Production Sharing Contract (the "PSC") is a common type of contract signed between Perusahaan Pertambangan Minyak dan Gas Bumi Negara (the "PERTAMINA") as a Government Institution, and a contractor (the "Parties") that is intended to carry out petroleum operations that includes exploration and exploitation under the supervision of the PERTAMINA (the "Joint Operation"). Further under the PSC, the Parties shall establish a Joint Operating entity to carry out the Petroleum Operation. Pursuant to the case that is presented in this internship report, the PSC contained a dispute settlement clause that requires the Parties to settle any arising dispute through Arbitration. In practice, Arbitration is often used for the settlement of commercial disputes, particularly in the context of international commercial transactions. Arbitration is an alternative dispute resolution outside a civil court which can be conducted only if the Parties have a written arbitration agreement to do so. The disputing Parties shall appoint one or more arbiters to adjudicate and stipulate an award to such dispute. Pursuant to Article 3 of Law No. 30 of 1999 about Arbitration and Alternative Disputes Resolutions, The District Court is not authorized to adjudicate a dispute between parties that are bound by an arbitration agreement. Therefore, the adjudication or verdict made by a District Court towards a dispute that is bound under an arbitration agreement constitutes a discrepancy to The District Court's authority.