Badan Arbitrase Nasional Indonesia (“BANI”) updated its arbitration rules, that took effect 00effect on 1 January 2022 (“BANI Rules 2022”). These Rules containamendments to the previous 2021 BANI Arbitration Rules (“BANI Rules 2021”). Compared to the previous amendments, the current version includes several notable important amendments which shorten the length of submission period, and minor updates as are summarized below.
A. Change of Time Period for Pleadings Submission and Appointment of Arbitrator
The most significant update would be shorter submission timelines as follows:
|BANI Rules 2021||BANI Rules 2022|
|Written Reply||30 days||14 days||after receiving the submission of the request for Arbitration|
|Appointment of arbitrator||30 days||14 days||Together with Reply; after receiving the submission of the request for Arbitration|
|Response to Counterclaim||30 days||14 days||after receiving the submission of the Reply containing Counterclaim.|
Pursuant to the amended Article 8 of BANI Rules 2022, obtaining an extension of time for submission of Reply and Reply to Counterclaim still remains possible. At the request of the Respondent, the Chairman of BANI must be authorized to extend the time period for the submission of the Reply, at the latest at the first arbitration hearing.
Article 8 paragraph (2) of BANI Rules 2022:
“Within not longer than 14 (fourteen) days after receiving the submission of the request for Arbitration, the Respondent shall be obliged to submit its Reply.
BANI Chairman shall be authorized at the request of the Respondent, to extend the time limit of the Respondent’s response at the latest at the first arbitration hearing.”
The possibility of extending the submission timeline for Reply to Counterclaim is also preserved in Article 8 paragraph (6) of BANI Rules 2022 which retains the phrase ‘or such other time limit as the Tribunal may deem appropriate’. The relevant provision is set out below.
Article 8 paragraph (6) of BANI Rules 2022:
“In the event that the Respondent has submitted a counterclaim or reconvention, the Claimant (being a respondent there under) shall be afforded a period of 14 (fourteen) days, or such other time limit as the Tribunal may deem appropriate, to submit its response to the counterclaim or reconvention.”
Nonetheless, a party’s failure to appoint an arbitrator comes triggers the authority of the Chairman to appoint an arbitrator on behalf of the party.
Article 11 paragraph (5) of BANI Rules 2022:
“In any case in which either party fails to designate or appoint an arbitrator within the time limitation as set out herein, taking into consideration the provision in Article 6 (4) and Article 8 (4), the Chairman of BANI shall be authorized to make such appointment on behalf of that party.”
B. Changes in Definitions and Terminologies
We also note that there are changes in the definition of BANI and terms used in the new Rules. BANI Rules 2021 defined BANI as an institution established by Decision of Indonesian Chamber of Commerce (Kamar Dagang dan Industri Indonesia – KADIN). Meanwhile, BANI Rules 2022 defines BANI as “a national arbitration body based in Jakarta and in a number of regions in Indonesia”. What used to be known as “BANI Representative” is now known as “BANI Regional”. This seems to emphasize that BANI Regionals are still part of BANI.
C. Additional Provisions
There are additional provisions in BANI Rules 2022 emphasizing its role as an independent institution in administering the dispute settlement process. Subsequently, these new provisions also regulate the role of the Secretariat of BANI to support dispute settlement, and the role of BANI Regional to administer the cases submitted to them. These additional provisions might be added to emphasize the authority of Regional BANI, as they have the similar authority as the chairman of BANI in relation to the administration of the arbitration process in its respective region.
D. Deletions of Several Provisions
We note that the New Rules have also deleted several provisions. These include :
i. Arbitrator’s Qualification
Article 10 paragraph (4) of BANI Rules 2021 on the requirements of an arbitrator has been removed. The deletion of this provision may not give any effect to the practice and the content the same as Article 12 Law Number 30 of 2009 concerning Arbitration and Alternative Dispute Resolution which would still apply in domestic arbitration,where most, if not all BANI cases are administered.
ii. Amendment of Claim and Counterclaim
BANI Rules 2022 no longer includes Article 8 paragraph (8) of BANI Rules 2021, which provides:
“Either party may amend their claim or counterclaim unless the Arbitration Tribunal considers such amendment is inappropriate, having regard to the delay that may be caused or prejudice to the other party or any other circumstances.”
We understand that this deletion does not mean that the parties are not allowed to amend their claim. Referring to Article 21 of BANI Rules 2022, amendment of a claim and/or response on the merit of the case would still be possible until the first hearing. The exclusion is only if there is agreement of the Arbitral Tribunal and the disputing parties. Any amendment that falls outside the scope of the arbitration agreement would be restricted.
iii. Requirement on the Presiding Arbitrator to Reside in Indonesia
Further, BANI Rules 2022 deleted Article 10 paragraph (6) of BANI Rules 2021 which required Arbitral Tribunal of Indonesian-law-governed disputes to have at least one arbitrator who is an Indonesian law graduate or practitioner who is familiar with Indonesian law and resides in Indonesia.
Consequently, a dispute concerning Indonesian law matters can now be proceeded by an Arbitral Tribunal that consists of arbitrator(s) without an Indonesian law background/practice and who do(es) not reside in Indonesia. While this would give more flexibility for the party in appointing its arbitrator for BANI Arbitration, it may still be helpful to have an arbitrator who has a good knowledge of the Indonesian law (practice).
The updates in BANI Rules 2022 consist of mostly minor updates, such as changes in definition and terminology and role of Secretary of BANI and BANI Regional. The most important update in the BANI Rules 2022 is the shorter period of time for the (i) response to request for arbitration; (ii) response to a counterclaim; and (iii) appointment of arbitrator. This approach seems to be BANI’s attempt to have a timely and and cost efficient procedural rules when administering an arbitral proceeding. Other than the appointment of an arbitrator by the party, the timeline does not seem to be absolute. There is still room for possibility of extension of submission periods. This would accommodate the parties’ case preparation in complex cases. Another important change is the deletion of arbitrator’s requirement to have an Indonesian law background/practice experience and to reside in Indonesia for Indonesian law disputes. This would promote more flexibility to the parties in appointing their arbitrators.