<![CDATA[Article 32(1) of Law Number 25 of 2007 on Investment requires the Government and investors to pursue deliberation and consensus (musyawarah dan mufakat) before resorting to arbitration, alternative dispute resolution, or the courts, yet the Law provides no procedure, time limit, institution, or binding force for the outcome. This study analyses the normative position of deliberation and consensus in foreign investment disputes, identifies the legal and institutional obstacles that undermine its effectiveness, and formulates a more predictable settlement model. The author employs normative legal research with statutory, conceptual, comparative, and case approaches, and analyses the legal materials qualitatively and prescriptively. The study yields three findings. First, the phrase “terlebih dahulu” (first of all) makes deliberation a mandatory preliminary stage, but the absence of procedural parameters renders it a lex imperfecta whose effectiveness depends on official discretion. Second, fragmentation among Article 32, Law Number 30 of 1999, and Law Number 5 of 1968, the absence of a clear settlement authority, officials’ fear of allegations of state financial loss, and Indonesia’s position outside the Singapore Convention on Mediation weaken the parties’ incentives to settle. Third, data on seven investment arbitration cases against Indonesia show that three ended in settlement or discontinuance before any liability ruling, indicating that room for consensus remains open throughout the dispute cycle.]]>
