Arbitration as an Alternative for Resolving Investment Disputes in the North Sumatra Industrial Region: A Study of Business Actors and the Regional Government

Dody Safnul

doi:10.61860/jigp.v4i2.335

Authors

Dody Safnul Faculty of Law, Dharmawangsa University

DOI:

https://doi.org/10.61860/jigp.v4i2.335

Keywords:

Arbitration; Dispute Resolution; Investment; Local Government; North Sumatra Province

Abstract

Increased investment in the North Sumatra industrial region brings both the potential for economic growth and the risk of disputes between business actors and the regional government. Dispute resolution through litigation is often considered inefficient due to the lengthy process, high costs, and limited technical understanding of the investment sector. This study aims to assess the effectiveness of arbitration as an alternative for resolving investment disputes in the region. Using a qualitative-descriptive approach, data was collected through in-depth interviews with business actors, regional government officials, and legal practitioners. The results indicate that although arbitration is recognized as a faster and more flexible mechanism, its utilization remains limited due to minimal publicity, the limited capacity of local arbitration institutions, and the lack of integration of arbitration clauses into regional investment contracts. This study recommends the development of regional policies that encourage the use of arbitration, increasing the capacity of regional legal resources, and strengthening cooperation between the government and business actors in drafting investment contracts that promote fair and efficient dispute resolution.

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