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.