Law No.4/2009 Regarding Mineral and Coal Mining changed Indonesia’s mineral and coal mining system, from a Contract Regime to a Permit Regime. The changing of the regime also affected the mineral and coal mining dispute resolution. According to Article 154 of Law No.4/2009, the current dispute resolution determines that any dispute that arises from the implementation of the Mineral and Coal Mining Permit shall be resolved through domestic courts and domestic arbitration under the law and regulation. However, mineral and coal mining permit is a product of a State Administration Decree, thus Mineral and Coal Mining Permits dispute shall be settled through State Administration Court. Furthermore, the object of arbitration disputes as referred to in Article 5 and elucidation of Article 66 of Law No.30/1999 deems that arbitration may only settle an amicable dispute and commercial dispute such as commerce, banking, finance, investment, industrial, and intellectual property.

Mineral and Coal Mining Permit is a product of State Administration Decree

According to Article 1 Number 10 of Law No.51 of 2009, State Administration Dispute is a dispute between a civil individual or entity and a State Administrative Body Or Official, both at the central or regional levels, due to the enactment of a State Administrative Decree. A State Administration Decree is an object of the State Administration Dispute. In addition, State Administration Court is authorized to examine, decide, and solve State Administration Disputes. Hence, any dispute that arises from the enactment of the State Administration Decree shall be settled through State Administration Court.

The Mineral and Coal Permit (i.g IUP, IPK, IUPK) is categorized as a State Administration Decree (KTUN). Therefore, any dispute arising from the enactment of the Mineral and Coal Permit shall be settled through the State Administration Court.

Arbitration and The Object of Arbitration Dispute According to Law No.30/1999

Arbitration means a method of settling civil disputes outside the general courts, based on an arbitration agreement made in writing by the disputing parties. According to Law No.30/1999, Disputing is a legal subject, whether it is a civil or public entity.

Article 5 Paragraph 1 of Law No.30/1999 states that the only disputes that may be settled by arbitration are a dispute arising from the commercial sector and a dispute that is fully controlled by the disputing parties or in other words, an amicable dispute.

Resolution of Mining Permit Dispute Through Arbitration According to Law No.4/2009

Based on the explanation above, a dispute that arises from executing a Mineral and Coal Permit (i.g IUP, IUPK, and IPR) is classified as a State Administration Dispute. A State Administration Dispute cannot be settled amicably. Thus, the Mineral and Coal Permit Dispute is not fulfilling the object of Arbitration whether it is a dispute arising from the commercial sector or an amicable dispute.

Furthermore, to resolve a dispute through arbitration, the disputing parties must agree upon an Arbitration Clause. If a dispute arises from the execution of a Mineral and Coal Permit is allowed to be resolved through arbitration, although the mineral and coal permit did not stipulate any Arbitration Clause, thus the Government and the Permit Recipient only can resolve any dispute that arises from the permit is to arrange an Acte Compromis as an Arbitration Clause.

Through BANI Letter No.11.821/VI/BANI/HU, BANI expands the definition of “commercial sector” as stipulated in Law No.30/1999. In our perspective, BANI’s statement is “too subjective” and lacks a legal basis.

In Conclusion, Article 154 of Law No.4/2009 is arising a legal uncertainty.

Conclusion

1. A dispute that arises from the execution of a Mineral and Coal Permit (i.g IUP, IUPK, and IPR) is classified as a State Administration Dispute, thus the dispute shall be settled through the State Administration Court.
2. A State Administration Dispute is not included as the object of the arbitration dispute as referred to in Article 5 of Law No.30/1999 neither as a commercial sector or a dispute that cannot be settled amicably under the regulations and the force of law.
3. BANI’s interpretation in Letter No.11.821/VI/BANI/HU is “too subjective” and also ambiguous due it does not have a sufficient legal basis.