In a recent judgment, the District Court of South Jakarta refused to hear an application to recuse an arbitrator in arbitral proceeding held under the Indonesian National Board of Arbitration ('BANI') rules. The District Court was of the view that it had no jurisdiction to deal with the application.
The judgment in proceeding No. 533/Pdt.G/2014/PN.Jkt.Sel dated 28 November 2014 related to a dispute between PT Citra Televisi Pendidikan Indonesia ('PT CTPI') and PT Berkah Karya Bersama ('PT BKB') over the ownership of a television company. Mohamad Jarman, the Director of PT CTPI, filed an application in the District Court of South Jakarta to recuse an arbitrator appointed to hear the dispute under BANI rules. It was reported that the application was based on Article 25 of Indonesian Arbitration Law No. 30 of 1999 ('Arbitration Law'), which reads:
"In the event the request for recusal submitted by one of the parties is not consented by the other party and the arbitrator concerned is unwilling to resign, the party concerned may submit its request for recusal to the Chief Judge of the District Court, whose decision on the matter shall bind the two parties, and shall not be subject to appeal."
During the proceedings in the District Court, BANI presented a motion stating that the application to recuse should be filed with BANI. The Plaintiff's argument, however, was that the relevant provision in the BANI rules conflicted with the Arbitration Law and that, in this situation, the latter should prevail.
Article 11 paragraph (1) of BANI Rules:
"Any arbitrator may be challenge if circumstances exist that give rise to justifiable doubts as to the arbitrator impartiality or independence. A party wishing to make such recusal shall so notify BANI in writing..."
In the judgment, the presiding judge of the District Court accepted the motion that the Court has no jurisdiction to examine the question of whether the arbitrator should be recused. Consequently, the Court's judgment was that the application was inadmissible.
The judgment confirms the position of the Arbitration Law, i.e. where parties have agreed that a dispute should be referred to an arbitral institution for resolution, the rules of the institution should fully govern the conduct of the arbitration, including procedures for the appointment and recusal of arbitrators. Intervention of the courts is only to support the arbitration. The courts have no jurisdiction apart from the enforcement of or other relief against, the arbitral award. This is generally in line with BANI rules which give full authority to the tribunal to determine the procedure and to make rulings which it deems as appropriate.
The Indonesian legal system does not adopt the principle of case law or court precedent. Judges are not bound by previous judgments. The District Court judgment sent a firm message that if there is a difference between procedural rules as set out in the Arbitration Law and the rules of the arbitral institution to which a dispute is referred for arbitration, the rules of the latter should prevail. The judgment of the District Court is also seen as the Indonesian Court's support to improve Indonesian arbitration practice and create an arbitration-friendly jurisdiction.
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