Legal Impacts from the Dissemination of COVID-19 Pandemic in Indonesia’s Infrastructure

Deciding whether COVID-19 could be classified as a force majeure event is hinge on the wording of the contract. Alternatively, we could also rely on the Indonesian Civil Code. In any event, the objectivity test of whether the affected party could rely on the force majeure clause is that (i) the event is unforeseeable, (ii) such unforeseeable event is not within the affected party’s control, and (iii) whether such party act in good faith.

The Coronavirus Disease 2019 (“COVID-19”) is currently spreading globally, and the World Health Organization (“WHO”) has declared COVID-19 as a pandemic on 11 March 2020. Every government of each country has taken an effort to counter the dissemination of the virus by issuing a physical distancing to lockdown policies. Consequently, many businesses, both international and domestic, need to temporarily stop their operation.

In response to the WHO statement, the President of the Republic of Indonesia has issued a Presidential Decree No. 12/2020, which decides that a non-natural disaster due to COVID-19 is a national holocaust. The Countermeasures of such national holocaust due to COVID-19 shall be performed by the task force to expedite the handling of COVID-19 with a synergy between the relevant ministry/institution and regional government.

The issuance of the said policies also affects the infrastructure sector. In particular, such policies cause disruption to the performance of infrastructure contracts. As a result, to avoid any legal dispute and loss, the postponement or annulment of a contract shall be considered by the relevant parties.

Based on the foregoing issues, this publication will elaborate on the impact inflicted by the spread of COVID-19 on the infrastructure contract in Indonesia. Besides, it will also elucidate the basic guidelines for the fulfillment of the contract in the event of force majeure.