Analysis Of The Validity Of Arbitration Agreements In Business Dispute Resolution In A Social Environment

DOI

10.2991/978-2-38476-565-2_15How to use a DOI?

Keywords

Arbitration; Business Disputes; Social Environment

Abstract

The purpose of this study is to analyze 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, socialization, 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.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Download article (PDF)

TY  - CONF
AU  - Dhian Indah Astanti
AU  - Endang Setyowati
AU  - Muhammad Yunus
PY  - 2026
DA  - 2026/04/30
TI  - Analysis Of The Validity Of Arbitration Agreements In Business Dispute Resolution In A Social Environment
BT  - Proceedings of the 2nd International Conference on Social Environment Diversity (ICOSEND 2025)
PB  - Atlantis Press
SP  - 126
EP  - 130
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-565-2_15
DO  - 10.2991/978-2-38476-565-2_15
ID  - Astanti2026
ER  -