Legal Protection for Debtors When the Fiduciary Guarantee Object is Unilaterally Deprived by Creditors

From               : A.M Oktarina Counsellors at Law

Contributors : Ricki Rahmad Aulia Nasution, S.H., Pramudya Yudhatama, S.H., Raysha Alfira, S.H., Khaifa Muna Noer Uh’Dina, S.H., Putri Shaquila, S.H.

Reviewer        : Noverizky Tri Putra Pasaribu, S.H., L.L.M (Adv).

A. Background

Nowadays, there are many cases of misunderstanding between Creditors and Fiduciary Debtors, in that objects to the Fiduciary Guarantee Object are executed by Creditors unilaterally and arbitrarily without a determination from the Court. The execution of Fiduciary Guarantee cannot be done carelessly by Creditors because there must be a determination from the Court and also the existence of a Notary Deed and Fiduciary Guarantee Certificate against the object of guarantee that has been registered. So what are the legal remedies that may be taken by the Debtor and legal protection against the Debtor for the Fiduciary Guarantee Object executed by the Creditor unilaterally and arbitrarily?

B. Legal Basis

1. Criminal Code (“KUHP“)
2. Civil Code (“KUH Perdata“)
3. Herziene Inlandsch Reglement (“HIR“)
4. Rechtreglement voor de Buitengewesten (“RBg“)
5. Law Number 42 of 1999 concerning Fiduciary Guarantee (“Law 42/1999“)
6. Government Regulation Number 21 of 2015 concerning Procedures for Registration of Fiduciary Guarantees and Costs for Making Fiduciary Guarantee Deed (“PP 21/2015“)
7. Constitutional Court Decision Number 18/PUU-XVII/2019 (“Constitutional Court Decision 18/PUU-XVII/2019“)
8. Regulation of the Head of the National Police of the Republic of Indonesia Number 8 of 2011 concerning Securing the Execution of Fiduciary Guarantees. (“Perkapolri 8/2011“)

Before understanding further into the fiduciary mechanism, by definition fiduciary itself refers to Article 1 number 1 of Law 42/1999 that reads:

“Fiduciary is the transfer of ownership rights of an object on the basis of trust provided that the object to which ownership rights are transferred remains in the possession of the owner of the object.”

and Article 1 number 2 of Law 42/1999 that reads:

“Fiduciary Guarantee is a security right to movable goods, both tangible and intangible, and immovable goods, especially buildings that cannot be encumbered with dependent rights as referred to in Law Number 4 of 1996 concerning Dependent Rights that remain in the control of the Fiduciary, as collateral for the repayment of certain debts, which gives the Fiduciary a preferred position over other creditors.”

Judging from the two articles above, when the Creditor transfers property rights to the Debtor for Fiduciary Guarantee, the Fiduciary Guarantee Object is still in the hands of the Debtor for use. When the Debtor is deemed to have committed Default  in accordance with Article 1238 of the KUH Perdata for not carrying out its obligations in accordance with the principal agreement between the parties, the Creditor may execute the Fiduciary Guarantee Object. However, the execution cannot be carried out directly, and there are mechanisms that must be known, such as the following provisions.

Referring to Article 5 paragraph (1) of Law 42/1999 that reads:

“(1) The encumbrance of Objects with Fiduciary Guarantee is made by notarial deed in Indonesian and is a deed of Fiduciary Guarantee”

Article 4 PP 21/2015 that reads:

“The application for registration of Fiduciary Guarantee as referred to in Article 3 shall be submitted within a maximum period of 30 (thirty) days from the date of making the deed of Fiduciary Guarantee.”

Article 11 paragraph (1) of Law 42/1999 that reads:

“(1) Objects encumbered with Fiduciary Guarantees must be registered.”

It may be explained, the fiduciary must be stated in the Notarial Deed and registered. The mechanism, after obtaining the deed of Fiduciary Guarantee, the object is registered with the Fiduciary Registration Office by the Creditor by attaching a statement of registration of Fiduciary Guarantee, after that according to Article 14 paragraph (1) of Law 42/1999 explains:

“(1) The Fiduciary Registration Office issues and delivers to the Fiduciary a Certificate of Fiduciary Guarantee on the same date as the date of receipt of the application for registration.”

The Fiduciary Guarantee is born if the Object of Fiduciary Guarantee has been registered and a Certificate of Fiduciary Guarantee has been issued. If the Fiduciary Guarantee Object has not been registered, the Creditor has no right to execute the Fiduciary Guarantee Object. This of course provides legal protection and legal certainty to the Debtor.

In the event that the Creditor wishes to execute the Fiduciary Guarantee, it has several ways as stipulated in Article 29 paragraph of Law 42/1999 that reads:

“(1) If the debtor or Fiduciary defaults, the execution of the Thing which is the object of the Fiduciary Guarantee may be carried out by:

1. implementation of executory title as referred to in Article 15 paragraph (2) by the Fiduciary Beneficiary.
2. sale of Objects that are the object of Fiduciary Guarantee on the Fiduciary Beneficiary’s own power through public auction and take repayment of his receivables from the proceeds of the sale;
3. underhand sales made under the agreement of the Fiduciary Grantor and Beneficiary if in such a way the highest price in favor of the parties can be obtained.

(2) The implementation of the sale as referred to in paragraph (1) point c shall be carried out after the lapse of 1 (one) month since notified in writing by the Grantor and or Fiduciary to the interested parties and announced in at least 2 (two) newspapers spread in the relevant area.”

Then refer to Article 15 paragraphs (2) and (3) of Law 42/1999 that reads:

“(2) The Fiduciary Guarantee Certificate as referred to in sub-article (1) shall have the same executory power as a court decision that has obtained permanent legal force.

(3) If the debtor defaults, the Fiduciary Receiver shall have the right to sell the Thing which is the object of the Fiduciary Guarantee in his own discretion.”

Referring to the two articles above, that has been published through the Constitutional Court Decision 18/PUU-XVII/2019, it is explained that Article  15 paragraph (2) of Law 42/1999 on the phrases “executory power” and “the same as a court decision” is contrary to the Constitution of the Republic of Indonesia Year 1945 and has no binding legal force as long as it is not interpreted “For fiduciary guarantees where there is no agreement on default and the debtor objects to voluntarily surrender the object of the fiduciary guarantee, all legal mechanisms and procedures in the execution of the Fiduciary Guarantee Certificate must be carried out and apply the same as the execution of a court decision that has permanent legal force.”

Then in Article 15 paragraph (3) of Law 42/1999 it is explained that the phrase “default” is also contrary to the Constitution of the Republic of Indonesia Year 1945 and has no binding legal force as long as it is not interpreted “the existence of a default is not determined unilaterally by the Creditor but on the basis of an agreement between the creditor and the debtor or on the basis of legal remedies that determine the occurrence of a default”.

Therefore, the execution by the Creditor must be based on an agreement between the Creditor and the Debtor that there has been a Default and there have been certain legal remedies that have determined the occurrence of the Default. If the Debtor objects, the Creditor is not entitled to execute except for legal remedies that declare the Debtor in Default.

Law 42/1999 does not authorize Creditors to carry out forced self-execution of objects that are the Object of Fiduciary Guarantee from the Debtor without interference from competent authorities such as the Court and the Police. If the Creditor wishes to execute the Fiduciary Guarantee Object, the Creditor needs to submit an Execution Application to the Head of the District Court that will then be reviewed by the Junior Registrar. If it has been reviewed, the Head of the District Court will issue a warning of execution/Aanmaning in accordance with  Article 196 HIR or Article 208 RBg.

So what legal remedies may be taken by the Debtor if the Creditor executes the Fiduciary Guarantee Object? This may be dissected, and pursued through Criminal and Civil legal remedies. If you want to take it through Crime, the Debtor can report the Creditor for the act of Extortion & Threats in accordance with Article 368 paragraph (1) of the KUHP that reads:

“Whoever, with intent to benefit himself or another unlawfully, compels a person by force or threat of violence to give away any thing, wholly or partly belonging to that person or others, or to make a debt or write off a receivable, shall be punished with extortion with imprisonment for not more than nine years.”

There are elements in Article 368 of the KUHP as follows:

Fulfill objective elements:

• Enforce;
• Other people;
• By force or threat of violence;
• To give or deliver (wholly or partly belonging to another);
• In order to give debt;
• To write off receivables.

This may be done, considering that in practice there are often violence or threats to the Debtor, and to hand over something.

If the Debtor wants to pursue through Civil legal remedies, the Debtor may file an Unlawful Action lawsuit with the elements contained in Article 1365 of the KUH Perdata, namely:

• The existence of deeds;
• Such acts are against the law;
• The presence of losses;
• The presence of errors;
• There is a relationship between unlawful acts and losses.

In terms of the execution of Fiduciary Guarantee, it is also necessary to look at the Perkapolri 8/2011 that in Article 20 regulates as follows:

“In the event that the execution respondent feels that he has paid or paid off his obligations to another officer appointed by the execution applicant, resulting in a dispute during or is being carried out execution, the National Police personnel who carry out security shall take the following actions:

1. hold a persuasive approach between the applicant and the respondent through deliberation;
2. politely and humanely ask the respondent, to show supporting documents or proof of payment or repayment;
3. securing the environment surrounding the execution to prevent escalating security escalation; and
4. if the respondent has valid proof of payment or repayment, National Police personnel:
   1. delay or stop execution execution;
   2. bring and hand over the officer assigned by the applicant to the National Police investigator for further handling; and
   3. Take the respondent and the execution applicant to the nearest police station for further handling.”

C. Conclusion

   Based on the discussion previously explained, the execution of the Fiduciary Guarantee Object cannot be carried out directly, unilaterally, or forcibly by Creditors. There are several conditions if a Creditor wants to execute the Fiduciary Guarantee Object, namely:

• Execution may only be carried out if there has been a Deed of Fiduciary Guarantee made before a notary and the object of the Fiduciary Guarantee Object has been registered with the Fiduciary Registration Agency and a Certificate of Fiduciary Guarantee has been issued;
• There is an agreement between the Debtor and the Creditor that there is indeed a Default committed by the Debtor;
• There is a legal remedy stating that the Debtor has defaulted.

If the Debtor does not acknowledge that it has committed Default and objects to surrender the Fiduciary Guarantee Object, then the Creditor cannot execute it alone and must apply for execution to the District Court. And if the Debtor objects to the forced execution carried out by the Creditor, then the Debtor can take legal action by making a Police Report and may also file an Unlawful Action lawsuit to the District Court. Thus, the rights of the Debtor and the rights of the Creditor are protected equally.

For further information, please call:

• partner@amoktarina.co
• pasaribu@amoktarina.co
• 0817779122