Cancellation Of Foreign-Language Contracts: Challenges and Solutions
Friday, December 18, 2015
The issuance of Law No. 24 of 2009on The Indonesian Flag, Language, National Emblem, and National Anthem (Law 24/2009) could very well be described as a thorn in the side of the freedom-of-contract principle. The reason for this revolves around the Language Law, which stipulates that contracts entered into by Indonesian parties must be drawn up in the Indonesian language.
Reza Fikri Febriansyah, the Chief of the Draft Bill Discussion Organizing Committee at the Directorate General of Laws and Regulations at the Ministry of Law and Human Rights, has stated that there are three main objectives as regards the incorporation of the Indonesian language into Law 24/2009. These break down into the need to strengthen national unity and cohesion, maintain dignity and sovereignty, and also to create a definitive and orderly standard for the use of the Indonesian language.
Mr. Febriansyah further revealed that the enforcement of Law 24/2009 changed the implementation of the freedom-of-contract principle. Indeed, Law 24/2009 ultimately shatters the paradigm that all parties are free to draw up contracts as they see fit, so long as they do not violate any prevailing laws and regulations.
“[The issuance of Law 24/2009 is] for protection,” stated Mr. Febriansyah at an event titled Cancellation of Foreign Language Contracts: Challenges and Anticipations, which was held in Jakarta on Thursday, 10 December 2015.
Also present at the event was legal expert Eri Hertiawan, who in contrast with Mr. Febriansyah asserted that annulling the freedom-of-contract principle in this way was unnecessary. The use of the Indonesian language does not constitute a crucial part of any contract, according to Mr. Hertiawan, and therefore the use of any foreign language should not result in an automatic contract default.
“The contents of an agreement are not determined by the language in which they are laid out, but instead by the intentions of the relevant parties [to the agreement],” asserted Mr. Hertiawan.
In practice, Mr. Hertiawan points to five challenges and solutions that need to be tackled by parties who are intending to draw up contracts in foreign languages. Firstly, the Indonesian language is not widely spoken and is by no means a universal language. The solution in this case would be to draw up bilingual contracts in notary form (aktaotentik).
A second potential problem is that one party may argue that a foreign-language contract is incomprehensible and then file a cancellation lawsuit with a court in accordance with Article 1449 of the Indonesian Civil Code (Kitab Undang-Undang Hukum Perdata – KUHPer). Article 1449 of the KUHPer stipulates that parties that draw up contracts under coercion, err, or deception can be sued for cancellation.
In this situation, the assertion that a contract has been intentionally drawn up in a foreign language in order to mislead one of the parties needs to be proven. Furthermore, mistakes in themselves are not enough to have a contract cancelled, unless such mistakes relate to the object of the contract, or the contract is made with a party which finds itself the victim of a mistake, as stipulated under Article 1322 of the KUHPer.
A third challenge relates to the possibility of a dispute being brought before a court. In Indonesian courts, only documents which are submitted in the Indonesian language can be used as evidence. Therefore, Mr. Hertiawan suggests that evidentiary documents, including documents in foreign languages, be notarized (dilegalisasi).
More specifically, documents in foreign languages must first be translated into Indonesian, before this translation is then attested by a notary. Finally, these attested translation results must be registered at the Indonesian Post Office. The party in question can now submit the relevant foreign-language documents to the court as evidence, alongside certified copies, and their translations, which have been attested by a notary and registered with the Indonesian Post Office.
Fourthly, foreign language contracts are prone to multiple interpretations. In order to prevent this problem occurring, parties to a contract usually agree to decide whether they will refer to the foreign-language or Indonesian-language contract, in the case of any interpretation disputes arising.
Finally, electronic contracts and other forms of electronic agreements of a similar nature involving Indonesian citizens must be drawn up in the Indonesian language as mandated under Article 48 of Government Regulation No. 82 of 2012on Electronic Transaction Systems and Their Implementation.
In order to prevent the cancellation of contracts as a result of language problems, Mr. Hertiawan has proposed a number of possible solutions. One of these solutions is to obtain an attestation from a notary.
In order to achieve this, an electronic agreement must first be printed out onto paper and then brought before a notary in order to be verified. The notary will then attest that the printout of an electronic contract is authentic and identical to the original contract, which is in digital form. The attested printout of the electronic contract can then be translated by an official or sworn translator.
Mr. Hertiawan also noted that the mandatory use of the Indonesian language in contracts was problematic, as the Law 24/2009 does not stipulate any sanctions for non-compliance. Indeed, Mr. Hertiawan believes that some parties may misuse the obligation to use the Indonesian language in contracts in order to deliberately cancel contracts drawn up in foreign languages by claiming that they cannot understand them.
These parties will then be able to discharge their responsibilities without the need to fulfill any of the obligations set out in the foreign-language contracts. However, Mr. Hertiawan also added that the inclusion of the word “must” in Article 31 of Law 24/2009 did not necessarily entail the imposition of any sanctions for non-compliance.
Author : MarcellSihombing&Fitri N. Heriani
HOW CAN BP LAWYERS HELP YOU?
BP Lawyers has extensive experience in assisting Foreign Investors to establish FDI Company in Indonesia. If you need immediate assistance, please contact the BPL Help Desk at: