Yogyakarta Religious Court Decision No. 101 of 2014: Murabahah Financing Agreement Dispute

The plaintiff submitted that, on 24 June 2011, he and the defendant had entered into a murabahah financing agreement for a 2011 Daihatsu vehicle. Pursuant to the agreement, the plaintiff was to pay to the defendant IDR 198,060,000. This figure comprised the price of the vehicle, insurance, as well as other incidental costs. The parties agreed that the plaintiff would pay this sum in 52 monthly payments of IDR 3,301,000, which, for the first seven months, the plaintiff did. On the eighth month, however, a person borrowing the vehicle from the plaintiff did not return it, causing the plaintiff to report the vehicle stolen to the police. The plaintiff requested that the defendant grant him a grace period vis-à-vis repayments while the police conducted its investigation into the vehicle’s whereabouts. The defendant, however, reported the plaintiff to the police for dealing with the vehicle inappropriately by transferring it to a third party. (The defendant had perceived the vehicle to be a fiduciary security guarantee.) The plaintiff cited art 55 of Law No. 21 of 2008 on Shari’a Banking, claiming that the defendant should have instead sought to resolve the issue pursuant to shari’a principles, via deliberation (musyawarah), banking mediation, through the National Shari’a Arbitration Body (Badan Arbitrase Syariah Nasional – BASYARNAS), or, if necessary, the religious courts. Moreover, that the grounds invoked by the defendant in his police report repudiated the fiduciary principles of the agreement, and were contradictory to the principles of shari’a. In principle, the plaintiff argued, a murabahah agreement is a financing facility designed to benefit both parties. It is instigated by a capital holder (shahib al-mal) with another party in need via a sale-purchase transaction, clear that the sale price includes a profit for the capital holder and is to be repaid in cash or instalments (art 20(6) of Supreme Court Regulation No. 2 of 2008 on the Compilation of Shari’a Economy Laws). By repudiating the plaintiff’s request for a grace period, the plaintiff claimed that the defendant had, in fact, turned the agreement into a fiduciary security guarantee agreement. For pain and suffering, the plaintiff sought IDR 300 million.

Citing art 1338 of the Indonesian Civil Code (Kitab Undang-Undang Hukum Perdata), as well as the principle of Pacta Sunt Servanda (agreements must be kept), the defendant lodged an objection to the perceived absolute authority of the court to adjudicate the case. The defendant stated that both he and the plaintiff had agreed (in art 8(2) of their agreement) to resolve any disputes arising from the agreement before the Yogyakarta State Court (Pengadilan Negeri Yogyakarta), if initial deliberation proved unsuccessful. In other words, the parties had agreed to preclude the court from having jurisdiction over the case. To strengthen his claim regarding a civil court adjudicating a shari’a banking dispute, the defendant cited art 55(2) of Law No. 21 of 2008, including the Elucidation of art 55(2).

The defendant lodged three other objections:

  1. that while the plaintiff had incorrectly filed his complaint against a Maman Suryanto, rather than the defendant, he still should have filed his complaint against the company represented by the defendant, rather than the defendant personally;
  2. that the damages for pain and suffering sought by the plaintiff were not supported by sufficiently clear particulars and authentic evidence; and
  3. that the plaintiff’s assertion that the defendant had transformed the agreement into a fiduciary guarantee agreement was premature in that it was contingent upon the police investigation into whether or not the plaintiff’s conduct constituted a criminal transfer of a fiduciary security guarantee (the vehicle), contrary to art 372 of the Indonesian Criminal Code (Kitab Undang-Undang Hukum Pidana) and art 36 of Law No. 42 of 1999 on Fiduciary Guarantees.

As part of his counterclaim, the defendant sought to have the court find that the plaintiff had defaulted on his repayments. The defendant claimed he had reminded the plaintiff several times, verbally and in writing, to make the eighth repayment, but the plaintiff had still defaulted. The defendant sought IDR 674,953,000 in material and immaterial loss, requested that the court guarantee this sum against the plaintiff’s current and future assets, as well as the Daihatsu vehicle, and sought an additional IDR 1 million for every day the plaintiff was late in making repayments.

First, the court noted that the defendant’s claim regarding the court’s judicial authority (or lack thereof) had been dismissed in an interlocutory decision on 17 June 2014. It assented to the defendant’s first objection, however, dismissing the case on the grounds that the defendant lacked the necessary legal standing, and that, therefore, the plaintiff should have submitted its claim against the company of the defendant, rather than against the defendant himself.

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