The current practice of law enforcement against corporate crimes in Indonesia still faces serious systemic challenges. Reflecting on the handling of mega-corruption cases such as the e-KTP project, irregularities in the mining sector, as well as environmental crimes and money laundering, an ineffective handling pattern is evident, namely slow judicial processes, high costs, and complex evidentiary requirements. Ironically, instead of recovering state losses amounting to trillions of rupiah, the punitive orientation that remains fixated on the imprisonment of individual legal subjects (corporate management) actually adds to the burden on the state budget without providing adequate loss recovery solutions. Responding to this deadlock, the global trend in corporate criminal law enforcement has now shifted towards utilizing a more effective and efficient mechanism, namely the Deferred Prosecution Agreement (“DPA“). This mechanism offers a negotiation-based solution that defers case prosecution subject to strict prerequisites, including the payment of restitution and fines, as well as the improvement of corporate governance under court supervision. The effectiveness of DPAs in balancing procedural efficiency and substantive justice has been proven in various jurisdictions such as the United States, the United Kingdom, France, and Singapore, where cases involving large corporations such as Siemens, Rolls-Royce PLC, and Prudential were successfully resolved with optimal loss recovery without protracted litigation processes.

 

Previous Regulations

Normatively, Law No. 8 of 1981 on the Criminal Procedure Code (“Old KUHAP“) did not regulate the DPA mechanism. However, along with legal developments, Indonesia began to adopt the concept of restorative justice implemented in various regulations, one of which is the Regulation of the Attorney General of the Republic of Indonesia No. 15 of 2020 on the Termination of Prosecution Based on Restorative Justice (“Perja 15/2020“). Although the spirit of restorative justice in Perja 15/2020 shares conceptual similarities with DPAs, this regulation explicitly excludes its application to corporate suspects. This restriction is contained in Article 5 paragraph (8) of Perja 15/2020, which states:

“Termination of prosecution based on Restorative Justice is excluded for cases of:

1. criminal offenses against state security, the dignity of the President and Vice President, friendly nations, heads of friendly nations and their representatives, public order, and morality;
2. criminal offenses threatened with minimum penal sanctions;
3. narcotics criminal offenses;
4. environmental criminal offenses; and
5. criminal offenses committed by corporations.”

Current Regulations

Under Law No. 1 of 2023 on the Criminal Code (“New KUHP“), corporations have been explicitly recognized as subjects of criminal offenses. As stipulated in Article 146 of the New KUHP, the scope of corporations includes:

1. Legal Entity Business Enterprises

a. Limited Liability Companies

b. Foundations

c. Cooperatives

 

2. Non-Legal Entity Business Enterprises

a. Civil Partnerships

b. Firm Partnerships

c. Limited Partnerships

 

To hold the aforementioned corporations liable as perpetrators of criminal offenses, the element of corporate fault must be fulfilled. Referring to Article 48 of the New KUHP, corporate fault occurs if the criminal offense committed by the management, order giver, controller, or beneficial owner of the Corporation meets the following criteria:

1. Included in the scope of business or activities as determined in the articles of association or other applicable provisions for the Corporation;
2. Unlawfully benefits the Corporation;
3. Accepted as a Corporate policy;
4. The Corporation fails to take the necessary steps to prevent, mitigate greater impacts, and ensure compliance with applicable legal provisions to avoid the occurrence of the criminal offense; and/or
5. The Corporation allows the criminal offense to occur.

Once the subject qualification and corporate fault elements are fulfilled, the corporation can be held liable as a perpetrator of a criminal offense. For corporations meeting these qualifications, Indonesian criminal procedural law now presents an alternative dispute resolution, made possible since the enactment of Law No. 20 of 2025 on the Criminal Procedure Code (“New KUHAP“). Through the New KUHAP, the Deferred Prosecution Agreement (DPA) mechanism is explicitly recognized.

Under the provisions of Article 1 point 7 of the New KUHAP, a DPA is defined as a legal mechanism for the Public Prosecutor to defer Prosecution against a defendant where the perpetrator is a corporation. Comprehensive arrangements regarding this DPA mechanism are regulated in Article 328 paragraphs (1) to (17) of the New KUHAP. In Article 328 paragraphs (1) and (2), it is emphasized that this DPA mechanism can only be applied to criminal offenses committed by corporations and aims to improve corporate legal compliance, recover losses resulting from criminal offenses, and ensure efficiency in the criminal justice process. The execution flow of this DPA mechanism is further regulated in Article 328 paragraphs (3) to (17) of the New KUHAP, which includes:

 

1. Submission of Application

This DPA mechanism is initiated by an application submitted by the Suspect or their Advocate to the Public Prosecutor, The application must be submitted before the case is transferred to the court.  Vide Article 328 paragraph (3).

 

2. Consideration of the Application by the Public Prosecutor

Following the application submitted by the Suspect or their Advocate, the Public Prosecutor may accept or reject the application based on several considerations, namely:

a. Justice;

b. The Victim;

c. The Defendant’s compliance with statutory provisions.

If the Public Prosecutor accepts the application, they must notify the court regarding the planned execution of the DPA process, and the Court must record it in the minutes. Conversely, if the Public Prosecutor rejects the application, the prosecution will continue. Vide Article 328 paragraphs (4) to (5).

 

3. Agreement Drafting

After notifying the court, a negotiation process will be conducted between the Public Prosecutor and the Suspect to reach an agreement, which may take the form of:

a. Payment of compensation or Restitution to the Victim;

b. Implementation of a legal compliance program or improvement of anti-corruption corporate governance;

c. Reporting obligations and cooperation with law enforcement during the deferred Prosecution process; or

d. Other corrective actions deemed necessary by the Public Prosecutor.

If the agreement has been signed by the Public Prosecutor and the Suspect, the Public Prosecutor must submit the results of the agreement to the court within a maximum period of 7 (seven) days. Vide Article 328 paragraphs (6) and (12).

 

4. Court Examination Hearing

After the Public Prosecutor notifies the court of the agreement results, the court must hold an examination hearing to assess the feasibility and validity of the DPA before it is ratified. In this examination, the Judge must consider several aspects, namely:

a. The conformity of the conditions in the Deferred Prosecution Agreement with statutory provisions;

b. The proportionality of administrative sanctions or other obligations imposed on the Suspect or Defendant;

c. The impact on the Victim, society, the environment, the state economy, and the criminal justice system; and

d. The ability of the Suspect or Defendant to fulfill the stipulated conditions.

Furthermore, during the examination, the Judge may request additional information or clarification from the Public Prosecutor, the Suspect, the Defendant, or other interested parties. If the Judge approves the DPA, this DPA will be ratified and set forth in a court determination, thereby suspending the case. However, if the Judge rejects the DPA, the case will proceed to trial under ordinary examination procedures. Vide Article 328 paragraphs (7) to (11).

 

5. Execution of the DPA

Once the DPA is ratified through a court determination, the Suspect or Defendant must fulfill all their obligations within the time specified in the agreement     , where the execution of these obligations will also be supervised by the court. If the Suspect or Defendant successfully fulfills their obligations, the case can be terminated without further Prosecution by a court determination. Conversely, if the Suspect or Defendant fails to fulfill their obligations, the agreement will be null and void by operation of law (batal demi hukum), and the Public Prosecutor is authorized to resume the prosecution process without requiring additional approval. Against this, the Suspect or Defendant may file an objection or resistance. Vide Article 328 paragraphs (12) to (17).

 

Critical Notes on the Regulation and Application of DPA

Regarding the DPA regulations contained in the New KUHAP, the provisions are still general in nature and do not touch upon technical matters, thus necessitating implementing regulations in the form of a Supreme Court Regulation (“Perma“) and an Attorney General Regulation (“Perja“). Several matters that need to be regulated in these implementing regulations include:

1. Limitations on the Application of DPA

The application of the DPA mechanism as an instrument for resolving corporate crimes must not be absolute or boundless. Like other alternative dispute resolution mechanisms in the criminal justice system, DPAs strictly require tight limitations to prevent the abuse of this instrument as a loophole for impunity for problematic corporations. This limitation has actually been normatively alluded to in the provisions of Article 328 paragraph (4) of the New KUHAP, which reads in full:

“The Public Prosecutor may accept or reject the application as referred to in paragraph (3) based on considerations of justice, the Victim, and the Defendant’s compliance with statutory provisions.”

Based on these provisions, the New KUHAP has indeed provided several essential variables that must be used as parameters by the Public Prosecutor in accepting a DPA application. However, the formulation of the article still leaves gray areas because there is no technical clarity on how the Public Prosecutor can truly measure and consider these variables objectively. Therefore, there is a need for affirmation regarding these variables, including:

 

a. The Urgency of Victim’s Consent

Considering that the “Victim” is explicitly listed as a determining variable in Article 328 paragraph (4), consideration of the victim’s fate must not merely become a unilateral discretion in the hands of the Public Prosecutor. To realize the variable of “justice”, the victim’s position must be tangibly represented. This means that a DPA application must be bound by the absolute condition of explicit consent from the victim (whether individuals, affected communities, or harmed state agencies). Without the victim’s consent regarding the restitution value and governance improvement plans, the DPA agreement will lose its spirit of restorative justice and is prone to harming those most affected by corporate crimes.

 

b. Limitation on the Qualification of Criminal Offenses

Aside from the aspect of victim consent, strict limitations must also be applied to what types of criminal offenses can or cannot be resolved through a DPA. Referring to other customary alternative instruments such as Restorative Justice and Plea Bargaining, there are strict boundaries, for example, exclusions for offenses with high penal threats, extraordinary crimes, or recidivists. A similar logic of limitation must be adopted in the DPA mechanism. There needs to be derivative provisions regulating absolute exclusions, where DPAs cannot be applied to corporate crimes resulting in the loss of human life and gross human rights violations. Conversely, the application of DPAs should be focused on and limited to corporate crimes with economic motives (economic/white-collar crimes) where the loss recovery agenda is the main priority.

 

2. Parameters in Determining DPA Clauses

In the New KUHAP, the parameters for determining these DPA clauses are regulated in Article 328 paragraph (12) which reads in full:

“The conditions in the Deferred Prosecution Agreement may take the form of:

a. Payment of compensation or Restitution to the Victim;

b. Implementation of a legal compliance program or improvement of anti-corruption corporate governance;

c. Reporting obligations and cooperation with law enforcement during the deferred Prosecution process; or

d. Other corrective actions deemed necessary by the Public Prosecutor.”

Based on the above provisions, the Public Prosecutor is granted immense discretion to include clauses in the DPA, considering the normative construction uses the word “may”. Although this DPA will later be examined in a court hearing by a Judge, the Judge’s role in ratifying the DPA must not become a “safety net” that makes the Public Prosecutor negligent in measuring justice. The proportionality of the clauses must be maturely fulfilled before the DPA is submitted to the court, so that the proposed DPA truly reflects a balance between the interests of law enforcement, corporate sustainability, and victim recovery.

 

3. Court Supervision Mechanism

The supervision mechanism is a crucial element to ensure the fulfillment of obligations within the DPA. However, reviewing the New KUHAP, the provisions regarding the supervision of DPA execution are only regulated limitatively in one paragraph, namely Article 328 paragraph (14) which states:

“The Court is authorized to monitor the execution of the Deferred Prosecution Agreement in accordance with the time specified in the agreement.”

Thus, detailed arrangements regarding the supervision mechanism by the court are necessary. Forms of supervision may include reporting obligations by the corporation, periodic evaluation hearings to monitor the progress of DPA execution, and others.

 

4. Final Resolution Mechanisms of the Deferred Prosecution Agreement

The normative inconsistencies found in Article 328 paragraphs (13), (15), and (17) of the New KUHAP potentially create legal uncertainty if not immediately translated into detailed implementing regulations. Regarding the provision on the termination of prosecution in Article 328 paragraph (13) which reads in full:

“In the event the Suspect or Defendant fulfills all obligations in the Deferred Prosecution Agreement during the specified period, the case may be terminated without further Prosecution by a court determination.”

The phrase “by a court determination” demands a clear procedural law mechanism, considering that courts are passive in nature. Therefore, the Perja must explicitly stipulate the obligation of the Public Prosecutor to submit a Request for Termination of Prosecution accompanied by the Final Report of DPA Execution as the basis for the judge to issue a determination. Without this provision in the Perja, the judge has no procedural basis to issue such a determination. Furthermore, there is a potential for arbitrariness in Article 328 paragraph (15) which reads in full:

“In the event the Suspect or Defendant fails to fulfill the obligations in the Deferred Prosecution Agreement, the Public Prosecutor is authorized to resume the Prosecution process without requiring additional approval.”

Wherein the Public Prosecutor can resume prosecution unilaterally if the corporation fails to execute the DPA. This provision must be mitigated through a systematic interpretation alongside Article 328 paragraph (13) which requires a court determination upon the execution of the DPA. This is crucial to guarantee the principle of checks and balances; if the ratification of the DPA and the termination of prosecution due to the corporation executing the DPA involve a judge, then its cancellation must also undergo a judicial review, rather than merely relying on the prosecutor’s subjective assessment. Lastly, the jurisdictional ambiguity in the mechanism of objection or resistance in Article 328 paragraph (17) which reads in full:

“A violation of the procedures of the Deferred Prosecution Agreement may result in it being null and void by operation of law and serve as a basis for the Suspect or Defendant to file an objection or resistance.”

This demands clarity in the judicial hierarchy. Considering the principle of nemo judex in causa sua (no one is a judge in their own cause), it is highly illogical if an objection against the cancellation of a DPA is filed to the same District Court that issued the cancellation determination. Therefore, the Perma must specifically regulate that such legal remedies of objection or resistance fall under the absolute competence of the High Court or the Supreme Court. Detailed technical arrangements in the Perma and Perja are absolutely necessary so that the DPA can operate as an instrument guaranteeing justice, certainty, and legal utility in criminal law enforcement.

 

Conclusion

The introduction of the DPA mechanism in the New KUHAP represents a progressive step in addressing the inefficiency of corporate criminal law enforcement, by shifting the orientation from imprisoning management towards recovering state losses and improving governance. However, its highly general regulations potentially create legal uncertainty and arbitrariness due to the broad discretion of the Public Prosecutor. Therefore, to prevent the DPA from becoming a loophole of impunity for problematic corporations, it is absolutely necessary to establish implementing regulations in the form of a Perma and a Perja. These derivative technical rules must detail and restrict the application of DPAs specifically to economic-motivated crimes, mandate victim consent, and provide absolute exceptions for crimes that result in the loss of life or gross human rights violations. Furthermore, such regulations must detail the parameters of clause proportionality, periodic court supervision mechanisms, and clarify the procedures for terminating prosecutions and legal resistance remedies to guarantee the principle of checks and balances. With comprehensive technical regulations in place, it is hoped that the DPA can operate optimally as a law enforcement instrument providing justice, certainty, and utility.

 

This concludes the discussion in this article. Should you require further information or wish to discuss any part of this article, you may contact us at TRNP Law Firm for the most current details.