Indonesian Legal Review: Constitutional Law


By Nico Mooduto

As of December 31, 2015, the Constitutional Court (the “Court”) had rendered 157 decisions. Of those cases, only 25 applications for judicial review were granted by the Court. This article focuses only on those applications that have been granted and then only on those judicial review decisions that reviewed the constitutionality of laws and which we consider significant from a commercial law perspective or which are otherwise key decisions. As might be known, the Court can also examine disputes between state institutions, disputes concerning regional elections and disputes regarding general elections. Those types of disputes are not addressed here.

Constitutional Court Decisions

A.         Environmental Protection: In early 2015, in Decision No. 18/PUU-XII/2014, the Court entertained a judicial review petition of Law No. 32 of 2009 regarding Environmental Protection and Management (October 3, 2009) (the “Environmental Law”). The petition was filed by Bachtiar Abdul Fatah, an employee of PT Chevron Pacific Indonesia. The petition concerned the constitutionality of the Environmental Law’s provisions regarding the management of hazardous, or B3, waste.

Article 59, paragraph (4) of the Environmental Law requires that a permit be obtained for the management of B3 waste. Article 59, paragraph (1), in conjunction with Article 103 of the Environmental Law, obliges persons and companies to perform management of B3 waste and if they fail to do so, they risk the imposition of sanctions. The petitioner argued that these provisions contradict one another and impaired the right of the petitioner, especially since the company for which he worked had already obtained a B3 waste management license under the previous environmental law and an extension of such license was still in process with the relevant authorities at the time it expired. The petitioner argued that the contradiction in these provisions created a situation in which a person or company may be held in violation of the Environmental Law when that person’s or company’s B3 waste management license is in the process of renewal.

The Court granted the petitioner’s application. The Court held that Article 59, paragraph (4) of the Environmental Law is unconstitutional insofar as the provision is not interpreted to include those who have already obtained a B3 waste management license and whose license is in the process of extension. The Court also struck down the word “may” (dapat) from Article 95, paragraph (1) of the Environmental Law and stipulated a modified interpretation of such article.

B.         Water Resources: In Decision No. 85/PUU-XI/2013, the Court reviewed a petition that contended that Law No. 7 of 2004 regarding Water Resources, dated March 18, 2004 (“Water Law”), was unconstitutional. The petition was filed by the Muhammadiyah Central Leaders (Pimpinan Pusat Muhammadiyah) and several other groups and individuals. The petitioner argued that the Water Law paved the way for the privatization of water management and the complete relinquishment of control over the management of water resources by the State, which the petitioner argued was contrary to Article 33 of the 1945 Constitution. The Court held that Article 33 of the 1945 Constitution mandates that access to water is a human right. The Court further concluded that the 1945 Constitution guarantees the State’s control over water resources management. Since the Water Law and several implementing regulations enacted by the Government of Indonesia (the “GOI”) run counter to the principles of water resources management enshrined in the 1945 Constitution, the Court annulled the Water Law and reinstated Law No. 11 of 1974 regarding Irrigation, dated December 26, 1974.

C.         Criminal Investigations, Due Process and Pre-Trials: In Decision No. 21/PUU-XII/2014, the Court dealt with a fundamental criminal law issue. A petition was filed with regard to the scope of Law No. 8 of 1981 regarding the Criminal Procedure Law (December 31, 1981) (the “CPL”) by Bachtiar Abdul Fatah, the PT Chevron Pacific Indonesia employee. The petition’s core issue concerned due process in criminal investigations. One particular issue that was raised concerned the scope of Article 77 of the CPL, which states that the District Court is authorized to examine and decide on matters in relation to: (a) the lawfulness of arrest, detention, termination of a criminal investigation, or cessation of prosecution; and (b) damages and/or rehabilitation for a person whose criminal case has been terminated at the stage of criminal investigation or prosecution.

As can be seen, Article 77 on its face only provides limited grounds for challenging certain prosecutorial actions. The petitioner argued that the scope of such article does not adequately protect the rights of a suspect from violation of a person’s human rights. In reaching a decision, the Court examined the interpretation and application of the CPL in light of Article 28I, paragraph (4) of the 1945 Constitution. Ultimately, the key decision of the Court opened the door to an examination of the proper status of a “suspect,” as well as the lawfulness of a search or seizure, which may be challenged pursuant to Article 77 of the CPL in connection with a motion for pre-trial. The Court also stipulated that the provisions of Article 1, number 14, Article 17, and Article 21, paragraph (1) of the CPL, specifically with regard to the “minimum evidentiary threshold,” meant two valid items of evidence as referred to in Article 184 of the CPL.

The impact of the Court’s decision paved the way for a pre-trial challenge on the ground of a suspect’s status, i.e., such that the naming of a person as a suspect can be lawfully determined by a pre-trial. This interpretation broadened the scope of the CPL beyond the expressly limited grounds of the CPL.

D.         Criminal Defamation: In another decision regarding criminal law, the Court reviewed a petition for judicial review of the Criminal Code filed by heads of non-governmental organizations. The background of the case revolved around a criminal defamation report concerning alleged defamation of regional government officials of Tegal, Central Java, by the petitioners. The report was lodged by a person who was not a subject of the alleged defamation and the relevant provision of the Criminal Code appeared to allow such a report. The petitioners argued that this went against the concept that a criminal defamation report is a report based on a crime and that it must be reported by the alleged subject of the defamation himself. The petitioners raised issues of equal treatment before the law and the rule of law as grounds for striking down the relevant provision under the Criminal Code and referred to the Court’s past decisions.

The Court in Decision No. 31/PUU-XIII/2015 accepted the petition and struck down the relevant phrase under Article 319 of the Criminal Code, which allowed a defamation report to be reported by other than the subject of the alleged defamation.

E.         Taxation: In Decision No. 46/PUU-XII/2014, the Court granted a petition filed by PT Kame Komunikasi Indonesia for a judicial review of Law No. 28 of 2009 regarding Regional Taxation and Regional Retribution (September 15, 2009) (“Law 28/2009″). The issue at hand concerned the way the calculation of the retribution on telecommunication towers imposed by the GOI was applied, which was alleged to have caused unconstitutional legal uncertainty. Specifically, the essence of Law 28/2009 was that retribution is to be calculated on the costs incurred in supervising telecommunication towers. However, the Elucidation of Article 124 of Law 28/2009, which imposes a flat tariff of 2 percent, permits the GOI to collect a retribution that would exceed its actual supervision costs provided that the retribution of 2 percent is not exceeded, which thus violated Law 28/2009.

The Court annulled the Elucidation to Article 124 of Law No. 28 of 2009 regarding Regional Taxation and Regional Retribution because, in the Court’s opinion, it was inconsistent with Article 28D, paragraph (1) of the 1945 Constitution, which provides a constitutional guarantee of legal certainty.

F.         Banking: In Decision No. 109/PUU-XII/2014 with regard to the judicial review of Law No. 10 of 1998 regarding the Amendment of Law No. 7 of 1992 regarding Banking (November 10, 1998) (the “Banking Law”), the Court examined the constitutionality of Article 49 of the Banking Law. Article 49, paragraph (2)b stated in pertinent part:b. not conducting the steps necessary to ensure compliance by banks of provisions of this law and provisions of other laws for banks.

The Court accepted the petition and struck down the phrase “for banks” (“bagi bank”). It reasoned that the inclusion of such a phrase in the provision may lead to the interpretation that banks were only bound by regulations governing banks and were not bound by other laws and regulations, and court orders, on other matters. Hence, the phrase was declared unconstitutional.

G.         Financial Services Authority: In Decision No. 25/PUU-XII/2014, the Court examined a petition for the judicial review of Law No. 21 of 2011 regarding the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) (November 22, 2011) (the “OJK Law”). The petition was filed by three Indonesian citizens concerning the independence of the OJK. The petitioners argued that Article 23D of the 1945 Constitution required that banking matters be regulated by the central bank (Bank Indonesia) and not the OJK. The petitioners cited Article 1 (1) of the OJK Law, which stipulated that the: “Financial Services Authority, hereinafter referred to as OJK, is an institution that is independent and free of intervention from other parties. …”

The Court held that the independence of the OJK was derived from and therefore intertwined with the independence of the central bank and the Court annulled the phrase “and free of intervention from other parties” (“dan bebas dari campur tangan pihak lain”) from Article 1 (1) of the OJK Law. The Court reasoned that such phrase was already covered under the term “independent” that preceded the phrase.

H.         Electricity: In Decision No. 58/PUU-XII/2014, the Court rendered its decision on the judicial review of Law No. 30 of 2009 regarding Electricity (September 23, 2009) (the “Electricity Law”). The petitioner was a private employee. The relevant provisions that were submitted for review were Article 44, paragraph (4) of the Electricity Law, which imposes the obligation to obtain a certificate of worthiness for every electric installation, and also Article 54, paragraph (1) of the Electricity Law, which imposes a criminal sanction of five years and a fine of not more than Rp 500 million for failure to comply with that requirement. The interpretation of the foregoing articles would appear to allow the imposition of a criminal sanction for an administrative violation (the failure to obtain a certificate of worthiness). In short, the Court held the imposition of a criminal sanction for a failure to comply with Article 44, paragraph (4) was unconstitutional. The impact of such decision is that one can no longer be imprisoned for failure to obtain a certificate of worthiness for an electric installation.

I.          Criminal Investigation of a Member of Parliament and Presidential Approval: On two occasions, the Court rendered decisions on the judicial review of Law No. 17 of 2014 regarding the People’s Consultative Assembly, the House of Representatives, Regional Representatives and the People’s Legislative Council (August 5, 2014) (“Law 17/2014″). The respective petitions were filed by a private group and citizenry as well as parliamentary members. The Court’s decision in 2015 regarding Law 17/2014 is that a criminal investigation of a parliament member must obtain the President’s written approval. Other parts of the decision concerned the procedure for submission of draft laws and the draft budget of the Regional Representatives.

J.          Advocates: In Decision No. 112/PUU-XII/2014 and Decision No. 36/PUU-XIII/2015, the Court examined by judicial review Law No. 18 of 2003 regarding Advocates (April 5, 2003) (the “Advocates Law”). The Court’s decision concerned the scope of a provision in the Advocates Law, namely the interpretation of Article 4, paragraph (1), as to whether there is discrimination in the oath taking of advocates from a particular advocates organization. The Court ruled that the High Court must accept advocates who are sworn in irrespective of the membership of the organization of the person, specifically whether it is the Peradi organization or the KAI organization. The Court reiterated its position on the issue from its past decisions.

K.         Courts: The Court entertained petitions that affect other Indonesian courts. Specifically, in Decision No. 68/PUU-XIII/2015, the Court made a decision with respect to the written recommendation by mediators and conciliators in industrial relations disputes pursuant to Law No. 2 of 2004 regarding Settlement of Industrial Relations Disputes (January 14, 2004) (the “Industrial Dispute Law”). Under the Industrial Dispute Law, a mediator and a conciliator are only authorized to issue a “written recommendation.” However, the Industrial Dispute Law imposes a requirement that a plaintiff submit “minutes of settlement” from the mediator or conciliator before his case may be heard by the court.

Since a plain reading of the Industrial Dispute Law prevents a mediator or conciliator from issuing “minutes of settlement,” which is a requirement for a case to be heard, no plaintiff would ever have his case be heard by the Industrial Dispute Court. This was considered a violation of the petitioner’s Constitutional Right enshrined under Article 28D, paragraph (1) of the 1945 Constitution. Following this, the Court interpreted the relevant provisions of the Industrial Dispute Law to synchronize a written recommendation with minutes of settlement.

In Decision No. 43/PUU-XIII/2015, the Court in effect held that the selection of judges for the district courts, religious courts and state administrative courts must be done by the Supreme Court alone, and not by or with the approval of the Judicial Commission.

L.         Manpower: In Decision No. 7/PUU-XII/2014, the Court entertained a petition for judicial review of Law No. 13 of 2003 regarding Manpower (March 25, 2003) (the “Manpower Law”). The petitioners argued the unconstitutionality of several provisions of the Manpower Law insofar as they negate the right of employees to apply for enforcement of the Employment Memoranda (Nota Pegawai) of Manpower officials. The petitioners argued that the Employment Memoranda issued by a Manpower official stipulates, and thereby converts by law, a particular employee’s fixed-term contract to be a permanent contract. The petitioners argued that the refusal to enforce such Employment Memoranda impairs the employee’s constitutional rights. The Court accepted the petition.

M.        Forests: Last, the Court examined the constitutionality of Law No. 18 of 2013 regarding Prevention and Eradication of Deforestation (August 6, 2013) and Law No. 41 of 1999 regarding Forestry (September 30, 1999) (collectively, the “Forestry Laws”) in Decision No. 95/PUU-XII/2014. The petitioners were several private individuals and non-governmental organizations. The gist of the petitions pivoted primarily on the uncertainty of the provisions of the Forestry Laws that could lead to the unfair criminalization of certain local communities and indigenous people who have lived and built settlements in forestry areas for years. The Court decided that so long as the forest was not used for commercial purposes and it was only used for the necessary survival of the local community and indigenous people living in the forest, certain criminal provisions under the Forestry Laws do not apply.

This article is from SSEK’s Indonesian Legal Review, which looks at recent legal and regulatory developments in almost 50 sectors, from Airports to Tourism. For more information, click Indonesian Legal Review.

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