Semarang High Religious Court Decision No. 160 of 2014: Appeal Regarding a Multi-Service Ijarah Financing Agreement

For relevant facts, see Purbalingga Religious Court Decision No. 1721 of 2013.

The appellant successfully sought an interlocutory order, which required the judge of the lower court (Purbalingga Religious Court) to reopen the proceeding, summons both the appellant and respondent, and seek the following:

  1. an explanation regarding the object of the ijarah and in whose possession the item was;
  2. an explanation on the meaning of a sentence contained in the relevant multi-service ijarah financing agreement dated 13 September 2011, which stated that the customer, in developing his business, had submitted a request to the bank to obtain a multi-service ijarah financing agreement, the profit from which would be shared propotionally between the bank and customer in accordance with the extent of the financing from the bank and capital from the customer.

With that in consideration, the appellant sought to overturn the decision of the lower court on the grounds that inappropriate evidence had been submitted by the respondent, and evidence not submitted had been considered by the lower court in its judgment. Firstly, the appellants claimed, the written evidence submitted related to another debtor. Second, the lower court had considered witness evidence, whereas the respondent had not submitted any witness information as evidence. Third, the respondent as creditor had decided that the appellants had defaulted on their loan, whereas evidence had been submitted that the customer was considered to have been negligent or to have repudiated the agreement if payment was late.

The lower court had ordered the appellants to pay to the respondent IDR 252,393,450 to cover its financial loss based on their repudiation of the agreement. The court, however, found this to be an oppressive order, as making the appellants pay the whole sum back was contrary to the instalment plan (IDR 4,166,667 per month, plus a IDR 3 million fee or ujroh, for 60 months payable on the 13th of each month) to which the parties had agreed.

The court found that the lower court was correct in finding that the appellants had defaulted on their loan repayments. It opted, however, to enforce the instalment plan against the appellants, rather than ordering them to pay a lump sum. It dismissed the other appellants' other objections.

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