Arbitration body is slowly coming of age

Arbitration body is slowly coming of age

By Arief S. Suditomo

JAKARTA (JP): The National Board of Arbitration (BANI), long
shunned by people seeking dispute settlements, is slowly gaining
recognition, after 17 years of existence.

"The board has settled 15 business disputes this year, 90
percent of which involved foreign parties such as from the United
States, Japan, Britain and Australia," the board's chairman Prof.
Priyatna Abdurrasyid said in an interview.

The largest of the business disputes which the board helped
settle was one for US$10 million, he said.

Priyatna said foreign companies who have disputes with
Indonesian companies are opting for his board, rather than the
more internationally reputed arbitration agencies, because it is
far cheaper and not necessarily less efficient.

BANI charges Rp 150,000 (US$68) for registration fee, Rp
250,000 for administration and one percent of the value of the
settlement for the arbitration fee.

"In the beginning, foreign parties questioned our capability
because our fee is so cheap but after showing them the list of
our arbitrators they began to believe in BANI's competency," he
said.

But Priyatna dismissed any notion that the board favors the
foreign parties.

In the dispute settled by BANI this year, the foreign parties
were on the losing end.

He lamented the tendency of foreign parties to belittle their
local partner and the arbitration board. "They often ignored our
requests to attend a hearing that sometimes we were forced to
make a ruling in their absence."

BANI's arbitrators include noted Indonesian figures, whose
integrity have been proven in international arbitration forums,
such as international law expert Prof. Komar Kantaatmadja, noted
economist Prof. Soemitro and civil law expert Prof. Subekti.

Lower

BANI's fees are far lower than those charged by international
arbitration bodies such as the International Chamber of Commerce
(ICC), the UN Commission on International Trade Law (UNCITRAL) or
the International Center for the Settlement of Investment
Disputes (ICSID).

"These bodies charge around $2,000 registration fee, $5,000
administrative fee and the fee of an arbitrator which must not be
less than around $67,000 per dispute," he said.

Priyatna said he has often been asked to serve as an
arbitrator for ICSID, saying disputing parties are obliged to pay
for first class air fares, first class accommodation and a daily
allowance of $500.

BANI, which has its headquarters in Jakarta and is an agency
under the Indonesian Chamber of Commerce and Industry (Kadin
Indonesia), has no immediate plans to raise its fees, as it is
putting more emphasis on the quality of settlements and the
integrity of its arbitrators.

Priyatna, who is a lawyer by training and now also advises the
Air Force chief of staff on legal matters, said he had no
specific target of how many cases BANI should handle each year.

Priyatna said another advantage BANI offers is that the agency
is able to reach a settlement within six months or less and the
legal status of its settlement, known as award, is final and
binding.

"So far, no BANI ruling has been violated by disputing parties
because their business reputation is at stake," he said.

Among Indonesians, however, the idea of arbitration as a means
of settling disputes has yet to catch on with people still
preferring to go to court, despite the prospect of an arduous,
lengthy, complex and not to mention costly, legal process.

Priyatna said this preference for court rather than arbitrage
has been strengthened by the general perception that people can
influence a court ruling and that they can buy time by going
through all the appeal stages.

He said BANI has no intention of competing with the courts.
Its objective is more to reduce their heavy load.

Priyatna said another advantage of the arbitration process is
that the cases are discussed and settled behind closed doors
without the glare of publicity.

Practicing lawyers, who have the power to advise their clients
about the services of BANI, are still in two minds about BANI.

Pandji Prasetyo of Notodisurjo and Associates Law Firm in
Jakarta, said he always recommends BANI to his client because it
has a good reputation in settling business disputes, whether it
be a local or international one.

But Dhira Yuzar of Wiriadinata and Widyawan Law Firm said she
rarely recommends BANI to her clients, preferring instead foreign
arbitration bodies.

"The legal system here enables a party to resubmit the case to
the court regardless, although their business agreement may state
that disputes should be settled by an arbitration agency," she
said.

Ideally, she added, the court should reject a case which has
already been referred to an arbitration body.

Priyatna however denied that the court could re-litigate a
case which has already been referred to an arbitration body.

"There is no such occurrence here," he said.