COULD RECUSAL BE MADE FOR THE APPOINTED ARBITRATORS?
“Against the arbitrator who is not doing its duties freely nor siding with one party, the other party may submit a recusal on the arbitrator.”
One of the problems that can arise when the process of dispute resolution through arbitration is about the impartiality or independence of the arbitrator appointed by both parties. Although it is very rare, the fact that in some cases it can happen. The appointed arbitrator is indicated in favor of either party having a blood relationship with the Petitioner or the Respondent, or may also have a financial interest or other interest in the arbitral award.
If there is an evidence that the arbitrator is not independent in the process of dispute resolution through arbitration, one of the party may file a recusal of the arbitrator.
Regulation of Recusal in Law Number 30 Year 1999 on Arbitration and Alternative Dispute Settlement (“Arbitration Law”),
Based on the practice of arbitration dispute settlement, in an agreement containing the arbitration clause will usually be found a clause related to the number of arbitrators who will handle the dispute, whether to use arbitrator appointed by the Court or Arbitration Institution, or may also be through a single or tribunsl Adhoc arbitrator, includes the right of the parties to appoint the arbitrators, in which the two appointed arbitrators shall each sit as members of the arbitral tribunal and then the arbitration settlement hearing shall decide on the third arbitrator to serve as chair of the arbitral tribunal.
Regarding to the impartiality and independence of this arbitrator, it is stipulated in Article 12 of Arbitration Law, the arbitrator shall meet the following requirements:
“(1) Having no family relationship by blood or marriage, to the third degree, with either of the disputing parties; (2) Having no financial or other interest in the arbitration award”
If either party doubts the impartiality and independence of the arbitrator appointed by the counterpart, it may submit a recusal of the arbitrator. This is in accordance with the provisions of Article 22 of the Arbitration Law which regulates:
“(1) A demand for recusal may be submitted against an arbitrator if there is found sufficient cause and authentic evidence to give rise to doubt that such arbitrator will not perform his/her duties independently or will be biased in rendering an award.(2) Request for recusal of an arbitrator may also be made if it is proven that there is any familial, financial, or employment relationship with one of the parties or its respective legal representatives.”
In practice, the reasons for impartiality and t independence are the two main reasons put forward by the parties. This independence is defined as the arbitrator’s dependence on the party to which it is pointed and the dependence here is not related to any relationship or financial interest to the dispute. This independence intersects the psychological aspects of the arbitrator. For example, this can be seen in international disputes, where arbiters come from the same nationality of either party.
Meanwhile, impartiality is closely related to an arbitrator who is openly seen in favor of one party. For example, in a trade dispute whereby one of the parties is a selected trade and arbitrator organization is a member of that trade organization. This certainly makes the arbitrator to be neutral or partial.
What is regulation of Recusal in BANI?
Regarding this right of repudiation, BANI implements two legal policies on neutrality and independence. Firstly, before the arbitration tribunal is established, any arbitrator elected as a member and chair of the tribunal shall make and sign a declaration of impartial self. Second, the obligation of impartiality and independence is affirmed in Article 12 Paragraph 2 of BANI arbitration rules, in which the arbitrator is required to resign if the aribiter has a conflict of interest with the case or the parties to the dispute. Further, if the assembly has been formed, then the arbitrator can no longer resign from his position, unless there is denial of him.
Subsequently, BANI’s procedural rules containing revocation rights are provided for in Article 11 Paragraph 1, in which:
” Any arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence. A party wishing to make such challenge shall so notify BANI in writing within 14 (fourteen) days from the time it is advised of the identity of such arbitrator, attaching documentation establishing the basis for such challenge. Or, if the information which forms the basis of the challenge becomes known to the challenging party thereafter, such challenge must be submitted within 14 (fourteen) days after such information becomes known to the challenging party.”
Furthermore, upon the submission of such recusal, BANI formed a special team to examine the evidence of such denial. This is in accordance with the provisions of Article 11 Paragraph 2 of BANI’s procedural rules:
” BANI shall be obliged to review the exhibits through a special team and convey the result to the arbitrator being challenged and the other parties regarding the challenge. If the arbitrator being challenged agrees to resign, or another party agrees with the challenge, a replacement arbitrator shall be designated in the same manner as in the case of designation of the recused arbitrator, based on the stipulations in article 10 above. Otherwise BANI may, but not required to, approve the recusal, in which case the Chairman of BANI shall designate a replacement arbitrator..”
If the recusal is not accepted by the other party or the arbitrator and the Chairman of the BANI also considers the recusal to have no basis, then referring to Article 11 Paragraph 3 of the BANI procedure rules, the recused arbitrator shall continue his duty as arbitrator.
This recusal is not only to denounce the arbitrator appointed by the counterpart, but the party may refute the arbitrator it has designated on the grounds that the party has only known or obtained grounds for recusal after the appointment has been made. This is in accordance with Article 11 Paragraph 4 of the BANI procedure rules.
We hope this article is useful.
BP Lawyers can assist you
BP Lawyers can assist you in providing the best solution in planning and preparing all of your needs for dispute resolution through arbitration in BANI. You may contact us through:
Dalmy Nasution, S.H. /Ali Imron, S.H.I