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Indonesian Take on Alternative Dispute Settlements Part Three : Initiating BANI Arbitration
By Setyawati Fitrianggraeni, Eva F. Fauziah & Deviana Bella Saputra[1]
Keywords: BANI, BANI Arbitration Center, BANI Rules, Initiating arbitration, Request for Arbitration, Registration of dispute, Constitution of Arbitral Tribunal
It has become more common for parties to hold their arbitration in Indonesia. Many of those are held under the rules of Badan Arbitrase Nasional Indonesia (“BANI”) — the most prominent Indonesian arbitration institution known that was established in 1977 by Kamar Dagang Indonesia (Indonesia Chamber of Commerce). If the parties agreed to proceed to arbitration under BANI rules, what are the necessary steps for commencing arbitration in BANI?
- BANI Rules 2022
BANI has its own set of rules to stipulate arbitration. The applicable version is BANI Rules 2022 (“BANI Rules”), effective from 1 January 2022. BANI Rules shall apply to arbitrations administered by BANI. By designating BANI or choosing the BANI Rules for the resolution of a dispute, the parties to the agreement or dispute shall be deemed to have agreed to waive the process of case examination through the District Court in connection with the agreement or dispute and shall execute any awards made by the Arbitration Tribunal. Where BANI Rules are silent on regulating specific issues of arbitration, the rules shall be determined by the Arbitration Tribunal examining the dispute.[2]
- The Request for Arbitration
As initiation of arbitration under other rules, the party who wants to initiate a dispute for arbitration (referred to as Claimant) shall prepare a Request for Arbitration. BANI Rules specify that the Request shall at least contain: (a) the names and addresses of the parties; (b) information regarding facts of the dispute and the legal basis of the arbitration, i.e., the arbitration clause; (c) the details of the dispute; and (d) the claim and/or the requested amount of claim.[3] A copy of the agreement containing the arbitration clause or agreement must be attached. The Claimant can also submit other relevant documents as exhibits to the Request.[4]
- Registration of the Dispute
After the Request for Arbitration and attached documents are complete and ready, the Claimant shall submit those and register its dispute to BANI Secretariat. The Claimant shall pay a registration fee of IDR 5 million.[5] Following this step, the Secretariat will register the Request for Arbitration in BANI’s case registry. The arbitral process commences with registering and submitting the Request for Arbitration to the BANI Secretariat.[6]
- Review Process by the Board of BANI
When the dispute has been registered in BANI, the Board of BANI will subsequently review the Request for Arbitration to determine whether the contract’s arbitration agreement or clause adequately provides the competence for BANI to examine the dispute. If the Board of BANI determines so, they will appoint one or two secretaries of the Tribunal to assist the Tribunal in the administrative matters of arbitration.[7]
- Notification of the Request for Arbitration to the Respondent
The following process is that the Secretariat should notify the Respondent concerning the Request for Arbitration filed by the Claimant by sending the Respondent a copy of the Request for Arbitration and its attached documents.[8] This notification is generally delivered to the Respondent within 7 to 14 days from submitting and registering the Request for Arbitration, depending on where the Respondent is domiciled. Subsequently, with the notification, the Respondent must submit a written response/reply within no longer than 14 (fourteen) days from receiving the Request for Arbitration from the BANI Secretariat. This period may be extended by the Respondent’s request to the BANI Chairman, the latest being at the first arbitration hearing, but this is subject to the BANI Chairman’s discretion.[9] The Respondent may also submit a counter-claim to Claimant’s claim (with separate costs and fees) together in its Statement of Defence or at the latest at the first hearing or determining Tribunal’s decision.[10]
6. Designation of Arbitrator
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- The Claimant may designate an arbitrator in its Request for Arbitration within 30 (thirty) days since the Request for Arbitration is registered at BANI Secretariat. At the Claimant’s request to the BANI Chairman, an extension of no more than 14 (fourteen) days may be possible. The Claimant can also hand over the designation to the Chairman of BANI.[11]
- On the other side, Respondent may designate an arbitrator in its Reply within 14 (fourteen) days from receiving the Request for Arbitration from the Tribunal. At the Respondent’s request to the BANI Chairman, this period can be extended no more than 14 (fourteen) days. The Respondent can also hand over the designation to the Chairman of BANI.[12]
- Constitution of Arbitral Tribunal
An arbitrator candidate must submit to BANI a written statement of willingness to act as arbitrator. If necessary, (s)he must also disclose any circumstances likely to give rise to justifiable doubts regarding its impartiality or independence.[13] The appointed arbitrator must sign a Statement of Independence from the BANI Secretariat.[14]
- Sole Arbitrator: if the Tribunal consists of only one arbitrator, the Claimant may propose one or more candidates. Suppose the Respondent accepts one of the candidates. That individual will be designated as the Sole Arbitrator following the approval of the BANI Chairman.[15] If there is no agreement and unless both parties agree to a Tribunal of three arbitrators, the BANI Chairman has the absolute power to determine the Sole Arbitrator.[16]
- Three arbitrators: if the Tribunal comprises three arbitrators, each party has designated their respective arbitrators. The BANI Chairman must designate one arbitrator as the Presiding Arbitrator in the Tribunal.[17]
- The unspecified number of arbitrators: if the parties do not reach an agreement on the number of arbitrators, it becomes the BANI Chairman’s authority to determine whether the dispute requires one or three arbitrators. The decision will be based on the dispute’s nature, complexity, and scale.[18]
An arbitrator may be challenged in circumstances that give rise to justifiable doubts about the arbitrator’s impartiality or independence, either before or after the arbitral Tribunal is formed. A party can challenge by submitting a written application to the Chairman of BANI within 14 (fourteen) days since the notification of the arbitrator’s identity or since the condition that raises justifiable doubts becomes known to the challenging party.[19]
- Arbitration Fees[20]
In addition to the registration fee of IDR 5 million described above, there is also an arbitration fee that covers: (i) administrative fee, (2) examination fee, and (3) arbitrator fee. The minimum arbitration fees for arbitration in BANI is IDR 20 million. The estimated fee will be based on the claim value, which ranges from 0.6% to 10%.
- Miscellaneous
In addition to the above, it is typical for a BANI tribunal to be assisted by a secretary. BANI Chairman assigns the secretary to the Tribunal once a case is registered. Depending on the Tribunal’s style in proceeding arbitration, in some cases, the secretary to the Tribunal will be the bridge between the parties to communicate with the Tribunal. The role of a secretary tribunal in BANI Arbitration is like a court clerk.
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BIBLIOGRAPHY
BANI Rules 2022
BANI Arbitration Fees, https://baniarbitration.org/fees, accessed on 21 April 2023.
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Eva F Fauziah
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[1] Setyawati Fitrianggraeni is a Managing Partner at Anggraeni and Partners, Indonesia, Assistant Professor at the Faculty of Law University of Indonesia, and PhD Candidate at the World Maritime University, Malmo. Eva F. Fauziah & Deviana Bella Saputra are from International Arbitration and Litigation Practice Group Anggraeni and Partners. Writers thanks Dr Hary Elias for his time to provide feedback on the articleJunior Associate at Practice Group International Arbitration & Litigation at Anggraeni & Partners
[2] Art. 3 of BANI Rules 2022
[3] Art. 6 (2) of BANI Rules 2022
[4] Art. 6 (3) of BANI Rules 2022
[5] Art 6 (5) of BANI Rules and BANI Arbitration Center, “BANI Arbitration Fees” https://baniarbitration.org/fees accessed on 21 April 2023
[6] Art. 6 (1) of BANI Rules 2022
[7] Art. 7 of BANI Rules 2022
[8] Art. 8 (1) of BANI Rules 2022
[9] Art. 8 (2) of BANI Rules 2022
[10] Art. 8 (5) of BANI Rules 2022
[11] Art. 6 (4) of BANI Rules 2022
[12] Art. 8 (4) of BANI Rules 2022
[13] Art. 10 (4) of BANI Rules 2022
[14] Art. 10 (5) of BANI Rules 2022
[15] Art. 11 (1) of BANI Rules 2022
[16] Ibid.
[17] Art. 11 (2) of BANI Rules 2022
[18] Art. 11 (3) of BANI Rules 2022
[19] Art. 12 (1) of BANI Rules 2022
[20] Art. 6 (5) of BANI Rules and BANI Arbitration Center, “BANI Arbitration Fees” https://baniarbitration.org/fees accessed on 21 April 2023
