Haikou, 15 September 2026
Upholding the Rule of Law in Making Institutional Reform of Dispute Resolution to Escort Trade Prosperity
Tony Budidjaja
Chairman of MedArbId
(The Indonesian Academy of Independent Mediators and Arbitrators)
Opening
Distinguished guests, colleagues, ladies and gentlemen,
It is a great honor to be here at the Rule of Law and Openness Forum – 2026 Global Business and Law Conference, and to have the opportunity to discuss a subject that is becoming increasingly important to international commerce.
My presentation is entitled “Upholding the Rule of Law in Making Institutional Reform of Dispute Resolution to Escort Trade Prosperity.” My remarks today are guided by a simple proposition: in international commerce, disputes are inevitable; however, what matters most is that the resolution of those disputes should not be uncertain.
The Changing Nature of International Commerce
International commerce today is changing at a remarkable pace. Perhaps the most profound change is technological. Technology and digitalization have fundamentally transformed the way businesses operate, create value, and interact across jurisdictions.
Today, trade and commerce are no longer limited to the cross-border exchange of physical goods. The traditional distinction between trade in goods and trade in services is becoming less meaningful.
Cross-border transactions increasingly involve data, technology, intellectual property, digital platforms, and artificial intelligence. These are no longer secondary elements of commercial activity. They are becoming central to the way businesses conduct international transactions.
As the nature of commerce changes, the disputes arising from that commerce inevitably change and become more complex as well. Some of these disputes involve technologies or business models that existing legal and procedural frameworks were simply not designed to anticipate. The law may not yet provide clear answers, and established practices may still be developing.
That is why dispute resolution systems designed for yesterday’s commercial environment may be inadequate for today’s, and certainly tomorrow’s, commercial disputes. If international commerce is changing, dispute resolution institutions must be capable of changing with it.
Dispute resolution institutions should move toward procedures that are more flexible and better tailored to the disputes before them. Different disputes involve different levels of complexity, value, urgency, and technological sophistication. Dispute resolution procedures must be capable of accommodating novel disputes involving emerging technologies and rapidly developing areas of law.
Flexibility is essential where existing rules could not have anticipated the dispute. At the same time, that flexibility must operate within fundamental procedural safeguards.
New Quality Productive Forces (NQPF)
The concept of New Quality Productive Forces (NQPF), as introduced by President Xi Jinping which places greater emphasis on technology, the efficient coordination of factors of production, and the contribution of knowledge workers, is fundamental to the development of modern dispute resolution.
Three characteristics of NQPF are particularly relevant to our approach to dispute resolution today:
First, it is intelligent. Artificial intelligence and other technologies increasingly enable production processes to become automated, with greater capacity for prediction, decision-making, and dynamic adjustment.
Second, it is data-driven. Data has become a core factor of production, with value generated through its collection, analysis, and application.
Third, it is collaborative. Innovation is no longer confined to a single organization. Cross-industry and cross-regional collaboration has become increasingly important, with value created through open cooperation.
The development of intelligent technologies, however, also brings questions that can directly affect commercial relationships and, ultimately, become sources of disputes.
AI will change how disputes are resolved. It can assist with document review, chronology, translation, legal research, and case management. This can make dispute resolution faster and potentially more accessible. In mediation, AI can help identify the parties interests, develop appropriate settlement options, and analyze possible outcomes.
At the same time, AI will create new categories of commercial disputes, for example, concerning AI-generated contractual performance, cybersecurity, and responsibility for autonomous systems.
In an AI-assisted dispute resolution process, we should ask an important question: who should bear responsibility when decisions are partly or substantially generated by AI or automated systems?
The challenge, therefore, is not simply to ensure that our dispute resolution institutions are capable of dealing with disputes arising from an economy that is becoming more digital, more intelligent, and more interconnected. We must also establish appropriate rules for the use of AI in dispute resolution, ensuring that the ultimate decision in a dispute remains attributable to a properly accountable human decision-maker. AI should augment human judgment, not replace human responsibility.
The Rule of Law as the Foundation of Effective Dispute Resolution
Ultimately, institutional reform should strengthen, rather than weaken, confidence in the legitimacy of dispute resolution.
Modern commerce requires not only capital, technology, talent, and infrastructure. It also requires confidence that, when commercial relationships break down, rights will be protected, obligations will be enforced, and disputes can be resolved efficiently, fairly, and intelligently. This is where the rule of law has a vital role to play.
Whatever form dispute resolution takes in the future, parties must continue to have confidence that their disputes will be handled independently and impartially, and that each party will have a fair opportunity to present its case.
Legal certainty, predictability, and enforceability must also remain central. Businesses need to know that disputes will be handled under clear and reliable procedures, and that the resulting decisions will have meaningful legal effect.
The rule of law matters for dispute resolution because dispute resolution ultimately concerns the exercise of authority: who decides, according to which rules, through what process, and with what consequences. There are five reasons why the rule of law is fundamental to effective dispute resolution.
First, the rule of law creates predictability. Disputes should be resolved according to established and reasonably predictable legal rules, rather than personal preference, political influence, or arbitrary decision-making. This predictability is particularly important in international commerce, where parties often operate across different legal systems. Legal certainty reduces commercial uncertainty, while effective dispute resolution provides a mechanism for when that certainty breaks down.
Second, the rule of law guarantees equality and due process. Parties must have an equal opportunity to present their case, respond to the opposing side, present evidence, and be heard by an impartial decision-maker. This requires independent tribunals and meaningful procedural fairness. As dispute resolution becomes increasingly fast and technology-driven, we must remember that efficiency cannot come at the expense of justice.
Third, the rule of law protects the independence and impartiality of decision-makers. A dispute resolution mechanism cannot command confidence if its decision-makers are vulnerable to pressure from governments, corporations, political interests, or other powerful actors. Parties must be confident that a decision will be based on law and evidence, rather than on who they are or how much power they possess.
Fourth, the rule of law gives legitimacy to the outcome. There is an important distinction between saying that a tribunal has the power to decide and saying that it has the legitimate authority to decide. The legitimacy of a decision depends not only on its finality, but also on the fairness and integrity of the process through which it was reached.
And fifth, the rule of law makes enforcement credible. In international commerce, winning a dispute is only part of the equation. The more important question is often whether the resulting judgment or arbitral award can actually be recognized and enforced.
The prosperity of international commerce ultimately depends not only on the ability to create economic opportunities, but also on the ability of legal institutions to provide certainty, trust, and effective mechanisms for preventing and resolving disputes.
Closing
International commerce will continue to evolve. Artificial intelligence, data, digital technologies, and collaborative innovation will continue to reshape how businesses operate across borders.
Our responsibility is to ensure that dispute resolution institutions are ready for the future, where new legal risks and new disputes will continue to emerge.
We need institutions that are innovative enough to respond to new disputes, but stable enough to remain trusted.
As we consider reform, there is an important point that should not be overlooked: innovation should not mean abandoning the foundations of dispute resolution.
So, as we look ahead, I believe the direction is clear: we must preserve the rule of law principles that make dispute resolution legitimate and trusted, while continuing to innovate so that our institutions remain relevant to the realities of modern commerce.
Once again, disputes may be inevitable; uncertainty should not be.
Thank you very much.
