Analysis of the Validity of Arbitration Agreements in Business Dispute Resolution in a Social Environment Dhian Indah Astanti, Wafda Vivid Izziyana
Universitas Semarang
Abstract
Abstract
The purpose of this study is to analyse the validity of arbitration agreements in the settlement of business disputes in a social environment, as well as to assess the extent of the public^s understanding of the law, particularly small and medium-sized enterprises (SMEs), regarding arbitration mechanisms. The background of this research stems from the fact that arbitration is an efficient and confidential alternative dispute resolution method, but its effectiveness is highly dependent on the validity of the arbitration agreement made by the parties. In practice, many business actors in the social environment include arbitration clauses without understanding the legal consequences, thus giving rise to various legal and social problems. The research method used was a normative juridical approach supported by a sociological approach to law. The normative juridical approach was used to examine legislation, such as Law No. 30 of 1999 and Article 1320 of the Civil Code, which form the basis for the validity of arbitration agreements. Meanwhile, the sociological approach was used to understand the perceptions and practices of communities in social environments, including MSMEs and cooperatives, regarding the application of arbitration clauses. Data was obtained through literature studies and qualitative analysis of social phenomena that indicate low legal literacy and bargaining power imbalances in business relationships. The results of the study show that the level of legal understanding among business actors in the social environment is still low, resulting in many arbitration agreements that do not meet the elements of a valid agreement, such as free agreement and legal competence. This condition gives rise to defects of consent and imbalances in the agreement, thereby potentially rendering the arbitration clause null and void. Furthermore, the culture of deliberation and kinship in Indonesian society is often incompatible with the formal and costly nature of arbitration, making arbitration less desirable at the local level. The conclusion of this study confirms that the validity of arbitration agreements in the social sphere is not yet fully guaranteed due to low legal awareness and economic inequality between parties. Therefore, it is necessary to improve legal literacy, socialisation, and procedural reform of arbitration institutions to make them simpler, more transparent, and more affordable for small businesses. Thus, arbitration can function effectively as a fair, efficient, and appropriate mechanism for resolving business disputes in Indonesian society.
Keywords: Keywords: Arbitration, Business Disputes, Social Environment.
Topic: Governance, Policy, and Education of Coastal Area
