Frequently Asked Question

What kinds of cases that resolved by BAPMI (Indonesian Capital Market Arbitration Board)?

All civil cases on any transactions in capital market may be resolved through BAPMI. Any cases may settled by BAPMI if there is a request submitted by the disputing parties, and they themselves may elect a procedure of resolution through binding opinion, mediation, or arbitration mechanisms.

BAPMI will not handle any cases that are under the jurisdiction of public or common law, such as criminal law (for example market manipulation, insider trading) and administration (for example suspension and revocation of business license, decisions or decrees of any government institutions or state officials existing under the jurisdiction of state administrative courts).

How many cases settled at BAPMI?

Until today, BAPMI has yet to settle any cases, even though formally BAPMI has received three requests for resolution from one of the disputing parties. Not all the three requests processed, as they did not meet the requirement of a mutual agreement of the parties to refer the disputes to BAPMI. Therefore, it is essential that the parties shall set forth an option of dispute resolution methods in their agreements.

If the parties have determined in the agreement that they shall settle their disputes through any court or such other arbitration organization, would they be able to refer such disputes to BAPMI?

In case that the agreement requires so, then the parties must first make an amendment to the agreement (amendment or addendum) by replacing the resolution forum from a court or such other arbitration body to BAPMI.

In the event that the capital market players have resorted that their settlement of dispute shall be referred to any court or such other arbitration body, does it mean that such court or other arbitration body no longer has any jurisdiction with the existence of BAPMI?

The option of dispute resolution forum is the sole right of the parties to select and to agree; this is the principle of the freedom of contract adhered by the Indonesia civil system. If the parties mutually agree and enter into an agreement establishing that their dispute shall refer to a court, then they should submit their dispute to such court, and accordingly, other legal bodies no longer have the jurisdiction over the dispute. Similarly, if the parties of an agreement agree that their dispute shall settle through arbitration body X, then they must go to such body, and any court or such other arbitration will have no jurisdiction.

The most important thing is the parties do not elect two different forum of dispute in their contract, for instance by setting forth "shall be resolved through BAPMI or the relevant District Court". Such clause will create ambiguity in the future implementation.

What kinds of civil disputes frequently arise?

We have not made the data regarding this matter available yet, but we will mention several examples:

1. dispute between an investment manager and its customer regarding the failure of investment manager to fulfill its obligations to the customer;
2. dispute between a financing company and the holding company regarding pledge-of-share financing agreement;
3. dispute between underwriter and investor regarding the performance of obligations in share allotment;
4. dispute between the company and its shareholders regarding sales of share to other parties without preemptive right.

What does ADR mean?

ADR is an abbreviation of Alternative Dispute Resolution. ADR is an alternative or option for the parties in dispute to settle their cases out of court. Theoretically, ADR mechanisms will include Binding Opinion, Mediation, Expert Assessment, Reconciliation, and Arbitration.

With the existence of ADR, the parties in dispute may become aware that in order to resolve their dispute, they do not have to or do not always go to a court. Some other alternatives are suitable to be resorted as they have some advantages in a number of aspects compared to the court. Even in the current civil litigation processes in Indonesia, daading (amicable settlement before the judge) must first seek through mediation mechanism (court-annexed mediation).

What are the advantages of settling the dispute through ADR compared to the court?

As a mechanism that is alternative in nature, ADR has developed since there is a need by the justice seekers, as their requirements are not fully satisfy by court mechanism. Such requirements include the justice seekers requiring a quick decision making process, requiring final and conclusive decisions, requiring a decisions made by the experts of any particular fields, requiring confidentially during settlement process, and requiring specific resolution mechanism which is unique, in accordance with the specifications and uniqueness of the dispute itself. These are some of the advantages that obtain from ADR, which not provided by the court.

What is the difference between Mediation and Arbitration?

In mediation, the parties are still quite convinced that their dispute can be resolved peacefully. What they need is the presence of a neutral third party that is able to guide them to reach a peaceful agreement. In the meantime, Arbitration involves the parties that are no longer in peace. What they need is the presence of a neutral third party who will examine their disputes and make a final and binding decision to the parties.

Based on such definition, then the special characteristics that distinguish Mediation and Arbitration are as follows:

1. In Arbitration, the parties will submit the power to a third party in order to decide, as in Mediation, the third party acts as a facilitator;
2. The results of a mediation are very much determined by the intention of the parties, as the outcomes of an arbitration are greatly dependent on the correctness or the faults by law;
3. In Mediation, each party must convince the other so they can compromise and accept, as in Arbitration, the parties must be able to make the arbitrator believe so their claims can be granted;
4. Mediation processes is determined by the parties themselves such that the proceedings are not necessarily formal one, as Arbitration process often refers to the regulations of Arbitration bodies so elected and the prevailing laws and regulations on Arbitration such that the proceedings are conducted in formal ways.

What are the differences between Arbitration and Court?

There are a number of fundamental differences between Arbitration and Court:

1. Court proceedings are carried out in an open-to-public hearing, as Arbitration is a closed proceeding;
2. Claims or lawsuit may be referred to Arbitration may only if the parties in dispute are bound in an Arbitration Agreement, as lawsuits may be filed to any court by anyone;
3. Litigation in any court is conducted in formal, very inflexible way, as Arbitration is not very formal, nor too inflexible;
4. Arbitrators may be elected on the basis of their expertise as judges appointed are commonly generalist;
5. In several judicial systems, the judges abide by precedence or jurisprudence, as arbitrators do not recognize precedence;
6. arbitral award is final and binding, and no appeal and no other resorts allowed, as court decisions may appeal, cassation or even a review.

Is it possible to submit an arbitral award to a court?

Law Number 30 year 1999 expressly provides that arbitral award is final and binding, and that any court shall have no authority to examine any cases bound under an Arbitration Agreement, and that the parties so bound under Arbitration Agreement shall reserve no right to submit such case to any court. This is the legal certainty provided by the Law with regard to an arbitral award.

How can Arbitration have power of enforcement? Does BAPMI have the authority to ensure any enforcement?

Law Number 30 year 1999 requires that any arbitral award must register at the Registrar of the relevant District Court. As from its registration, such arbitral award will become binding and enforceable. On the contrary, if it is not registered, such arbitral award is not binding and may not be enforceable.

BAPMI has no apparatuses to make the enforcement of an arbitral award possible; the competent authority to do so is the court. Therefore, the Law regulates that if any party is not willing to comply with an arbitral award that has registered, then the concerned party may lodge a petition for an execution to the chief of local district court. Chief of district court will issue a writ of execution on the sheet of arbitral award without reviewing the substance of the case as well as considerations for an arbitral award, and instead, he will only examine and ensure the authority of Arbitration to examine and decide the relevant case.

In practice, it is not easy to enforce an arbitral award, and instead the parties are trying to resort some other ways, including that they submit the dispute to a court. How could this happen?

Law Number 30 year 1999 expressly establishes that:

• arbitral award is final and binding;
• any court shall have no jurisdiction to examine the case which is bound under an Arbitration Agreement;
• the parties bound under an Arbitration agreement shall reserve no right to refer the case to any court;
• arbitral award shall be registered;
• arbitral award may be enforced by a writ of execution;
• Chief of the relevant Court will no longer examine the substance of the case and the considerations from arbitrator.

If, in practice, other efforts are still made by any particular party to submit it to the court, this is only a phenomenon of an application of new system which has yet to be widely known and well understood by the disputing parties, advocates or lawyers and the judges themselves.

What is the difference between BAPMI and BANI?

BANI (Indonesian National Arbitration Board) are a general arbitration body, as BAPMI specializes in capital market sector. Currently, there is a tendency of actors in one particular field to establish a special arbitration body, or an arbitration body that specializes in a particular field, such as:

• BASYARNAS for sharia economics aspects;
• in banking industry, a mediation body has been established for small amount of claims;
• and in insurance, the establishment of similar body is presently being assesses;
• moreover, possibly in other fields such as consumers, environment, and others.

Is it BAPMI under the supervision of Bapepam (Indonesian Capital Market Supervisory Agency) or SROs?

BAPMI is a private and non-profit organization. In conducting examination and rendering award over a dispute, BAPMI is an independent, neutral body, which is free from any undue influence or intervention from any party whatsoever.

Does BAPMI only handle the disputes in capital market arising in Indonesia?

The main objective of the establishment of BAPMI is to provide an alternative dispute resolution out of court to all capital market players in Indonesia in order to settle their civil dispute that they are experiencing in capital market through faster, easier, more inexpensive mechanism and with final and binding settlement outcome. BAPMI does not limit whether the capital market players in Indonesia are domestic or foreign, whether their transactions made in Indonesia or abroad. The most important thing is there is a mutual agreement between the parties in dispute that their dispute will settle through BAPMI.

The counter party in prefers to appoint foreign arbitration or other arbitration bodies, which known better, as their choice of forum for dispute settlement. How does BAPMI see this tendency?

There are two important questions may often arise about arbitration selection: first, what the regulations are, and second, who the arbitrators are. Before, there used to be another question, whether or not the legal system of the relevant state admits an arbitral award. The third question is no longer relevant in the context of Indonesian legal system since the enactment of Law Number 30 year 1999.

Regarding the first question, it can explain that laws regarding Arbitration and regulations on arbitration bodies in many countries have a number of commonness and similarities in terms of the basic principles. This is not very surprising as arbitration is in fact mainly intended for business players who do not recognize country borders any longer in undertaking their business activities in line with the practices commonly acceptable to the international transactions. We hardly find any fundamental difference between Law Number 30 year 1999 and New York Convention 1958 or UNCITRAL Model Law on International Commercial Arbitration, for instance. Furthermore, BAPMI regulations of procedures are mostly referring to Law Number 30 year 1999. Therefore, it ensures that BAPMI litigation procedures and regulations comply with the practices commonly acceptable to the international transactions.

Regarding the second question, it can explain that this is a basic difference of one arbitration body and another, which is the arbitrator. Currently, BAPMI has 17 Arbitrators/Mediators registered with their specialties in capital market with their respective distinguishable backgrounds; some of them are capital market practitioners, advocates, accountants, and academicians. In addition to their expertise in capital market, they also have the skills of leadership as well as the implementation and operation of arbitration and mediation. If the disputing parties wish to appoint any arbitrators other than those listed in BAPMI arbitrators list, they may propose them to BAPMI, and BAPMI will appoint them as Ad Hoc Arbitrators subject to certain conditions. Therefore, there is nothing to worry about in respect of the arbitrators of BAPMI Arbitration.