Abstract:

Arbitration clauses in a business contract are essentially aimed at avoiding dispute resolution through the judiciary. This paper aims to have a deeper understanding of matters concerning the binding force of the Arbitration Clause. This contract also traces the competence of the judiciary and the cancellation of the arbitration agreement (Arbitration Clause) that has been agreed upon by the parties from the start. This research uses normative law research with legislation approach and legal concept analysis approach. The results of the study show that from the perspective of Covenant Law, in particular the principle of Pacta Sund Servanda contained in the provisions of Article 1338 paragraph (1) of the Civil Code, the Arbitration Clause has binding force like law for the parties. With the Arbitration Clause, the arbitration institution that has been chosen by the parties authorized to settle disputes and the judiciary does not have the authority to examine and resolve the dispute. The Arbitration Clause cannot be withdrawn and canceled, unless agreed by both parties.

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