In carrying out a project work, it is not uncommon for several companies to form a Joint Operation (“JO”) based on a Joint Operation Agreement. This Joint Operation Agreement is usually participated in by two (2) or more companies. Once the JO has been agreed upon and has commenced its work on a project, the JO will naturally have a legal relationship with a third party based on an agreement that has been made and agreed upon. If, under the agreement with the third party, the JO fails to fulfill its obligation to make a payment, the third party may demand the JO to fulfill such obligation, one of which is by submitting a Petition for Suspension of Debt Payment Obligations (“PKPU”) against the JO. The issue that then arises is: if the third party wishes to submit a PKPU Petition against the JO, who should be designated as the Respondent in the PKPU proceeding?
A Joint Operation Agreement is an agreement between two or more parties who agree to jointly complete a project. The agreement must, of course, fulfill the validity requirements of an agreement, namely legal capacity, mutual consent, a specific object, and a lawful cause, as regulated under the provisions of Article 1320 of the Indonesian Civil Code (KUHPerdata). A JO Agreement made by the parties does not give rise to a new entity (legal subject), as it is essentially a form of cooperation between the JO members who are themselves legal subjects.
Although it does not have the status of a legal entity, a JO may, administratively, obtain a Taxpayer Identification Number (“NPWP”) and be registered as a Corporate Taxpayer as stipulated in Minister of Finance Regulation Number 79 of 2024 on Tax Treatment in Joint Operations (“PMK 79/2024”). This grants the JO recognition as a legal subject in the context of taxation, even though it is not an independent legal entity under civil law.
Subsequently, if in the course of the legal relationship between the JO and a third party there is an obligation or payment that has not been fulfilled by the JO, the third party has the right to demand the JO to perform its obligation. One of the possible actions that the third party may take against the JO is to submit a PKPU Petition. As stipulated in Article 222 paragraph (3) of Law Number 37 of 2004 concerning Bankruptcy and Suspension of Debt Payment Obligations (“Law 37/2004”), it is stated that:
“A creditor who foresees that the debtor will not be able to continue paying its debts that are due and payable may file a petition for the debtor to be granted a suspension of debt payment obligations, in order to allow the debtor to submit a settlement plan which includes an offer to pay part or all of the debt to its creditors.”
As stipulated in Article 222 of Law 37/2004, a third party or creditor may file a PKPU Petition against the JO as the debtor, provided that there are at least two (2) or more creditors, the existence of debts that are due and payable, and that such conditions can be proven in a simple manner.
The position of a JO may be equated with a business entity in the form of a Firm (Firma). Under the provisions of the Indonesian Commercial Code (“KUHD”), particularly Article 16, it is stated that a Firm is a partnership established to conduct business under a single joint name. Furthermore, Article 18 of the KUHD states that each partner in a Firm is jointly and severally liable for all obligations of the Firm. Therefore, if a JO is to be named as the Respondent in a PKPU Petition, then the members of the JO must also be named as Respondents in the PKPU Petition. This is in line with the considerations of the Supreme Court Decision Number: 01/K/N/1999 dated 23 February 1999, which essentially states:
“Considering, that by taking into account the formation method of Hutama Bina Maint Joint Operation, which is a joint business that is not a legal entity between PT. Hutama Karya and PT. Bina Maint with the aim of earning joint profit with a respective ratio of 60% and 40%. The Supreme Court is of the opinion that such joint business may be categorized as a partnership as referred to in Article 1618 of the Civil Code, and when observing the use of a joint name, namely Hutama Bina Maint Joint Operation, the partnership which is a joint business of the Cassation Respondents may be categorized as a Firm as referred to in Article 16 of the Commercial Code;
Considering, that in accordance with the provisions of Article 1643 of the Civil Code or Article 18 of the Commercial Code, each partner bears joint and several liability. Therefore, the Cassation Respondents are liable for the debts incurred by Hutama Bina Maint Joint Operation.”
Furthermore, in practice, there are differing views among Panels of Judges regarding the submission of a JO as the Respondent in a PKPU Petition. Some Judges hold the view that if a JO is submitted as the PKPU Respondent, it is sufficient for only the members of the JO to be named as Respondents. However, there are also views stating that if a PKPU Petition is filed against a JO, then both the JO itself and its members must be named as Respondents. This difference in opinion creates uncertainty in seeking accountability from the JO, although in essence, the members of the JO remain liable for the obligations of the JO to third parties.
As reflected in the Supreme Court Cassation Decision Number: 01/K/N/1999, which essentially annulled the lower court’s decision, the Supreme Court in its ruling granted the Bankruptcy Petition filed by the Petitioner and declared the Respondents bankrupt along with all its legal consequences, whereby the Respondents were the members of the JO. Therefore, referring to this decision, the filing of a PKPU Petition against a JO should be sufficiently directed to the members of the JO as the PKPU Respondents.
However, this differs from the considerations of the Panel of Judges in PKPU Decision Number: 54/PKPU/2012/PN.Niaga Jkt.Pst, where the Panel declared that the PKPU Petition was inadmissible due to the absence of a necessary party. This was because the Petitioner filed the PKPU Petition only against the members of the JO without naming the JO itself as a Respondent. The Panel of Judges provided the following considerations:
“Considering, that in the aforementioned PKPU Petition, the Petitioner named Respondent I PT Pertamina Hulu Energi Raja Tempirai and Respondent II PT Golden Spike Energy Indonesia, Ltd, while the Joint Operating Body Pertamina – Golden Spike Indonesia, Ltd was not included as a Respondent in the Petitioner’s PKPU Petition;
“Considering, that according to the Panel, the Joint Operating Body – Production Sharing Contract constitutes a civil partnership that does not have the status of a legal entity, but liability can be imposed on the parties that established it;
“Considering, that in order to position the Joint Operating Body as a legal subject, the Petitioner should have included the Joint Operating Body itself in the PKPU Petition a quo, since according to the jurisprudence of the Supreme Court of the Republic of Indonesia No. 01/K/N/1999 dated 23 February 1999, such joint venture may be categorized as a Firm as referred to in Article 16 of the Commercial Code;
“Considering, that due to the exclusion of the Joint Operating Body in the PKPU case a quo, the Petitioner’s PKPU Petition is deemed to lack a necessary party and therefore must be declared inadmissible.”
Furthermore, in PKPU case Decision Number: 161/Pdt.Sus-PKPU/2020/PN Niaga Jkt.Pst, the PKPU Petitioner named Respondent I as CNQC – MTRA JO, Respondent II as PT Mitra Pemuda, Tbk, and Respondent III as Qingjian International (South Pacific) Group Development Co., Pte, Ltd. Respondents II and III are legal entities that entered into a joint operation agreement to form CNQC – MTRA JO. In this case, the Panel of Judges granted the PKPU Petition filed by the Petitioner, with the ruling as follows:
“Adjudicating:
- Granting the Temporary Suspension of Debt Payment Obligations (PKPU) Petition filed by the PKPU Petitioner against the PKPU Respondents along with all its legal consequences;
- Declaring a Temporary Suspension of Debt Payment Obligations (PKPU) for a maximum period of 44 (forty-four) days as of the date this decision is pronounced;
- …”
Therefore, in the Author’s view, when filing a PKPU Petition against a JO, it is important to understand that a JO is not a business entity, but is merely deemed or categorized as a firm pursuant to the Jurisprudence of the Supreme Court of the Republic of Indonesia No. 01/K/N/1999 dated 23 February 1999. In this context, the actual legal subject remains with the members of the JO, which are generally legal entities such as Limited Liability Companies, while the JO itself is merely a contractual cooperation vehicle among its members. Nevertheless, in taxation practice, a JO may possess its own NPWP and be recognized as an administrative legal subject for taxation purposes.
In relation to this, in the Author’s view, if a PKPU Petition is filed against a JO, the parties to be named as PKPU Respondents should be limited to the members of the JO without the need to name the JO itself as a PKPU Respondent, bearing in mind that a JO does not have the status of a civil law legal subject. However, in judicial practice, a JO is often still included as one of the PKPU Respondents to avoid potential objections on the grounds of a lack of parties, considering that the JO is the party that entered into the legal relationship with the creditor.
Accordingly, the Author believes that this matter should be given due attention by the Supreme Court to harmonize the views on the parties to be named as PKPU Respondents in relation to PKPU proceedings against a JO, to that end, the Supreme Court may consider issuing specific guidelines regulating the procedures and provisions for filing a PKPU Petition against a JO, so that such Guidelines can serve as a clear reference not only for Judges in adjudicating cases, but also for interested parties, particularly creditors intending to file a PKPU Petition against a JO.
That concludes the discussion in this article. Should there be any information requiring further discussion regarding the matters in this article, please feel free to contact us at TRNP Law Firm to obtain more up-to-date legal insights.
