The Indonesian Minister of Public Works and Housing ("MOPWH") has issued MOPWH Regulation No. 11 of 2021 regarding the Procedure and Technical Guidelines for Construction Dispute Adjudication Board ("Regulation 11/2021"), which provides a comprehensive framework for the use of Dispute Adjudication Boards ("DAB") in the construction industry. The regulation applies to ministries, regional governments, and construction service providers. It establishes the obligation to use DAB in certain contracts involving construction services funded by domestic or foreign loans or grants. It also sets out mandatory qualifications for DAB members and outlines the procedure for dispute resolution through adjudication. However, the regulation does not address the issue of enforcement, and parties may need to resort to arbitration to enforce DAB decisions.
While Regulation No. 11 of 2021 provides clear guidelines for the use of DABs in Indonesia's construction industry, the lack of a direct enforcement mechanism for DAB decisions poses challenges. Parties may need to include specific contractual provisions regarding the consequences of non-compliance with final and binding DAB decisions. Overall, stakeholders in the construction industry should be aware of and comply with the regulations when drafting construction contracts or DAB agreements to ensure effective dispute resolution and adherence to prescribed procedures.
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