NEWSLETTER

4 August 2021

UMBRA ARBITRATION SERIES:

NEW CHAPTER IN THE BANI DUALITY
SAGA – KADIN ENTERS THE STAGE

An Overview
The duality of the Indonesian National Arbitration Board (Badan Arbitrase Melati D.S. Siregar
Nasional Indonesia or BANI) enters a new chapter, and a new entity has entered Senior Partner
+62 811 853 020
the stage: the Indonesian Chamber of Commerce (Kamar Dagang dan Industri (melati@umbra.law)
Indonesia or KADIN).
Junianto James Losari
Counsel
While all past legal actions relating to BANI were filed by the BANI addressed +62 817-5169-400
in Mampang (also known as the BANI Arbitration Centre, referred to as BANI (james@umbra.law)

Mampang)1 and the BANI addressed at the Sovereign Plaza Building (referred Nikki Krisadtyo
to as BANI Sovereign),2 the latest lawsuit was filed by KADIN (the KADIN Senior Associate
(nikki@umbra.law)
Lawsuit). The KADIN Lawsuit was filed against the founders of BANI
Sovereign before the South Jakarta District Court. In the lawsuit, KADIN Insan Fernaldi Lubis
Associate
argued that it is the legitimate founder of BANI through its decree in 1977. The (insan@umbra.law)
court recently issued its judgment on the KADIN Lawsuit. In this article, we
will analyze the court’s findings and assess the legal impact of the judgment on
UMBRA – Strategic Legal Solutions
existing and future BANI arbitration clauses.
Telkom Landmark Tower, 49th Floor
The Telkom Hub
I. Past Judgments Jl. Gatot Subroto Kav. 52
Jakarta 12710 – Indonesia
(+62) 21 5082 0999
Prior to the saga of the two BANIs, there was essentially just one BANI
(i.e., the one addressed in Mampang). Then a dispute arose over the
management of BANI between (i) the then management team of BANI UMBRA - Strategic Legal Solutions

and (ii) several heirs of the founders of BANI. The heirs claimed that the
then management of BANI Mampang should not hold their position as www.umbra.law

1 https://www.baniarbitration.org/
2 http://baniarbitraseindonesia.org/

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they were neither the heirs nor appointed by the heirs of the founders.
The heirs then subsequently established BANI Sovereign.

What followed was a series of legal actions separately initiated by BANI

Mampang and BANI Sovereign. We set out below a summary of the past
judgments relating to the BANI duality saga to get readers up to speed.

Latest
Legal Action Verdict Legal Impact
Status
Civil Claim - The management of - The The Civil Claim
Judgment BANI Mampang is Supreme Judgment is
dismissed. Court
essentially in favor
- The establishment upheld the
of BANI Sovereign.
of BANI Sovereign judgment.
is declared valid. - An However, we
- BANI Mampang execution understand that as
must hand over its order has of the time of
office units to the been
writing of this
heirs of the issued.
article, the
founders.
management team
of BANI Sovereign
has not taken over
BANI Mampang,
and the latter
continues to
operate as usual.

State The revocation of the The The State

Administrative Ministry of Law and Supreme Administrative
Judgment Human Rights’ Court Judgment is
(MOLHR) approval upheld the essentially against
of BANI Sovereign’s judgment BANI Sovereign.
establishment. and rejected The State
BANI Administrative
Sovereign’s Court considered
civil review that since BANI
petition. Mampang has
existed and has
been widely known
by the public, the
MOLHR should
have verified the

2
 Latest
Legal Action Verdict Legal Impact
Status
application
manually by
checking with
BANI Mampang.
Without this
manual
verification, the
court found that
the MOLHR
breached the
principle of
carefulness,
openness, and
good governance
(in particular the
principle to hear
both sides, in this
case BANI
Mampang and
BANI Sovereign).
As such, the court
revoked the
MOLHR’s
approval of BANI
Sovereign’s
establishment. The
effect of this
revocation to the
enforcement of
arbitral awards in
BANI Sovereign-
administered
arbitrations is
unclear.

Trademark The registration of The The Trademark

Judgment BANI’s trademark Supreme Judgment is in
requested by BANI Court
upheld the

3
 Latest
Legal Action Verdict Legal Impact
Status
Mampang remains judgment favor of BANI
valid. and rejected Mampang.
BANI
Sovereign’s
civil review
petition.

II. Latest Judgment

In the KADIN Lawsuit, KADIN sued the heirs of several founders of
BANI at the South Jakarta District Court with the intention of confirming
the legitimacy of BANI Mampang’s establishment. KADIN argued that
BANI was established by KADIN through its decree instead of by the
individual founders. Furthermore, KADIN argued that BANI is not a
civil partnership, hence it cannot be inherited by the heirs of the
founders.

On 20 May 2021, the court issued Judgment No.

210/Pdt.G/2020/PN.Jkt.Sel (Judgment 210). In Judgment 210, the court
decided, among other things, the following:

1. BANI is not a civil partnership; and

2. BANI, which was established by KADIN through its decree, is
legally valid.

In effect, Judgment 210 is in favor of BANI Mampang. This finding is in

a way contradictory to the Civil Claim Judgment, which ordered the
dismissal of BANI Mampang’s management team because BANI
Sovereign’s management team are the heirs of the original founders,
hence the management of BANI belongs to BANI Sovereign.

Judgment 210 has not become final and binding as the heirs have filed an
appeal against the judgment to the Jakarta High Court. It remains to be
seen how the High Court (and perhaps, ultimately, the Supreme Court)
will decide the case.

4
 III. Next Steps
Unfortunately, Judgment 210 does not completely eliminate the
uncertainty arising from the BANI duality saga. Firstly, it has not become
final and binding. Secondly, BANI Sovereign can potentially still rely on
the Civil Claim Judgment in which it prevailed to argue that it is a
legitimate institution that can administer disputes that are referred to
BANI. However, in light of the other conflicting judgments, it is unclear
whether the enforcement of arbitral awards in BANI Sovereign-
administered arbitrations will be affected.

Parties looking to execute agreements with BANI arbitration clauses

should clearly indicate which BANI the parties appoint, e.g., by
including the address of the relevant BANI. And parties that have
existing agreements may consider amending their arbitration clauses to
avoid any ambiguity in the arbitration clauses, thus avoiding
unnecessary arguments on the forum chosen by the parties.

If you are currently drafting or seeking to review your existing

agreements with BANI arbitration clauses, please do not hesitate to
contact our arbitration specialists.

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