The Minister of Labor and Transmigration has recently issued Ministerial Decision No. KEP-92/MEN/VI/2004 (the “Decision”) on the Appointment and Dismissal of Mediators  including Mediation Procedures to facilitate the implementation of Article 9(g) and Article 16 of Law No. 2 of 2004 on Industrial Relations Dispute Resolution (“PPHI Law”).  Article 16 of the PPHI Law mandated the Minister to regulate the provision concerning dismissal and appointment of mediators including mediation procedures.

The Decision which -- contains 25 Articles and 10 chapters – contained very specific criteria to be fulfilled by mediator candidates, namely that the individual must be a civil servant, certified healthy by a doctor, educated to at least an undergraduate level, undergone specialized industrial relations training held by the ministry of labor and transmigration, and is at least one year experienced in industrial relation field. Mediators may only performed their task only after being legitimized by the Minister. However, under specific circumstances, the minister may authorize the head of regional labor and transmigration office to become the ex-officio mediator.

Mediators are tasked with (a) summoning the parties in dispute to the tribunal, manage and lead the mediation process, assisting the drafting of written agreement of resolution, create a written suggestion to be referred to industrial court should no amicable settlement is achieved and to create a final report of the mediation process.

PPHI Law and the Decision render the mediators with a very broad authorization through Article 9 of the Decision. Mediators may suggest the parties to resolve their dispute in good faith prior to commencing mediation. Mediators may request documents, affidavit, summon witnesses and obtain all necessary access to bookkeeping and to refuse appearance by parties without appropriate power of attorney. It is interesting to note that Article 14 (2) require the presence of the parties in dispute during mediation although they are being represented by attorneys. The PPHI Law itself is silent toward this matter.

Article 9 of the Decision which regulates the authority of the mediators constitute an implementation provision towards Article 12 of the PPHI Law. The Law itself grants authority to mediators to access all necessary documentation and summon witnesses or expert. For those who failed to fulfil the mediators’ request, this provision entails a criminal sanction of at least one month of imprisonment or a fine up to 50 million rupiahs.  Government employees may invoke secrecy regulation if they are asked to give testimony although it does not in any way hampers the mediators right in obtaining their affidavit. Elucidation of Article 9, however, set examples as to the application of obtaining documentation access into bookkeeping concerning wages, or overtime orders.

Nevertheless, the elucidation of Article 9 does not specifically restricts the authority of the mediators in obtaining documentation specifically into labor-related files. In practice, it is possible that mediators may request the company’s file not directly related to the dispute. This provision has been heavily criticized for several reasons (1) that the nature of the mediation process itself is not binding and can be referred to the court at any time should the process failed, therefore rendering such authority to the mediators are deemed to exaggerate. (2) the Law is silent as to the extent of the authority given to the mediators. Its right in summoning witnessed backed with criminal provision resembles a subpoena right, a right traditionally belongs to the court. Meanwhile, its right in requesting documentation is not limited to labor-related issues. This may cause documentations relating to company’s secrecy to be revealed and discussed during the mediation process.

The PPHI Law and its implementing provision may spark legal uncertainties and hampers the law reform process. Some of its provisions are overlapping and some do not give clear definitions. The inconsistent ADR approach of this law may cause delay of justice, re-bureaucratization and more financial expenses to the parties in dispute. Please see our related issues by clicking the link below. (mma)