The regulation related with in rem security right especially regarding Fiduciary Guarantee and Mortgage is regulated in specific Law. Similar with others in rem security, both Fiduciary Guarantee and Mortgage as secondary agreement (accessoir) which is exist to guarantee the repayment of debt from debtors which previously arisen due from Principle Agreement between the creditors and the debtors. Furthermore the definitions of Fiduciary Guarantee and Mortgage will be explain in this section, namely:
A. Definitions of Fiduciary Guarantee and Mortgage
- Fiduciary Guarantee
Fiduciary Guarantee is regulated under Law Number 42 of 1999 (hereinafter referred to Fiduciary Law). Fiduciary Guarantee is security right over a movable object both tangible and intangible and/or immovable objects in specific buildings that cannot be encumbered with a Mortgage as regulated in Law Number 4 of 1996.
Fiduciary Guarantee is provided as guarantee for repayment of certain debt which provide the priority right to secured creditor for repayment of debt from other creditors, but with provisions the protection of these objects still on the Fiduciary Provider (based on Article 1 point 2 of Fiduciary Law). In Fiduciary Guarantee the control of the property remains with the owner of the object, this is differentiate a Fiduciary Guarantee from Pawning Guarantee.
Whereas the Mortgage is regulated under Law Number 4 of 1996 (hereinafter referred to Mortgage Law). The Mortgage is a security right which encumbered over right on land and include the objects related to the land, for repayment of debt that provide priority to secured creditors from other creditors (based on Article 1 point 1 of Mortgage Law).
B. The implementation of execution on Fiduciary Guarantee and Mortgage.
The implementations of execution on Fiduciary Guarantee is regulated in Article 29 Fiduciary Law, while in Mortgage is regulated in Article 20 Mortgage Law. The implementations of execution Fiduciary Guarantee which regulated in Fiduciary Law similar as implementation of execution which regulated in Mortgage Law. If the debtors default/breach of contract then execution of object Fiduciary Guarantee and Mortgage can be conducted in several ways, as follows:
- Implementation of the executorial title referred in certificate of Fiduciary and Mortgage have executorial power equivalent to a valid and binding court decision. Therefore, execution to the object of Fiduciary Guarantee and Mortgage can be carried out by request execution to related District Court.
- Implementation of execution with sale the object of Guarantee through a public auction (Parate Executie) and take the repayment of debt from proceeds the sale of the guarantee object.
- The Private sale made under consent between the creditors and the debtors is one of optional to carry out the execution of Fiduciary Guarantee and Mortgage. This private sale is such a method to obtained the highest price for obtainable the benefit to the parties. But execution in private sale there are several requirements, the private sale can be carried out after the expiration of 1 (one) month since notified in writing by the creditors and or/ debtors to the interested parties, and also announced at least 2 newspapers circulated in the relevant area (based on Article 29 paragraph 2 Fiduciary Law and Article 20 Paragraph 2 Mortgage Law).
In addition, in Article 34 of Fiduciary Law and in the elucidation of Article 20 Mortgage Law is regulated in terms of proceeds the execution are not sufficient for repayment of debt, then the debtors remains responsible for the unpaid portion of the debt. On the other side if proceeds of execution exceed the value of the guarantee, the creditors required refund the excess to the debtors.
C. The implementations of Parate Executie in Fiduciary Guarantee and Mortgage.
One of the implementation execution Fiduciary and Mortgage objects which regulated in Law is Parate Executie through the public auction, this ease execution provided by the Fiduciary Law and Mortgage Law. Parate Executie is the right given to the Receiver of Fiduciary Guarantee and Mortgage to sell the object of guarantee under its own authority, if the debtors default/breach of contract this is intended to provide ease and expedite the procedure of law enforcement.
Fiduciary Law and Mortgage Law is regulated specifically the provision of Parate Executie. The implementation of Parate Executie for Fiduciary Guarantee objects and Mortgage objects is possible because the certificates of Fiduciary Guarantee and certificates of Mortgage contain executorial titles with the sentence:
“For the sake of justice under One Almighty God“.
This leads to legal consequences for the certificates of Fiduciary Guarantee and certificates of Mortgage possess same executorial power as a court decision which has permanent legal power (final and binding).
The implementation of Parate Executie on Fiduciary Guarantee and Mortgage will be explain as follow:
- Parate Executie in Fiduciary Guarantee
In Fiduciary Guarantee the provisions regarding implementation of Parate Executie is regulated in Article 15 juncto Article 29 of Fiduciary Law which essentially regulated that Fiduciary receiver has the right to sell Fiduciary Guarantee objects through public auctions (State Assets and Auction Service Office of Ministry of Finance Republic of Indonesia) and collect repayment of debt from proceeds sale of the guarantee object.
For creditors as Fiduciary Guarantee receiver, executorial titles in the Fiduciary Guarantee certificate is important because the objects of Fiduciary Guarantee generally is moveable object both tangible or intangible in the authority of the debtor.
In practice, there is a problem with execution of Fiduciary Guarantee because the Fiduciary Guarantee provider often face issues to request the debtor to hand over the guarantee object voluntarily, if the debtor in the conditions of defaults/breach of contract.
Actually there is a provision based on article and elucidation of Article 30 in Fiduciary Law which stipulated that Fiduciary provider required to hand over the object of Fiduciary Guarantee at the time of execution. Other than that, there are provision in Article 17 Paragraph (4) The Ministerial Decree of Finance of Republic Indonesia Number 27/PMK.06/2016 regarding Guidelines Implementation Auction, that stipulated the requirements of the seller (in this regards Fiduciary Guarantee receiver) for must control the physical movable object at the time of auction.
Because in the practice often face issues the debtor as fiduciary provider reject/objection to hand over the object of fiduciary guarantee to creditors as fiduciary receiver, thus the implementation of Parate Executie in Fiduciary Guarantee must requesting the assistance of authorized security agency, as regulated in Article 30 Fiduciary Law. That regulation above also in line with the Regulation of the Head of National Police of Republic Indonesia Number 8 of 2011 regarding The security of Execution Fiduciary Guarantee.
Afterward, currently the implementation of Parate Executie for Fiduciary Guarantee has restricted by Constitutional Court Decision Number 18/PUU-XVII/2019 dated 25 November 2019 (herein after referred to MK Decision). Wherein MK decision stipulated restricted of implementations Parate Executie in Fiduciary Guarantee, shall fulfil the requirements as bellow:
- The condition of defaults/ breach of contract must be consent by the parties in Agreements attached to the Fiduciary Guarantee;
- The debtors as Fiduciary Guarantee provider must hand over voluntarily the object of Fiduciary Guarantee to the creditors.
If that requirements above unfulfilled, so the implementation of Parate Executie in Fiduciary Guarantee cannot be carried out by the seller (in this regards Fiduciary Guarantee receiver). Based on that condition according to MK Decision the mechanism of execution must be carried out by request execution to the Court.
- Parate Executie in Mortgage
Parate Executie in Mortgage could be caried out without special conditions/requirements. The legal basis for the implementation of Parate Executie in Mortgage regulated in Article 6 Mortgage Law, which is stipulated that if the debtors default/breach of contract, the first Mortgage holder has the right to sell the object of the Mortgage under its own authority through a public auction (Parate Executie) and take the repayment of debt from proceeds the sale of the guarantee object.
Based on the description above, shall concluded that there are difference requirement the implementations of Parate Executie between Fiduciary Guarantee with Mortgage. It caused by Fiduciary Guarantee since the existence MK Decision, that required implementation of Parate Executie for Fiduciary Guarantee must be fulfilled the requirements which stipulated in MK Decision that there must be consent by the parties the condition of defaults/breach the contract and also with the object of Fiduciary Guarantee shall to hand over voluntarily by the debtor as Fiduciary Guarantee provider to the creditor as Fiduciary Guarantee receiver. If the requirements unfulfilled then according to MK Decision that implementations Parate Executie cannot be implemented, but only be carried out by execution with request execution to the Court.
Therefore, the implementations of Parate Executie of Fiduciary Guarantee will be difficult with the existence MK Decision. Meanwhile for the implementation of the Parate Executie in the Mortgage, there is no special conditions/ requirements thus if the debtors defaults/ breach of contract, the creditors as the receiver of the Mortgage could be carried out the Parate Executie on the guarantee object regardless of there is approval from Mortgage provider.
This article is personal opinions from the author which cannot be used as a reference for certain specific issues. Therefore if there are several issues which needed more explanations or specific opinion regarding Fiduciary Guarantee and Mortgage, so you can conduct further consultation with contact TRNP Law Firm.