within a period agreed by the parties, but

KLRCA offers fast track arbitration process with a

maximum settlement of 160 (one hundred sixty) days.

Arbitration is held at the arbitrator's place, if it

does not approve it, then the place of arbitration can

be carried out at the party's choice by determining by

considering the circumstances and according to the

objectives. Based on the results of research on the

arbitration process in Indonesia and Malaysia, it can

be seen in the following table:

Table 1.

Comparison of the Arbitration Settlement

Process in Indonesia and Malaysia

Indicat

Country

Informati

Indonesia Malaysia

Name

of the

arbitrat

ion

body

BANI KLRCA

There is a

similarity

nomenclat

ure

Legal

Basic

1. The

1970

Act on

Basic

Provisio

ns of

Arbitration

Rules 2017.

There is a

difference

Arbitration of Business Disputes within the Asian Economic Community: Context Indonesia and Malaysia

1123

Judicial

Power.

2. Law

no. 30 of

1999 on

Arbitrati

on and

ADR.

3.Presiden

tial Decree

No. 34 of

1981

2.Malaysian

Arbitration

Act.

Arbitra

tion

Process

1.Registrati

.Performe

Arbitrato

3.Respond

ent's

Respons

4.Changin

Requests

5.Field

Examinati

1.Registrati

2.Performer

Arbitrators

3.The trial

process

There is

differenc

Numbe

r of

Arbitra

tors,

Appoin

tment

1 or 3

arbitrators.

(article 8

(2) of Law

No. 30 of

1999 on

Arbitratio

n and

APS)

1. The parties

are free to

choose the

number of

arbitrators.

2. 1 or 3

arbitrator rule

4 number 3

KLRCA

ARBITRATI

ON RULES

(As revised

in 2017).

There is a

difference

Time

period

The

slowest

time in

180 (one

hundred

and

eighty)

days.

(Article 48

of Law

No. 30 of

1999 on

Arbitratio

n and

APS)

1.The

agreement of

the parties

2.a quick

arbitration

arbitrationpro

cess with a

maximum of

160 (one

hundred and

sixty) days

There is a

difference

Place

of trial

The

courtroom

is fixed by

the

arbitrator,

but if

agreed

The parties

may decide

themselves or

determined

similar

upon by

all parties

the venue

may

change.

(Article 37

of Law

No. 30 of

1999 on

Arbitratio

n and

APS)

by the

arbitrator.

(Rule 7 No. 1

KLRCA

ARBITRATI

ON RULES

(As revised

in 2017).

Form

Decisio

The

verdict is

final and

binding.

(Article 60

of Law

No. 30 of

1999 on

Arbitratio

n and

APS)

The verdict is

final and

binding.

(Rule 12 No.

10 KLRCA

ARBITRATI

ON RULES

(As revised

in 2017).

similar

8 Fee

Terms of

fees are

based on

the value

of the

speech.

Terms of fees

are based on

the value of

the speech.

There is a

difference

Objectives of the ASEAN economic community

which provides for bribery and simplification of the

bureaucracy/ regulation to promote the development

of the world of commerce in ASEAN.

B. Appointment of Arbitrator, appointment of

arbitrator which does not take long, as described in

Article 8 letter f Act no. 30 of 1999 on Arbitration and

Alternative Dispute Settlement in which the

determination of the number of arbiters is not

regulated but the applicant may propose about the

number of arbiter desired in odd number 1 or

c. Duration, in Indonesia the arbitration process takes

180 (one hundred and eighty) days, which makes the

parties more efficient in the time used in

arbitration. In Malaysia and Thailand do not specify

the exact timing of the arbitration process, but

Malaysia offers arbitration proceedings with 160 (one

hundred and sixty) days which at a cost different from

ordinary arbitration. However, in a fixed period of

time it often makes the arbitration ruling not see the

case, the decision is likely to be terminated because

the prescribed time should not be bypassed.d. The

cost of arbitrage in Malaysia is differentiated between

fees for arbitrators and institutional fees, in addition

to Malaysia also distinguish between international

arbitrage fees and domestic arbitrage fees. The ideal

concept is the cost of arbitration in Indonesia that has

no distinction in fees.

In the era of MEA that open free market among

ASEAN countries currently make the trade intensity

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between high inter-state business actors can

potentially increase the dispute both in quality and

quantity and business actors prefer dispute settlement

with non-litigation process is litigated,

because litigation process has a fairly complicated

aspect in dispute settlement where the parties are

related to the standard rules of the court, and the

process of settling non-litigation chosen is by way of

arbitration.Arbitration is chosen by the business actor

because the arbitration is efficient in time and cost,

the identity of the parties in secret and the final and

bind ing arbitral award. And the reason the authors

chose Indonesia as the prospect of arbitration in the

era of MEA as described above in line with the spirit

and objectives of the MEA which provides bribery

and simplification of bureaucracy/regulation in order

to encourage the development of trade in

ASEAN. Completion of arbitration in the era of the

MEA will have to be faster, practical and efficient

which in accordance with the soul of the MEA.

4 CONCLUSION

That the business dispute resolution process through

the arbitration institution in the era of the MEA is

increasingly needed with the consideration that in this

era of MEA, the intensity of trade transactions

between the merchants both domestic and between

countries increasing both quality and quantity. In line

with the growing world of trade would have the

potential to increase the problem of law (conflict) is

increasingly intense both quality and quality.

However, from the results of the study produced by

the authors of 2 (two) arbitration agencies in

Indonesia and Malaysia, there are differences related

to the legal basis, arbitration process, duration and

cost. Given the different aspects of impact, it will

have an impact on traders that involve traders in

ASEAN countries, who are given the freedom to

choose arbitration institutions in ASEAN countries.

With different ways of working of 2 (two) arbitration

institutions in Indonesia and Malaysia, and the

absence of standardization of the same settlement

process it is possible in the event of a pulling out in

choosing that arbitrage institutions. Of the two

arbitration institutions, namely Indonesia and

Malaysia, which have an impact in the dispute

settlement process, mainly related to the arbitration

process, term and cost. Based on the above

differences, according to the authors, the Indonesian

arbitration institution has more positive prospects to

serve as a model for arbitration institutions in

ASEAN countries, although it is recognized that each

of the ASEAN law system is different. The authors'

views are in line with the spirit and objectives of the

ASEAN economic community which provides for

banning and simplifying the bureaucracy / regulation

to promote the development of the trading world in

ASEAN.

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