After working together since 1998, the Ministry of Environment and Forestry issued a Decree dated January 10, 2020, concerning the termination of its cooperation agreement with WWF-Indonesia. WWF-Indonesia is an independent institution of the WWF network and its affiliates, a global conservation organization that works in 100 countries in the world. The cooperation which was originally valid until 2023 was terminated early, among others because WWF-Indonesia expanded the scope of the 1998 agreement. WWF-Indonesia carried out activities related to climate change, environmental and forestry enforcement and waste management which had no legal basis, violating the principles of cooperation and fieldwork and making unilateral claims, violating the substance of the cooperation through social media campaigns and publishing reports that are not in accordance with the facts. Simply put, the Ministry of Environment and Forestry states that WWF-Indonesia has breached the 1998 agreement.
Breach of Contract Definition
According to Prof. Subekti, breach of contract happens when one of the parties in the agreement does not carry out what is being promised by the party; carries out what is being promised but not as it should; carries out what is being promised when it was too late to do it, and does something prohibited by the agreement. If applied to this issue, it appears that the Ministry of Environment and Forestry terminated the cooperation because WWF-Indonesia has conducted a breach of contract as stated above. On the other hand, the representative of WWF-Indonesia said that they would study the reasons of termination and would provide a response later. According to contract law, a cooperation agreement is an anonymous agreement (onbenoemde contract) which is subject to General Provisions of Chapter I, Article 1319 of the Civil Code which states “all agreements, both named and not having a specific name, are subject to the regulations contained in this chapter and the previous chapter”. So, the characteristic of a cooperation agreement is an agreement in which the parties agree to do something contained in the agreement. In this matter, the agreement was contained in the 1998 cooperation agreement. Then, what was the justification for the Ministry of Environment and Forestry to terminate the relationship? It can be simply answered: if WWF-Indonesia has breached the contract or violates the provisions agreed in the 1998 cooperation agreement. An interesting legal question to be studied: Can the breach of contract conditions be determined solely or unilaterally by the Ministry of Environment and Forestry, or would condition only occurs if it is recognized in advance by WWF-Indonesia?
Breach of Contract in the View of the Constitutional Court
We still remember clearly when the Constitutional Court issued Decision Number 18 / PUU-XVII / 2019, dated January 6, 2020, which, among other things, discussed breach of contract. According to the Constitutional Court, breach of contract 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 efforts that determine the occurrence of a breach of contract. So, to conclude that there is a breach of contract, there must be a consensus from the parties (creditors and debtors). This is stated in the Decision of the Constitutional Court, item 13.7 paragraph 3 which states: “Thus it is crystal clear that as long as the debtor has admitted that there is breach of contract and voluntarily surrendered the thing which is the object in the fiduciary agreement, then the creditor has a full authority creditors to be able to carry out their own execution (parate execution). However, if the opposite happens, in which the debtor does not admit that there is a breach of contract and objects to voluntarily give the thing that becomes the object of the fiduciary agreement, then the recipient of fiduciary rights (creditor) may not execute by himself but must submit an execution request to the district court. Thus the constitutionality rights of the debtor and the creditor is equally protected”. Therefore, to determine whether there is a breach of contract or not, there should be an admission from the debtor.
The Application of the Meaning of Breach of Contract Based on the Constitutional Court Decision
Logically, if for a relatively simple creditor and debtor agreement, the breach of contract conditions cannot be determined unilaterally by the creditor, of course, the breach of contract conditions in the cooperation agreement between the Ministry of Environment and Forestry and WWF-Indonesia which is more complex should not be determined individually by one party. By following the logic of thinking of the Constitutional Court, the termination of the cooperation by the Ministry of Environment and Forestry can only be valid if it is approved in advance by WWF-Indonesia. Without the approval or acknowledgment from WWF-Indonesia that it has committed a breach of contract, the Ministry cannot unilaterally declare that WWF-Indonesia has committed breach of contract and then terminate the relationship. The Ministry of Environment and Forestry first must file a lawsuit in a dispute settlement forum agreed in the agreement, whether it is in the district court or in the arbitration institution to prove the existence of a breach of contract committed by WWF-Indonesia.
What can WWF-Indonesia do?
A discussion to find a solution agreed by both parties certainly needs to be done to reach an agreement. Then what if the Ministry of Environment and Forestry is not willing to have a discussion and stick to its stance to terminate the cooperation? From a legal perspective, both the Ministry of Environment and Forestry and WWF-Indonesia are legal subjects who have the same standing, rights, and obligations before the law. Therefore, given that the Ministry of Environment and Forestry has unilaterally declared that WWF-Indonesia has committed a breach of contract and then decided to terminate the cooperation, in our opinion, there is an opportunity for WWF Indonesia to file an unlawful act claim (Article 1365 of the Civil Code) on the grounds that the Ministry of the Environment and Forestry has committed an unlawful act because it violates WWF-Indonesia’s right to cooperate until 2023 and also contradicts with the legal obligation of the Ministry of Environment and Forestry to respect the cooperation agreement that is still legally valid as a law for both parties (pacta sunt servanda). Furthermore, the act has resulted in losses to WWF-Indonesia, both material and immaterial, which are caused by the Ministry of Environment and Forestry’s mistake who unilaterally states that WWF-Indonesia has committed a breach of contract and terminated the agreement. The existence of causality between the loss of WWF-Indonesia and the mistake or unilateral termination by the Ministry of Environment and Forestry should also be noted.
Based on the above, if an amicable discussion cannot be reached, from a litigation perspective, we see a great opportunity and a strong legal basis for WWF-Indonesia to challenge or file a lawsuit against the Ministry of Environment and Forestry through a dispute settlement forum agreed by both parties in the agreement.
Hope this is useful,
FREDRIK J. PINAKUNARY LAW OFFICES