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EXAMINATION ON BUSINESS LAW

1. Contract Law:
Explain the important clauses that have to be contained in the partnership
agreement between Mrs. Selma and Mr. Yahya when they establish the Potato café.
Why are these clauses important to be included in the partnership agreement?
Answer :
Partnerships are the simplest type of legal structure to form for businesses with two
or more principles. If we are currently involved in a partnership or thinking about
starting up a business as a partnership, we should really take the time think about how
to write a partnership agreement. An agreement is an act pursuant to which one or
more individuals bind themselves to one another (Article 1313 Indonesian Civil Code).
Without a set of rules in place, even minor disputes could escalate into major
problems that could end up dissolving your partnership. A partnership agreement will
give us a firm understanding of our business relationship that you have with your
partners in our business. The partnership agreement will spell out how the business
profits will be divided amongst the partners, the rights and responsibilities of the
partners, the procedures to take when a partner leaves the business and many other
important rules and guidelines.
Here’s some clauses every partnership should include :
a. The Name of Our Partnership
Many partnerships often take the names of their partners, however we can also
choose the option of making a fictitious business name. If we decide to use a
fictitious business name we must make sure that the name is available for use and
has not already been taken.
b. The Respective Contributions of The Partners
When a partnership agreement is written it is important that all the partners get
together and agree on who will be making what.
c. How The Profits, Losses and Draws will be Allocated
Our ownership agreement should set out how the profits and losses will be
allocated. Another question that should be answered is whether every partner will

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be able to take a regular "draw," a withdrawal from his or her allocated profits,
each year, or whether the partners can take their entire allocated profits.
d. The Authority of The Partners
Without an agreement that is contrary, any decision of a partner can be binding
on the entire partnership, even without getting the other partners to agree. If we
want to make sure that no one partner can incur debt the for entire partnership
without the agreement of all the other partners, we need to be sure to include this
in our partnership agreement.
e. Business Decision-Making Powers
If we do not want one partner to be able to make important business decisions
without consent, then we need to make sure to spell out the business making
powers of each partner. One popular method is to require a unanimous vote of all
the partners for all important business decisions, but still allowing individual
partners to make minor business decisions without a formal vote. However, if we
decide to take such an approach, we need to be sure to spell out what constitutes
an "important" business decision and what constitutes "minor" business decisions.
f. Managing
Although it is probably not a great idea to spell out every detail of management in
a partnership agreement it would probably be a good idea to assign important
management duties such as who will be keeping the books for the business.
g. How to Bring in New Partners
There may come a time in your business when we want to bring in new partners.
If we can agree on this process at the outset, it will probably be much easier when
the time rolls around.
h. How to Deal with The Withdrawal or Death of A Partner
Many partnerships have fallen apart when on partner decides to leave, becomes
disabled or dies. We should be sure to have a buyout agreement included in our
partnership agreement that deals with such situations.
i. How to Resolve Disputes
If we spell out how you will deal with deadlocked disputes at the outset, we can
save a lot of money in the future. For example, instead of allowing the partners to
go to court, we could require that arbitration or mediation is used first.

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2. Company Law (Business Organization):
a. What should Mrs.Selma and her partners do to set up the PT?
Answer :
“Limited Liability Company” (here in after called a “Company”) means a legal
entity which constitutes an alliance of capital established pursuant to a contract in
order to carry on business activities with an authorised capital all of which is
divided into shares and which fulfils the requirements stipulated in this Act and its
implementing regulations (Article 1 paragraph (1) Law of The Republic of Indonesia
Number 40 of 2007). The limited liability company must go through the entire
registration and incorporation process and is the most costly business structure to
setup. Based on Law of The Republic of Indonesia Number 40 of 2007 concerning
Limited Liability Companies, here’s the step to set up limited liability company in
Indonesia:
1) Arrange for notary to obtain standard form of company deed.
Before that we should prepare the required documents and determine the
name of the company to be established first. Because Mrs. Selma and her
partners are Indonesian national, they should prepare a valid national ID
card or any other identity document and a record of the Tax Registration
Number (Nomor Pokok Wajib Pajak -NPWP). Determine the name of the
company is regulated in Government Regulation Number 43 of 2011
concerning Procedures for Submission and Use of Limited Liability
Companies. A company name consisting of a minimum of three syllables
must be specified. The name of the company must be a word that has
meaning, not a series of letters or symbols.

2) Asking for approval to the Ministry of Law and Human Rights of the
Republic of Indonesia.
The Notary would make a Company Establishment Deed and report to the
Ministry of Law and Human Rights of the Republic of Indonesia. Based on
Article 9 paragraph (1) Law of The Republic of Indonesia Number 40 of
2007), to obtain the Minister’s Decree with regard to the ratification of the
Company as a legal entity as contemplated in Article 7 paragraph (4), the

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founders shall jointly submit an application to the Minister electronically
via legal entity administration system information technology services,
filling in a form containing at least :
A. The Company’s name and domicile;
B. The Company’s period of incorporation;
C. The purpose and objective and business activities of the
Company;
D. The amount of authorised capital, subscribed capital, and paid
up capital;
E. The Company’s full address.

The application to obtain the Minister’s Decree contemplated in Article 9


paragraph (1) must be submitted to the Minister no later than 60 (sixty)
days as from the date on which the deed of establishment is signed,
complete with information regarding the supporting documents (Article 10
paragraph (1) Law of The Republic of Indonesia Number 40 of 2007). The
Ministry of Law and Human Rights of the Republic of Indonesia then will
issue a Decision to Ratify the Corporate Legal Entity (SK Kemenhukam).

3) Register
Based on the OSS (the new online system), once the Ratified Corporate
Legal Entity (SK Kemenkuham) is received, the new company will
automatically be registered as taxpayer. The company will receive the
NPWP. The company may wait until the NPWP is delivered to its registered
address or it may request the Tax Office to print the NPWP. Once the
company receives the Deed of Establishment and Ratified Corporate Legal
Entity, Investors can directly apply for Nomor Induk Berusaha (NIB) through
the OSS system. NIB is a Company Number and valid as Company Register,
Importer Identification Number and Customs Access Rights. Beside that,
we also need to apply for a Trading Business Licence (Surat Izin usaha
Perdagangan) and create a Company Registration Certificate (Tanda daftar

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Perusahaan) while registering the company to meet the criteria for
Corporate Registration (Wajib Daftar Perusahaan).

4) Declaration
Once a company obtains these documents, the company name will be
listed in the announcement in the State Gazzete of the Republic of
Indonesia (Berita Negara Republik Indonesia) and the establishment of our
company has been declared valid.

b. What is the responsibility of the board of directors if the losses suffered by PT


are caused by the directors’ faults and omissions?
Answer :
According to article 92 paragraph (1) Law of The Republic of Indonesia Number 40
of 2007, Boards of Directors shall undertake the management of Companies in the
interest of the Companies and in accordance with the Companies’ purpose and
objectives. Boards of Directors are authorised to undertake the management
contemplated in paragraph (1) in accordance with any policy that seems
appropriate within the limits specified in this Act and/or the articles of association.
Regarding the responsibilities of directors in the event that the company stumbles
over legal issues, we can refer to the Article 97 paragraph (3) of the Company Law:
“Each member of the Board of Directors shall fully personally liable for the
Company’s losses if the Director concerned is at fault or negligent in carrying out
his/her duties in accordance with the provisions contemplated in paragraph.”
M. Yahya Harahap, S.H., in his book entitled “Limited Liability Company Law” (pp.
383-384), states that what is meant by "good faith" includes aspects:
a) Must be trusted (fiduciary duty) which is forever reliable (must always be
bona fide) and must always be honest.
b) Must carry out arrangements for reasonable and reasonable purposes
(duty to act for a proper purpose);
c) Must comply with laws and regulations (statutory duty or duty obedience);

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d) Loyalty of the company (loyalty duty), not using the company's funds and
assets for personal interests, must keep all confidential duty of information
confidential;
e) Must avoid conflicts of personal interest with company interests (must
avoid conflict of interest), are prohibited from using company assets, are
prohibited from using company information, do not use positions for
personal gain, do not take or hold part of the company's profits for private,
do not make transactions between personal and company, not competing
with the company (competition with the company), also obliged to carry
out the management of the company with full responsibility, which
includes aspects:
 Must be careful and careful in carrying out the duty of due care,
ordinary prudent person in such conditions and positions that are
accompanied by reasonable judgment reasonable attention;
 Must carry out duty to be diligently, continuously, naturally spill
attention to the events that have befallen the company;
 Perseverance and tenacity must be accompanied by skills and expertise
(duty to display skills) in accordance with the knowledge and
knowledge they have.
From the description above, we can conclude that the Board of Directors that
made a mistake that harmed the company could be prosecuted (criminal) or
sued (civilly) through the court.

c. Explain how (legal) responsibility distributed for the 3 parties involved in the
business!
Answer :
a) Mr. Yahya as Director
Under the Company Law, the Board of Directors is under obligation to, among
other things:
1. Deliver an annual report (that includes the financial statement of the
Company) after it has been examined by the Board of Commissioners

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to the General Meeting of Shareholders within 6 months the end of
the Company's financial year;
2. Prepare a business plan (that includes an annual budget plan) for the
next financial year prior to the commencement of the next financial
year and submit the business plan to the Board of Commissioners or
General Meeting of Shareholders of the Company as regulated in the
Articles of Association of the Company;
3. Prepare and maintain a Register of Shareholders of the Company and a
Special Register containing information on the share ownership in the
company and/or other companies of members of the Board of
Directors and the Board of Commissioners and their immediate family
members;
4. Archive the resolutions of the Shareholders and Board of Directors of
the Company and all other corporate documents;
5. Obtain approval from the General Meeting of Shareholders for the
transfer or the encumbrance of more than 50% of the total assets of
the Company in one or more transactions, whether related or not, in
one or more financial years as regulated in the Articles of Association
of the Company;
6. Hold a General Meeting of Shareholders (including to send invitations
or summons to the shareholders) either annually or extraordinary as
necessary or requested by certain Shareholders, Commissioners or
Directors of the Company as regulated in the Articles of Association of
the Company;
7. Notify the Minister of Law and Human Rights (the "MLHR") of any
change to the composition of the Boards of Directors or
Commissioners of the Company within 30 days as of the date of the
resolution of the General Meeting of Shareholders with regard to the
change;
8. Record any transfer of shares (or encumbrance of shares) in the
Company in the Company Register and notify the MLHR regarding the

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change of the shareholders within 30 days as of the date of the
transfer of shares;
9. Notify the creditors of the Company if there is a reduction in the
capital of the Company in at least one newspaper within 7 days of the
resolution of the General Meeting of Shareholders regarding the
reduction.

Also, in certain transactions such as the merger, acquisition, consolidation,


segregation or dissolution of the Company, the Board of Directors also has a
number of obligations regarding the transaction, such as to prepare the
transaction plan, announce the proposed transaction in the newspapers, or
act as the liquidator in the dissolution of the Company.

Mr. Yahya as the board of Director is required to take full responsibility for the
management of the company for the interests and objectives of the company
and representing the company, both inside and outside the court (Article 98
paragpraph (1) Law of The Republic of Indonesia Number 40 of 2007). The
responsibility for the company’s loss can be directed towards the company
itself, the shareholders or creditor in the event of bankcruptcy of the
company. As a result of the Director’s actions that harm the company, the
company can sue the directors to be personally responsible for the losses they
have caused.

b) Mrs. Selma as Commissioner


According to article 108 paragraph (1) Law of The Republic of Indonesia
Number 40 of 2007, Boards of Commissioners shall supervise management
policies, the running of management in general, with regard to both the
Company and the Company’s business, and give advice to the Board of
Directors. The supervision and giving of advice contemplated in paragraph (1)
shall be done in the Company’s interests and in accordance with the
Company’s purpose and objectives. Mrs. Selma as the Board of
Commissioners will also be held personally liable for every loss suffered by the

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Company if she acts wrongfully or fails to perform her duties in good faith,
prudently and responsibly. However, Mrs. Selma will not be personally held
liable if she can prove that:

a. She has carried out his/her supervision duties in good faith and
prudently for the benefit of the Company and according to the
purposes and objectives of the Company.
b. She has no personal interest either directly or indirectly in the
management of the Company that causes a loss; and
c. She has advised the Board of Directors to take all the necessary actions
to prevent the occurrence or continuance of a loss.

In the case of the bankruptcy of the Company, Mrs. Selma will not be held
liable if she can prove that:

a. Thea bankruptcy was not due to her fault of negligence;


b. She has carried out her supervision duties in good faith and prudently
for the benefit of the Company and in accordance with the purposes
and objectives of the Company;
c. She has no personal interest either directly or indirectly in the
management of the Company that has leads to bankruptcy; and
d. She has advised the Board of Directors to take all the necessary actions
to prevent the occurrence of the bankruptcy.

Other liabilities which apply to the Board of Directors also apply to the
Board of Commissioners, such as if they provide inaccurate or misleading
financial reports, fail to return interim dividends, and for bankruptcy
losses.

c) Mrs. Rosita as Company’s Shareholder


A shareholder doesn’t manage the day to day business of the company as this
is handled by the board of directors. However, decisions in relation to the

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company’s goals and overall performance often require shareholder approval,
which include (but are not limited to) the following:
 Changes to the constitution of the company
 Declaring a dividend
 Approving the financial statements of the company
 Winding up of the company by way of voluntary liquidation
Shareholder decisions can be made by resolution or at general meetings,
where shareholders discuss the company’s performance and vote on relevant
resolutions.

Based on article 3 paragraph (1) and (2) Law of The Republic of Indonesia
Number 40 of 2007, Companies’ shareholders are not personally liable for
legal relationships entered into on behalf of the Company and are not liable
for the Company’s losses in excess of the shares they own. The provisions
contemplated in paragraph (1) do not apply if:
a. The requirements for the Company to be a legal entity have not been or
are not fulfilled;
b. The shareholder concerned directly or indirectly exploits the Company
in bad faith in his/her personal interest;
c. The shareholder concerned is involved in illegal acts committed by the
Company; or
d. The shareholder concerned directly or indirectly illegally uses the
Company’s assets with the result that the Company’s assets become
insufficient to pay off the Company’s debts.
A shareholder’s liability is limited as the company’s debts are the
responsibility of the company itself. Mrs. Rosita as the company’s shareholder
is liable only for the price she paid for the shares however it should be noted
that if the shares are partially paid, Mrs. Rosita will be required to pay the
remaining balance, either when the directors or an administrator (if the
company is in financial difficulty) call up the unpaid amount.

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3. Labor/Manpower Law:
a. Is it possible for the employees of The Potato’s cafe resto and bungalow enforce
their labor rights and seek compensation from PT Grand Pundi?
Answer :
Yes, it is. Employees terminated by an employer have certain rights. Should
termination of employment take place, the entrepreneur is obliged to pay the
dismissed worker severance pay and or a sum of money as a reward for service
rendered during his or her term of employment and compensation pay for rights
or entitlements (Article 156 paragraph (1) President of Republic of Indonesia Act
Number 13 Year 2003). In this case, the management paid its employees’
“Severance Money/compensation”, but failed to pay their “(Work Period)
Appreciation Money”, which caused the terminated employees unsatisfied and
brought the case to the Industrial Court. This is not according to article 164
paragraph (1) President of Republic of Indonesia Act Number 13 Year 2003:
“The entrepreneur may terminate the employment of workers/labourers
because the enterprise has to be closed down due to continual losses for 2 (two)
years consecutively or force majeure. The workers/labourers shall be entitled to
severance pay amounting to 1 (one) time the amount of severance pay stipulated
under subsection (2) of Article 156, reward pay for period of employment
amounting to 1 (one) time the amount stipulated under subsection (3) of Article
156 and compensation pay for entitlements according to subsection (4) of Article
156.”

b. Is the step taken by employees correct? If not, what should they do?
Answer :
No, it is not. According to article 1 paragraph (30) President of Republic of
Indonesia Act Number 13 Year 2003 Concerning Manpower, “A wage is the right
of the worker/ labourer that is received and expressed in the form of money as
remuneration from the entrepreneur or the employer to workers/ labourer, whose
amount is determined and paid according to a work agreement, consensus, or laws
and regulations, including allowances for the worker/ labourer and their family for
a job and or service that has been performed or will be performed”. As we know

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wages are workers' rights, so that disputes between employers and workers
(regarding wages) are the rights disputes. Rights disputes are a type of industrial
relations dispute. The settlement of industrial relations disputes is regulated in Act
Number 2 of 2004 on Industrial Relations Disputes Settlement.

The settlement of industrial relations disputes is regulated President of Republic


of Indonesia Act Number 2 Year 2004 Concerning Industrial Relations Dispute
Settlement, Industrial relations disputes are required to be resolved first through
bipartite bargaining in deliberation to reach consensus (article 3 paragraph 1 Act
Number 2 Year 2004). In the event the bipartite bargaining failed as stipulated in
Article 3 paragraph (3), then one or both of the parties can file their dispute to the
local authorized manpower offices, and attaching proof that efforts to resolve the
dispute through bipartite bargaining have been conducted (article 4 paragraph 1
Act Number 2 Year 2004).

After receiving a written report from one or both parties, the local authorized
manpower offices is required to offer to both parties a Collective Agreement to
select a settlement through conciliation or arbitration (article 4 paragraph 3 Act
Number 2 Year 2004). If workers and employers do not choose the conciliation or
arbitration process, the employment agency will submit to the mediator. If this
process is also unsuccessful, then one party can file a lawsuit to the Industrial
Relations Court.

The Industrial Relations Court is a special court within the general court (article 5
Act Number 2 Year 2004). The Industrial Court is assigned and authorized to
investigate and adjudicate at the first level regarding disputes on rights. The
Petition of the industrial relations dispute is submitted to the Industrial Relations
Court in the District Court which jurisdiction covers the workplace of the worker/
labourer (article 81 Act Number 2 Year 2004). Petitions that involve more than one
plaintiff may be submitted collectively by providing a special power of attorney
(article 84 Act Number 2 Year 2004). If one of the parties does not accept the
decision of the Industrial Relations Court, then it can file a cassation law. So, this

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is the process of resolving industrial relations disputes. Industrial relations
disputes cannot be filed directly with the court, but must go through a series of
previous stages.

4. Unfair Business Practice


Based on the case above, the market control that PT. Grand Pundi did can be
categorized as unfair business practice? Explain!
Answer :
Yes, the market control that PT. Grand Pundi can be categorized as unfair business
practice. Because in this case the management forbade the other restaurant to be
established around Potato Cafe Resto and Bungalow and it against the law. Based on
Article 19 Law of The Republic of Indonesia Number 5 of 1999 concerning The Ban of
Monopolistic Practices and Unfair Business Competition, entrepreneurs are
prohibited from conducting one or more activities, either separately or jointly with
other entrepreneurs, which can cause monopolistic practices and/or unfair business
competition by:

1) Refusing and/or hampering certain entrepreneurs from conducting the


same type of business in the relevant market; or
2) Hampering the consumers or clients of their company’s competitors from
conducting any business contact with those company’s competitors; or
3) Restricting distribution and/or selling of the goods and/or services in the
relevant market; or
4) Conducting discrimination practices against certain entrepreneurs.

5. Intelectual Property Law


According to the case below, please explain what the issue of intelectual property
law is?
Answer :
According to the case, PT. Grand Pundi use intentionally a logo from one of trademark
of a famous restaurant for The Potato’s Café Resto and Bungalow and it against the
law. Law of The Republic of Indonesia Number 20 of 2016 provide direction for the

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Directorate General of Intellectual Property of the Ministry of Law and Human Rights
to reject brand registration applications that have similarities in principle or in whole
with :
a. Registered trademarks owned by other parties or previously requested by
other parties for similar goods and / or services;
b. Famous brands owned by other parties for similar goods and / or services;
c. Famous brands belonging to other parties for non-similar goods and / or
services that meet certain requirements; or
d. Registered Geographical Indications.

The similarity in this case is the similarity caused by the presence of a dominant
element between one brand and another brand which gives the impression of equality
regarding the form, method of placement, method of writing or combination of
elements, as well as the similarity of speech sounds contained in the brand itself.
Sanctions for every person who uses another person's brand that has an equality in
principle is regulated in Article 100 paragraph (2) of the Law of The Republic of
Indonesia Number 20 of 2016 :
“Every person who without rights uses a Mark that has similarities in principle
with registered Marks owned by other parties for goods and / or services
similar to those produced and / or traded, shall be punished with imprisonment
of a maximum of 4 (four) years and / or a maximum fine IDR 2,000,000,000.00
(two billion rupiahs).”

6. Alternative Dispute Resolution (ADR)


a. What should be contained in the written agreement to settle dispute through
arbitration?
Answer :
An arbitration agreement is valid if its contents contain matters mentioned in
Article 9 of the Law Number 30 of 1999 concerning Arbitration Act and Alternative
Dispute Resolution. Its contents are (1) Disputed problems; (2) Full name and
residence of the parties; (3) Full name and place of residence of the arbitrator or
arbitral tribunal; (4) The place of the arbitrator or the arbitral tribunal will make a

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decision; (5) Full name of secretary; (6) Period of dispute resolution; (7) Statement
of willingness from the arbitrator; and (8) A statement of willingness from the
parties to the dispute to bear all costs necessary to resolve the dispute through
arbitration. The arbitration agreement which does not contain the eight materials
is null and void by law.
b. Name the dispute resolution processes that can be done before they go to the
arbitration. Explain the differences of these processes.
Answer :
Alternative Dispute Resolution refers to a variety of processes that help parties
resolve disputes without a trial. Typical ADR processes include negotiation,
mediation, conciliation and arbitration. These processes are generally
confidential, less formal and less stressful than traditional court proceedings.
There some dispute resolution processes that can be done before they go to the
arbitration :
1) Negotiation
While the two most common forms of ADR are arbitration and mediation,
negotiation is almost always attempted first to resolve a dispute. It is the
preeminent mode of dispute resolution. Negotiation allows the parties to
meet in order to settle a dispute. The main advantage of this form of
dispute settlement is that it allows the parties themselves to control the
process and the solution.
2) Mediation
Mediation is also an informal alternative to litigation. Mediators are
individuals trained in negotiations, who bring opposing parties together
and attempt to work out a settlement or agreement that both parties
accept or reject. The mediator does not decide the case, but helps the
parties communicate so they can try to settle the dispute
themselves. Mediation may be particularly useful when family members,
neighbors, or business partners have a dispute. Mediation may be
inappropriate if a party has a significant advantage in power or control over
the other.

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3) Conciliation
Conciliation is an alternative out-of-court dispute resolution instrument.
Like mediation, conciliation is a voluntary, flexible, confidential, and
interest based process. The parties seek to reach an amicable dispute
settlement with the assistance of the conciliator, who acts as a neutral third
party. The main difference between conciliation and mediation
proceedings is that, at some point during the conciliation, the conciliator
will be asked by the parties to provide them with a non-binding settlement
proposal. A mediator, by contrast, will in most cases and as a matter of
principle, refrain from making such a proposal. Conciliation is a voluntary
proceeding, where the parties involved are free to agree and attempt to
resolve their dispute by conciliation. The process is flexible, allowing parties
to define the time, structure and content of the conciliation proceedings.
These proceedings are rarely public. They are interest-based, as the
conciliator will when proposing a settlement, not only take into account
the parties' legal positions, but also their; commercial, financial and / or
personal interests. Like in mediation proceedings, the ultimate decision to
agree on the settlement remains with the parties.

c. Can the above case be resolved in court? Explain your answer!


Answer :
If both parties have agreed to the arbitration award, the award has been written
and can not be submitted to the court. But if the party that wins in the arbitration
award is proven to have cheated, then the award can be delayed and it can be
submitted to the court. According to article 70 Law Number 30 of 1999, an
application to annul an arbitration award may be made if any of the following
conditions are alleged to exist:
a) Letters or documents submitted in the hearings are acknowledged to be
false or forged or are declared to be forgeries after the award has been
rendered;

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b) After the award has been rendered documents are founded which are
decisive in nature and which were deliberately concealed by the opposing
party; or
c) The award was rendered as a result of fraud committed by one of the
parties to the dispute.

An application for annulment of an arbitration award must be submitted in


writing within not more than thirty (30) days from the date such arbitration award
was submitted for registration to the Clerk to the District Court (Article 71 Law
Number 30 of 1999). An application for annulment of an arbitration award must
be submitted to the Chief Judge of the applicable District Court. If the application
as contemplated in paragraph (1) above is granted the Chief Judge of the District
Court shall determine further the consequences of the annulment of the whole,
or a part, of the arbitration award (Article 72 paragraph (1) & (2) Law Number 30
of 1999).

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