Arbitration Analysis as an Alternative for Dispute Resolution Between

PT. Setdco Intrinsic Nusantara with the Department of Public Works

(Case Study to BANI Decision No. 08.358 / VI / BANI / Ktd)

By:

Dania Sabrina (017201800007)

Martharina (017201800012)

Raselya Wirsa Prihasti (017201800019)

Sonia Celinda Asmi (017201800017)

Yovanka Angela Siregar (017201800013)

Subject: Moot Court and Arbitration

Lecturer: Sujana Donandi S., S.H., M.H.

President University

Law Study Program

Faculty of Humanities

2020
 CHAPTER I
INTRODUCTION
A. BACKGROUND

Toll roads are a facility provided by the state to the public with the aim of
facilitating mobility in a country. Toll roads began operating in Indonesia since 1978, with
the operation of the Jagorawi toll road (the toll road connecting the cities of Jakarta, Bogor,
and Ciawi).1 Until now, the construction of toll roads is still being carried out. This is
because toll roads have many benefits for people in Indonesia. Apart from facilitating
mobility and access to people and goods, toll roads are also useful for increasing equitable
development in Indonesia.

In addition to the various benefits that we can enjoy from the existence of toll roads
in Indonesia, it turns out that there is one toll road construction project that is interesting to
discuss, because the problem has been resolved by BANI (Indonesian National Arbitration
Board). The Public Works Department (PU) held an auction for the Pandaan-Malang toll
road construction project. And the road construction project that occurred some time ago
was won by PT. Setdco Intrinsic, so that PT. Setdco Intrinsic is obliged to build the
Pandaan-Malang toll road.

In the agreement between PT. Setdco Intrinsic with the Department of Public Works,
it was written that in working on this project, PT. Setdco Intrinsic is in charge of preparing
funds and the company appointed PT. Amindo Investment Nusantara to take care of the
issuance of bank guarantees.2 After some time had passed, PT. Setdco Intrinsic has yet to
show its performance in preparing the funds needed for the construction of the Pandaan-
Malang toll road. Until finally, the Department of Public Works terminated its contract with
PT. Setdco Intrinsic. After terminating the contract, the Ministry of Public Works intends to
disburse the guarantee fund at PT. Bank Mandiri, Tbk. But unfortunately, the guarantee on

1
Bpjt.pu.go.id, “Sejarah Jalan Tol”, https://bpjt.pu.go.id/konten/jalan-tol/sejarah, accessed on December,
2020.
2
Tempo.co, “Kasus Setdco Intrinsic Masuk Arbitrase”, https://bisnis.tempo.co/read/112275/kasus-setdco-
intrinsic-masuk-arbitrase, accessed on December, 2020.
behalf of PT. Setdco Intrinsic is not registered with PT. Bank Mandiri, Tbk or in other
words, the guarantee is a fake guarantee fund. As a result of this problem, the Ministry of
Public Works registered a case of falsifying the implementation guarantee of PT. Setdco
Intrinsic to BANI, because it caused state losses of Rp. 26 billion.

The Indonesian National Arbitration Board (BANI) in decision number 08.358 / VI /

BANI / Ktd stated that PT. Setdco Intrinsic was proven to have committed an unlawful act
and was sentenced to compensate the state as much as Rp. 26 billion. BANI is an institution
that organizes dispute resolution through arbitration forums and all alternative forms of
dispute resolution as regulated in Law Number 30 Year 1999 concerning on Arbitration and
Alternative Dispute Resolution.3

B. RESEARCH QUESTION
Based on the explanation above, this paper will discuss about two topics, which are:

1. How to resolve the disputes between PT. Setdco Intrinsic Nusantara and the
Department of Public Works?
2. What are the advantages and disadvantages of settlement by arbitration in the case
between PT. Setdco Intrinsic Nusantara and the Department of Public Works?

3
Widnyana, I Made, “Alternatif Penyelesaian Sengketa & Arbitrase”, (Jakarta: PT. Fikahati Aneska, 2014), p.
193
 CHAPTER II

LITERATURE REVIEW

a. General Literature of Arbitration

1. Definition of Arbitration
According to Article 1 Paragraph (1) Law No. 30 of 1999 concerning Arbitration and
Alternative Dispute Resolution, Arbitration means a method of settling civil disputes
outside the general courts, based on an arbitration agreement made in writing by the parties
to the dispute.4

Definition of Arbitration according to BANI (Badan Arbitrase Nasional Indonesia) in

Paragraph 1 Anggaran Dasar BANI, “Arbitration is providing a fair and speedy settlement
in civil disputes that arise regarding trade, industry, finance, both national and
international.5”

Arbitration itself is a term used to describe a form of appropriate peaceful procedure or

provision by means of how to resolve disputes that arise so as to achieve a certain outcome
which is legally final and binding.6 Thus, in short, Arbitration is a settlement of a case to
obtain a final and legally binding result but not through litigation process.

From all those definitions, thus Arbitration is a special type of trial. The things that
can be said as special because Arbitration uses a tribunal forum, which is a forum formed
specifically for resolving disputes that occur. Arbitration is also an easy process and
informal because those parties can arrange everything even through an agreement provided
those parties agree and not make the Arbitration prolonged. Arbitration processes can be
adjusted to suit parties' needs, for example those parties agreed to delete replicate and

4
Law No. 30 of 1999, Art 1 paragraph 1
5
Arbitration Rules and Procedures of BANI, Art 1
6
H. Priyatna Abdurrasyid, Arbitrase dan Alternatif Penyelesaian Sengketa, Jakarta: PT. Fikahati Aneska,
2002, pg 54
duplicate sessions thus they can jump to the next agenda which are examination of
witnesses, facts, expert and evidence. Nevertheless, the arbitrator remains in control of the
case.

2. The Source of Law of Arbitration

In Indonesia, there are a few laws and regulations that regulating Arbitration, that are Law
No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution, Article 377 of
Herzien Inlandsch Reglement (HIR), Article 705 Rechtsreglement Buitengewesten (RBG),
Law No. 48 of 2009 concerning Judicial Power in Article 58-61.

3. Types of Arbitration
There are two types of Arbitration in Indonesia who have the authority to examine and
decide upon disputes that occur between the disputing parties, that are Institutional and
AdHoc Arbitration.7

a. Institutional Arbitration (Permanent)

Institutional Arbitration is an arbitration institution or body that is permanent in nature
(permanent arbitral body), deliberately established to handle cases that arise in the field of
business/trade.8

b. Ad Hoc Arbitration (Volunteer)

Ad Hoc Arbitration is an Arbitration that is specially formed to resolve or decide certain
disputes. This arbitration is temporary in nature or is only formed temporarily for each
dispute that occurs.9

Both of those Arbitrations have the same authority to adjudicate and decide upon disputes
that occur between the parties who hold into an agreement. The difference between those

7
Joni Emirzon, 2011, Alternatif Penyelesaian Sengketa di Luar Pengadilan, Jakarta: Gramedia Pustaka
Utama, pg 102.
8
Gunawan Widjaja, Seri Aspek Hukum Dalam Bisnis: Arbitrase Vs Pengadilan, pg 36
9
Tinneke Louise Tuegeh Longdong, 1998, Asas Ketertiban Umum dan Kovensi New York, Bandung : Citra
Aditya Bakti, pg 70.
Arbitrations are Ad Hoc Arbitration is not coordinated by an institution, However
Institutional Arbitration is coordinated by an institution.10

4. The Principles of Arbitration

There are also principles of arbitration in Indonesia which underlies the law and at the same
time becomes a basis for thinking in resolving disputes, both disputes of a national nature
and international. One of the principles that can be used in Arbitration is principles in
contract which are, The Principles of Freedom of Contract, The Principles of
Consensualism, The Principles of Pacta Sunt Servanda, The Principles of Togoe Dentrow,
and The Principles of Personality.11

Besides that, there are more principles of arbitration like The Principles of Severability it’s
from common law system tradition. This principle is also regulated in Article 10 Law No.
30 of 1999 concerning Arbitration and Alternative Dispute Resolution.

A good principle of justice contains severals principles, which are The Principle of a Trial
that is fast, Simple and Low Cost, Passive Judge, The Principle of an open trial, second
listening principle both parties, The Principle of inclusion of reasons in the decision;
Principle of Charging in Proceedings; and The Principle that there is no obligation to
represent.12

b. Alternative Dispute Resolution

1. Definition of Alternative Dispute Resolution
According to Ali Achmad, A dispute is a conflict between two or more parties that
originates from different perceptions of an interest or property right which can have legal
consequences for both.13 For short, dispute is a different opinion beside two parties or more.

10
Rachmadi Usman,2013, Pilihan Penyelesaian Sengketa di Luar Pengadilan, Bandung: PT Citra Aditya
Bakti, pg.165.
11
Ricardo Simanjuntak, “Asas-Asas Utama Hukum Kontrak Dalam Kontrak Dagang Internasional: Sebuah
Tinjauan Hukum”, Jurnal Hukum Bisnis, Vol. 27, No. 24, Tahun 2008, pg. 43.
12
Cicut Sutiarso, Pelaksanaan Putusan Arbitrase dalam Sengketa Bisnis, pg 70-83
13
Ali. Achmad Chomzah, Seri Hukum Pertanahan III Penyelesaian Sengketa Hak Atas Tanah dan Seri
Hukum Pertanahan IV Pengadaan Tanah Instansi Pemerintah, (Jakarta : Prestasi Pustaka, 2003), pg 14.
 Normally, if there is a dispute, those parties who have a dispute for instance like one
of the parties have different interpretations from what was agreed in the contract, so they
will take the case to the court to be resolved. But, for some parties suppose that resolving
their case in the court just waste their time because to resolve a dispute in the court will
have a long process, requiring a relatively long and drawn out time.

For some parties they avoid resolving their dispute to the court because in the court
their identity will be exposed because there is a principle in the court called open to the
public. Because of that, the public try to find another resolution system that is fast, effective
and efficient called Alternative Dispute Resolution.

Alternative Dispute Resolution regulated in Chapter II of Law No. 30 of 1999, according

to Article 6 Paragraph 1, definition of Alternative Dispute Resolution is Disputes or
differences of opinion may be resolved by the parties by alternative dispute resolution
based on good faith by waiving the resolution by litigation in the District Court.14

2. Types of Alternative Dispute Resolution

According to Article 1 Number 10 of Law No. 30 of 1999, there are five types of
Alternative Dispute Resolution outside the court which are Consultation, Negotiation,
Mediation, Conciliation, and Expert Assessment.

a. Consultation
There is no explanation about Consultation under the Law No. 30 of 1999. But, according
to Black’s Law Dictionary that Gunawan Widjaja cited, Consultation is “the act of
consulting or conferring e.g patient with doctor, client with lawyer. Deliberation of persons
on some subject”.15 In this ADR, a consultant's role to settle the dispute is not dominant at
all that can be said, their role is just to give the client a legal opinion about the dispute and
the decision will be taken from their client itself later on.

b. Negotiation

14
Law No. 30 of 1999, Article 6 Paragraph 1.
15
Gunawan Widjaja dan Ahmad Yani, Seri Hukum Bisnis (Hukum Arbitrase), (Jakarta: Raja Grafindo
Persada, 2001), pg 28-29.
 The definition of Negotiation itself is an effort to resolve disputes between the
parties without going through a court process with the aim of reaching a mutual agreement
on the basis of more harmonious and creative cooperation.16 Negotiation can be defined as a
process of bargaining to reach an agreement on certain issues that occur between the
parties, and Negotiations were carried out because there was a dispute between the parties
but there’s no agreement between them because it had never been discussed. Negotiation
can be successful if there’s a compromise between the parties that can be measured in value
for money.

c. Mediation
The definition of Mediation is a way to resolve the dispute through the negotiation process
to obtain an agreement between the parties, who are assisted by a mediator. 17 Mediation is
carried out to help the parties solve their problem through an impartial and neutral external
party who will help to find a solution that satisfactorily for both parties, the person or the
third party who helps the mediation process called Mediator.

d. Conciliation
According to Frans Winata, Conciliation is a way to resolve the dispute that the mediator
will act as conciliator with the agreement of the parties by working out an acceptable
solution.18 The conciliator also is a neutral person, generally Conciliation refers to a process
in which a third party acts as a party that sends a settlement offer between the parties but
has less role in the negotiation process than a mediator.

e. Expert Assessment
Giving a legal opinion, an Arbitration institution is an input for the parties in drafting
or making a contract that will regulate the rights and obligations of the parties, in providing
interpretations or on one or more provisions in the agreement that has been made by the
parties.19 In Article 52 Law No 30 of 1999 stated that “Parties to an agreement are entitled
to request a binding opinion from an arbitration institution on a particular legal issue in an
16
Frans Hendra Winarta. 2012. Hukum Penyelesaian Sengketa. Jakarta: Sinar Grafika, pg 7-8.
17
Ibid.
18
Ibid.
agreement.20” In other way, Expert Assessment or legal opinion has a binding character
because an opinion that stated become a part is inseparable by the principal contract.

CHAPTER III

DISCUSSION

19
Jinner Sidauruk, Tinjauan Yuridis Arbitrase Sebagai Alternatif Penyelesaian Sengketa Dalam Kontrak
Dagang Menurut UU No 30 Tahun 1999, pg 20.
20
Law No 30 of 1999, Article 52.
Dispute Resolution between PT Setdco and the Department of Public Works

Arbitration is an alternative in resolving civil disputes outside the public court, where
the arbitration agreement is made in writing by the parties involved in the dispute case.21
Basically, the disputing parties must make and decide voluntarily. A decision obtained
through arbitration is final and binding or has permanent legal force where the head of the
court or the like is not willing to examine or reconsider any case that has been decided
through the arbitration. Likewise in the case of PT Setdco Intrinsic Nusantara which was
decided by BANI (Indonesian National Arbitration Board) which was proven to have
committed an illegal act.

This started with a contract between PT Setdco Intrinsic Nusantara (Setdco) and the
Ministry of Public Works regarding a contract to build the 35-kilometer Pandaan-Malang
toll road. Where PT Setdco Intrinsic Nusantara (Setdco) is the investor of the toll road
construction project. The Ministry of Public Works has terminated the contract to build the
35-kilometer Pandaan-Malang toll road, which originally required US $ 350 million. The
reason for the Ministry of Public Works terminating the contract was because PT Setdco
Intrinsic Nusantara (Setdco) was apparently unable to meet the required capital required by
the Department of Public Works, or US $ 350 million. So this case is also referred to as the
fake bank guarantee case by PT Setdco Intrinsic Nusantara (Setdco).

The fake bank guarantee case was revealed when the Department of Public Works
found out that when the guarantee letter was going to be disbursed, the Bank Mandiri-
bound guarantee letter that was given by Setdco at the beginning of this contract was made
apparently unregistered. However, the Department of Public Works demands that the
performance bond worth Rp26.09 billion must be disbursed immediately by Bank Mandiri.
22
The guarantee letter with the head of the Bank Mandiri Gambir branch which was later

21
Article 1, paragraph 1, Law No. 30 Year 1999 about Arbitration.
22
Tjindra as a Ministry of Public Works Officials, “Kasus Bank Garansi Bodong Bank Mandiri Berakhir di
BANI”, accessed from https://www.hukumonline.com/berita/baca/hol19200/kasus-bank-garansi-bodong-
bank-mandiriberakhir-di-bani/ Desember 20,2020, at 09:30 AM.
signed by Momon Suhilman as the general affairs staff of Bank Mandiri with the employee
number M.275, on July 3, 2006 was declared false or unregistered. Momon Suhilman, who
is a Bank Mandiri general affair staff member, was reportedly involved in making false
guarantees to Polda Metro Jaya together with other parties in July 2007. Then from the
Setdco side admitted that they used the arranger services of PT Amindo Investment
Nusantara (Amindo) to get a bank guarantee. worth IDR 26.09 billion from Bank Mandiri.
However, the funds could not be returned, so the department was involved in legal
problems which also caused losses to the State finances.

After the Public Works Department evaluated the share ownership of PT Setdco
Intrinsic Nusantara, it turned out that Setdco's stock consisted of a foreign investors or
Setdco is a joint venture company. In which the company's shares are owned by PT Setdco
Graha Nusantara (SGN) by 35 percent, PT Intrinsic Resources Indonesia Mutu Andan
(Intrinstic) by 34 percent, and Hwan Ho Construction Co. Ltd. (HHC) by 31 percent. It
turned out that this happened because PT Setdco Intrinsic Nusantara was unable to finance
the 35-kilometer Pandaan-Malang toll road construction project that it had received and
also because Setdco did not receive funding from any party, including banks.

Due to this incident, the two disputing parties are looking for a way to resolve this
case. The Public Works Department chose to take Setdco with BANI because the PPJT
stated that if a dispute occurs between the operator and the regulator, it will be resolved
through BANI and this is the right choice to decide the dispute between PT Setdco Intrinsic
Nusantara (Setdco) and the Department of Public Works.

This case has been decided by BANI in decision No. 08.358 / VI / BANI / Ktd dated
April 21, 2008. In this case decision, Setdco was proven to have committed an illegal act. It
is suspected that the Setdco failed to promise the Ministry of Public Works regarding the
implementation of the provisions in the PPJT that had been agreed upon earlier. For the
defeat of PT Setdco Intrinsic Nusantara, the Arbitrator Council sentenced him to pay
compensation to the Department of Public Works in the amount of IDR2.6.09 billion, and
pay the compensation no later than 30 days after the verdict was pronounced and read. If
the sentence is not fulfilled, then a penalty will be imposed in the form of a fine of 1% 0
(one mile) of the amount to be paid for each day of delay in paying compensation. Costs
incurred in this case must be paid by both parties to the dispute. The Ministry of Public
Works and PT Setdco Intrinsic Nusantara have to pay the cost of the case, each half of Rp.
603.4 million, the total cost of the case and the Ministry of Public Works has paid half of
the cost of the case which is its obligation in settling this case. This arbitration award is the
first and final level decision which binds both parties to the dispute so that this decision
cannot be contested.

Advantages and Disadvantages of Settlement by Arbitration

Settlement through court is often deemed not an appropriate solution in a case, apart
from being considered unable to embrace common interests because it focuses on the
victory of one party and the defeat of the other, settlement through court often adds to the
problem. One solution that can resolve cases without going through court is arbitration.

Arbitration is a way of resolving a civil dispute outside the general court based on an
arbitration agreement made in writing by the disputing parties. 23 Arbitration is often used as
a solution for disputing parties to resolve their case. The nature of this arbitration settlement
itself is that it cannot be coerced, which means that the agreement that arises from this
arbitration settlement is purely born of the parties who agreed it. The parties must also enter
into a written agreement which acts as evidence that they have reached an agreement in this
arbitration process and they have known and agreed to what was agreed upon in the
arbitration.

The parties to the dispute choose arbitration settlement because of the advantages this
method has, namely:

- The confidentiality of the parties is guaranteed, because according to article 27 of

Law no. 20 of 1999, examinations are conducted in private, which is different from public
courts, which are conducted openly. In the case of PT. PT Setdco and the Department of
Public Works. Given the importance of confidentiality in the company, of course this is an
important matter for PT. Setdco which must maintain the good name of the company.

23
Article 1 Law No. No.30 Year 1999
- The procedure is less likely to take a long time. For a businessman, this is very
important because every time that runs will spend even greater operational funds.
- It is final and binding. As is known, in the decision on the dispute settlement of PT.
Setdco and the Department of Public Works, BANI stated that PT Setdco Intrinsic
Nusantara was proven to have committed an illegal act. The joint investment company was
finally sentenced to pay compensation to the state amounting to Rp26.09 billion. 24 This
matter is final and binding for all parties. Which means that neither appeal nor cassation
cannot be filed if there is dissatisfaction by one of the parties in the future.
Apart from the advantages, each method must have its drawbacks as well. The same is the
case with arbitration which has flaws in its method, as follows25:

- The registration fee for arbitration is more expensive than ordinary courts
- If the losing party does not want to implement the arbitration decision, an order
from the court is required to carry out the execution of the arbitration decision.
- An arbitration decision is determined by the technical ability of the arbitrator to
provide a satisfactory decision to exercise the parties' sense of justice.
- In general, the disputing parties in the arbitration are large companies, therefore to
meet the will of the disputing parties and bring them to the arbitration body is not easy.
Even though it is final and binding, the parties concerned can submit a cancellation of the
verdict against the arbitration verdict, but on the basis of the suspicion that the following
elements have occurred during the dispute resolution process by arbitration26:
a. Letters or documents submitted during examination after a verdict has been passed are
admittedly false and / or declared false;
b. After the decision is made, a decisive document is found hidden by the opposing party
c. The decision is made based on the deception carried out by one of the parties in the
dispute examination.
24
Hukum Online, Kasus Bank Garansi Bodong Bank Mandiri Berakhir di BANI
https://www.hukumonline.com/berita/baca/hol19200/kasus-bank-garansi-bodong-bank-mandiriberakhir-di-
bani/
25
Article 77 Paragraph (2) UU No. 30 Tahun 1999
26
Article 70 of Law no. 30 of 1999
 CHAPTER IV

CONCLUSION

Bank guarantee itself is basically a documentary guarantee issued by a bank which

results in an obligation to pay the guarantee recipient if the guaranteed party is default
(Article 1 paragraph (3) letter (a) Decree of the Board of Directors. 23/88 / KEP / DIR
dated March 18, 1991) or in other words a guarantee from the Issuing Bank to the Recipient
that the Giving Bank (Applicant) will fulfill its obligations.

Arbitration is a way of resolving civil disputes outside the public court based on an
arbitration agreement made in writing by the disputing parties. The case that befell Bank
Indonesia, Government Guarantee Bank Fraud through the Ministry of Public Works
revoked the Pandaan-Malang toll road project contract which requires a capital of US $ 350
million for PT. Setdco Intrinsic, because they cannot withdraw the security deposit at PT
Bank Mandiri Tbk. in termination of the contract because Setdco was unable to meet the
capital requirements required by the Ministry of Public Works up to the specified time,
where it was known that the guarantee bank of PT. Setdco Intrinsic is fake because the
guarantee letter is not registered at Bank Mandiri. Arbitration is often a solution for
disputants to resolve their cases.

The disputing parties choose arbitration settlement because of the advantages of this
method, the confidentiality of the parties is guaranteed, because according to Article 27 of
Law no. 20 of 1999, the procedure tends to take a long time. For a businessman, this is very
important because every time that runs will spend larger operational funds and is final and
binding. As is known, in the dispute resolution decision of PT. Setdco and the Public
Works Office of BANI stated that PT Setdco Intrinsic Nusantara was proven to have
committed an illegal act. The joint investment company was finally sentenced to pay
compensation to the state amounting to Rp26.09 billion. This matter is final and binding on
all parties. This means that neither cassation nor appeal can be filed if there is
dissatisfaction by either party at a later date.
Likewise, arbitration has flaws in its method, one of which is that generally the disputing
parties in the arbitration are large companies, therefore to fulfill the wishes of the disputing
parties and bring them to the arbitration body is not easy. Even though it is final and
binding, the interested parties can submit a revocation of the award against the arbitration
award, but on the basis of the allegation that the following things have occurred in the
dispute resolution process through arbitration:

A. Letters or documents submitted at the time of examination after the verdict is passed are
recognized as false and / or declared false;

b. After the decision was made, the opposing party found documents that determined to be
hidden

c. Decisions are taken based on fraud committed by one of the parties in the dispute
examination.

Suggestion

Based on the study conducted by the author, the writer submits suggestions to the
Toll Road Regulatory Agency (BPJT), the Department of Public Works to be careful and
ask for confirmation from the bank issuing guarantee letters from the start then checking all
implementation guarantees or performance bonds from various projects to the issuing bank
in order to minimize their existence. problems like this that apparently the guarantee letter
is not registered.