Does Covid-19 May Stand as Legal Basis to Terminate Agreement?
Sarah and Anita
• General Corporate • 08 Jul 2021

Coronavirus Disease - 19 has attacked the territory of Republic Indonesia for approximately 1 (one) year. This situation has been causing various of changes in the lives of Indonesian people, including legal and business sectors. As known, Covid-19 is classified as a National Disaster through Decree of The President number 12 of 2020. Therefore, can Covid-19 be categorized as force majeure which immediately causes the termination of agreement? How are the legal implications of the agreement that agreed before the Covid-19? Let’s see the explanation below.  


First of all, we need to understand the Decree of the President number 12 of 2020 regarding the Stipulation of Non-Natural Disaster of the Corona Virus Disease 2019 (Covid-19) as a National Disaster (“Kepres 12/2020”) which has stated that Covid-19 is a national disaster. For more, first item of Kepres 12/2020 is as follows:

“to declare the non-natural disaster which resulted from the spread of the Corona Virus Disease 2019 (Covid-19) as a national disaster.”


Then, can Covid-19 virus be qualified as one form of Force Majeure? Before further explanation, it is necessary to understand the meaning of force majeure. Based on article 1244 and article 1245 Indonesian Civil Code, force majeure is as follows:

·          Article 1244

  “an obligator shall be ordered to compensate for costs, losses and profit if he/she cannot prove that the non-performance of a legal obligation or the late performance of such legal obligation, is caused by something which is unforeseen, for which he/she cannot be held responsible, even in the absence of bad faith on his/her part.


·          Article 1245

 There is no compensation for costs, losses or profit, if because of uncontrollable circumstances or because of happenstance, the obligor is prevented from delivering or performing something which is obligatory, or commits an act which is prohibited for him/her.”


From the two citations above, force majeure is understood as force majeure due to something which is unforeseen and cannot be held responsible, even in the absence of bad faith. That situation causes the obligator prevented from performing obligations under the agreement.  However, it is important to understand that article 1244 and article 1245 of the Civil Code are forms of exclusion from the implementation of obligation in the agreement that not include default. Force majeure does not automatically become a reason for termination of agreement, but can be a reason to postpone, to eliminate partial implementation of obligation in the agreement, or to terminate the agreement entirely.


The next question that arises is what about the Covid-19 virus?

With the President’s statement that Covid-19 is a national disaster, then the spread of Covid-19 can be categorized as force majeure. It is undeniable that the spread of the Covid-19 virus as a force majeure has implications for the difficulties of the Parties in fulfilling their obligations in the agreement. On several occasion, these difficulties prompted the Parties agreement to terminate the agreement. Specifically for the agreement of the Parties to terminate the agreement due to force majeure reasons, then that termination of agreement is classified as termination of agreement because of the Parties agreement as referred to article 1338 Indonesian Civil Code:

All legally executed agreements shall bind the individuals who have concluded them by law. They cannot be revoked otherwise than by mutual agreement, or pursuant to reasons which are legally declared to be sufficient. They shall be executed in good faith.”


Based on the provisions of article 1338 of the Civil Code, the agreement becomes law for the parties who make the agreement. In the event that the parties of the agreement agree if there is a force majeure, the agreement will be terminated, then the agreement will be terminate. However, in the event that the agreement made by the parties does not regulate force majeure, then the agreement will remain valid and the parties are still obliged to carry out their obligations.


Apart from that, it should be understood that in principle the parties who will terminate the agreement can request the termination of agreement to the judge in court, as regulated in article 1266 and article 1267 of the Civil Code. However, if the agreement between the parties disregard article 1266 and article 1267 of the Civil Code, it is sufficient for the parties to make an agreement to terminate the agreement. It should be noted that the waiver of article 1266 and article 1267 of the Civil Code does not eliminate the interests of third parties arising from the agreement that must be borne by the parties.




This article is generally made for the purpose of ANR Law Firm publication only and should not be treated as legal advice for your legal problem. Shall you have any further questions regarding this topic, you may contact the Advocate who authored this article at anrlawfirm@anr-lawfirm.com.

Authors : Sarah Sylvania Hutagalung, S.H. , Anita Khoirunisa, S.H.