Overview on the usage of BAPMI
Why the capital market participants are not choosing BAPMI as their alternative dispute settlement institution on solving the capital market disputes?
· BAPMI is expected to provide an improvement of convenience and to add a protection for the investors
· since the establishment 13 years ago, BAPMI has not been fully utilized by the capital market participants
Effectiveness of BAPMI in Supporting an Efficient and Orderly Capital Market Dispute Resolution
Capital Market is one of many activities that support significant economy development as well as increasing the average national livelihood. Law no. 8 of 1995 Concerning Capital Market defines capital market activities as activities that is correlated with General Offer and Trade Market, public companies and its published trading, and institutions and professions that correlates with trading itself.[1] In a broader view, capital market is the entirety of the organized financial system, including commercialized banks and its intermediaries, and short term/long term bonds.
Indonesian Capital Market Arbitration Board (BAPMI) was established at 2002 with the aim to resolve to provide an improvement of convenience and to add a protection for the investors and public through the provision of alternative dispute settlement services. However, since the establishment 13 years ago, the existence of BAPMI as an alternative dispute settlement institution on capital market area has not been fully utilized by the capital market participants, as evidenced by the minimum amount of disputes settled by BAPMI up to date.
There are many vulnerable spots in the field capital markets which require juridical assistance. With the establishment of the BAPMI, issuers, listed companies, stock holders, as well as those who were victims of capital market transactions would have a single competent institution to resolve their disputes. In addition to the effectiveness and assured confidentiality, the resulting output would also be accountable both legally and economically. The fact that the capital market disputes are intricate and complex resulted in the limited amount of individuals involved in arbitrary matter. Another value of resolving into arbitration lies in the dispute resolution mechanism itself, which is closed to public, so that the resulting award or decisions would not harm reputations or credibility of the parties.
Although BAPMI have guaranteed professionalism, neutrality, and independence in resolving capital market disputes, since its establishment in August 2002 there has been only a number of disputes that is resolved by arbitration through BAPMI. The scarcity of disputes resolved by arbitration through the BAPMI is not rooted from the deficiency of disputes that arise in capital market transactions, since there are copious amount of disputes on the capital market. Some examples of the disputes on the capital market includes a calculation NAV of a Mutual Fund, portfolio exploitation by investment managers, undeclared and unregistered mutual fund offers, and misuse of bond funds by the issuer. Of the examples set above, every single one of it has the civil aspect that needs to be resolved through BAPMI.
Taking a closer look at the root of the problem, there are seemingly 2 types of obstacles that hinder the effectiveness of BAPMI, which are: (i) an internal institutional factor, and (ii) an external capital market participants. Internally, BAPMI is an institution with a limited scope, authority and services to be offered. On the internal factor, pursuant to the Scopes of Services published by BAPMI,[2] capital market disputes that are not a civil in nature, such as disputes which are within the scope of penal and administrative law, cannot be resolved by BAPMI. In fact, capital market disputes that involves, or falls within the scope of penal law such as market manipulation and insider trading, as well as administration related disputes, such as, freezing, suspension, and revocation of business licenses is among the most common occurrence in the capital market.
On the other hand, external factor also play a significant role in the lack of cases handled by BAPMI. Parties concerned over a capital market disputes often overlooks BAPMI due to the poor understanding and unfamiliarity over the institution. Aside than the probable cause of lack of socialization, parties in dispute also often trust the more well-known and established Indonesian National Arbitration Board (BANI)
The reluctance of public to utilize BAPMI might also be triggered by the common perception that resorting into arbitration as an alternative dispute settlement would consume a large amount of money, which in most cases, deemed costly. This factor is somehow close to reality, as BAPMI established in its Arbitration Costs and Fees,[3] there are 4 types of expenses a party must be willing to pay in order to resolute: (i) registration cost, (ii) examination cost, (iii) service fee, and (iv) execution cost. Further, pursuant to BAPMI resolution of Kep-02/BAPMI/11.2002, and amended by resolution of r Kep-01/BAPMI/07.2005 concerning Regulation of Dispute Resolution Fees and Costs, the amount of expenses for disputes with values smaller than five hundred million rupiah would be 8% the value of the claim, while for values larger than five hundred billion rupiah would be 0.24% of the claim value.
BAPMI is aware of this unfavorable situation and has well established numerous efforts to boost and promote its existence as one of the leading institution in alternative dispute resolution. In one of their latest effort, is by enacting numerous promotions, including to promote their leading quality in resolving disputes, as well as planning to establish a low-cost service aimed for parties and investors with marginalized income. Aside than enacting efforts above, BAPMI also aims to boost public’s awareness and knowledge regarding arbitration and is working hand in hand with other leading arbitration institution such as BANI and BASYARNAS.
Externally, BAPMI also works with BAPEPAM and other arbitration institution in order to limit, if not diminish, a local court judge’s role in intervening an arbitration proceeding. This was done to strengthen the image of arbitration into a more secure and independent way of resolving disputes, as opposed to public view that arbitration award is not binding and is still subject to objection and further ruling by the local or district court. With these efforts that was conducted having in mind the lack of utilization of BAPMI, the public, especially those who are involved in capital market disputes is in need to be reintroduced to the benefits of resorting their disputes to resolving disputes through arbitration, and ultimately through BAPMI.