The liability which arises from the failure of a party to perform its contractual obligation can be unattributable if that failure is caused by a force majeure event. As the current situation of the Corona Virus Disease 2019 (“COVID-19”) in Indonesia and in international level is still rapidly spreading, the question regarding whether COVID-19 outbreak could be classified as a force majeure event needs to be carefully considered since the effect of COVID-19 affects many aspects including business operations. Before proceeding any further, J.Thomson & Partners would like to express high gratitude to all medical and other various personnel who served as a frontline in fighting the current COVID-19 disease. May we all given the strength to do our parts in the effort to suppress the COVID-19 outbreak and its impacts.

On March 11th, 2020, the World Health Organization had declared the current COVID-19 situation as a pandemic. The Indonesian government, on the other hand, had established a National Task Force in response to the following COVID-19 spread in Indonesia through the establishment of the Presidential Decree No. 7 of 2020, and further, consider the situation as a national disaster which classified a non-natural disaster by the establishment of the Presidential Decree No. 12 of 2020. However, these reasons do not immediately imply that parties bound by a contract could invoke the force majeure clause in excuse for its failure to perform certain contractual obligations.

The legal basis of the force majeure regulation in contracts under Indonesian law is stipulated in the Indonesian Civil Code (“ICC”) article 1244 and 1245 respectively. Article 1244 and 1245 of the ICC do not explicitly provide the situations or events which can be classified as a force majeure event, but rather provide that when a failure in performance of a party is caused by the occurrence of a force majeure event, such failure cannot be attributed to that party, and thus releasing them from their liability of the losses or damages. The party which invoked the force majeure clause as their defense must prove that their failure to perform the contractual obligation is because of an unforeseeable or unanticipated event, and that they, in good faith, had tried all the reasonable measures to perform their obligation to the counterparty.

Thus, as the ICC does not explicitly regulate the situations or events which are classified as a force majeure event, the answer to the question of whether the COVID-19 pandemic can be ‘seen’ as a force majeure event according to Indonesian law heavily depends to the force majeure clause stipulated in a contract on a case-by-case basis. This is due to the ‘freedom of contract’ principle as stated in Article 1320 and 1338 of the ICC, which gives the parties of a contract to ‘freely’ sets the situations agreed as force majeure event, how to invoke the force majeure clause, and its consequences.

This article is not intended to be a comprehensive legal review. The Reader must consult for legal advice from an advocate before applying the information presented above.