Badan Arbitrase Nasional Indonesia (“BANI”), established in 1977 is recognised as the first and leading arbitral institution in Indonesia. The inception of BANI was on the initiative of three prominent lawyers, namely Prof. Subekti, Haryono Tjitrosoebono and Prof. Priyatna Abdurrasyid. It was initially supported and a part of the Indonesia Chamber of Commerce and Industry (KADIN). To date, BANI has set up regional offices in various major Indonesian cities, including Bandung, Denpasar, Medan, Pontianak, and Batam and has administered more than 1000 cases.
Notwithstanding its remarkable contribution in developing arbitration in Indonesia, every now and then, BANI has faced some criticism for its purported irresponsive to current trends in international arbitration and internal governance issues. However, it was not until September 2016 that BANI faced a serious disruption to its services — the launching of BANI Pembaharuan. It was explained on the press release of its launch that BANI Pembaharuan is a “transformed BANI”, with a newly registered status as a legal entity. Such transformation was reportedly motivated by the desire to save the existing BANI from its poor governance issues and is apparently supported by the heirs of BANI’s founders. On the other hand, the BANI’s Chairman of Governing Board, M. Husseyn Umar, expressed that the new BANI was primarily created because of a disagreement between BANI’s board members and one of the members of Indonesian arbitration community.
BANI will be celebrating its 40th birthday in November this year. However, the past year has been quite a rough time for BANI. The aforementioned launch of BANI Pembaharuan has resulted in the submission of not less than three proceedings: in the South Jakarta District Court against the heirs of BANI’s founders, in the Jakarta Administrative Court against the Ministry of Law and Human Rights and BANI Pembaharuan, and in the Central Jakarta Commercial Court against BANI Pembaharuan. These proceedings, although different in substance, all potentially affect the continuing existence of BANI.
II. PROCEEDING BEFORE THE SOUTH JAKARTA DISTRICT COURT
On July 2016, the heirs of Prof. Priyatna Abdurrasyid and Haryono Tjitrosoebono (collectively mentioned as the “Claimant”) filed their claim of ‘unlawful act’ against members of BANI’s Governing Board, i.e. M. Husseyn Umar, Ir. Harianto Sunidja, and Dr. N. Krisnawenda (collectively mentioned as the “Defendant”). The claim dates back to the first days of BANI’s establishment. Back in 1977, BANI was established with the initiative of KADIN. KADIN, however, did not provide sufficient funding for BANI’s operation. Reportedly, Prof. Priyatna Abdurrasyid and Haryono Tjitrosoebono were the ones who consistently provided financial support for BANI until 1998. This included financing for day-to-day operation, business trips and organizing workshop and seminars. This financing was at very significant personal cost to the founders. The founders, on the deed of establishment, apparently agreed that should one of the founders decease, their position and responsibilities are to be passed to their respective heirs or beneficiary.
The Defendant, however, argued that BANI is not a partnership that is subject to the Indonesian Civil Law and its Law of Agreements. They claimed that the institution of BANI was based on KADIN’s Decree in 1977, and with the exception of Prof. Priyatna Abdurrasyid, the other founding members was acting in an official capacity on behalf of their respective positions in an institution; KADIN and PERADIN. Further, the Defendant submitted that BANI’s institution was subject to Reglement op de Rechtsvordering (Rv), the applicable law at that time, and Law 30 of 1999 on Arbitration and Alternative Dispute Resolutions (“Indonesian Arbitration Law”), which on the Defendant’s interpretation, indicated that BANI was meant to be as an association. This would make the application of Article 1618 Civil Law invalid, such that it would not be possible for individuals to bequeath certain positions and responsibilities in relation to BANI.
In response, the Claimant submitted that even if Rv is to be applied, it would require such institution to be registered and acknowledged by the Ministry of Law and Human Rights. However, until the time of submission of this claim, such registration has never been done. In fact, in 2006, BANI issued the BANI Statute, which inter alia stipulates “the Board of Founders are the Founders and those whom has been appointed by the Founders to be a part of the Board.” The Claimant argued that this strengthens the Claimant’s position that the institution of BANI is meant to be a partnership governed by the Civil Code. As a consequence, the money provided since BANI’s establishment should be entitled to the Founders and their heirs, both by virtue of the Law and the Deed of Establishment.
The Court Decision was in the Claimant’s favor, declaring that BANI should stop to operate. Further, the court ruled that, BANI Pembaharuan, with its status as an independent legal entity, is deemed to be the valid BANI. Arguably, the decision did not directly adjudicate on the main issue, namely the question of whether BANI’s governing board committed an unlawful act. BANI is known to have submitted an appeal of this case to Jakarta High Court.
III. PROCEEDING BEFORE THE JAKARTA ADMINISTRATIVE COURT
On 24 November 2016, a few of BANI’s arbitrators (the “Claimants”) started a claim in Jakarta Administrative Court against the Minister of Law and Human Rights, who was subsequently joined by BANI Pembaharuan. The Claimants’ claim is premised on the fact that the Indonesian Arbitration Law does not call for an arbitral body to be in a form of a legal entity in order for it to be valid. BANI was initiated by a KADIN Decree, which is a governmental body. Since then, BANI has maintained its daily operation, as well as gained the public’s trust and recognition—both in the national and international level. Therefore, when the Ministry of Law and Human Rights informed Claimants about the issuance of the Minister of Law and Human Rights’ Decree on the “Authorization of the Establishment of Perkumpulan Badan Arbitrase Nasional Indonesia as a Legal Entity”, the Defendant was taken aback. The Claimants claim that the Minister has failed to perform its duty transparently and with accountability. The Claimants claimed that the Ministry of Law and Human Rights only reached out to the Claimants two months after the issuance of the Decree — and that were no attempts to consult BANI prior to the issuance of the Decree.
The Claimants submitted that the Decree caused the existence of two arbitral body under the same name—BANI—that results in legal uncertainty, as well as potential obstacles in the recognition of arbitral awards issued by either institution. Further, the Claimants argued that this confusion would deprive them of the public’s trust, as the Claimants are registered arbitrators in BANI. The Claimants provided that they were compelled to submit this claim as some of them, in the capacity of BANI’s Governing Board, are being sued before the South Jakarta District Court in relation to the Decree in question.
The Defendants jointly argued that the issuance of the Decree has undergone a series of examinations under the Law and the Ministry’s Regulation on Decree Issuance, although it is argued in response that the examination is limited to checking whether the legal entity’s proposed name has been registered before. As “Badan Arbitrase Nasional Indonesia” has never been registered before, the Decree can be issued. However, the Defendants did not provide further substantial argument, and the Administrative Court ruled in favor of the Claimants, noting the fact that even the public notary who assisted BANI Pembaharuan to establish its status as a legal entity would not be doing so should she know that BANI Pembaharuan is not the same entity as BANI. Bani Pembaharuan has submitted its appeal to Jakarta High Administrative Court.
IV. PROCEEDING BEFORE JAKARTA COMMERCIAL COURT
The latest decision in this legal skirmish relates to intellectual property. BANI Pembaharuan requested the Jakarta Commercial Court to nullify BANI’s ownership of certain trademarks. It is arguable from the two aforementioned decisions that the dispute can be narrowed down into who has the right to proceed under the name “BANI”, as the Rv. And the Indonesian Arbitration Law does not restrict the existence of multiple arbitral bodies in Indonesia. This is also supported by the fact that there has been some other existing arbitral bodies under different names.
In this battle, BANI Pembaharuan supported its claim with the argument that BANI procured the trademark under bad faith, as it is not a valid legal entity. Husseyn Umar, on behalf of BANI, maintained that even if BANI is indeed not a legal entity, it is a recognized body that is allowed under the Indonesian Arbitration Law. The Jakarta Commercial Court ruled in favor of BANI.
Taking into account three proceedings that BANI has undergone, it is arguable that the crux of the dispute between BANI and BANI Pemhaharuan relates to the question of which entity has the exclusive right to operate under the “BANI” brand. BANI is a reputable name in the local and regional business landscape and the brand has accrued significant commercial value. Arguably, this is one point which differentiates the BANI division with the recent split that CIETAC faced. In 2012, CIETAC’s former Shanghai and Shenzhen sub-commissions declared their independence. Both adopted their own set of arbitration rules, panels of arbitrators, and even new organisation names. Arguably, the confusion resulting from the CIETAC division was not as protracted as in BANI’s case, as the newly split CIETAC institutions were willing to rebrand themselves with new names.
Still, the CIETAC split might be of some guidance for those who have submitted their disputes to BANI prior to the BANI division and those who are considering including BANI arbitration clauses in their agreements today. China’s Supreme People’s Court held that arbitration agreements entered into prior to the CIETAC split and referring to “CIETAC Shanghai” or “CIETAC Shenzhen” would be deemed as conferring jurisdiction to CIETAC, as that was the arbitral institution that the parties intended to refer to. Likewise, after the CIETAC split, arbitration agreements referring to “CIETAC Shanghai” or “CIETAC Shenzhen” would also be deemed to be conferring jurisdiction to CIETAC, as both institutions have since renamed themselves and are no longer referred to as CIETAC. In BANI’s case, both institutions have sought to continue operating under the identical name. Nevertheless, various practitioners have suggested means to distinguish the two, including referring to each institution by their respective address: referring to the “old BANI” as “BANI Mampang” and BANI Pembaharuan as “BANI Sovereign”.
The impressive growth of arbitration in Indonesia may in part be attributed to BANI’s efforts. It is unfortunate that it is now beset with such internal struggles after almost 40 years of its establishment. With M. Husseyn Umar holding the chairman position in Asia Pacific Regional Arbitration Group (APRAG) and the ascending economies in this region, Indonesia is poised to make a significant contribution to the regional dispute resolution landscape; it is hoped that the players and partners involved in BANI’s dispute may work together for the greater good of the community.
This article may be cited as follows: Aldwin Octavianus Wijaya and Janet Lim, “Two BANIs and a Game of Chance” International Arbitration Asia (24 October 2017) <www.internationlarbitrationasia.com/articles/two-banis-a-game-of-chance/>.
The views expressed in this article are the authors’ own.
 KADIN or Kamar Dagang dan Industri Indonesia, is the Indonesian for Indonesia Chamber of Commerce and Industry
 Herbert Smith Freehills Arbitration Notes, “A Tale of Two BANIs – Uncertainties Abound as Latest Court Ruling Questions Legitimacy of Indonesia’s National Arbitration Centre”, http://hsfnotes.com/arbitration/2017/08/29/a-tale-of-two-banis-uncertainties-abound-as-latest-court-ruling-questions-legitimacy-of-indonesias-national-arbitration-centre/
 Hukum Online, “Catatan “Perang” Urat Saraf Dua BANI”, http://www.hukumonline.com/berita/baca/lt57f6e3a62cdef/catatan-perang-urat-saraf-dua-bani. See also BANI Pembaharuan’s Press Release
 BANI Pembaharuan’s Press Release (link to file, if possible)
 See BANI Pembaharuan’s Press Release, para. 7
 Hukum Online, “BANI Versi Mampang: BANI Pembaharuan Lakukan Perbuatan Melawan Hukum”, http://www.hukumonline.com/berita/baca/lt57d2c5c898bc2/bani-versi-mampang–bani-pembaharuan-lakukan-perbuatan-melawan-hukum.
 South Jakarta District Court, “Arman Sidharta Tjitrosoebono et. al. (the Heirs) v. M. Husseyn Umar, S.H., FCBArb., FCIArb. et. al. (BANI’s Governing Board)” (“South Jakarta Decision”), Putusan Nomor 674/Pdt.G/2016/PN.Jkt.Sel., 8 August 2017. [BANI Dispute, South Jakarta District Court Decision No. 674]
 Jakarta Administrative Court, “H. Kahardiman, S.H., FCBArb., et. al. (BANI’s Arbitrators) v. Minister of Law and Human Rights of Republic of Indonesia & Perkumpulan Badan Arbitrase Nasional Indonesia” (“Administrative Court Decision”), Putusan Nomor 290/G/2016/PTUN-JKT, 4 July 2017.
 Central Jakarta Commercial Court, “BANI Pembaharuan v. BANI” (“Commercial Court Decision”), Putusan Nomor 34/Pdt-Sus-Merek/2017/PN.Niaga, 12 September 2017.
 It is not the whole Governing Board, as Prof. Huala Adolf, one of the member of the Governing Board, is not included as the main Defendant.
 BANI Dispute, South Jakarta District Court Decision No. 674, p. 16
 Article 4 (1) of BANI Statute. Translated from the Statute embedded in the South Jakarta Decision (p. 10, ¶32).
 These arbitrators are H. Kahardiman, M. Husseyn Umar, Anangga Wardhana Roosdiono, Ir. Harianto Sunidja, Prof. Huala Adolf, Prof. Achmad Zen Umar Purba, Abdul Rahman Saleh, Fred B.G. Tumbuan, Dr. Ir. Madjedi Hasan, Ir. H. Agus G. Kartasasmita, Prof. Dr. Joni Emirzon, Dr. Junaedy Ganie, and Prof. Dr. Garuda Wiko. See the decision of Jakarta Administrative Court p. 1-6.
 Decision of Jakarta Administrative Court, p. 21 para. 10
 Decision of Jakarta Administrative Court, p. 45 para. 3
 The Notary’s Affidavit during the proceeding. See the Decision of Jakarta Administrative Court, p. 140 para. 3
 For example: BAPMI (Badan Arbitrase Pasar Modal Indonesia), BASYARNAS (Badan Arbitrase Syariah Nasional).
 Alison Ross, “Clarity at last in China after CIETAC split”, http://globalarbitrationreview.com/article/1034623/clarity-at-last-in-china-after-cietac-split
 SHIAC (Shang Hai International Arbitration Center) and SCIA (Shenzhen Center for International Arbitration)