“There must be an agreement between the debtor and the creditor in the Fiduciary Guarantee Certificate regarding when and under what circumstances the debtor can be declared default.”

The provisions of Article 15 paragraph (2) and its Elucidation as well as Article 15 paragraph (3) of Law Number 42 of 1999 concerning Fiduciary Guarantees, especially regarding the phrase default, executorial power, and phrases equal to court decisions that have permanent legal force have been declared conditionally unconstitutional based on Constitutional Court Decision. The implication of this Decision is that in the Fiduciary Guarantee Certificate, there must be an agreement between the debtor and the creditor or at least based on legal remedies regarding when and under what circumstances the debtor can be declared “default” so that the creditor can execute the Fiduciary Guarantee Object. Therefore, against fiduciary guarantees where there is no agreement regarding default and the debtor objects to voluntarily surrendering the object that is a fiduciary guarantee, all mechanisms and legal procedures must be followed that are the same as executing court decisions that have permanent legal force prior to executing the Fiduciary Guarantee Certificate by the creditor.

Constitutional Court Decision Number 18/PUU-XVII/2019, 6 January 2020

Source: Constitutional Court Website (www.mkri.id)

Best regards,

Fredrik J. Pinakunary