THE ROLE OF ARBITRATION IN DISPUTE RESOLUTION

E-COMMERCE ON INTERNATIONAL TRANSACTIONS

Compiled by:
Naufal Riski - 205210247

FACULTY OF LAW
TARUMANAGARA UNIVERSITY
JAKARTA
2024
 THE ROLE OF ARBITRATION IN DISPUTE RESOLUTION
E-COMMERCE ON INTERNATIONAL TRANSACTIONS

ABSTRACT

The development of e-commerce has created new opportunities and challenges in the
world of international business. One of the challenges that arises is the increasing
potential for disputes between business actors and consumers in international
transactions. Dispute resolution in an agreement bond can basically be resolved in various
ways. One way is through the litigation process and settlement by referee court. The
choice of dispute resolution is highly dependent on the willingness of the business
parties, both agreed upon before the implementation of the agreement and the agreement
after the dispute occurs. This journal discusses the role of arbitration in resolving e-
commerce disputes on international transactions. Arbitration is an alternative dispute
resolution outside the court that is based on the agreement of the parties.

Keywords: Arbitration, E-commerce, Disputes

ABSTRACT

The development of e-commerce has brought new opportunities and challenges to the
business world. One of the challenges that arises is the increasing potential for disputes
between business actors and consumers in international transactions. Settlement of
disputes that arise in the implementation of an agreement can basically be resolved using
various options. Such as through the lawsuit process in general court and settlement by
referee. This choice really depends on the wishes of the parties, whether agreed before
the implementation of the agreement or agreed upon after a dispute occurs. This journal
discusses the role of arbitration in resolving e-commerce disputes in international
transactions. Arbitration is an alternative dispute resolution outside of court based on
the agreement of the parties.

Keywords: Arbitration, E-commerce, Dispute

1
 CHAPTER I
BACKGROUND

In an agreement established by the parties by binding themselves to each

other in an agreement, it is not uncommon in this case to find negligence in
carrying out certain clauses in the agreement. The occurrence of this negligence
will certainly cause one of the parties to feel disadvantaged which can ultimately
cause a dispute between the two parties. The emergence of a dispute in a
relationship, especially a business relationship, is an inevitable thing and often
occurs.

As at the beginning, the attachment was established on the basis of wanting to find
something mutually beneficial for both parties; this also applies equally in the
steps of efforts to resolve the dispute that occurred. The parties that are established
between each other usually anticipate the worst possibility and prolonged disputes
from the agreements that have been formed. The form of anticipation that has
usually been prepared is, by including a clause in the agreement. Usually the
clause will be written, that if there is a dispute during the agreement or contract,
then the settlement will be carried out by peaceful consensus deliberation efforts
to get a solution in the form of a joint decision. 1 Just as at the beginning the
attachment was established based on wanting to find something mutually
beneficial for both parties, this also applies equally in the steps of efforts to
resolve disputes that occur.2 The parties that are established with each other
usually anticipate the worst possible outcome of the agreement that has been
formed. The form of anticipation is that it has been arranged in advance to know
how to stage and solve problems in the event of a dispute in the business
relationship that will be carried out later. In this modern era, there are already
many ways to resolve a case without going directly to court, one of which is by
using mediation and arbitration channels. The term arbitration itself is an
alternative route that can be carried out both litigated and non-litigation, as a way
of resolving disputes in civil law that is carried out outside the general court based
on the agreement of the two parties in the arbitration agreement made in writing
by both parties to the dispute.3

1
Sarwono Hardjomuljadi, Alternative Construction Dispute Resolution in Indonesia, (Bandung:
Logoz Publishing), p. 7.
2
Grace Henni Tampongangoy, "Arbitration is a Legal Remedy in the Settlement of International
Trade Disputes", Lex et Societatis, Vol. 3 No. 1, Year 2017, p.161.
3
Wahyu Simon Tampubolon., "The Role of an Arbitrator in Dispute Resolution Through
Arbitration", Scientific Journal of Advocacy, Vol. 07 No. 01, Year 2019, p. 21

2
 Along with the rapid development of the industrial and technological revolution in
Indonesia, community life is now becoming more practical with the help of
technology in helping to facilitate people's mobility. One of these can also be felt
in the business sector which can be done with electronic-based technology.
Electronic Commerce or commonly abbreviated as e-commerce, is the process of
buying and selling goods or services electronically through the internet. 4 In e-
commerce, business transactions occur online without any direct interaction
between buyers and sellers. The concept of e-commerce has been around since the
early 1970s, but its growth and mass adoption only occurred in the 1990s as the
internet and information technology evolved. Ever since the 1990s e-commerce is
already become one of the most important sectors in the whole wide world
economy and continues to grow rapidly until today. 5 There are several business
models that usually used by e-commerce, here are the following:

1. Business to Consumer (B2C)

This business model involves the direct sale of products and services from the
company itself to the end consumer through an e-commerce online or offline
platfrorm. The example is when someone buys clothes or electronic devices
from a website or local stores.
2. Business to Business (B2B)
This business model involves transactions between two or more companies.
which as we speak about e-commerce, by this means the purchase of raw
materials or work equipment from suppliers or distributors to other
companies.
3. Consumer to Consumer (C2C)
This business model allows consumers to sell products and other services to
consumers aswell through e-commerce platforms via online and offline
aswell. The example is when someone sells their used items online auction
sites such as Facebook or sells goods through social media or silent auction.
4. Consumer to Business (C2B)
This business model is when consumers offering their products and services
to companies. The example is when an influencer offers their services to
some local/international brand to endorse their product to gain many
positivities.
5. Business to Government (B2G)
This business model means that selling products and services from companies
straight to the government agencies. The example is when the government
orders equipment and services from vendors through an e-procurement
platform via online and offline.
E-commerce has provided many benefits for businesses and consumers. For
business people, e-commerce allows them to reach a wider market, reduce
operational costs, and improve business efficiency. For consumers, e-commerce
provides ease of shopping, access to various products and services, and a more
personalized shopping experience.
4
Kasmir and Jafar, Business Feasibility Study, (Jakarta: Prenada Media, 2020), p. 7.
5Dewi Sulistianingsih, Melliniarini Dibura Utami & YuliPrasetyo Adh, "Legal Protection for Consumers in E-commerce Transactions as a Business Challenge in
the Global Era",
Mercatoria Journal, Vol. 16 No. 2, Year 2023, p. 120.
6
Amran Suadi, Sharia Economic Dispute Resolution: Theory and Practice, (Jakarta: Kencana), p. 7-8.

3
 However, with the various advantages provided by e-commerce, it does not rule
out the possibility of business problems that occur when using it. Legal problems
that generally occur in the use of e-commerce as a business medium include:6
1. Protection of Personal Data
Personal data protection is one of the main issues in e-commerce. Businesses
must comply with data privacy regulations such as GDPR in the European
Union or the Personal Data Protection Law (PDP Law) in Indonesia. They
must ensure that consumers' personal information is stored and processed
securely, as well as obtain appropriate consent before collecting personal
data.
2. Taxes and Regulations on Electronic Commerce
E-commerce taxes can be very complicated since transactions go across
multiple countries' boundaries and authorities. These rules also differ per
nation changing how goods are ordered or delivered from internet based shops.
3. Consumer Protection
When it comes to e-commerce transactions, consumers have rights that have to
be respected. These rights include the right of getting clear information in
relation to products or services, the right for filing complaints as well as
returning items that are not what they wanted and compensation incase of
fraudulent or faulty goods.
4. Abuse of Intellectual Property Rights (IPR)
Pirated or counterfeit products are commonly sold on E-commerce platforms,
thereby infringing on intellectual property rights including trademarks,
copyrights and patents. Businesses must ensure they do not violate others’
intellectual property rights through E-commerce activities.
5. Contract Terms and Online Transaction Law
The seller’s agreement with the consumer must clearly define the terms and
personalized consumer sites must be aligned with the legislation. Thus, it
contains the right and duty of the seller as well as the purchaser. And also how
to return goods and where to address disputes in case they arise.
6. Transaction Security and Online Fraud
Businesses need to take steps to protect online transactions from fraud and
security attacks such as identity theft, phishing, and malware. They must also
ensure that their payment and delivery systems are safe and secure.
7. Data Usage and Analytics
The use of consumer data for analytics and marketing purposes must also
comply with applicable data privacy regulations, and businesses must ensure
that they do not violate consumer privacy in their use of such data.

6
Amran Suadi, Sharia Economic Dispute Resolution: Theory and Practice, (Jakarta: Kencana), p. 7-8.

4
Understanding and complying with applicable legal regulations is important in
running an e-commerce business safely and legally. Therefore, efforts are needed
to resolve effectively and comprehensively in the event of a business dispute,
where this is aimed at not affecting the economic flow of business which is
carried out too late.

In this modern era, dispute resolution efforts are also known as arbitration as an
alternative route that can be carried out both through litigation and non-litigation.
Arbitration itself is a way of resolving disputes in civil law that is carried out
outside the general court based on the agreement of both parties in the arbitration
agreement made in writing by the parties to the dispute. 7 The legal basis
governing dispute resolution by arbitration itself is regulated in Law Number 30
of 1999 concerning Arbitration and Alternative Dispute Resolution. There are
other alternative steps for dispute resolution contained in the article such as
negotiating, conciliation, consultation, providing expert views and opinions, and
resolving by other alternative means that can include as a form of mediation
process.

According to the opinion submitted by Subekti, arbitration is a settlement or

termination of a dispute carried out by a judge or other judges based on the
consent of the parties who will submit or obey the decision that will later be given
by the judges they elect.8 Dispute resolution by arbitration is considered an
efficient and practical way to find solutions and a middle way out of the problems
that occur. Based on what is stipulated in Law Number 30 of 1999, there are
several advantages obtained by using the arbitration route as a dispute resolution
process, including:9

1. The confidentiality of the parties to the dispute is guaranteed;10 reviews

2. Delays caused by procedural and administrative matters can be avoided;
3. The parties may choose arbitrators who are experienced, have sufficient
background on the disputed issue, and are honest and fair;
4. The parties may determine the choice of law for the resolution of their
problem;
5. The parties may choose the venue of the arbitration; and
6. An arbitral award is a decision that binds the parties through a simple
procedure or can be directly enforced.

7
Wahyu Simon Tampubolon., "The Role of an Arbitrator in Dispute Resolution Through
Arbitration", Scientific Journal of Advocacy, Vol. 07 No. 01, Year 2019, p. 21.
8
Candra Irawan, Alternative Law of Dispute Resolution in Indonesia, Revised Edition,
(Bandung: Mandar Maju, 2017), p. 7.
9
Faisal Riza and Rachmad Abduh, "Arbitration Dispute Resolution to Protect Consumers
through the Consumer Dispute Resolution Agency", EduTech Journal, Vol. 4 No. 1, Year 2018, p.
34.
10
Nita Triana, Alternative Dispute Resolution: Alternative Dispute Resolution with
Mediation, Arbitration, Negotiation, and Conciliation Models, (Yogyakarta: Pustaka Ilmu, 2019),
p. 2.

5
Dispute resolution using this arbitration route has actually existed for a long time
in Indonesia, although it has only been crowded in recent years. There are several
regulations that regulate juridically related to arbitration authority, including: 11
1. Article 337 HIR or Article 705 RBG
"If Indonesians or Foreign Orientals want their disputes to be decided by
arbitrators or arbitrators, then they are obliged to comply with the rules of the
courts applicable to Europeans". As explained above, the court regulations
applicable to European Nations referred to in Article 377 of the HIR are all
provisions on Civil Proceedings regulated in the RV.
2. Article 615 – Article 651 RV
The rules regarding arbitration in the RV are set out in Book 3 of the First
Chapter of Articles 615 to 651 of the RV, which include the approval of the
arbitration and the appointment of arbitrators, the pre-examination of the
arbitration, the arbitral award, the efforts to appeal the arbitral award, and the
termination of the arbitral proceedings.
3. Article 3 paragraph (1) of Law Number 14 of 1970 concerning the Principal
Provisions of Judicial Power Settlement of cases outside the court on the
basis of peace or through referees or arbitration is still allowed.
4. Article 80 of Law Number 14 of 1985 concerning the Supreme Court
The only law about the Supreme Court that applies in
Indonesia, namely Law No. 14 of 1985, does not regulate arbitration at all.
The transitional provisions contained in Article 80 of Law No. 14 of 1985,
stipulate that all existing implementing regulations regarding the Supreme
Court are declared to remain valid as long as these regulations do not
contradict this Supreme Court Law. In this case, we need to refer back to Law
No. 1 of 1950 concerning the Composition of Power and the Court Road of
the Supreme Court of Indonesia. Law No. 1 of 1950 appoints the Supreme
Court as the court that decides in the second instance an arbitral award
regarding a dispute involving an amount of money more than Rp. 25,000
(Article 15 Jo. Article 108 of Law No. 1 of 1950).12 reviews
5. Law No. 5 of 1968 concerning the Ratification of the Convention on the
Settlement of Disputes Between States and Foreigners Regarding Investment
or as a form of ratification of the International Convention on the Settlement
of Investment Disputes Between States and Nationals of Other States:
This law states that the government has the authority to give approval for a
dispute regarding 5 foreign investments to be decided by the International
Centre for the Settlement of Investment Disputes (ICSD) in Washington.

11
Didin R Dinovan, "The Authority of the Commercial Court to Adjudicate Bankruptcy Cases
Against the Existence of Arbitration Clauses in Agreed Agreements", Supremacy Jurnal Hukum,
Vol. 1 No. 2, Year 2019, p. 91.
12
Directorate General of the Ministry of Law and Human Rights, "Harmonization of Laws and
Regulations", http://ditjenpp.kemenkumham.go.id/htn-dan-puu/421-harmonisasi-
peraturanperundang-undangan.html, Directorate General of Laws and Regulations, (accessed April
28, 2024).

6
 6. Presidential Decree Number 34 of 1981
The Indonesian government has ratified the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, abbreviated as the New York
Convention (1958), the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, which was held on June 10, 1958 in New York and
initiated by the United Nations.
7. Supreme Court Regulation Number 1 of 1990
Furthermore, with the ratification of the New York Convention with
Presidential Decree No. 34 of 1958, the Supreme Court issued Supreme Court
Regulation (PERMA) No. 1 of 1990 concerning Procedures for the
Implementation of Foreign Arbitral Awards, on March 1, 1990 which took
effect from the date of issuance.
8. Law Number 30 of 1999 concerning Arbitration and Alternative Dispute
Resolution13
As the latest provision regulating arbitration institutions, the government
issued Law No. 30 of 1999 concerning Arbitration and Alternative Dispute
Resolution, on August 12, 1999 which is intended to replace the regulations
on arbitration institutions that are no longer in accordance with the
development of the times and the progress of international trade. Therefore,
the provisions regarding arbitration as referred to in Articles 615 to 651 RV,
Article 377 HIR, and Article 705 RBG, are declared invalid. Thus, the
procedural law provisions of the current arbitration institution have used the
provisions contained in Law No. 30 of 1999.
According to the statement submitted by H.M.M. Purwonosutjipto said that the
use of the term referee in arbitration is interpreted as a form of peace justice,
where the parties will later agree that disputes that occur regarding personal rights
that they cannot fully control will be examined and tried by impartial judges
appointed by the parties themselves and the decision is binding for both parties. 14
In carrying out its duties, there are 2 (two) basic principles of arbitration that must
be upheld and carried out by arbitrators when handling the settlement of disputes,
namely:15
1. Dispute resolution with this arbitration effort must be carried out based on a
fair, fast, and independent settlement in finding solutions to the problems to
be solved;
2. The settlement of cases outside the court on the basis of peace is carried out
by ensuring the confidentiality of disputes, avoiding various forms of delays
caused by procedural and administrative problems, and the settlement must
emphasize solutions using the concept of win-win-solution for both parties to
the case.

13
Indonesia, Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution,
Ps. 4 paragraph (2): "The agreement to resolve disputes through arbitration as referred to in
paragraph (1) is contained in a document signed by the parties."
14
Firda Ainun Fadillah and Saskia Amalia Putri, "Alternative Dispute Resolution and
Arbitration (Literature Review of Ethics), Journal of JIMT: Journal of Applied Management
Sciences, Vol.2 No.6, Year 2021, p.5
15
Sarman Sinaga, Reconstruction of Business Dispute Resolution in Electronic Transactions
(E-Commerce) Based on the Value of Justice, (Doctoral thesis: Sultan Agung Islamic
University, 2019), pp. 25-26.

7
 In Article 1 paragraph (1) of Law Number 30 of 199 concerning Arbitration, it is
explained that arbitration is a way of resolving civil disputes outside the court
based on an arbitration agreement that has been written and agreed upon by both
parties. Thus, the arbitration clause itself is a unit of arbitration and cannot be
separated from the existing principal agreement. 16 Therefore, the arbitration
clause in this agreement must be carefully drafted, accurate, and binding.

The arbitral authority in resolving business disputes is based on the arbitration

agreement agreed upon by the disputing parties, as well as the laws and principles
governing arbitration proceedings in general. It is the responsibility of arbitrators
to ensure that the arbitration proceedings are conducted in compliance with
relevant regulations and concepts, while taking into consideration interests and
equitable treatment for all parties. It is the responsibility of arbitrators to ensure
that the arbitration proceedings are conducted in compliance with relevant
regulations and concepts, while taking into consideration interests and equitable
treatment for all parties.17 reviews

In their contracts with each other, those who are in dispute when they both trade
online will say they want it resolved out-of-court instead of going to court
[arbitration]. Among others, for these clauses to be comprehensive and concise
one must file certain documents such as what method should be employed during
dispute resolution-arbitration procedures-, what persons should act as arbitrators
(arbitration procedure)-the type of law (governing arbitration). The legal setting
that discusses this in Indonesia includes: Regulation No. 30/1999 on Arbitration
as well as its Supreme Court Directive 4/2016 on Arbitration Guidelines.
Therefore, it is important for the parties involved to understand the arbitration
procedure, select a suitable arbitral institution, and undergo the process in good
faith in order to achieve a fair and satisfactory settlement.
16
Didin R Dinovan, "The Authority of the Commercial Court to Adjudicate Bankruptcy Cases Against the Existence of
Arbitration Clauses in Agreed Agreements", Supremasi Jurnal Hukum, Vol. 1 No. 2, Year 2019, p. 91.
17 Pujiyono, "Absolute Authority of Arbitration Institutions", Journal of Rechts Vinding, Vol. 7 No. 2,
Year 2018, p. 245.
18 Jeffry Latumahina, "The Legal Relationship of the Arbitration Calendar with the Jurisdiction of the
District Court", Ecodemica Journal, Vol. 4 No. 2, Year 2020, p. 291.

8
 When looking at business disputes that occur in the international realm, the
parties involved must determine the choice of law that will later be used in
practice. Arbitration agreements usually set out the law that will govern the
dispute. This law can be the national law of one of the parties, international law,
or special law related to the subject matter of the agreement. After the election of
the law is enforced, then the
It will also affect the jurisdiction of the courts in looking at the recognition of the
enforcement of arbitral awards by courts in various jurisdictions. 19 This is based
on the arbitration agreement usually stipulating the scope of the arbitration
authority, i.e. the types of disputes that can be submitted to arbitration. This
arbitration authority shall be consistent with applicable law and other relevant
provisions.20 Therefore, the location where the arbitral proceedings will take
place is also specified in the agreement. These locations are usually chosen based
on considerations of practicality, cost, and other relevant factors.21 reviews

PROBLEM FORMULATION
After explaining the background above, the author compiles 2 (two) problem
formulations that can be further studied for the problem as follows:

1. How effective is the role of arbitration in handling business disputes in e-

commerce?
2. What is the arbitral authority in handling e-commerce business disputes in
international transactions?

19
Ni Nyoman Adi Adisti & Jefry Tarantang, "Business Dispute Resolution Through Arbitration
Institutions", Al-Qardh Journal, Vol. 3 No. 2, Year 2018, p. 115.
20
Cut Memi, International Commercial Arbitration, Application of Clauses in District Court
Decisions, (Jakarta: Sinar Grafika, 2017), p. 51.
21
M. Alvin Syahrin, "Determination of Authoritative Forums and Dispute Resolution Models for
International Business Transactions Using E-Commerce: A Study of Legal Certainty in National
Economic Development", Journal of Rechts Vinding, Vol. 7 No. 2, Year 2018, p. 211.

9
 CHAPTER II
ANALYSIS

I. HOW EFFECTIVE IS THE ROLE OF ARBITRATION IN HANDLING

BUSINESS DISPUTES IN E-COMMERCE?

In today's digital age, living a life full of rapid expansion and improvement, e-
commerce is one of the most active and growing sectors of the industry. This
increase is made possible by the growth in the number of new companies trading
personal goods, and services over the internet. But it also led to an increase in
disputes, which became increasingly complex and represented a new testing
ground for the law. One of the most popular methods and ways of solving them is
arbitrage in e-commerce. This is possible due to several advantages of arbitration
that make it more efficient than trial in court. This article discusses this method,
why it is effective, and what are its benefits and challenges.

Dispute issues in e-commerce may involve everything from contracts to

copyrights, counterfeiting, fraud, and those related to static data protection. After
evaluating the technical characteristics of the above disputes, it can be observed
that the nature of one of the cases is that they are cross-jurisdictional
technological disputes that require a quick resolution. E-commerce trade and
services are often international and involve multiple countries and each party, so it
is difficult to avoid international disputes. Arbitration is an extraordinarily
effective way of resolving disputes relating to these properties.1

Compared to traditional litigation, arbitration offers significant flexibility. This

provides an opportunity for the parties to choose arbitrators who have knowledge
in the field of technology and electronic commerce (e-commerce) that does not
necessarily exist in the traditional litigation system. In addition, the parties may
structure the arbitration proceedings to their liking and determine the location of
the dispute resolution and determine the language used in the arbitration
proceedings. This flexibility allows dispute resolution to be tailored to the needs
of the e-commerce company itself. In the fast-paced business world, this
flexibility is invaluable, allowing parties to adapt quickly and accurately to
changing circumstances and needs.2

1
Dian Rubiana Suherman, ONLINE ARBITRATION IN BUSINESS DISPUTE RESOLUTION AS A
FORM OF CONSUMER RIGHTS PROTECTION
2
Barkatullah, Abdul Halim. "Application of online arbitration in e-commerce transaction dispute
resolution." Ius Quia Iustum Law Journal 17.3 (2010): 363-382.
1
0
 Arbitration is often used as a dispute resolution method by international e-
commerce companies for a variety of reasons, making it more attractive than
traditional litigation. The speed of the dispute process is one of the main
advantages of arbitration. In the fast pace of the international eCommerce sector,
time cannot be afforded. Arbitration beats litigation because parties give
arbitrators specific timeframes. This means that time sensitive approach helps to
forestall long term business interruptions through quicker settlement of disputes.
There often remains a significant interference with business practices through old-
style judicial processes mainly because of slowness and bureaucratic red tapes.
Conversely, the effectiveness of arbitration is evidenced by the faster but more
organized settlements which reduce the timing for one to get an award.3

Even though arbitration costs are relatively high, they’re usually more efficient
than lengthy litigation expenses. Costs matters in international e-commerce since
profit margins may be thin. Parties to an arbitration can regulate costs more easily
than parties to litigation because of the possibility to decide how many arbitrators
would sit, at what point the hearing should start or end and how intricate a matter
they want heard.4 Also, the indirect consequences of avoiding long litigations
include disruptions in the reputation of companies and businesses. It can also help
to lower the indirect expenses including lost productivity and disruptions to
normal operations by shortening the disagreement settlement period; it is also
important to note, though, that arbitration cost varies, too. Arbitration experts who
are high rated and skilled can ask for substantial amounts. Nonetheless, these
expenses usually depend on the advantages gotten, saying promptness in settling
disputes and more targeted ones together with useful decisions. Moreover, to
lessen the time when resolving disputes, such a method is also beneficial in that it
in return reduces consequential costs such as lowered work output or harm done
to one’s commercial activities.

Most often than not arbiration dispute resolution is more cost-effective compared
to ordinary litigation. What traditional courts do is to charge the attorney fees,
litigation costs, and many are unpredictable in most circumstances. The cost is
more predictable because arbitration puts more decisionmaking powers into the
hands of the parties – they control arbitrator selection, determination of the
arbitration schedule and venue and can make adjustments to save costs.

3
Salami, Rochani Urip, and Rahadi Wasi Bintoro. "Alternative Dispute Resolution in Electronic
Transaction Disputes (E-Commerce)." Journal of Legal Dynamics 13.1 (2013): 124-135.
4
Barkatullah, Abdul Halim. "Application of online arbitration in e-commerce transaction dispute
resolution." Ius Quia Iustum Law Journal 17.3 (2010): 363-382.
1
1
 In international e-commerce disputes often involving sensitive information such
as customer data and trade secrets, the level of confidentiality that arbitration
offers is huge. It cannot be achieved through public litigation. The arbitration
proceedings are closed to the public, and the results are not publicized, thus
protecting the privacy of the parties and safeguarding the company's reputation. It
is essential for the parties to allow for justice and be pleased with the outcome of
the case. This is only possible when both parties can share their evidence and
arguments freely without worrying about their image or place in the market.

Enforcing awards is made easier when disputes are arbitrated internationally. The
New York Convention of 1958 concerning the Recognition and Enforcement of
Foreign Arbitral Awards permits recognition and enforcement of arbitral awards
globally. The principle underlying this is that parties can expect their dispute
resolution or judgments from courts to bear fruit in many nations; something
important when it comes to cross border e-commerce transactions as such actions
may be subject to different legal systems within various regions of the world.. 5

There have been various crucial cases that have taken place highlighting the
utilization of arbitration in e-commerce disputes. Domain name ownership and
use disputes are commonly arbitrated, for instance with UDRP being the most
preferred route to resolve such issues. UDRP requires for three arbitrators to be
involved in order to come up with quick and efficient outcomes on domain name
disputes. Furthermore, arbitration is used for resolving conflicts about copyrights,
patents and trademarks concerning e-commerce. Arbitrators with special expertise
in the field of intellectual property can render precise and in-depth rulings on
technical issues. Contract disputes between e-commerce platforms and sellers or
between sellers and buyers can also be resolved through arbitration, including
disputes regarding breach of contract, product non-conformity, and payment
issues. While resolving disputes using arbitration has many benefits, there are
several challenges that it faces. One of them is because the cost of arbitration can
be very high if the dispute case is handled with a highly skilled arbitrator or the
dispute has many disputes involving many witnesses and technical evidence.

Arbitration hearings are always conducted in closed rooms, in the sense that they
are not open to the public, and decisions pronounced in closed hearings are almost
never made public. Thus, the settlement through arbitration is expected to
maintain the confidentiality of the parties to the dispute.41The principle of
examination conducted behind closed doors at each stage can also be seen in
Article 14 paragraph (5) of the BANI Procedure Regulations which reads: "All
examinations are conducted with closed doors." 42This principle must not be
violated, the consequences can be fatal. As a result, the examination and decision
are null and void so that the dispute must be re-examined with the door closed.
Only such consequences can be overcome by asking for the consent of both
parties.
However, these costs often outweigh the benefits obtained for resolving the
dispute case itself.
5
DEWI, NI WAYAN LISNA, I. GUSTI KETUT ADNYA WIBAWA, and I. WAYAN ANTARA.
"Arrangements for the Recognition and Enforcement of International Arbitral Awards Based on the 1958
New York Convention in Indonesia." Scientific Magazine of the University of Tabanan 18.1 (2021): 121-
127.
1
2
 The success or failure of an arbitration proceeding depends largely on whether the
parties agree to participate in the arbitration proceeding. Without this consent, the
arbitration cannot take place. In addition, cultural and legal differences in
international conflicts can pose challenges in understanding and resolving
conflicts. For arbitrators to be able to make a just and equitable award, they
should take cognisance of these degeneracies in dispute resolution. Public
authorities and other regulators play a key role in promoting the utilization of
arbitration within the realm of internet trade disagreements/cases .
Comprehensible legal framework and promotion about trade arbitration would
enhance the trust which firms have towards such arrangements. Some nations
have enacted statutes that promote arbitration and mediation thereby reducing
litigation costs. It is crucial to establish a supportive legal context and to give
certainty and clarity to all parties who resort to arbitration as a means of settling
disputes. 6

Arbitration is faster and more structured in the world of e-commerce, where

change is fast-paced and immediate solutions are vital compared to traditional
litigation. Often, traditional court proceedings are slowed down by bureaucracy as
well as case backlogs as it may result in serious delays therefore; arbitration is
beneficial. On the other hand, going over a private agreed-upon judge lets persons
to choose a precise and often less span of time, which shortens the span taken to
reach a completion.7

Arbitration provides flexibility in setting hearing schedules and times for

rendering decisions, a particularly attractive feature for e-commerce businesses
operating under fast-paced conditions. Such businesses may suffer a lot due to
delays in resolving disputes especially when they involve violation of intellephot
property rights, breach of contracts or fraudulent activities which directly affect
the organization’s standing and daily activities. Arbitrators are experts in one way
which enhances the efficiency of arbitration. In the realm of e-commerce, disputes
tend to be complicated and necessitate the knowledge of technology, cyber laws,
and digital market dynamics. Selected arbitrators often have specialized expertise
in the field, which allows them to handle disputes more effectively compared to
court judges who may not have the same specialized knowledge.8

6
Fadillah, Firda Ainun, and Saskia Amalia Putri. "Alternative Dispute Resolution and Arbitration
(Literature Review of Ethics)." Journal of Applied Management Science 2.6 (2021): 744-756.
7
Riza, Faisal, and Rachmad Abduh. "Alternative Dispute Resolution by Arbitration through the Utilization
of Information Technology." De Lega Lata: Journal of Legal Sciences 4.1 (2019): 77-86.
8
Matheus, Juan. "E-Arbitration: Digitization of Business Dispute Resolution in the E-Commerce Sector in
Welcoming the Industry 4.0 Era in the Midst of the Covid-19 Pandemic." Lex Renaissance 6.4 (2021): 692-
704.
1
3
 Arbitrage has also adapted to technological advancements, which is increasingly
relevant in e-commerce business. Many arbitral institutions now offer online
arbitration, which allows parties to participate in the arbitration proceedings
without having to be physically present. This reduces travel costs and makes it
easier for parties in different geographical locations to resolve their disputes.
Online arbitration uses a secure digital platform to conduct hearings, deliver
documents, and communicate. This technology not only improves the efficiency
of the process but also makes arbitration more accessible to all parties involved.
Flek's understanding of e-commerce-specific technology and terminology ensures
that decisions are made more relevant and on target. This is very important to
ensure justice and satisfaction of the parties to the dispute. Expert arbitrators can
also offer creative and practical solutions that may not be possible through
conventional court proceedings. Confidentiality is one of the main advantages of
arbitration, especially in the context of e-commerce. Business disputes often
involve sensitive information such as customer data, trade secrets, and business
strategies that they do not want to disclose to the public. Open court proceedings
can cause this sensitive information to become public, which can damage a
company's reputation and provide a competitive advantage to competitors.
Arbitration, on the other hand, offers a more closed process, where only the
parties involved and the arbitrator have access to sensitive information. This
confidentiality allows the parties to be more open in providing their evidence and
arguments, without fear of negative impact on their reputation or market position.

Along with the times, e-court was then introduced by the Supreme Court. Now the
administrative arrangements for cases and trials in the court electronically are
regulated separately into Perma 1/2019. Meanwhile, if referring to Article 4
paragraph (3) of Law 30/1999 which states: "In the event that it is agreed that the
settlement of the dispute through arbitration occurs in the form of an exchange of
letters, then the delivery of telephone, telegram, facsimile, e-mail or in the form of
other means of communication, must be accompanied by a record of receipt by
the parties."9 With the above law, now arbitration for international e-commerce
dispute resolution can be carried out more easily with the existence of online
arbitration, online arbitration is the latest innovation that is increasingly popular in
e-commerce dispute resolution. Online arbitration platforms allow parties to file
their cases, submit evidence, and participate in hearings over the internet. This not
only reduces travel costs but also makes the process more accessible for parties
from different geographical locations. The use of technology in arbitration, such
as video conferencing and electronic documents, improves process efficiency and
reduces logistical barriers. This allows disputes to be resolved quicker and less
expensively, and offers more options to geographically and financially restricted
parties.

9
Ningtyas, Gerynica Ayu. Application of Law Number 30 of 1999 concerning Arbitration and Alternative
Dispute Resolution to Online Trade Dispute Resolution (E-commerce) through Online Arbitration. Diss.
Brawijaya University, 2014.
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10

Arbitration is a dispute resolution technique that takes place outside court systems
and has been employed in various sectors for many years. E-commerce disputes
are also resolved through arbitration in today’s rapidly changing digital era. As
one of the most vibrant and rapidly expanding industries, e-commerce often
witnesses different forms of conflicts that necessitate prompt solutions. To
determine how effective arbitration, One of arbitration’s benefits is that when the
arbitrator makes an award it will be considered final and immutable hence parties
are required to accept its ruling, therefore, curtailing the possibility of dragging
cases as it happens with normal courts. As such, when scrutinizing arbitration
procedurally it amounts to scrutinizing several significant aspects namely;
quickness in reaching settlements, the costs involved, arbitrator’s familiarity with
the case at hand, secrecy surrounding a particular case – thereby ensuring minimal
publicity regarding the same – in addition to abidance by the established arbitral
awards. It thereby decreases the probability of long and dragged out legal disputes
that are often typical of traditional litigation. Moreover, arbitral awards are easier
to enforce in external jurisdictions compared to court judgments due to
international conventions such as the New York Convention on the Recognition
and Enforcement of International Arbitral Awards. In the field of e-commerce,
where transactions typically span countries, this renders its execution in various
jurisdictions a huge plus. This ensures that the parties can reach an effective and
efficient settlement, without having to engage in complex and repetitive legal
proceedings in different countries. So, it can be concluded that Law 30/1999
opens up opportunities to use internet instruments. [2] The same thing was also
said by the Deputy Chairman of the Indonesian National Arbitration Board
(BANI), Huala Adolf, explaining that arbitration dispute resolution is allowed
using electronic means, as stipulated in Article 14 paragraph (4) of the BANI
Arbitration Rules and Procedures 2022 also regulates: "... Internal meetings and
hearings of the Arbitral Tribunal may be held at any time and place, including via
the internet, if the Arbitral Tribunal deems it necessary."

Indonesia itself already has a set of rules that support the implementation of
online arbitration as a mechanism for resolving e-commerce disputes, as well as
encouragement from the President through Presidential Instruction Number 74 of
2017 concerning the Roadmap of the Electronic-Based National Trade System
(Road Map E-Commerce) for 2017-2019. In the regulation, there is consumer
protection with the aim of building consumer trust with a comprehensive legal
framework that will accommodate:
1. Classification of e-commerce business actors: divided based on various
factors, including business scale, business model, and role in the e-
commerce ecosystem.
2. Electronic authentication: used to encrypt data transmitted between users
and e-commerce servers.
3. Accreditation process: This accreditation is essential for building
consumer trust, improving a company's reputation, and ensuring that the
business adheres to established quality, safety, and ethical standards.

10
Arum Afriani Dewi. Online Arbitration in the Era of the Industrial Revolution 4.0 and the COVID-19
Pandemic. Journal of Legal Reasoning, Vol. 3, No. 2, 2021;

1
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 4. Payment mechanism policy: payment mechanism policies are essential to
ensure safe, efficient, and convenient transactions for consumers around
the world. This policy involves various aspects, from the choice of
payment methods to transaction security.
5. Consumer and industry player protections specific to electronic-based
commerce (e-commerce) transactions: These protections cover various
aspects of law, regulation, and best practices designed to ensure safe, fair,
and transparent transactions for all parties involved.
6. Online dispute resolution scheme: a dispute resolution process that uses
digital technology to facilitate the resolution of problems between parties
to a conflict. In the context of international e-commerce, ODR is
becoming increasingly important as transactions occur across borders, and
traditional courts are often impractical or effective.
7. Internalization of consumer protection specifically for e-commerce in
national consumer protection strategies: Consumers in e-commerce
transactions often face risks such as fraud, inappropriate goods, data
privacy issues, and lack of transparency. Therefore, the internalization of
consumer protection in national strategies is very important to ensure
consumer trust and convenience in online transactions, especially in the
context of international business.
8. Electronic-based (e-commerce) business actor information application
system: a digital platform designed to facilitate and manage various
aspects of online business transactions between countries. The system
integrates a wide range of functions and services to ensure efficient and
secure operations in international electronic commerce.11

Alibaba, one of the world's largest e-commerce platforms, has implemented an

arbitration mechanism to resolve disputes between sellers and buyers. The platform
works closely with international arbitration institutions to provide fast and efficient
arbitration services. This shows how e-commerce platforms can leverage
arbitration to increase user trust and reduce the burden of disputes. Alibaba's ability
to resolve disputes through arbitration successfully indicates the extent to which
arbitration can be employed in the sphere of online trade. There have been many e-
commerce disputes taken to arbitration. One instance is the Alibaba vs. Lazada case
in which PT. Alibaba Group Holding Limited acting as a plaintiff sued PT. Lazada
Group Limited from Singapore acting as a defendant in the year 2016. Alibaba
stated that Lazada broke the terms of the agreement, as they employed its hi-tech
and brand illegally, which Lazada refuted, saying they legitimately used their own
technology and trademarks.

11
Ridayati, Emanuella, et al. "The Imposition of E-Commerce Tax After the Promulgation of Law Number
11 of 2020 concerning Job Creation." Lex Specialis Journal 1.2 (2020).
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The dispute resolution process was submitted to the Singapore International
Arbitration Centre (SIAC) for follow-up, this arbitration panel consisted of 3
people formed to handle this case. The arbitration panel in this case consists of
arbitrators who are experienced in the field of e-commerce and intellectual
property.
This ensures that cases are handled by individuals who have in-depth knowledge of
relevant issues. The parties presented their evidence and arguments before the 3
arbitration panels. The license agreement between Alibaba and Lazada clearly
defines the rights and obligations of each party. This assists the arbitral tribunal in
understanding the nature of the dispute and in reaching an appropriate award.
Alibaba was able to provide strong evidence to support its allegations against
Lazada. This is especially important in arbitration cases, as the arbitral tribunal
does not have the same authority as the court to compel the disclosure of evidence.
In the context of e-commerce, where transactions are often cross-country, the ease
of enforcement of arbitral awards in various jurisdictions is a great advantage. This
ensures that the parties can reach an effective and efficient settlement, without
having to engage in complex and repetitive legal proceedings in different countries.

The arbitral panel issued a ruling in favor of Alibaba in part and ordered Lazada to
pay damages to Alibaba. This case shows that arbitration can be an effective forum
for resolving complex and cross-border e-commerce business disputes. The
arbitration panel has the necessary expertise and experience to understand the
technical issues involved in the case and to reach a fair and equitable solution.
From this case, several important points can be analyzed as follows:
 The legal document between Alibaba and Lazada spells out the rights and
responsibilities of each party for a common understanding among
arbitrators so they can come up with appropriate decisions.
 Supports its allegations with strong evidence: According to its accusations
of Lazada, Alibaba supports it with such strong evidence that turns out to
be of great importance when it comes to solving e-commerce
disagreements during international transactions where arbitral tribunals are
not endowed with the same powers as state courts in terms of compelling
parties to produce evidence.
 Feasibility of arbitration committee: These arbitrators have extensive
knowledge on e-commerce and intellectual property rights; therefore cases
are only tackled by those persons who possess sufficient understanding
about them
 The arbitral tribunal's award in this case has significant consequences for
both parties including getting compensated for Lazada's breach of the
license agreement and changing Lazada’s business practices to adhere to
the agreement.

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 The limitation of the Alibaba v. Lazada scenario shows that for complicated e-
commerce business disputes involving different nations, arbitration can work
well. Whenever parties make deals across the borders in e-commerce, it is
important for them to take into account arbitration as one of the available ways of
addressing any eventualities that may arise from such transactions. By way of
example, this matter indicates how international arbitration can effectively
facilitate resolution of e-commerce disputes:
 Fast and Efficient Resolution: Arbitration proceedings only take about 10
months, compared to court proceedings that can take years. This is
important for e-commerce businesses that need quick legal certainty.
 Fair and Reasonable Solution: The arbitral tribunal's award obliges Lazada
to pay damages to Alibaba for Lazada's breach of the license agreement.
This shows that arbitration can result in a fair and reasonable solution for
both parties.
 Confidentiality: The arbitration process is confidential, so sensitive
information about both parties' business is not disclosed to the public. This
is important for e-commerce businesses that want to maintain their
reputation.
 Enforcement of Strong Awards: Binding arbitral awards are enforceable in
most countries in the world under the New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards. This ensures
that the winning party in the arbitration can obtain an effective settlement.

Overall, arbitration offers many advantages in resolving e-commerce disputes,

including speed, flexibility, controlled costs, confidentiality, and ease of enforcement
of awards. Despite its challenges, such as high fees and compliance of the parties, the
benefits that arbitration offers make it an attractive option for many e-commerce
businesses. Innovations such as online arbitration and strong regulatory support will
further enhance the effectiveness of arbitration in handling e-commerce disputes. As
such, arbitrage will continue to play a key role in maintaining stability and trust in the
ever-evolving e-commerce industry. To ensure arbitration remains relevant and
effective, it is important for the parties to select arbitrators with appropriate expertise,
adopt efficient procedures, and support policies that encourage out-of-court dispute
resolution. As such, arbitrage will continue to play a key role in maintaining stability
and trust in the ever-evolving e-commerce industry.12

12
Riza, Faisal, and Rachmad Abduh. "Alternative Dispute Resolution by Arbitration through the Utilization
of Information Technology." De Lega Lata: Journal of Legal Sciences 4.1 (2019): 77-86.
1
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 II. WHAT IS THE ARBITRAL AUTHORITY IN HANDLING E-
COMMERCE BUSINESS DISPUTES ON INTERNATIONAL
TRANSACTIONS?

Legal authority is an important issue in arbitration. It is the first statement

filed by an arbitral institution, court, and arbitral panel before considering and
deciding a dispute. The arbitration panel declaring itself responsible will
decide whether the dispute will proceed. On the other hand, if the arbitral
tribunal considers that it does not have authority, then the arbitral tribunal will
immediately refuse to adjudicate the dispute. The jurisdiction or authority of
the arbitral tribunal arises from:
1. Legal instruments: Legal instruments, whether international or
national, are the primary prerequisite for the birth of legal authority or
arbitration jurisdiction (body). For national legal instruments, the
limits of the authority of an arbitral body are determined by the
decision of the legislative body that makes the laws and regulations in
the field of arbitration.13 For example, Law No. 30 of 1999 concerning
Arbitration and Alternative Dispute Resolution. Article 5 of the
Arbitration Law emphasizes that disputes that can be resolved by
arbitration are disputes in the field of trade and disputes that according
to laws and regulations can be peaceful.14The scope of trade law is
activities in the fields of commerce, banking, finance, investment,
industry, and intellectual property rights, among others.15
2. Agreement of the Parties The agreement of the parties is an additional
prerequisite (subsidiary) for the birth of the legal authority (body) of
arbitration. According to Redfern and Hunter, in their book Huala,
Adolf stated: "An arbitral tribunal may only validly resolve those
disputes that the parties have agreed that it should resolve. This rule is
an inevitable and proper consequence of the voluntary nature of
arbitration. In consensual arbitration, the authority or competence of
the arbitral tribunal comes from the agreement of the parties; indeed,
there is no other source from which it can come." 16 Regarding the
jurisdiction of the BANI Arbitration Body, in article 1 of the BANI
Arbitration Procedure Rules, it is formulated "If the parties to a
business agreement or transaction in writing agree to bring a dispute
arising between them in connection with the relevant business
agreement or transaction to arbitration before the Indonesian National
Arbitration Board (BANI) or using the BANI Procedure Rules, then
the dispute shall be resolved under the administration of BANI based
on the the regulation..."17

13
Ibid, p.142
14
Article 5 of Law No. 30 of 1999
15
Explanation of Article 66 of Law No.30 of 1999
16
Ibid, p.144.
17
Article 1 of the BANI Arbitration Procedure Rules
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 In order for a dispute to be submitted to the Indonesian National Arbitration
Board (BANI) for examination and adjudication, in the agreement made by the
parties there must be an article containing the following arbitration clause: "All
disputes arising from this agreement shall be resolved and decided by the
Indonesian National Arbitration Board (BANI) in accordance with the rules of the
procedure of the Indonesian arbitration. Bani's decision is binding on both parties
to the dispute, as the first and last decision." It is important to note that in the
arbitration clause or arbitration agreement, it is stated that the arbitral/BANI
award is binding on both parties as the first and final award, which cannot be
compared to the Supreme Court. Taking into account the nature of arbitration as a
voluntary or extra-judicial institution, compared to a court which is an official
body with the function and authority to adjudicate cases, can the arbitration clause
agreed upon by the parties get rid of the court's jurisdiction to examine and
adjudicate disputes? For more details, the following will be discussed about the
absolute authority of arbitration and the general principles of arbitration.

1. ABSOLUTE AUTHORITY OF ARBITRATION

If it has been agreed by the parties in the agreement to bring a civil case to
arbitration, then the dispute must be resolved through an arbitration forum, this is
as stipulated in Article 3 of the Arbitration Law which reads: "The District Court
is not authorized to adjudicate disputes between parties who have been bound by
an arbitration agreement."18

The existence of an arbitration agreement makes the parties to the agreement

unable to submit a dispute resolution related to the agreement to the District
Court.19 Regarding the agreement or arbitration clause is the foundation or basis
for arbitration, making the principle that has developed in the field of contract
law, namely pacta sunt servanda, has an important meaning in arbitration related
to the nature of the arbitration agreement or clause. The basic reading of pacta
sunt servanda contained in Article 1338 of the Civil Code: "All consents made in
accordance with the law apply as law for those who make them. The consent
cannot be withdrawn other than by agreement of both parties, or for reasons
prescribed by law, the consent must be carried out in good faith."20

18
Article 3 of Law No. 30 of 1999
19
Frans Hendra Winarta, Op.cit, hlm.57.
20
Criminal Code, Permata Press, 2008 p.318
2
0
 Since the arbitration clause is an agreement or agreement made by the parties to
the agreement, it applies entirely to the arbitration agreement:21
 Arbitration agreement is absolutely binding on the parties
 If a dispute arises from what they have agreed on, the authority to
resolve and decide the dispute is "absolutely" the authority of
arbitration.
 The court has no authority to examine and adjudicate disputes
absolutely
 The lapse of the arbitration clause only occurs if it is expressly
withdrawn upon the agreement of the parties
 The law of tacit withdrawal cannot be justified, let alone unilateral
withdrawal.

As stipulated in Article 11 of the Arbitration Law, the State Court is required not
to accept and not participate in cases that have been stated in its agreement that
arbitration is the medium of dispute resolution.
 "The existence of a written arbitration agreement negates the right of
the parties to submit the resolution of disputes or differences of opinion
included in the agreement to the District Court."
 "The District Court is obliged to refuse and will not intervene in a
dispute settlement that has been determined through arbitration, except
in certain matters stipulated in this law."22

Even in arbitration, the agreement made by the parties to the agreement or

arbitration clause is also binding on third parties, including courts or competent
institutions in the judiciary.23 Another implication of pacta sunt servanda in the
provisions of Article 3 and Article 11 of the Arbitration Law is somewhat
contrary to one of the widely known principles, namely that the agreement is only
binding on the parties who make it. 24The absolute authority of arbitration is still
affirmed in the implementation of the arbitral award made by the District Court as
stated in Article 62 paragraph (4) of the Arbitration Law which reads "The Chief
Justice of the District Court does not examine the reasons or considerations of the
Arbitration award." Thus, the Chief Justice of the District Court does not have the
authority to review an arbitral award materially.25

21
Yahya Harhap, O.P. Sit, Halam.88.
22
Article 11 of Law No. 30 of 1999
23
Huala Adolf, Ibid, hlm.26.
24
Ibid, pp.26-27
25
Huala Adolf, Arbitration of ASEAN Countries, Jakarta: National Legal Development Agency, Ministry
of Law and Human Rights of the Republic of Indonesia, 2009, p.51.
2
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 2. GENERAL PRINCIPLES OF DISPUTE RESOLUTION
THROUGH ARBITRATION

a. Prinsip Competence Competence

This principle has been generally accepted in international commercial
arbitration. One of the doctrines that is an important principle in
arbitration related to the jurisdiction of arbitral bodies is the doctrine of
competence-competence.26 Based on this principle, arbitral bodies have the
authority to determine for themselves whether they have jurisdiction to
hear and decide disputes regarding the validity of an agreement or
arbitration clause.27

Based on the explanation above, according to the author, if there are

parties who question the validity of an arbitration clause, then to determine
the party who has the right to decide the authority is not the District Court
or other judicial bodies, but the arbitration body is the most entitled.
According to Huala Adolf, Law No. 30 of 1999 on Arbitration and
Alternative Dispute Resolution does not explicitly regulate or contain the
principle of Competence because the provisions related to the authority of
arbitration or arbitral tribunals in determining their authority, do not
directly relate to the arbitral authority with jurisdiction.28

However, the vacancy regarding the principle of competence in the

Arbitration Law does not apply to the Bani Rules of Procedure, as seen in
Article 18 paragraph (1) of the BANI Rules of Procedure which reads:
"The Tribunal shall have the right to express an objection to a declaration
that it is not authoritative, including an objection relating to the existence
or validity of an arbitration agreement if there are grounds for it."29

b. Final Principles and Binding

The legal consequences or impacts of the arbitral award for the parties are
final and binding. This principle is reflected in the provisions of Article 60
of the Arbitration Law which reads "The arbitral award is final and has
permanent legal force and is binding on the parties." 30 The meaning of the
final decision is that the decision of the Arbitral Court is the decision of
the first and last level. This means that arbitral awards cannot be appealed,
cassated, or reviewed. The meaning of a binding decision is that the
decision since it was handed down is directly binding on the parties. 31 For
arbitration awards that are final and binding, it provides the privilege of
litigating through an arbitration institution because it can save time, costs,
thoughts, and energy for the parties to the case.

26
Huala Adolf, Op.cit, hlm.163.
27
Ibid, p.164
28
Ibid, p.165.
29
Article 18 paragraph (1) of the BANI Procedure Regulations
30
Article 60 of Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution
31
Suleman Batubara and Orinton Purba, Op.cit, pp.88-89.
2
2
 c. Principles of Decision-Making Based on Fairness and Propriety
In court institutions, in examining, adjudicating, and giving verdicts, the
approach is more in accordance with the applicable legal provisions. This
means that the decision given is based solely on the application of the law,
which can result in a winning party and a losing party (win-lose). On the
other hand, arbitration-based dispute resolution prioritizes the principles of
fairness and balance, as well as considering the interests of the parties to
the dispute. This approach tends to produce a win-win solution for all
parties involved.32 The principle of decision-making based on propriety
and fairness is emphasized in Article 56 of the Arbitration Law which
reads:
(1) "The arbitrator or arbitral tribunal shall make a decision based on the
provisions of law, or on the basis of fairness and propriety."
(2) "The parties have the right to determine the choice of law that will
apply to the settlement of disputes that may or have arisen between the
parties."33 The litigants (entrepreneurs) usually still want to maintain the
permanence of their business relationship so that a decision that is a win-
win solution is a decision that both parties want.

d. The Principle of Closed Session for the Public

Among business people, good name is an indicator that can bring their
name into two possibilities, namely success or destruction. Businessmen
will be successful if they have a good image in the big community and
vice versa.34 Efforts that can be made to overcome the occurrence of this
situation, the way that businessmen do it is to resolve disputes through
non-litigation channels, namely arbitration. The principle of closed
examination for the public is regulated in Article 27 of Law No. 30 of
1999 which reads "All examination of disputes by arbitrators or arbitral
tribunals is carried out behind closed doors"35

Arbitration hearings are always conducted in closed rooms, which means

they are not open to the public, and the final path spoken in such closed
hearings is almost never made public. Thus, arbitration is expected to
maintain the confidentiality of the disputing parties. 36 The principle of
inspection is carried out behind closed doors at each stage can also be seen
in Article 14 paragraph (5) of the BANI Procedure Regulations which
reads: "All inspections are carried out with closed doors." This principle
must not be violated, the consequences can be fatal. As a result, the
examination and decision are null and void so that the dispute must be re-
examined with the door closed. Only such consequences can be overcome
by asking for the consent of both parties."

32
Suleman Batubara and Orinton Purba, Op.cit, p.25.
33
Article 56 of Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution
34
Suleman Batubara and Orinton Purba, Op.cit, p.26.
35
Article 27 of Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution
36
Gatot Soemartono, Arbitration and Mediation in Indonesia, Jakarta: PT Gramedia Pustaka Utama, 2006,
pp.11-12.
2
3
 One example of resolving business disputes outside of litigation is the ownership
dispute of PT Cipta Televisi Pendidikan Indonesia (TPI) which has been renamed
MNC TV between Siti Hardiyanti Rukmana (Tutut) and PT Berkah Karya Bersama
(BKB). PT Berkah Karya Bersama (BKB) has filed a legal remedy with the
Indonesian National Arbritase Agency (BANI). Settlement efforts to the Indonesian
National Arbritase Agency (BANI) are in accordance with the investment
agreement made by both parties. The problem arises when one of the litigants is
dissatisfied with the arbitration award, so the dissatisfied party seeks to take
another path, namely through a lawsuit in court with a different object of dispute to
avoid exclusion from the other party.

PT Cipta Televisi Pendidikan Indonesia (TPI), which is in a dispute with PT

Berkah Karya Bersama (BKB) and has been resolved through an arbitration forum,
apparently also filed a lawsuit with the Central Jakarta District Court and the case
has reached the level of Cassation at the Supreme Court with a decision to win the
lawsuit of PT Cipta Televisi Pendidikan Indonesia (TPI). The Supreme Court (MA)
has granted the appeal on behalf of Siti Hardiyanti Rukmana, et al against PT
Berkah Karya Bersama (BKB). The case with Registration No 862.K/PDT/2013
was decided on October 2, 2013 by a panel of judges consisting of Sofyan
Sitompul. Rahmadi's destiny. and I Made Tara. The Supreme Court in its decision
declared the Extraordinary General Meeting of Shareholders (EGMS) of TPI dated
March 18, 2015 invalid. In the EGMS, BKB by holding a Power of Attorney
(Power of attomery) dated June 3, 2003 made changes to the board of directors of
TPI as stated in deeds No. 16 and No. 17. The Extraordinary General Meeting of
Shareholders (EGMS) determined Mbak Tutut's ownership shares which were
initially 100%, delinquent until 25% remained, while the Extraordinary General
Meeting of Shareholders (EGMS) dated March 17, 2005 was declared valid by the
Supreme Court. The EGMS Extraordinary General Meeting of Shareholders was
held by Tutut and other shareholders, namely PT Tridan Satriaputra Indonesia. PT
Citra Lamtoro Gung Persada, and the Purna Bhakti Pratiwi Foundation to overhaul
the board of directors, the board of commissioners of TPI version of Mbak Tutut.37

The dispute over the ownership of shares of PT Cipta Televisi Pendidikan

Indonesia (TPI) which has been renamed MNC TV between Siti Hardiyanti
Rukmana (Tutut) and PT Berkah Karya Bersama (BKB). it involves a third party
that currently controls PT Cipta Televisi Pendidikan Indonesia (TPI) which has
been renamed MNC TV, namely PT Media Nusantara Citra (MNC) Tbk. Dispute
settlement between the ownership dispute of PT Cipta Televisi Pendidikan
Indonesia (TPI) which has been renamed MNC TV between Siti Hardiyanti
Rukmana (Tutut) and PT Berkah Karya Bersama (BKB) is carried out through two
channels, namely the arbitration route and the court route.

37
www.Mediaonline.com

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 CHAPTER III
CONCLUSION

1. HOW EFFECTIVE IS THE ROLE OF ARBITRATION IN HANDLING

BUSINESS DISPUTES IN E-COMMERCE?

Arbitration offers several advantages compared to the court route for resolving e-
commerce business disputes, including:
 Flexibility and autonomy: Parties to a dispute can determine for themselves the
rules of procedure, arbitrators, and the place of arbitration.
 Expertise and specialisation: Arbitrators can be selected based on their expertise
and experience in the field of e-commerce and international transactions.
 Confidentiality and privacy: Arbitration proceedings are generally confidential, so
sensitive information about the business and transactions is not disclosed to the
public.
 Efficiency and speed: Arbitration proceedings are generally faster and more
efficient than court proceedings.
 Enforcement of awards: Binding arbitral awards are enforceable in most countries
of the world.
Case studies show that arbitration can be an effective forum for resolving complex
and cross-border e-commerce business disputes.
Overall, arbitration can be an effective option for resolving e-commerce business
disputes. Parties involved in international e-commerce transactions should consider
arbitration as a viable alternative to resolving disputes that may arise.

2. WHAT IS THE ARBITRAL AUTHORITY IN HANDLING E-

COMMERCE BUSINESS DISPUTES ON INTERNATIONAL
TRANSACTIONS?

Arbitration as an extra-judicial institution has legal authority based on legal

instruments from national laws and regulations in the field of arbitration and the
agreement of the parties in the agreement containing the arbitration clause. The
arbitration clause in the agreement gives the arbitral institution absolute authority to
resolve disputes arising from the implementation of the agreement under Article 3 jo.
Article 11 of the Arbitration Law. The District Court is not allowed to examine the
reasons or considerations of the arbitral award, according to the provisions of Article
62 paragraph 4 which shows that the substance of the case is the absolute authority of
the arbitration.

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Legislation
Indonesia, Law Number 30 of 1999 concerning Arbitration and Alternative Dispute
Resolution.
Online Articles
Directorate General of the Ministry of Law and Human Rights, "Harmonization of
Laws and Regulations", http:// ditjenpp.kemenkumham.go.id/htn-dan-
puu/421-harmonisasi-peraturan-perundang-undangan.html, Directorate
General of Laws and Regulations, (accessed April 28, 202

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