News

Badan Arbitrase Nasional Indonesia (BANI) has introduced its 2025 Rules and Procedures, bringing several key changes that impact arbitration in Indonesia. These changes modernize the arbitration framework but also introduce areas of uncertainty.

Key Changes and Their Implications

1. Absence of a Formal Effective Date

• The 2025 BANI Rules have been published, but no official effective date is mentioned.
• BANI confirmed that cases submitted on or after January 2, 2025, will follow these rules.
• This raises concerns about whether parties can still apply the 2022 BANI Rules if explicitly referenced in their arbitration agreements.
• To avoid procedural uncertainty, parties should seek official confirmation from BANI before initiating arbitration.

2. New Rules on Multiparty and Multicontract Arbitration

• Previously, under the 2022 BANI Rules, consolidation of arbitration cases required BANI Chairman’s discretion, along with consent from all parties.
• The 2025 BANI Rules remove discretionary consolidation and instead:
  • Allow multiparty arbitration if a clear connection exists between the parties.
  • Permit multicontract arbitration if agreements are interrelated and designate BANI as the forum.
• This change simplifies the arbitration process but leaves uncertainty about whether previous consolidation methods are still valid.

3. Expanded Grounds for Challenging Arbitrators

• A new provision in Article 13 (“Kelalaian Bertindak” or “Failure to Act”) introduces an additional ground for challenging arbitrators.
• If an arbitrator fails to perform their duties (either inaction or incapacity), they can be removed by the BANI Chairman.
• This increases arbitrator accountability and gives parties greater control over tribunal composition.

4. Introduction of Emergency Arbitration

• A significant addition is the Emergency Arbitrator mechanism, allowing urgent relief before the tribunal is fully formed.
• Key aspects of Emergency Arbitration:
• Provides interim measures when immediate action is required.
• Aligns BANI arbitration with international best practices (e.g., SIAC, ICC).
• However, Indonesia’s Arbitration Law (Law No. 30 of 1999) does not explicitly recognize Emergency Arbitration, raising enforceability concerns.

5. Issues with Emergency Awards’ Finality and Enforceability

• The 2025 Rules state that Emergency Awards are final and binding, but also indicate their interim nature.
• The waiver of the right to seek recourse from District Courts is included, potentially limiting parties’ ability to annul Emergency Awards.
• Legal uncertainty arises because Indonesia’s Arbitration Law allows annulment in cases of fraud or procedural violations (Article 70).
• Comparison with international standards:
• SIAC and ICC treat Emergency Awards as interim measures, allowing modifications.
• Indonesia’s Supreme Court Regulation No. 3 of 2023 permits partial enforcement of arbitral awards, but its applicability to Emergency Awards remains unclear.

6. Unclear Scope of Emergency Arbitrator’s Authority

• Unlike international arbitration rules, the 2025 BANI Rules do not clarify whether a regular tribunal can modify or overturn an Emergency Award.
• This lack of clarity could create enforcement issues for parties using Emergency Arbitration.

7. Lack of a Specific Deadline for Emergency Awards

• The 2025 BANI Rules provide a 14-day timeframe for Emergency Arbitration proceedings (extendable by 7 days).
• However, no specific deadline is mentioned for issuing the Emergency Award.
• In contrast, SIAC and ICC have clear deadlines for emergency decisions.
• This gap could lead to delays and procedural uncertainties.

8. Challenges to Emergency Arbitrators – Unclear Impact on Proceedings

• The new rules allow parties to challenge an Emergency Arbitrator.
• However, they do not specify whether the challenge suspends emergency proceedings.
• SIAC rules, for example, explicitly suspend proceedings during a challenge.

Conclusion

While the 2025 BANI Rules represent progress in arbitration, parties engaging in BANI arbitration should:

• Confirm procedural details with BANI before filing cases.
• Carefully draft arbitration clauses to avoid conflicts.
• Monitor developments in Indonesian arbitration law for further legal clarity.