Legal counsel Eliadi Hulu during the ruling hearing of the material judicial review of the Commercial Code, Friday (1/3/2025). Photo by MKRI/Ifa.

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JAKARTA (MKRI) — The Constitutional Court (MK) held a ruling hearing for Decision No. 83/PUU-XXII/2024 in the case of material judicial review of the Commercial Code petitioned by Maribati Duha, on Friday, January 3, 2025. In its verdict, the Court adjudicates that the norms of Article 251 of the Commercial Code are conditionally unconstitutional.

“[The Court] declares that the norms of Article 251 of the Commercial Code (Staatsblad 1847 No. 23) is in conflict with the 1945 Constitution of the Republic of Indonesia and has no binding legal force conditionally as long as it is not interpreted, “including with regard to the cancellation of coverage must be based on the agreement of the insurer and the insured ruled by a court decision,” said Chief Justice Suhartoyo when reading the verdict of Decision No. 83/PUU-XXII/2024.

“The norms of Article 251 of the Commercial Code, upon a thorough examination by the Court, are norms that have the potential to cause multiple interpretations, especially if related to the terms of cancellation of an insurance agreement where there are issues relating to the existence of elements hidden by the insured even in good faith. This is because the norm of Article 251 of the Commercial Code does not expressly regulate the mechanism of the cancellation requirement or the way the cancellation is carried out if there are things that are hidden in making an agreement, except that there is only one possible consequence to arise, namely the agreement is canceled or the agreement will not be held or will be held under different conditions if the things that are wrong or hidden are known beforehand. Therefore, it is obvious that there is no affirmation regarding the cancellation procedure due to erroneous or concealed matters in the notification by the insured party in relation to the agreement made by the insurer,” said Justice Ridwan, delivering the Legal Considerations.

An agreement should provide a balanced position based on its principles. Meanwhile, the norm of Article 251 of the Commercial Code is only intended to warn the insured without providing a balance of rights from the insured party on the agreement made together with the insurer. Therefore, the Court agreed to provide affirmation and interpretation of the norms of Article 251 of the Commercial Court.

“An agreement, in nature, should provide a balanced position on the basis of the principles of the agreement, including the requirements of freedom of contract and the agreement of the parties, among others. The party addressed by the norms of Article 251 of the Commercial Code seems to be intended only to caution the insured without providing a balance of rights for the insured party to the agreement made together with the insurer. Therefore, the norms do not provide fair protection and legal certainty, especially for the insured,” Justice Ridwan added.

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A Colonial Legacy

Another legal reasoning underlying the Court’s decision is to emphasize that Article 251 of the Commercial Code is an outdated legal product of the Dutch colonial government and, thus, no longer in accordance with society's development and current legal needs. Hence, the Court views that the norms of the provision are no longer relevant in providing fair protection and legal certainty.

“The norms of Article 251 of the Commercial Code are a legal product of the Dutch colonial government that has been outdated so that they are not in accordance with the development of society and current legal needs. Therefore, according to the Court, to provide fair protection and legal certainty, the norms of Article 251 of the Commercial Code must be declared in conflict with the 1945 Constitution and has no binding legal force as long as it is not interpreted as ‘including in relation to the cancellation of coverage must be based on the agreement of the insurer and the insured based on a court decision,” Justice Ridwan explained.

Through the a quo decision, the Court prioritizes the provision and/or enforcement of fair protection and legal certainty in the context of insurance agreements. This means that the Court does not want the insurer in an insurance agreement to abuse the norms of Article 251 of the Commercial Code as an instrument to breach their obligations to the insured. Moreover, insurance agreements have a special nature because they are still based on circumstances/events that do not occur for certain.

“Insurance agreements that have a special nature because they are still based on circumstances/events that are not certain to occur, the insurer should be able to consider believing the agreement that will be taken in following up on the agreement that will be made together with the insured party, not making the norms of Article 251 of the Commercial Code as an instrument to breach their obligations to the insured,” Justice Ridwan stated.

Also read:

Insurance Payout Inaccurate, Commercial Code Challenged

Petitioner of Commercial Code Passed Away

Sopan Santun Passed Away, Petition on Commercial Code Dismissed

Author            : Ahmad Sulthon Zainawi 
Editor             : N Rosi.
PR                 : Fauzan F.  
Translator      : M. Hafidh Al Mukmin/Rizky Kurnia Chaesario

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.

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