THE SALE AND PURCHASE OF LAND BY A FOREIGN NATIONAL THROUGH A NOMINEE IS CONTRARY TO THE LAW AND DOES NOT FULFILL ONE OF THE ELEMENTS OF A VALID AGREEMENT, NAMELY A LAWFUL CAUSE.

The Plaintiff is a foreign national who had previously purchased a piece of land and building through a deed of sale and purchase made before a notary. In the purchase, the Plaintiff used the name of Defendant I to be the purchaser as stated in the Certificate of Title to the disputed land and building. This was done because the Plaintiff knew that in accordance with the law, foreigners were not allowed to purchase and own land and buildings in Indonesia.

The Plaintiff also entrusted Defendant I to hold the Title Certificate. At some point in time, Defendant I, without the Plaintiff’s permission, sold the disputed land and building to Defendant II through a deed of sale which was also made before a notary. After the sale and purchase, the Denpasar City Land Office (Defendant III) conducted a name transfer process so that the Certificate of Title to the disputed land and building became in the name of Defendant II. Therefore, the Plaintiff, who is a foreigner, filed a tort claim against Defendant I and requested compensation. However, the Plaintiff’s claim was rejected entirely by the District Court and the rejection was also upheld by the Court of Appeal.

The Plaintiff also filed an appeal, and the Supreme Court decided that in accordance with the provisions of Article 21 paragraph (1) of the Basic Agrarian Law, a foreigner cannot become the owner of a piece of land in Indonesia so that the sale and purchase of the disputed object land by a foreigner in the case of the Plaintiff by borrowing the name of an Indonesian citizen in the case of Defendant I is an agreement that is contrary to Article 21 paragraph (1) of the Basic Agrarian Law, because it is invalid because it does not fulfill one of the elements of a valid agreement, namely a lawful cause as referred to in the provisions of Article 1320 of the Civil Code.

-> Supreme Court Decision Number 3020 K/PDT/2014, Dated April 8, 2015.

Source: https://putusan3.mahkamahagung.go.id/direktori/putusan/2f9d81b1f804fc900ff653dd24aeba4c.html.

Salam Pancasila,
Fredrik J. Pinakunary