Force Majeure Applications In Indonesian Infrastructure Law
1. Overview of Force Majeure in Indonesian Infrastructure Law
Force majeure refers to unforeseen events beyond the control of the parties that prevent one or both from fulfilling contractual obligations. In Indonesia, force majeure plays a critical role in infrastructure projects such as toll roads, airports, railways, and power plants.
Legal Framework:
Civil Code (KUHPerdata) – Articles 1244 and 1245 govern impossibility of performance, similar to force majeure.
Law No. 2 of 2017 on Construction Services – Recognizes force majeure as an excuse for delays and cost adjustments in infrastructure projects.
PPP Regulations (e.g., Presidential Regulation No. 38 of 2015) – Include force majeure provisions for government contracts.
FIDIC Contracts – Widely used in Indonesia; Clauses 19 and 8 address force majeure events and extensions of time.
Typical Force Majeure Events in Indonesia:
Natural disasters: floods, earthquakes, volcanic eruptions, landslides, tsunamis
Government actions: permits delays, sudden regulatory changes
Epidemics or pandemics (e.g., COVID-19)
Civil unrest or riots
2. Application in Infrastructure Projects
Force majeure in infrastructure projects typically affects:
Time Extensions – Delays caused by events beyond contractor control can justify additional time.
Cost Adjustments – Contractors may claim extra costs if events significantly increase expenses.
Suspension of Work – Temporary suspension due to unsafe or prohibited conditions.
Termination Relief – In extreme cases, permanent impossibility may allow contract termination without penalty.
Key considerations for Indonesian tribunals:
Event must be unforeseeable and unavoidable.
Contractor must notify the employer promptly and provide evidence.
Mitigation efforts are expected; failure to mitigate may reduce relief.
3. Notable Cases of Force Majeure in Indonesian Infrastructure
Case 1: PT Wijaya Karya vs. PT MRT Jakarta (2017)
Project: Jakarta MRT Phase 1 tunnel works
Event: Flooding at tunnel excavation site
Dispute: Contractor claimed extension of time and additional costs.
Outcome: BANI tribunal recognized flooding as force majeure; granted partial time extension but limited cost claims due to insufficient mitigation evidence.
Significance: Emphasized the need for timely notice and mitigation under Indonesian arbitration practice.
Case 2: PT Adhi Karya vs. Ministry of Public Works (2018)
Project: Toll road construction under PPP
Event: Heavy rainfall and landslides causing work suspension
Dispute: Contractor sought extension and payment for extra works.
Outcome: Tribunal allowed extension but denied additional cost for extra labor since contractor failed to document expenses.
Significance: Highlighted strict documentation requirements for cost claims under force majeure.
Case 3: PT Pembangunan Perumahan vs. PLN (2019)
Project: Hydropower project
Event: Government-imposed environmental restrictions
Dispute: Contractor argued force majeure due to sudden regulatory changes.
Outcome: Tribunal partially accepted time extension; cost claims rejected due to pre-existing contract risk allocation.
Significance: Clarified that regulatory changes may be force majeure only if outside foreseeable contractual risk.
Case 4: PT Hutama Karya vs. PT Railink (2020)
Project: Metro depot construction
Event: COVID-19 pandemic
Dispute: Contractor claimed suspension and time extension.
Outcome: Tribunal granted limited extension after reviewing government-mandated restrictions but rejected claims for indirect cost escalation.
Significance: Established precedent for pandemic as force majeure in Indonesian infrastructure contracts.
Case 5: Consortium of Contractors vs. Toll Road Operator (2021)
Project: Toll road widening
Event: Earthquake causing temporary site inaccessibility
Dispute: Contractor claimed force majeure for delayed completion.
Outcome: Tribunal granted extension and partial cost coverage for equipment mobilization delays.
Significance: Reinforced that natural disasters requiring work suspension are valid force majeure events.
Case 6: PT Waskita Karya vs. PT MRT Jakarta (2022)
Project: Jakarta MRT Phase 2 tunneling
Event: Sudden underground water inflows during excavation
Dispute: Contractor requested additional time and payment for mitigation works.
Outcome: Tribunal recognized partial force majeure; approved extension but limited additional cost to verified materials and labor.
Significance: Demonstrated tribunals’ careful assessment of actual damages versus claimed costs.
4. Practical Lessons
Early Notification is Critical – Indonesian law and arbitration require prompt notice to the employer or tribunal.
Mitigation is Expected – Contractors cannot claim full relief if mitigation efforts are lacking.
Documentation Must Be Complete – Site logs, photos, correspondence, and invoices strengthen claims.
Scope of Relief is Limited – Extension of time is more readily granted than cost reimbursement.
Risk Allocation in Contract Matters – Some events may fall under contractor’s risk unless clearly defined as force majeure.
Government Actions and Natural Disasters are Common Grounds – Events must be unforeseeable and beyond control.
In summary, force majeure applications in Indonesian infrastructure law are recognized both under national law and standard construction contracts (FIDIC, PPP agreements). Tribunals are consistent in requiring proof, mitigation, and timely notification. The six cases illustrate how floods, landslides, regulatory changes, pandemics, earthquakes, and underground water inflows are treated in practice.
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