07
Jul2021

Settlement of Trade Disputes Through Electronic Systems

Introduction

Trading activities through electronic systems have become an inseparable part of today’s society. Based on the provisions in Article 1 of Government Regulation number 80 of 2019 concerning Trading Through Electronic Systems (GR 80/2019), Trading Through Electronic Systems, hereinafter abbreviated as PMSE (in Bahasa: Perdagangan Melalui Sistem Elektronik), is defined as Trade whose transactions are carried out through a series of electronic devices and procedures.

The rapid development of digital trading technology brings a new issue. There is dissatisfaction with the transactions that occur between the seller (merchant) and the buyer which then causes a dispute. Disputes between Merchant and Buyer is something that will probably happen, but the Indonesian regulations are sufficient to regulate it. Full discussion as follows.

  1. Preventive obligations of business actors in terms of dispute resolution

Business actors are required to provide complaint services for consumers, which services include:[1]

  1. the address and contact number of the complaint;
  2. Consumer complaints procedures;
  3. complaint follow-up mechanism;
  4. officers who are competent in processing complaints services; and
  5. complaint resolution period.

With the provision of providing complaint services for consumers, consumers who later have complaints or dissatisfaction in transactions can make complaints first before taking it on the dispute.

Apart from providing complaint services, the parties that involved in PMSE are required to draft a contract in advance. Drafting an electronic contract or other contractual mechanism as an embodiment of the agreement of the parties, in which the information in the electronic contract must be in accordance with the offer and contain at least:[2]

  1. identity of the parties;
  2. agreed specification of Goods and/or Services;
  3. legality of Goods and/or Services;
  4. Trade transaction value;
  5. terms and terms of payment;
  6. operational procedures for the delivery of Goods and/or Services;
  7. procedures for returning the Goods and/or Services in the event of a discrepancy between the Goods and/or Services received and those agreed upon;
  8. procedures in the event of cancellation by the parties; and
  9. PMSE choice of law dispute resolution.

According to the provision above, in electronic contracts, there must be several preventive provisions to avoid disputes.

  1. Dispute settlement mechanism in PMSE

Dispute resolution in PMSE, can be through the Court or through other dispute resolution mechanisms. PMSE dispute resolution also can be conducted electronically (online dispute resolution). In the event of a dispute between Domestic Business Actor and Consumer, the Consumer may sue the Business Actor through the consumer dispute settlement agency or submit it to the judicial institution at the consumer’s domicile.[3]

Other dispute resolution here is defined as in the form of consultation, negotiation, conciliation, mediation, or arbitration in accordance with the provisions of the legislation.

Basically, electronic dispute resolution (online dispute resolution) returns to the agreement of the parties. This can be in the form of electronic mediation organized by supporting professionals such as advocates or mediators, through an online arbitration institution that has been accredited, or through a government agency authorized to do so.

  1. Choice of Law Settlement of disputes in PMSE

The parties that involved in PMSE have the authority to choose the applicable law, and if the parties do not choose the applicable law, then the applicable law provisions are based on the principles of International Civil Law[4]. What is meant by “parties” is Indonesian Business Actor and foreign business actor or foreign consumer.

Choosing the applicable law made by the parties in international contracts, including those made electronically, is known as choice of law. This law is binding as the applicable law for the contract. The choice of law in PMSE can only be made if the contract contains foreign elements and its application must be in line with the principles of International Civil Law (in Bahasa: Hukum Perdata International).

  1. Choice of dispute resolution forums in PMSE

The parties that involved in PMSE are also have the authority to choose court forums, arbitrations, or other alternative dispute resolution institutions that are authorized to handle disputes that may arise from the international PMSE they create. In the event that the parties do not make a choice of forum, the determination of the authority of a court, arbitration, or other alternative dispute resolution institution authorized to handle disputes that may arise from the transaction, is based on the principles of International Civil Law.

The forum authorized to adjudicate international contract disputes, including those conducted electronically, is the forum chosen by the parties. The forum may take the form of a court, arbitration, or other alternative dispute resolution institution.

In the event that the parties do not make a choice of forum, the authority of the forum shall apply based on the principles of International Civil Law. This principle is known as the principle of the defendant’s residence (the basis of presence) and effectiveness which emphasizes the place where the defendant’s property is located (principle of effectiveness).

If the parties choose to resolve international PMSE disputes through dispute resolution forums in Indonesia, the institutions authorized to resolve the dispute are:[5]

  1. Central Jakarta district court; or
  2. Arbitration institution or other alternative dispute resolution, in accordance with the provisions of laws and regulations.

If the parties are Overseas Business Actor conducting transactions with Indonesian Consumers and do not make a choice of law and a choice of dispute resolution forum, then the dispute resolution is carried out through:[6]

  1. institutions tasked with resolving disputes between consumers and business actors; or
  2. courts within the general judiciary,

In accordance with the provisions of laws and regulations in the field of Consumer protection.

Disclaimer

Any information contained in this Article is provided for informational purposes only and should not be construed as legal advice on any subject matter.  You should not act or refrain from acting based on any content included in this Legal Update without seeking legal or other professional advice.  This document is copyright protected. No part of this document may be disclosed, distributed, reproduced, or transmitted in any form or by any means, including photocopying and recording or stored in retrieval system of any nature without the prior written consent of SIP Law Firm.

 For more information, please contact the Authors

 

Zubaidah Jufri, S.H., M.Kn., CHRP.

Managing Partner

 

Contact:

Mail       : Zubaidah@siplawfirm.id

Phone   : +62-21 799 7973 / +62-21 799 7975

 

R. Yudha Triarianto Wasono, S.H., M.H.

Associate

 

Contact:

Mail       : Yudha@siplawfirm.id

Phone    : +62-21 799 7973 / +62-21 799 7975

 

 

M. Ihsan Abdurrahman, S.H.

Associate

 

Contact:

Mail       : Ihsan@siplawfirm.id

Phone    : +62-21 799 7973 / +62-21 799 7975

 

 

[1] Article 27 of GR 80/2019

[2] Article 53 of GR 80/2019

[3] Article 72 of GR 80/2019

[4] Article 73 of GR 80/2019

[5] Article 74 of GR 80/2019

[6] Article 75 of GR 80/2019

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