ADJUSTMENT OF ARBITRATION PROCESS DURING COVID-19 PANDEMIC

arbitration, covid-19, pandemic

Today, arbitration is one of the popular dispute resolution forums chosen by business actors on a local and international scale. As stated in Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution ("Arbitration Law"), arbitration is a method of settling civil disputes outside the general courts based on an arbitration agreement made in writing by the parties to the dispute. In line with its nature and characteristics that prioritize effectiveness in dispute resolution, the arbitration forum is widely chosen by business actors because it is considered effective from various aspects that prioritize the following matters: (1) Confidentiality, where the examination of arbitration cases will be carried out in a closed and limited manner only for the parties to the arbitration agreement, which means that the confidentiality of the parties to the dispute will be protected, so that it does not have a negative impact on the parties to the case, in terms of protection of trade secrets (trade secrets) and the reputation of the parties which is not covered by the media; (2) Party autonomy, which gives the parties to the dispute the freedom to agree to determine the arbitration procedure that is considered the most effective for the parties, such as the language used, the governing law, and the arbitrator they will choose according to the choice and expertise of the arbitrator; and (3) A final and binding award, which means that the arbitration award is final and binding, so that there are no appeal, cassation, or motion to reconsider, which makes the examination of arbitration cases faster and more effective which, on average, takes no more than 6 (six ) month.

In connection with the Corona Virus Disease 2019 (“Covid-19”) pandemic which causes restrictions on activities in most business sectors, there are adjustments that must be made by every business actor, including by arbitration institutions as a dispute resolution forum chosen by many business actors. Several arbitration institutions have made adjustments to the implementation of arbitration such as online (electronic) hearings without the physical presence of the parties and the tribunal, so that the dispute resolution process can still be carried out in the midst of the Covid-19 pandemic to ensure that the parties still have legal certainty over the dispute is being examined.

The Indonesian National Board of Arbitration or also known as BANI as one of the national arbitration institutions that is often chosen by business actors has made adjustments to the implementation of arbitration during the pandemic by issuing Decision No. 20.015/V/SK-BANI/HU regarding the Rules and Procedures for Electronic Arbitration. The provisions stipulated in the decision regarding electronic arbitration include:

1. Arbitration can be carried out electronically if there is a disaster emergency and special circumstances as stipulated in Article 1 of Law No. 24 of 2017 concerning Disaster Management;
2. Rules and procedures for electronic arbitration will be administered if the parties have agreed to use the rules and procedures for electronic arbitration;
3. In order for the parties to agree to apply the rules and procedures for electronic arbitration, the hearing may be conducted using internet-based telecommunication facilities including but not limited to teleconferences, video-conferences or virtual conferences using a platform agreed upon by the parties;
4. The parties that will hold the hearing electronically are required to carry out technical preparations for the trial, such as the preparation of the platform equipment that will be used and convey who will attend the hearing; and
5. Provisions in the BANI Rules and Procedures shall remain in effect unless stipulated otherwise in the Rules and Procedures for Electronic Arbitration.

Prior to this Decision regarding the Implementation of Electronic Arbitration, BANI through Decision No. 20.007/III/SK-BANI/HU dated March 23, 2020 concerning the Temporary Suspension of Hearings at BANI During the Corona Virus Disease (COVID-19) Pandemic, temporarily suspended hearings, which resulted in obstruction of the case resolution process. However, to provide legal certainty for the parties to the dispute, BANI has made adjustments by implementing electronic arbitration that allows the parties to conduct hearings virtually on a platform agreed upon by the parties. Thus, the dispute resolution process can still run and is not hampered by the Covid-19 pandemic.

Apart from BANI, the Singapore International Arbitration Center (SIAC) has also started implementing the arbitration process virtually. SIAC ensures that the arbitration hearings will continue, as quoted on the official SIAC website which states that "SIAC arbitrations are continuing subject to the prevailing COVID-19 situation where the parties, counsels, and tribunal are located". The arbitration process will be implemented virtually, in line with the provisions of Article 19.1 of the SIAC Rules 2016 which state that the arbitral tribunal shall conduct the arbitration in such manner as it considers appropriate to ensure the fair, expeditious, economical and final resolution of the dispute. Therefore, it is possible for the parties to discuss the virtual hearing with the arbitral tribunal. We quote the article as follows:

 “Article 19.1 of the SIAC Rules 2016:

 The Tribunal shall conduct the arbitration in such manner as it considers appropriate, after consulting with the parties, to ensure the fair, expeditious, economical and final resolution of the dispute.

In line with BANI and SIAC, the International Chamber of Commerce (ICC) also ensures that the arbitration process will continue during the pandemic. ICC issues the ICC Guidance Note on Possible Measures Aimed at Mitigating the effects of the Covid-19 Pandemic dated 9 April, 2020, to provide guidance to parties, legal counsels, and arbitral tribunals regarding several provisions that can be used to reduce adverse effects during the Covid-19 pandemic. Some of what is contained in the ICC Guidance are, among others:

1. The ICC Secretariat remains open to business and is fully committed to fair and efficient dispute resolution, regardless of the challenges posed by the COVID-19 pandemic;
2. Documents to be used in the arbitration process can be sent to the ICC Secretariat electronically;
3. Hearings can be held by audioconference or videoconference.

Thus, parties who have chosen or will choose arbitration as a dispute resolution forum do not need to worry about obstacles caused by the Covid-19 pandemic, because various arbitration institutions both national and international such as BANI, SIAC, ICC, and others have made several adjustments, especially to conduct the arbitration process electronically, so that the arbitration process can run as usual and not be hampered by the current pandemic.

Today, arbitration is one of the popular dispute resolution forums chosen by business actors on a local and international scale. As stated in Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution ("Arbitration Law"), arbitration is a method of settling civil disputes outside the general courts based on an arbitration agreement made in writing by the parties to the dispute. In line with its nature and characteristics that prioritize effectiveness in dispute resolution, the arbitration forum is widely chosen by business actors because it is considered effective from various aspects that prioritize the following matters: (1) Confidentiality, where the examination of arbitration cases will be carried out in a closed and limited manner only for the parties to the arbitration agreement, which means that the confidentiality of the parties to the dispute will be protected, so that it does not have a negative impact on the parties to the case, in terms of protection of trade secrets (trade secrets) and the reputation of the parties which is not covered by the media; (2) Party autonomy, which gives the parties to the dispute the freedom to agree to determine the arbitration procedure that is considered the most effective for the parties, such as the language used, the governing law, and the arbitrator they will choose according to the choice and expertise of the arbitrator; and (3) A final and binding award, which means that the arbitration award is final and binding, so that there are no appeal, cassation, or motion to reconsider, which makes the examination of arbitration cases faster and more effective which, on average, takes no more than 6 (six ) month.

In connection with the Corona Virus Disease 2019 (“Covid-19”) pandemic which causes restrictions on activities in most business sectors, there are adjustments that must be made by every business actor, including by arbitration institutions as a dispute resolution forum chosen by many business actors. Several arbitration institutions have made adjustments to the implementation of arbitration such as online (electronic) hearings without the physical presence of the parties and the tribunal, so that the dispute resolution process can still be carried out in the midst of the Covid-19 pandemic to ensure that the parties still have legal certainty over the dispute is being examined.

The Indonesian National Board of Arbitration or also known as BANI as one of the national arbitration institutions that is often chosen by business actors has made adjustments to the implementation of arbitration during the pandemic by issuing Decision No. 20.015/V/SK-BANI/HU regarding the Rules and Procedures for Electronic Arbitration. The provisions stipulated in the decision regarding electronic arbitration include:

1. Arbitration can be carried out electronically if there is a disaster emergency and special circumstances as stipulated in Article 1 of Law No. 24 of 2017 concerning Disaster Management;
2. Rules and procedures for electronic arbitration will be administered if the parties have agreed to use the rules and procedures for electronic arbitration;
3. In order for the parties to agree to apply the rules and procedures for electronic arbitration, the hearing may be conducted using internet-based telecommunication facilities including but not limited to teleconferences, video-conferences or virtual conferences using a platform agreed upon by the parties;
4. The parties that will hold the hearing electronically are required to carry out technical preparations for the trial, such as the preparation of the platform equipment that will be used and convey who will attend the hearing; and
5. Provisions in the BANI Rules and Procedures shall remain in effect unless stipulated otherwise in the Rules and Procedures for Electronic Arbitration.

Prior to this Decision regarding the Implementation of Electronic Arbitration, BANI through Decision No. 20.007/III/SK-BANI/HU dated March 23, 2020 concerning the Temporary Suspension of Hearings at BANI During the Corona Virus Disease (COVID-19) Pandemic, temporarily suspended hearings, which resulted in obstruction of the case resolution process. However, to provide legal certainty for the parties to the dispute, BANI has made adjustments by implementing electronic arbitration that allows the parties to conduct hearings virtually on a platform agreed upon by the parties. Thus, the dispute resolution process can still run and is not hampered by the Covid-19 pandemic.

Although BANI has facilitated the implementation of electronic hearings during the Covid-19 pandemic, the parties to the dispute can also choose to continue to conduct physical hearings. The method to be used depends on what has been agreed upon and is considered the most effective for the parties.

Apart from BANI, the Singapore International Arbitration Center (SIAC) has also started implementing the arbitration process virtually. SIAC ensures that the arbitration hearings will continue, as quoted on the official SIAC website which states that "SIAC arbitrations are continuing subject to the prevailing COVID-19 situation where the parties, counsels, and tribunal are located". The arbitration process will be implemented virtually, in line with the provisions of Article 19.1 of the SIAC Rules 2016 which state that the arbitral tribunal shall conduct the arbitration in such manner as it considers appropriate to ensure the fair, expeditious, economical and final resolution of the dispute. Therefore, it is possible for the parties to discuss the virtual hearing with the arbitral tribunal. We quote the article as follows:

“Article 19.1 of the SIAC Rules 2016:

The Tribunal shall conduct the arbitration in such manner as it considers appropriate, after consulting with the parties, to ensure the fair, expeditious, economical and final resolution of the dispute.

In line with BANI and SIAC, the International Chamber of Commerce (ICC) also ensures that the arbitration process will continue during the pandemic. ICC issues the ICC Guidance Note on Possible Measures Aimed at Mitigating the effects of the Covid-19 Pandemic dated 9 April, 2020, to provide guidance to parties, legal counsels, and arbitral tribunals regarding several provisions that can be used to reduce adverse effects during the Covid-19 pandemic. Some of what is contained in the ICC Guidance are, among others:

1. The ICC Secretariat remains open to business and is fully committed to fair and efficient dispute resolution, regardless of the challenges posed by the COVID-19 pandemic;
2. Documents to be used in the arbitration process can be sent to the ICC Secretariat electronically;
3. Hearings can be held by audioconference or videoconference.

Thus, parties who have chosen or will choose arbitration as a dispute resolution forum do not need to worry about obstacles caused by the Covid-19 pandemic, because various arbitration institutions both national and international such as BANI, SIAC, ICC, and others have made several adjustments, especially to conduct the arbitration process electronically, so that the arbitration process can run as usual and not be hampered by the current pandemic.

 Written by: Harri Budiman & Maria Ulfa

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