LAPS SJK Based on POJK Number 61/POJK.07/2020

In the implementation of an agreement, not all agreements is implemented perfectly by all parties. That the parties in carrying out the agreement, may cause a dispute caused by the parties or one of the parties that has defaulted. If there is a dispute, then the dispute in the agreement should be resolved by mediation or a consensus without having to be resolved through a court or be based on the domicile of dispute resolution that has been agreed upon by all parties.

Dispute Resolution through the Court (litigation) or outside of the Court (non-litigation) is an dispute resolution for the parties who have decide for their dispute to be tried by a third party who which will made a binding legal decision to their disputes. The main difference lies in the substance of the dispute resolution. In court, the will of the parties in resolving the dispute does not become an importance because the dispute will only be tried in accordance with the evidence and applicable laws and regulations. However, outside the court, the will and good faith of the parties in the disputes resolution is prioritized without having to override the applicable laws and regulations. In the financial services sector, out of court dispute resolution is under the authority of only one institution, namely the Financial Services Sector Alternative Dispute Resolution Institution (LAPS SJK).

On December 16, 2020, the Financial Services Authority Regulation Number 61/POJK.07/2020 of Financial Services Sector Alternative Dispute Resolution Institution was promulgated. That with the promulgation of referred POJK, LAPS SJK was established on January 1, 2021. LAPS SJK is an institution authorized to facilitate the out of court settlement disputes in the financial services sector (non-litigation) for all Financial Services Businesses (PUJK). The referred PUJK is a financial service institution that carries out intermediary, fund management, and depository activities in the financial services sector, either conventionally or based on sharia law. As the only Alternative Dispute Resolution Institution in the financial services sector, LAPS SJK inherits the roles and functions of the previous 6 LAPS in the financial services sector, namely the Indonesian Capital Market Arbitration Board (BAPMI), the Insurance Mediation & Arbitration Board (BMAI), Pension Fund Mediation Agency (BMDP), Indonesian Banking Dispute Settlement Institution (LAPSPI), Indonesian Insurance Company Arbitration and Mediation Agency (BAMPPI) and Indonesian Financing, Pawnshop and Venture Mediation Agency (BMPPVI) along with expanding their authority to settle disputes in the field of Financial Technology (Fintech).

In essence, the objective of the LAPS SJK is to become an alternative institution for dispute resolutions in the financial sector that is professional, credible and renown for customers and financial service providers alike. In order to realize this objective, LAPS SJK has been given the following authorities: (1) to carry out the handling and settlement of Consumer Disputes; (2) providing consultation on the settlement of Disputes in the financial services sector; (3) conducting research and development of Dispute Settlement services in the financial services sector; (4) make regulations for the Disputes Settlement in the financial services sector; (5) cooperate with consumer protection institutions/agencies both nationally and internationally; and (6) developing growth of competence for mediators and arbitrators registered with the LAPS SJK. With these authorities, LAPS SJK will be able to fulfill its obligations effectively.

LAPS SJK is in essence, an alternative dispute resolution option for parties who do not want to settle their dispute through the courts. There are various reasons why the parties in a dispute choose LAPS SJK over the court, these reasons can be attributed to the benefits LAPS SJK or non-litigation settlement provides when compared to settlement by court or litigation. Non-litigation settlement is based on the consensus of the parties rather than the established system. This causes the will of the parties regarding how the dispute can be resolved to be heard more in the non-litigation settlement process than in litigation. Many parties want to first try to determine how their dispute can be resolved independently before their dispute is tried only with the applicable legal provisions. In addition to the preference of their own will over legal provisions, non-litigation settlement has a more controllable settlement time than litigation settlement. This is because non-litigation settlements can be completed when all parties agree on a solution to their dispute rather than waiting until the trial procedure is completed in litigation.

The procedures that must be passed by the applicant to resolve the dispute through their LAPS SJK can be explained as follows:

Based on the diagram above, there are 3 (three) types of dispute resolution provided by LAPS SJK, namely Mediation, Arbitration, and Binding Opinion. Mediation is a method of dispute resolution through a negotiation process between the disputing parties with the assistance of the LAPS SJK's Mediator in order to seek various possible dispute resolutions without breaking/imposing a verdict so that a settlement agreement can be reached that is beneficial to all parties. Arbitration is a method of resolving civil disputes outside of a general court based on an Arbitration Agreement made in writing by all parties of the dispute, through an examination conducted by a Sole Arbitrator/Arbitration Tribunal to give an Arbitration Verdict. Binding Opinion is a binding opinion regarding an issue related to the agreement by LAPS SJK which is made through the examination of the LAPS SJK Panel Team. All these procedures, must be initiated with the consent of all parties and therefore, the result of the decision is the result of the agreement of all parties.

In essence, dispute resolution through the LAPS SJK is an alternative dispute resolution option for parties who do not want to undergo a court process for various reasons or wish to undergo a non-litigation settlement before carrying out a litigation settlement. Non-litigation settlements through SJK LAPS are always based on the approval of all parties to the dispute. Without the approval of all parties, the dispute resolution procedure through the LAPS SJK cannot be started. In a situation where the PUJK parties in an agreement have a dispute and do not want to resolve their dispute through the courts, they can collectively choose to settle the dispute through the LAPS SJK, namely: Mediation, Arbitration, or Binding Opinion. (AAJ/BDP)