Newsletter

19 October 2021

Updates on the New BANI Arbitration Rules 2021

Badan Arbitrase Nasional Indonesia (BANI) published a 2021 version of the BANI Arbitration Rules, effective from 1 July 2021. The rules replace the 2018 version, and contain several minor changes.

| Rizki Karim

Introduction

Badan Arbitrase Nasional Indonesia (BANI) published a 2021 version of the BANI Arbitration Rules, which is effective from 1 July 2021. The BANI Rules 2021 replace the 2018 version, and contain several minor changes, which can be summarized as follows:

 

Notifications To Respondents Domiciled Outside Indonesia

Article 4 (3) of the BANI Rules 2021 is mainly identical to the previous version, except for one addition of a rule regarding how to notify respondents that are domiciled outside of Indonesia, as follows:

 

“When the Respondent is domiciled in foreign countries and his address is not found, the notice may be delivered to the Representative Office of the Republic of Indonesia in the country where the Respondent is lastly known.”

 

The new section seems to anticipate the growing use of BANI Arbitration internationally, and  it applies a similar principle as applicable to the Indonesian court litigation procedure for the summoning of foreign parties.

 

Changes in Terminology and Rectification of Typographical Errors

The BANI Rules 2021 splits several articles and modifies several terms that were previously used in the 2018 version. Some examples are as follows:

 

  • Article 10 (2) of the 2018 version used the term “Arbiter Luar” or “External Arbitrator”, whereas the BANI Rules 2021 employed the term “Arbiter Yang Tidak Terdaftar” or “Unlisted Arbitrator”.

 

  • Article 10 (3) of the BANI Rules 2021 also includes a specific paragraph for “Arbiter Asing” or “Foreign Arbitrator”. This definition was previously a part of the scope of “External Arbitrator”.

 

  • Article 18 (2) of the BANI Rules 2021 add the description “ikhtisar atau kerangka acuan” before the phrase “(Terms of Reference)”, which was absent in 2018 Bahasa Indonesia version.

 

  • Specific to the English version, the BANI Rules 2021 provide clarification in a footnote as follows:

 

“These Rules are the translation of the Arbitration Rules written in the Indonesian language. In the event of different meaning or interpretation between the Indonesian language version and the English version, the Indonesian language version shall prevail.”

 

  • The English version of the BANI Rules 2021 no longer uses the term “Petition” and replaces it with “Request for Arbitration” [See Articles 7 (1) and 20 (1)].

 

Deletions of Several Provisions

The BANI Rules 2021 also delete certain parts found in the 2018 version. For example, Article 14 (1) of the BANI Rules 2021 seems to clarify the distinction between the authorities of BANI as an arbitral institution and the BANI arbitral tribunal  selected for each particular case. The clarification can be summed up as follows:

 

Article 14(1) of the BANI Rules 2018 version

Article 14(1) of the BANI Rules 2021 version

After the formation or designation based on the stipulations in Chapter III above, the Arbitration Tribunal shall examine and rule on the dispute between the parties on behalf of BANI and therefore may exercise all of the authority possessed by BANI in connection with the examination and passing of resolutions on the dispute in question.

After the formation or designation based on the stipulations in Chapter III above, the Arbitration Tribunal shall examine and rule on the dispute between the parties.

 

Another example is the deletion of the section on the BANI Arbitration “model clause” at the end of the rules. Previously the rules provided a "model clause", as follows:

 

Arbitration Clause

BANI recommends all parties wishing to make reference to BANI arbitration, to use the following standard clause in their contracts:

 

“All disputes arising from this contract shall be finally settled by arbitration under the administrative and procedural Rules of Badan Arbitrase Nasional Indonesia (BANI) by arbitrators appointed in accordance with said Rules, which decision shall bind the parties and serve as a decision in the first and final instance”.

 

While it is unclear why the deletion was made, it might have stemmed from an issue in which parties may have contested the validity of a BANI arbitration clause which does not follow the model clause verbatim. However, having a model clause is a common practice in arbitral institutions (often useful for parties who are new to drafting arbitration clauses) and thus it is expected that BANI may well maintain its model clause in other platforms, such as on its website, although not in their rules.

 

Conclusion

The few revisions found in the BANI Rules 2021 do mark an improvement over the 2018 version. However, while it is a welcome change, most of the revisions are relatively minor in nature, and do not really cause any significant change in BANI arbitration practice in Indonesia. It is hoped that BANI will revisit their rules once again in the not too distant future.

 

 

 

 

Disclaimer: The content above is intended to provide a general guide to the subject matter, and should not be treated as legal advice. For more information on the subject matter, please feel free to contact KarimSyah Law Firm at info@karimsyah.com or rizki.karim@karimsyah.com.

 

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