Force Majeure and Unfulfillment of Construction Contracts Due to COVID-19 in Indonesia

DOI

10.2991/assehr.k.201209.313How to use a DOI?

Keywords

Covid 19, Construction Contract, Force Majeure

Abstract

The COVID-19 pandemic has a significant impact on economic stability, including a slowdown and even a recession in the world economy. This also has an impact on the construction problem in Indonesia which destroys all social pillars and especially business actors, plus the government has implemented various policies ranging from the relaxation of imports to large-scale social restrictions. This phenomenon hits business actors which have an impact on the difficulty of doing business normally. In fact, many construction projects in a district have been neglected because materials and workers come from neighboring districts whose mobility has been disturbed since the implementation of the regional quarantine policy. This is not to mention exacerbated by the escalation in prices and raw materials that increased due to the increase in the dollar exchange rate and imports. This results in projects not being completed on time. For example, the PLTS development in West and East Bali was delayed by 3-6 months. In addition, the construction of the Delta Park in Dalung Village, North Kuta Sub-District, cannot be continued this year. Meanwhile, in a contractual relationship, each party that has agreed on an agreement is obliged to carry out all the provisions contained in the agreement. This is explained in Law Number 18 of 1999 (Construction Services Law). However, COVID 19 makes one party unable to fulfill obligations. So that they cannot complete what has been promised. In the perspective of civil law, of course, parties who cannot carry out their obligations can be qualified as having “broken their promises” or “negligent in carrying out their obligations”. Based on the explanation above, researchers had an interest in conducting research on: 1. Can COVID-19 qualify as force majeure even though it is not stated in the agreement? 2. Can parties who are negligent in carrying out their obligations be released from the responsibility to compensate for losses arising from not implementing an agreement during force majeure due to COVID-19? This study used several stages namely: 1) Problem identification, 2) Literature study, 3) Primary and Secondary Data Collection, 4) Analysis and 5) Reporting. This study used a qualitative method using an approach through the Civil Code and Law Number 2 of 2017 on Construction Services. Based on the results, COVID-19 can be said to be a Force Majeure based on Law Number 24 of 2007 on Disaster Management. It is qualified as force majeure even though it is not regulated in this agreement, this is based on article 57 of Law Number 2 of 2017 concerning construction services which can be interpreted as a force majeure is an event that arises beyond the willing and ability of the parties that cause harm to one party. Then in Law Number 24 of 2007 concerning disaster management and strengthened by a statement from the competent authority and a statement from a legitimate government, namely a statement from the World Health Organization which has stated that COVID-19 is a pandemic. This was also strengthened by Presidential Decree No. 12 of 2020 concerning the designation of COVID-19 as a national disaster. So thus it can be said that the COVID-19 that occurs and spreads can qualify as force majeure, even though it is not regulated in the Agreement, with due regard to its nature and elements, COVID-19 can qualify as force majeure. However, this is not sufficient to become the basis that one of the parties to the agreement can delay the implementation of its obligations. In this case, it is necessary to prove that there is a direct causal relationship between the COVID-19 outbreak along with Government policies in overcoming COVID-19 which results in the inability to carry out obligations in an agreement. If the corona virus outbreak ends or the government removes the lockdown, the service user can demand the fulfillment of achievements again or can also choose to end the agreement with compensation. This is in accordance with the provisions of Article 1267 of the Civil Code.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Edison Hatoguan Manurung
AU  - Ina Heliany
PY  - 2020
DA  - 2020/12/14
TI  - Force Majeure and Unfulfillment of Construction Contracts Due to COVID-19 in Indonesia
BT  - Proceedings of the 2nd International Conference of Law, Government and Social Justice (ICOLGAS 2020)
PB  - Atlantis Press
SP  - 362
EP  - 367
SN  - 2352-5398
UR  - https://doi.org/10.2991/assehr.k.201209.313
DO  - 10.2991/assehr.k.201209.313
ID  - Manurung2020
ER  -