At the Chartered Institute of Arbitrators (Malaysia Branch) International Arbitration Conference 2018, Peter Godwin, the Managing Partner of Herbert Smith Freehills’ Kuala Lumpur office gave a keynote address. The topic of the address was “Evolving Asia, New Frontiers in Dispute Resolution”.
The text of Peter’s keynote is set out below.
In August last year, we reported that a new Indonesian arbitral institution had been established in mid-2016 under the name of Renewed BANI or BANI Pembaharuan (“BANI-P“), notwithstanding the continued existence of the separate institution already known as BANI. We reported that the two institutions were in dispute as to which of them could legitimately claim the right to refer to itself as BANI, and we explained that although this might at first appear to be of purely local interest, the confusion has real and serious implications for contracts that provide for arbitration under BANI rules (as many now do).
BANI-P brought the matter to the South Jakarta District Court. In August 2017 BANI-P prevailed in obtaining an order declaring it to be the rightful institution to be referred to as BANI. Meanwhile, however, the original BANI had succeeded in separate proceedings in the Jakarta State Administrative Court, obtaining a ruling nullifying the decision of the Ministry of Law and Human Rights to acknowledge and register BANI-P as an arbitral institution. BANI had also obtained a ruling from the Commercial Court confirming it as the rightful owner of the trademark name “BANI”.
Both BANI-P and BANI appealed against the decisions of the South Jakarta District Court and the Jakarta State Administrative Court. However, BANI-P has apparently elected not to appeal against the decision of the Commercial Court.
Recently, the State Administrative High Court issued a decision in favour of BANI-P and reversed the decision of the lower Administrative Court. However, the Administrative High Court made this ruling on a technical ground: it found that the administrative courts do not have jurisdiction on the matter which is effectively a civil dispute. The Administrative High Court observed that its conclusion is strengthened by the fact that there are already ongoing proceedings in the South Jakarta District Court and the Commercial Court dealing with the issue of which entity has the right to use the name of, and be recognised as, BANI.
This decision is a blow to BANI as it is now faced with two decisions that are not in its favour. Continue reading
Since its establishment in 1977, BANI (Badan Arbitrase Nasional Indonesia) has been the most active arbitral institution in Indonesia. With offices across the country, its own rules and procedures and over 100 Indonesian and foreign arbitrators on its list, BANI is well-established and has presided over a steady stream of domestic and international disputes. (Other arbitral institutions exist, but with more limited remits such as Islamic or capital markets transactions.)
For all its success, however (and there can be no doubt that BANI has been a positive influence in the development of Indonesian arbitration), BANI has found itself subject to criticism at various points in its history – most recently that it has been unable to keep up with developments and trends in international arbitration, due to the inflexible nature of its constitution.
September 2016 saw the unexpected establishment of BANI Pembaharuan, a new institution set up to deal with domestic and international general commercial arbitrations. Domestic commentary suggests that BANI Pembaharuan was set up with the stated intention of “institutionalising BANI, not creating a new BANI” (although there is a competing narrative that the BANI Pembaharuan was primarily created because of a disagreement between the BANI’s board members and one of the members of the Indonesian arbitration community).
BANI quickly issued a statement to the effect that it does not recognise BANI Pembaharuan and that its use of the “BANI” acronym is illegitimate. This was followed by multiple proceedings in the Indonesian courts concerning the new institution’s use of the “BANI” name. Regrettably, this has led to uncertainty as to which institution is rightfully entitled to administer arbitrations where parties have elected to refer to their disputes to “BANI”. Unfortunately, this uncertainty is set to continue for some time, as recent rulings from different courts have been contradictory and are likely to be appealed, prolonging the confusion.