News

October 9 2025

Regulations For Handling Conflicts Of Interest For Mediators Who Also Act As Advocates

According to Article 1 paragraph 1 of Perma 1/2016, mediation is a method of dispute resolution through a negotiation process to reach an agreement between the parties with the assistance of a mediator. In short, the mediator’s job in conflict resolution is to reach an agreement between the parties during mediation.

According to Article 1 paragraph 2 of Perma 1/2016, a mediator is a judge or other party with a mediator certificate as a neutral party who assists the parties in the negotiation process to find various ways to resolve disputes without deciding or imposing a settlement.

There is an important difference between the roles of a mediator and an advocate. The mediator helps the parties reach an amicable agreement and act neutral. Furthermore, the mediator has roles and responsibilities towards the parties he/she assists and towards his/her profession, adhering to principles such as neutrality, confidentiality (confidentiality of the process), independence, and avoiding conflicts of interest. Meanwhile, an advocate is a legal representative of one party who tries to fight for the interests of his client.

Article 1 paragraph 1 of the Advocate Law

An advocate is a person whose profession is to provide legal services, both inside and outside the court who meets the requirements under the provisions of this Law.

Article 1 letter a of the Indonesian Advocates Code of Ethics (“KEAI”)

An advocate is a person who practices providing legal services, both inside and outside the Court who meets the requirements based on the applicable Law, either as an Advocate, Lawyer, Legal Counsel, Practicing Lawyer, or Legal Consultant.

The Chief Justice of the Supreme Court established a code of conduct for mediators on June 17, 2016, through Decree of the Chief Justice of the Supreme Court No. 108/KMA/SK/VI/2016, which is expressly stated in the Appendix to Article 6 paragraph (3) as follows:

A mediator who is an advocate and a partner in the same law firm is prohibited from being a legal advisor to one of the parties in the dispute being handled both during and after the mediation process.

If the mediation process fails, the mediator cannot turn into an advocate representing the interests of either party in order to maintain the integrity of the profession and adhere to the principles of neutrality and confidentiality. In addition, because it is against their conscience, advocates can also refuse to provide legal advice and assistance.

Mediators may be subject to sanctions in the form of an oral reprimand, written reprimand, or removal of their name from the list of mediators if they violate these provisions.

Legal Basis:

Law Number 18 the Year 2003 on Advocates;
Supreme Court Regulation Number 1 of 2016 concerning Mediation Procedures in Court;
Decision of the Chief Justice of the Supreme Court Number 108/KMA/SK/VI/2016 of 2016 on Mediation Governance in Courts;
Indonesian Advocate Code of Ethics.

Reference:

Hukumonline.com

October 9 2025

Is It Possible for Foreign Citizens to Obtain Bank Loans in Indonesia?

News

Foreigners (namely WNA in Indonesia) are generally prohibited from becoming debtors at banks in Indonesia under Bank Indonesia Regulation No. 24/7/2022 (PBI 24/7/2022), which restricts banks from providing credit or financing in rupiah or foreign currencies to non-residents. A non-resident is defined as an individual or entity not domiciled in Indonesia or residing in the country for less than one year, including members of foreign diplomatic missions.

However, there are exceptions. Banks may extend credit to non-residents engaged in specific economic activities within Indonesia, such as local currency settlement transactions, intraday overdrafts for foreign exchange transactions, or financing related to priority sectors or inclusive economic activities. These exceptions are designed to support Indonesia’s economic recovery and encourage banks to finance certain sectors of the economy.

With regard to Indonesian citizens (WNI) married to foreigners (WNA), the situation is different. According to the Marriage Law, assets acquired during marriage are considered joint property. Suppose the marriage is registered in Indonesia and there is no prenuptial agreement in place. In that case, any credit obtained by the Indonesian spouse is regarded as joint property, thereby giving the foreign spouse legal rights over the credit.

In conclusion, although foreigners are generally restricted from becoming debtors at banks in Indonesia, certain exceptions apply to those involved in specific economic activities. Additionally, Indonesian citizens married to foreigners may have their foreign spouses involved in credit agreements if the marriage is registered in Indonesia and no prenuptial agreement exists.

(Source: Hukumonline)

October 9 2025

Duties And Authorities Of The Board Of Directors Of A Limited Liability Company

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Following the provisions of the articles of association, the board of directors is the organ authorized and fully responsible for the management of the company in accordance with its aims and objectives. The board of directors also represents the company in and out of court.

A company’s board of directors consists of one or more persons. However, a company that issues debt acknowledgment letters to the public or a public company must have at least two (two) members if its business activities include collecting and managing public funds.

If the Board of Directors consists of more than two members, a resolution of the General Meeting of Shareholders (GMS) determines how the division of management duties and authority is carried out among the Board of Directors members. If the GMS does not stipulate this, a resolution of the board of directors is used to determine the division of such duties and authority.

The Board of Directors has two kinds of obligations, namely obligations related to the company, and obligations related to the GMS. In the PT Law, the duties of the board of directors are regulated including:

Carrying out the management of the company for the benefit of the company and following the aims and objectives of the company.
Responsible for the management of the company;
Submitting an annual report to the GMS after being reviewed by the Board of Commissioners no later than 6 (six) months after the company’s financial year ends.

The management of the company entrusted to the board of directors can be divided into two: The act of beheren is an act of management in the narrow sense, such as day-to-day management, while the act of beschikking or van eigendom is an act of ownership in the broad sense, including special and privileged actions that are no longer owned by the board of directors.

Concerning their duties and obligations, the board of directors has the following authorities:

Represent and on behalf of the company in and out of court;
Giving written authorization to one or more employees or other persons for and on behalf of the company in carrying out certain legal actions as written in the power of attorney;
Propose to the District Court that the company be declared bankrupt after being approved by the GMS;
Defend themselves in the GMS forum if the directors are temporarily dismissed by the GMS or commissioners.

In the interests of the company, the board of directors acts as an independent and risk-aware organ. No pressure factors influence the decisions and actions of directors; this is known as independence. In carrying out their duties and authorities, directors must have good faith and prudence. If not, directors may be held fully liable if the company loses money.

Bearing in mind the statement in the company’s Articles of Association (AOA) that “2 members of the board of directors are jointly entitled and authorized to act for and on behalf of the board of directors and represent the Company,” it can be inferred that both members of the board of directors must participate in every action of the board of directors, both in and out of court.

Article 97 paragraph (4) of the PT Law states that if the members of the board of directors are more than one person, each member shall be jointly and severally liable for the management of the PT.

Article 98(2) of the PT Law states that if the members of the board of directors are more than one person, each member of the board of directors has the authority to represent the company unless otherwise specified in the articles of association.

Legal Basis:

Law Number 40 of 2007 concerning Limited Liability Companies;
Government Regulation instead of Law Number 2 of 2022 concerning Job Creation;
Law Number 6 of 2023 on the Stipulation of Government Regulation instead of Law Number 2 of 2022 on Job Creation into Law.

Reference:

Hukumonline.com

October 9 2025

Unilateral Termination Of The Contract

News

The principle of pacta sunt servanda, which means that an agreement applies as a law to its makers, is known in civil contract law. According to Article 1338 of the Civil Code, both parties bound in an agreement are subject to the entire contents of the provisions contained in the agreement.

In an agreement, the various rights and obligations of the parties are regulated. One of the parties can be considered in default if they do not carry out the contents of the agreement or carry it out but not as it should be.

In Article 1243 of the Civil Code on Default, default is a situation where the debtor does not fulfill the obligations that have been stipulated; this includes obligations made by law or agreement.

Article 1243 of the Civil Code:

Reimbursement of costs, losses, and interest for non-fulfillment of an obligation becomes obligatory if the debtor. However, he has been declared negligent, still fails to fulfill the responsibility, or if something that must be given or done can only be offered or done within a time that exceeds the time specified.

Based on the contents of Article 1243 of the Civil Code above, there are at least 3 elements of default, namely:

There is an agreement;
There is a party who breaks the promise or violates the agreement; and
Has been declared negligent, but still does not carry out the contents of the agreement.

According to Article 1239 of the Civil Code, if one party to an agreement does not fulfill its obligations, the party must pay costs, compensation, and interest.

Everyone can enter into agreements, both those regulated and those not regulated by law, according to Book III of the Civil Code, which adheres to an open system. Article 1338 of the Civil Code, which provides freedom for parties to determine the content, implementation, and terms of the agreement, as well as to:

Making and not making agreements;
Agreeing to an agreement with anyone; and
Determining the form of the agreement, namely written or oral.

If PT A has sufficient evidence to believe that PT B is unable to perform the work stipulated in the Agreement, PT A may terminate the agreement unilaterally by overriding Article 1266 of the Civil Code. Thus, the parties may arrange a clause containing unilateral termination of the agreement by PT A if there is sufficient evidence, believing that PT B is considered incapable of carrying out the work. The termination of this agreement does not need to be done by giving a warning letter, but simply by a written notice to PT B, by overriding Article 1266 of the Civil Code which regulates:

A condition of nullity is always considered to be included in a reciprocal agreement, in case one of the parties does not fulfill its obligations. In such a case, the agreement is not null and void, but rescission must be requested from the Court.

This request must also be made, even if the nullity condition regarding the non-fulfillment of the obligation is stated in the agreement. If the nullity condition is not stated in the agreement, the Judge, considering the circumstances, at the request of the defendant, is free to grant a time to fulfill the obligation, but the period must not exceed one month.

If PT B does not accept the unilateral termination of the agreement because it has a different interpretation of being considered incapable of carrying out the work, PT B can file a lawsuit to the court for unlawful acts (“PMH”).

Supreme Court Jurisprudence No. 4/Yur/Pdt/2018, which states:

Unilateral termination of the agreement is included in the tort.

Legal Basis:

Civil Code.

Decision:

Supreme Court Jurisprudence No. 4/Yur/Pdt/2018.

Reference:

Hukumonline.com