Jambi High Religious Court Decision No. 5 of 2015

On 20 September 2013, the appellant secured finance from the respondent for IDR 332.5 million via a Murabahah financial agreement, leveraging a property he owned in Jambi. In May 2014, he informed the respondent that, owing to financial difficulties, he would be unable to make that month's repayment. Pursuant to art 18(1) of the 20 September 2013 agreement, the appellant sought to consult with the respondent in order to be released from the agreement. The respondent, however, was not forthcoming. Again in June 2014, the plaintiff defaulted, and on 2 July 2014 received a reminder notice from the respondent. After unsuccessfully seeking finances from a third party, on 22 July 2014, the appellant received a second reminder notice. This prompted the appellant to seek to sell the secured property under the table, so to speak, given that the property was worth far more than the debt the appellant owed to the respondent. The respondent, however, did not take up the appellant's proposal. On 12 August 2014, the plaintiff received from the respondent a notice informing him that he had until 19 August 2014 to repay the debts he owed the respondent, otherwise his property would be auctioned. While the appellant sought to restructure the agreement with the respondent, the respondent did not accede to the appellant's request. The appellant submitted that the respondent's refusal to allow him to sell his property under the table contravened art 20(2) of Law No. 4 of 1996 on Mortgages of Land and Fixtures, and sought from the Court an order to grant him permission to sell his property under the table to pay his debts.

The appellant's claim before the Jambi Religious Court (lower court) had been dismissed. He sought to challenge the lower court's decision on the grounds that it lacked legal reasoning and references to the relevant legislative sections, that the lower court had incorrectly applied procedure by not including the relevant events and responses, and that it had failed to adjudicate the claim in its entirety. The Court concurred with the reasons for appeal. It found that the lower court had erred in finding that the appellant had no legal standing and that his claim lacked clartity. It did, however, dismiss the appeal for two reasons:

  1. the appellant's claim lacked a legal basis; and
  2. on the facts, the respondent was right to enforce its contractual rights pursuant to the agreement.
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