Indonesia - Chapter 6 - Force Majeure and Hardship in the Asia-Pacific Region
Tony Budidjaja is a Senior Partner at Budidjaja International Lawyers.
Originally from Force Majeure and Hardship in the Asia-Pacific Region
I. Force majeure
A. Background and definition of force majeure in Indonesia
1. Does Indonesia recognize force majeure or any other legal concept similar to force majeure such as frustration, etc. (in the following: “force majeure”)? Are there any statutory provisions or is there any case law setting forth the definition of force majeure?
The concept of force majeure is recognized in Indonesia. Although there is no statutory definition of “force majeure”, there are several provisions under the Indonesian Civil Code (which is taken from the 1838 Dutch Civil Code (Burgelijk Wetboek) that refer to a force majeure event (overmacht in its origin language of the Civil Code or inter alia “keadaan memaksa” or “keadaan kahar” in Indonesian, i.e., Article 1244 and Article 1245 of the Civil Code). We provide below the unofficial English translation of the relevant provisions.
Article 1244 of Civil Code:
If there is any reason for such, the debtor must compensate for costs, damages and interests if he cannot prove, that the non-performance or the late performance of such obligation, is caused by an unforeseen event, for which he is not responsible and was not acting in bad faith. (emphasis added)
Article 1245 of Civil Code:
The debtor needs not compensate for costs, damages or interests, if an act of God (force majeure) or an accident prevented him from giving or doing an obligation, or because of such reasons he committed a prohibited act. (emphasis added)
In short, the above articles regulate force majeure as any legal excuse not to compensate damages arising from non-fulfilment or unpunctual fulfilment of the contractual obligations due to an occurrence of unforeseeable circumstances outside of the responsibility of one of the parties, without any element of bad faith. If the party who was prevented to perform because of a force majeure event (defaulting party) is able to prove that its default was due to the force majeure event, that defaulting party may be exempted from responsibilities arising from the non-performance of contractual obligations.