Covid-19 (Corona Virus Disease) Article - Legal Remedy On The Impact Of Covid-19 In Indonesia
Indonesia and the rest of the world are in a state that forces us to change the rhythm and lifestyle, work patterns, delaying a lot of work and activities, even many industries whose businesses are forced to lay off their employees, cut employee salaries, reduce office operating costs, and make other actions to save the business that was built from the beginning. The government is also doing the same thing, cutting the budget which should’ve been initiated for infrastructure development, developing the quality of Human Resources, largely ruled out in order to save the lives of every Indonesian citizen from the Covid-19 pandemic.
The dilemma created by Covid-19 also has a serious impact on business actors who are bound by contracts with various parties, especially if the business actor's business be affected by Covid-19. For example, the business actor is bound to procure various amusement park games imported from China, in order for establishing a new amusement park located in Jakarta. The business actor certainly must experience some obstacles because the government clearly banned the import activities of the amusement park games (source: Regulation of the Minister of Trade of the Republic of Indonesia Number 10 of 2020 concerning Temporary Prohibition of Live Animal Imports from the People's Republic of China). If analysed generally, especially if the Force Majeure clause in the procurement contract also summarizes that the changes in government policy are included in the case of Force Majeure, certainly the Parties will follow the remedy efforts as the method specified in the contract, or at least to deliberate to reach consensus first to determine the solution.
The question arises, if the business actor is involved in a labour outsourcing contract with the relevant outsourcing company, where in this case, the outsourcing contract does not mention a pandemic as a force majeure factor. The business actor owns restaurant chains throughout Jakarta, and for cleaning, the workers are provided by an outsourcing service (cleaning service). In the midst of the Covid-19 pandemic, the government issues the appeal for social distancing and work from home for so many business sectors. The "Stay At Home" campaign is also voiced by many dignitaries, public figures, and spread so lively through social media, for the sake of stopping the spread of Covid-19. Automatically, the restaurant business actors be affected, the restaurant is empty of customers, even very rarely want to order delivery. A Turnover per day from Rp100,000,000.00 is becoming only Rp500,000.00 per day. Paying the restaurant operational costs alone is not enough, even less for paying the outsourcing service provider in the restaurant.
Should the business actors suspend or at least ease their obligations under the outsourcing contract on the basis of the outbreak of the Covid-19 pandemic as an element of force majeure? Do we must clearly write down a pandemic or epidemic as a force majeure factor?
First, we have to understand the term force majeure and the factors that formed it and its fulfilment. According to contract legal practitioners; Ricardo Simanjuntak, force majeure is "an obstacle in which one party does not have the ability to avoid the obstacle despite his best efforts already done. Other element that support the occurrence of force majeure, whereas the party can never predict when an obstacle occurs, and he does not have a contributory factor for the occurrence of the obstacle ". In addition, force majeure in general can also be interpreted as a forceful condition which causes one of the parties to be hampered or unable to carry out his performances due to an unexpected situation or event at the time the contract period is still valid, and that the situation or event cannot be held accountable to that party, because that party does not have bad faith or does not intend to intentionally breach the contract in question.
According to Indonesian law, force majeure is not literally regulated in the Civil Code, but we can interpret force majeure using the term of overmacht set out in Article 1244 jo. Article 1245 of the Civil Code, which the provisions are as follows:
“An obligor shall be required to compensate for any costs, profits and losses which are sustained if said obligor cannot prove that the non-performance or late performance of a legal obligation is caused by something unforeseen for which he/she cannot be held responsible, even in the absence of bad faith on his/her part; and”
“No compensation for costs, losses and interest shall be payable if an obligor, due to an act of God or an accident, is prevented from delivering or performing such an obligation, or commits an act which is prohibited for the obligor”
If we look at the two provisions in the two articles indicate that force majeure circumstances are unexpected, unreliable, things that happen by accident, when debtors are prevented from giving or doing something that is required, an act that is prohibited for him (the author interprets this as a coercive situation arising from government policies enacted during the contract period, which makes a performance in the contract is categorized as an act that is prohibited by law).
However, a legal vacuum also occurs, where the Civil Code does not describe the type of force majeure in question. In practice, force majeure is translated as types of force majeure that we normally apply in contracts, namely force majeure events or the events that occur outside of human power and are unforeseeable, such as natural disasters, new government policies, riots, embargoes, wars, and others.
Force Majeure in the Covid Pandemic Outbreak 19
Back to the question at the beginning of this article; what if a contract does not include a force majeure clause? Or what if the parties making the contract do not include a pandemic or epidemic as a determining factor in force majeure?
According to Article 1338 of the Indonesian Criminal Code, matters agreed by the relevant parties apply as law for the parties. If the parties do not include a force majeure clause in a contract, the parties may refer to the provisions in Article 1244 jo. Article 1245 of the Civil Code as stated in the paragraph above, as lex generalis which is supplemental to the contract of the parties. Article 1245 of the Civil Code is regulated in part of Book III of the Civil Code which completes the agreement. In other words, unless expressly excluded by the parties, the provisions of Book III, specifically related to force majeure, will apply to all contracts made under Indonesian law. Certainly, the contracting parties must also pay attention to the provisions relating to the regulation of force majeure clauses regulated by the relevant business sector. For example, for contracts regarding construction services, one must pay attention to Government Regulation No. 29 of 2000 concerning the Implementation of Construction Services, which states that the force majeure clause in a construction service contract includes an agreement on special risks, types of coercive conditions, and the rights and obligations of service users and service providers in a forced condition.
Force majeure itself can be categorized into 2 (two) types, namely general and special force majeure, with the forming factor whether the force majeure occurs because of an act of God or an act of human (special). Force majeure that occurs due to natural disasters is categorized as general force majeure, whereas in the case of the Covid-19 pandemic, it is categorized as a special force majeure, because that determines Covid-19 as a pandemic, and that the rules that deal with the Covid-19 pandemic made by humans. In other words, it is the government who determines that Covid-19 is something that is categorized as force majeure, so Covid-19 is classified as a special force majeure
In the case of determining force majeure, the proofing factor becomes an absolute thing. According to Mariam Darus Badrulzaman, the reason for force majeure must be met with three requirements; First, he must prove that he is innocent. Second, he cannot fulfill his obligations differently. Third, he does not bear the risk, either according to the provisions of the law or the agreement or in good faith must bear the risk. The current Covid-19 epidemic in Indonesia is difficult to be interpreted as a force majeure event, because in reality, not all businesses are encouraged to do work from home by the Government, and not all other businesses stop operating due to the virus. Analysis of whether Covid-19 should be used as the basis of force majeure and the suspension or reduction of obligations of a party in a contract that does not include an epidemic in the force majeure clause is to analyze regulations issued by the Government, both central and regional, as well as related appeals and the real situation in the area associated with the contract related object. So far, the Government, both Central and Regional, have issued regulations that prove how crucial the impact of Covid-19 is for the country's economy, among others, as follows (click to go to the links):
- Government Regulation in Lieu of Law of the Republic of Indonesia No. 1 of 2020 concerning State Financial Policies and Financial System Stability for Handling Corona Virus Disease 2019 (COVID-19) and / or In Order to Face Threats that Harm National Economy and / or Financial System Stability
- Government Regulation of the Republic of Indonesia No. 21 of 2020 concerning Large-scale Social Restrictions in Order to Accelerate Handling of Corona Virus Disease 2019 (COVID-19)
- Regulation of the Minister of Finance of the Republic of Indonesia No. 23 / PMK.03 / 2020 concerning Tax Incentives for Taxpayers Affected by Corona Virus Outbreak
- Regulation of the Minister of Health of the Republic of Indonesia No. 9 of 2020 concerning Large-Scale Social Limitation Guidelines in the framework of Accelerating the Management of Corona Virus Disese 2019 (COVID-19)
- Presidential Decree No. 11 of 2020 concerning Establishment of Corona Virus Disease 2019 (COVID-19) Public Health Emergency
- Decree of the Minister of Health of the Republic of Indonesia No. HK.01.07 / MENKES / 239/2020 concerning the Establishment of Large-Scale Social Restrictions in DKI Jakarta Province in the Context of Accelerating the Handling of Corona Virus Disease 2019 (COVID-19)
- Decree of the Director General of Tax Number Kep-156 / PJ / 2020 concerning Taxation Policies Regarding the Spread of Corona Virus 2019
- DKI Jakarta Special Region Governor Decree No. 361 of 2020 concerning the Extension of the Emergency Status of the COVID-19 Disaster in the Special Capital Province of Jakarta
- Circular of the Minister of Administrative Reform and Bureaucratic Reform No. 36 of 2020 concerning Restrictions on Activities Traveling Outside the Region and / or Mudik Activities for State Civil Apparatuses in Preventing the Spread of COVID-19
- Circular of the Minister of Transportation No. SE.5 BPTJ of 2020 concerning Restrictions on the Use of Transportation Modes to Reduce Movement of People From and To Jakarta, Bogor, Depok, Tangerang and Bekasi Areas During the Corona Virus Disease 2019 Pandemic Period (COVID-19)
- Circular of the Minister of Religion No. SE.6 YEAR 2020 concerning Guidance on Ramadhan and Eid Al-Fitr 1 Shawwal 1441 H Amid the Pandemic Outbreak of COVID-19
All of the above regulations, as well as other regulations and institutional appeals indicate an emergency situation caused by the Covid-19 outbreak in Indonesia. Besides, regulations issued by the Government, both central and regional, aim to minimize the mobilization of citizens, minimize activities outside the home, and minimize activities that gather large crowds. Of course, referring to the 3 (three) objectives of the ratification of the regulation, a lot of business activities are directly or indirectly affected by these regulations. By this far, it can be concluded, the situation of Covid-19's emergency response situation in Indonesia can be used as a force majeure factor in the implementation of a contract. In my opinion, the party affected by Covid-19 can also submit regulations issued by the Government, both Central and Regional, as proof of the force majeure arising from the Covid-19 pandemic in Indonesia. No less important, whereas the party affected by the Covid-19 pandemic that cannot fulfill its performances can submit facts about Covid-19 in Indonesia to its counterparts, such as the fact that the number of people who have been infected with the Covid-19 virus, the Rupiah exchange rate has decreased , and other facts that illustrate the effect of Covid-19 on the Indonesian economy. Then of course we cannot rule out the function of renegotiation or restructuring the rights and obligations of the parties in a contract. In the midst of the pandemic and difficulties experienced by many business actors in Indonesia, of course, dispute resolution based on mutual agreement is the most effective and real method of dispute resolution during times like this.
Some opinions say that a national disaster determination is needed so that the Covid-19 incident can be called a force majeure, is this true?
Quoted from HukumOnline, according to contract law practitioner Ricardo Simanjuntak, "to be categorized as force majeure, the obstacle does not have to be permanent. Events that occur temporarily can still be categorized as force majeure. The important thing is these elements are met. If all the elements become one entity and humanely they really do not have a contributory effect in the event, then that's where force majeure applies. According to Ricardo Simanjuntak, all of these elements are fulfilled in the outbreak of the Covid-19 pandemic in Indonesia. The reason is that First, people never know when this will happen (unpredictable). Second, people do not have a contributory effect on the spread of this epidemic. Third, the corona outbreak is indeed an obstacle that people cannot rule out.
Of course the next question is since when can those obstacles be categorized as force majeure? According to Ricardo Simanjuntak, "force majeure can apply when regulators regulate it. The regulator may be the President, or the governor at the provincial level. For example, if the Governor of DKI Jakarta states that Jakarta is locked down. " If related to the current situation, that as of March 31, 2020, the Government has established a Large-Scale Social Restrictions (PSBB) which at least covers the consolation of schools and workplaces, restrictions on religious activities, and / or restrictions on activities in public places or facilities. Although the terminology used is "social restrictions" not "lockdowns", this regulation remains a benchmark for determining the force majeure of Covid-19 on a contract. Thus, as of March 31, 2020, Covid-19 can be categorized as a force majeure that affects the contract between the parties concerned, so that the remedy regulated in the contract at the time of the force majeure can take effect.
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