THE DEVELOPMENT OF ANATOMY OF CONSTRUCTION DISPUTE

Abstract

The advancement of the construction industry in Indonesia is often not accompanied with adequate infrastructure system, especially in terms of regulations and legal system. The enactment of Law no 80–1999 has contributed to the expansion of construction market by allowing the private sector, including those from overseas, to play bigger roles in the industry. Although strongly acknowledged by stakeholders in the industry, the progress made by the government and the practitioner in the industry to response to the needs for more appropriate actions to cope with this ever increasingly complex system has been very slow. The dynamic of the construction industry in the region has changed the formerly rigid government-dominated construction sector to become an intricate one. The impact of such dynamic in the industry has been apparent. In particular, construction disputes have been experiencing changing in the dynamic of the way the disputes were handled; from the traditional litigation approach toward modern alternative dispute resolution mechanism. While litigation remains the dominant construction dispute resolution mechanism, nonlitigation approaches such as arbitration and dispute review board are beginning to gain recognition in industry. This paper presents a study on the development of anatomy of construction dispute in Indonesia, which will serve as a framework for analyzing the dynamic of construction disputes in Indonesia. Such a framework will help to identify factors affecting construction dispute mechanism, from the initiation of disputes to the resolution. The anatomy is developed based on analysis of construction dispute cases that have been recorded in judicial courts as well as from Indonesian Arbitration Board.