The cassation respondent had an iron sand transportation business and, in order to improve efficiency, had successfully applied for a credit facility (murabahah) from the cassation applicant to purchase a container truck. The agreement stated that, in the event of any dispute, the first course of action would be to resolve that dispute in a deliberative manner between the two parties, but if deliberations were to fail, both parties agree to resolve the dispute before the National Shari'a Arbitration Body (Badan Arbitrase Syariah Nasional).
The cassation respondent had acquired a credit facility from the cassation applicant for IDR 1.476 billion, with a down payment of IDR 265,100,000. The cassation respondent subsequently experienced many financial ups and downs, impeding his ability to make repayments to the cassation applicant. The cassation respondent, however, if late to make his repayment, would also pay the late fee associated therein.
On 3 August 2013 at 8:30pm, the cassation respondent repossessed the container truck, subject of the agreement. It did so after the cassation respondent was 17 days late to make a repayment. The parties had agreed that the cassation respondent would pay a late fee of 0.002 per cent of the nominal repayment per day, and after 30 days in default, the cassation applicant would be entitled to repossess the vehicle. Pursuant to art 1365 of the Indonesian Civil Code (Kitab Undang-Undang Hukum Perdata), the cassation respondent had sought damages.
The South Jakarta Religious Court (lower court) had ordered the cassation applicant to return to the cassation respondent the vehicle subject of the credit facility agreement, as well as to pay to the cassation respondent damages of IDR 167,355,000. At the same time, the lower court ordered the cassation respondent to pay to the cassation applicant arrears of IDR 167,355,000, and a fine of IDR 209,193,750. The Jakarta High Religious Court then upheld this decision on appeal.
The cassation applicant sought to challenge the decision on the grounds that the lower courts both erred in their application of the law. Specifically, that the Jakarta High Religious Court had failed to provide reasons or clarity for its decision to uphold the decision of the South Jakarta Religious Court.
The Supreme Court upheld the appeal, concurring with the cassation applicant that the lower courts had failed to apply the law correctly. The court found that the parties had entered into a murabahah agreement on 17 December 2010, the subject of which (the vehicle) had been repossessed by the cassation applicant. The court believed that such conduct was a breach of the agreement rather than illegal conduct. Moreover, the right to take legal action must be based on one party's failure to fulfil an contractual obligation, meaning that the cassation respondent needed to explain which section of the agreement it believed the cassation applicant had contravened. Finally, the court reasoned, the vehicle was not seized by the cassation applicant. For those reasons, the court found in favour of the cassation applicant.