06 Dec 2021

Frequently Asked Questions

What types of cases that can be settled in BAPMI?

All civil cases concerning transactions in capital market can be settled through BAPMI. The cases can only be settled at BAPMI upon request of the disputing parties, and they themselves choose to settle the cases through binding opinion, mediation, adjudication or arbitration mechanisms. Special for adjudication, BAPMI sets separate requirements (refer to Rules & Procedures of BAPMI's Adjudication).

BAPMI does not handle cases that are under the scope of public law, such as criminal (e.g. market manipulation, insider trading) and administration (e.g. suspension and revocation of business license, decision of agency or state/ government official within the jurisdiction of administrative courts).

When the parties have set forth in the agreement that they will settle any dispute through court or other arbitration institutions, could they bring it to BAPMI?
When in the agreement they have stipulated so, the parties must first make a change, in amendment or addendum to the agreement, by replacing the settlement forum, which was originally through court or other arbitration institutions, with BAPMI. However, keep in mind that when such change is made after the emergence of the dispute, the agreement is "an arbitration agreement made after the emergence of the dispute", and the agreement may not be made in amendment or addendum, as specifically set forth in Article 9 of Law Number 30 of 1999.

When the capital market players have set forth in the agreement that they will settle any dispute through court or other arbitration institutions, with the existence of BAPMI, are court or other arbitration institutions no longer competent?
The choice of dispute settlement forum is principally the freedom of the parties to choose and agree. It is the principle of freedom of contract adopted by the Indonesian civil law system. When the parties to the agreement have agreed that any disputes will be settled in court, they shall refer them to court, and other institutions become incompetent. Similarly, when the parties to the agreement have agreed that any disputes will be settled in arbitration institution X, they must be referred to arbitration institution X, and other courts or arbitration institutions become incompetent. Most importantly, the parties must not stipulate two options of settlement forum in the agreement, for example by stating that "any disputes will be settled through BAPMI or competent District Court". This clause would raise confusion in its implementation in the future and even no arbitration agreement is regarded to exist.

What kind of civil disputes often arise in capital market?
We do not have data on this, but we can mention a few examples:

  1. a dispute between an investment manager and its customer regarding non-compliance by the investment manager to the customer;
  2. a dispute between a financial company and its parent company regarding a funding agreement with stock guarantee;
  3. a dispute between an underwriter and an investor regarding fulfillment of obligations in stock allotment booking;
  4. a dispute between an issuer and an existing shareholder(s) on the sale of shares to another party without pre-emptive rights to the existing shareholders.

What is ADR?
ADR stands for Alternative Dispute Resolution, or, in the Indonesian language, is translated as Alternatif Penyelesaian Sengketa. ADR is a dispute resolution mechanism, which is understood as an alternative or another option for the parties to resolve their cases other than through courts. Theoretically, the ADR mechanism includes Binding Opinion, Mediation, Expert Assessment, Reconciliation and Arbitration. With the ADR, the disputing parties may know that resolving disputes must not and should not always be referred to court. There are other alternatives that also deserve to be taken, which in some cases have more advantages rather than courts. Even in civil court proceedings in Indonesia nowadays, daading (amicable settlement before judges) must first be sought through the Mediation mechanism (court-annexed mediation).

What are the advantages of resolving cases through ADR rather than through courts?
As an alternative mechanism, ADR is developing by the demands of justice seekers, which are not fully obtained from judicial mechanisms. The demands are, for example, the justice seekers require:

  1. rapid decision-making process;
  2. final and binding decisions;
  3. decisions to be made by people who are experts in their fields;
  4. confidentiality in the settlement process;
  5. specific, unique settlement mechanisms, according to the specification and the uniqueness of each dispute.

What is the difference between mediation and arbitration?
In mediation, the parties still believe that they can resolve the dispute amicably. What they need is the presence of a neutral third party who will guide them to settlement. As for arbitration, amicable settlement can no longer be reached by the parties. What they need is the presence of a neutral third party who will examine the dispute and pass a final and binding award on the parties. Based on such understanding, the characteristics that distinguish mediation from arbitration are as follows:

  1. In arbitration, the parties submit the authority to decide to the third party, while in mediation, the third party acts as a facilitator;
  2. The mediation result is determined by desires of the parties, while the arbitration result is determined under a right-based procedure/ approach;
  3. In mediation, any of the parties must convince the other to be willing to compromise and accept, whereas in arbitration, the parties must convince the arbitrator to grant the claims;
  4. The mediation process is determined solely by the parties. Thus, the procedure adopted is non-formal. The arbitration process often refers to rules of the selected arbitration institution and laws on arbitration. Thus, the procedure adopted is formal.

What is the difference between arbitration and court?
There are some fundamental differences between arbitration and court:

  1. court proceedings are open to the public, while arbitration proceedings are closed to the public;
  2. a claim referred to arbitration may only be proceeded when the disputing parties are bound by an arbitration agreement, while a claim to court may be made by anyone;
  3. Court proceedings are highly formal and very stiff, whereas arbitration proceedings are not too formal and stiff;
  4. Arbitrators are selected by their expertise, while generally judges are generalists;
  5. in some particular legal systems, judges adheres to precedent or jurisprudence, while arbitrators do not recognize precedent;
  6. An arbitration award is final and binding, cannot be petitioned for appeal or any legal action, while a court decision can be petitioned for appeal, cassation and even reconsideration;
  7. An arbitration award is almost applicable beyond limits of jurisdiction of state law, while a court ruling is not.

Is it possible to file an arbitration award to a court?
Law Number 30 of 1999 clearly stipulates that:

  1. an arbitration award is final and binding;
  2. a court is not competent to hear a case having bound by an arbitration agreement;
  3. parties have been bound by an arbitration agreement do not longer have the right to submit a case to a court.
This is the rule of law provided by Law regarding arbitration award.

How could an arbitration award be enforceable? Does BAPMI have the power to make it enforceable?
Law Number 30 of 1999 requires an arbitration award to be registered with the local district court clerk. Since its registration, an arbitration award is binding and enforceable, and vice versa when it is not registered yet, the arbitration award is not binding and non-enforceable. BAPMI is not authorized to enforce the execution of an arbitration award. The one authorized to do so is the state through court. Therefore, the Law stipulates that when either party refuses to execute a registered arbitration award, the interested party may submit a petition for execution to local district court chairman. The local district court chairman affixes an execution order on the arbitration award sheet without re-examining the subject matter and giving any considerations on the arbitration award. He simply checks the arbitration competency to examine and decide the case at hand.

In practice, an arbitration award is not easily executed; there are efforts of some disputing parties to bring the dispute to court. How does this happen?
Law Number 30 of 1999 clearly stipulates that:

  1. an arbitration award is final and binding;
  2. a court is not competent to hear a case having bound by an arbitration agreement;
  3. parties have been bound by an arbitration agreement do not longer have the right to submit a case to a court.
  4. an arbitration award must be registered;
  5. an arbitration award can be requested for execution order; and
  6. district court chairman does no longer examine the subject matter and give any considerations to the arbitrators.

Thus, when a case is brought to another forum, the forum is not only incompetent, but it also violates the principle of ne bis in idem. On the other hand, Law Number 30 of 1999 provides a possibility for cancellation of an arbitration award, but with limited terms. It does not only exist on Indonesian arbitration, but arbitration practices in all countries also provide such regulation. Mostly, the cancellation efforts of arbitration awards are only attempts to buy the time by the losing parties.

What is the difference between BAPMI and BANI?
BANI is a general arbitration institution, while BAPMI specializes in capital market sector. Currently, certain actors in certain sectors tend to establish their own special arbitration institutions, or arbitration institutions specializing in certain fields.

Is BAPMI under the supervision of OJK or SROs?
BAPMI is a private and non-profit organization. During examination and passing an award on a dispute, BAPMI is an institution that is independent, neutral, and free from any intervention of any party.

Do BAPMI only handle capital market disputes in Indonesia?
The main purpose of BAPMI's establishment is to provide an out-of-court alternative dispute resolution to the capital market sector in Indonesia to resolve civil disputes they have in capital market through faster, easier, cheaper mechanisms, and with final and binding settlement. BAPMI does not restrict whether the capital market in Indonesia is domestic or foreign, whether the transaction is made in Indonesia or abroad. Most importantly, a mutual agreement of the disputing parties that the dispute will be resolved through BAPMI is made.

While determining the choice of dispute resolution forum, the counter party prefers to choose a foreign arbitration forum or other well-known arbitration institutions. How does BAPMI see this trend?
While choosing an arbitration forum, there are two fundamental questions that usually arise: first, how the rules are, and second, who the arbitrators are. Previously another question arose, whether the country's legal system recognizes arbitration award. The third question is no longer relevant to be questionable in the context of Indonesia since the enactment of Law Number 30 1999.

With regard to rules and procedures, it is explainable that laws on arbitration and arbitration agency rules in many countries have similar basic principles. This is not surprising considering that arbitration is more intended for business people who do not recognize national boundaries, which conduct business in accordance with the prevalence of generally accepted practices in international transactions. We almost do not find any differences between the principles of Law Number 30 of 1999 and the New York Convention 1958 or the UNCITRAL Model Law on International Commercial Arbitration, for example. Furthermore, BAPMI's rules and procedures have largely referred to Law Number 30 of 1999 and the UNCITRAL Model Law on International Commercial Arbitration, with some modifications or adjustments to BAPMI's conditions. Thus, it can be guaranteed that BAPMI's rules and procedures are pursuant to the prevalence of generally accepted practices in international transactions.

In respect of the arbitrators, it is explainable that those distinguishing an arbitration institution and another are the arbitrators. Currently, BAPMI has 19 Arbitrators, 21 Mediators, and 10 Adjudikators with special expertise in capital market by their respective backgrounds. They consist of capital market practitioners, lawyers, accountants and academics. In addition to expertise in capital market, they also have skills to lead and run arbitration and mediation. If the disputing parties desire to appoint other people outside the list of BAPMI's arbitrators, the interested parties may nominate them BAPMI, and BAPMI will appoint them as Ad Hoc Arbitrators with certain requirements. Thus, there is no need to worry about arbitrators in BAPMI's arbitration.

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