William Chindrawa

1. The difference between a claim and a petition is as follows: 1) When a petition is filed,
there is no dispute or disagreement or conflict existing between the parties and it is
merely an issue with one party whilst a claim is filed when there is a dispute between the
two disputing parties which shall be resolved before the court, be it civil or criminal
dispute, 2) as regards to petition, there is no party or third party that is in a dispute, the
petition is devoid of any dispute and only filed in the interest of one party (ex-parte),
whilst a claim involves two disputing parties who are the claimant/plaintiff and
defendant/respondent, and 3) In regards to petition, the Judge will enforce a declaratory
judgement in regards to the petition, for example, inheritance petition. Whilst claim will
entail a decision by the judge on the dispute between the two disputing parties before
the court.

Tort claim and a default or breach of contract claim are both civil lawsuits under the
Indonesian Civil Code. By reading Article 1233 of ICC, under the open system
principle, obligations can either arise from agreements or law. With regards to the
former one, obligations arise from an agreement that is perfected pursuant to Article
1320 of ICC regarding Contract, satisfying the four conditions, namely, 1) consent of the
individuals binding themselves, 2) capacity to enter into the agreement, 3) a specific
subject matter, and 4) a permitted cause. In regards, to the obligation arising from the
law itself, such obligation entails parental authority pursuant to Article 298 of the ICC.
Whereas obligation arising from the law as a result of people acts results from lawful
action or unlawful action pursuant to Article 1353 of the ICC. The lawful actions are
provided in Article 1359 of ICC regarding payment by mistake or Solutio Indebiti, duty of
good housefather Article 1356 of ICC, and Article 1360 of ICC regarding the duty to
return something not owed. Whilst the unlawful actions are provided in Article 1365 of
ICC regarding tort. Tort is an obligation arising from the law as a result of people acts
that result from an unlawful act. The elements of Tort comprise: 1) the commission or
omission of an act 2) the act is unlawful; hence the existence of a fault, 3) the act has
caused harm to another person or property owned by another 4) the harm is caused
directly and immediately after the Act or there is a causal relationship between unlawful
act and damage done. According to Legal Expert, Tort can be divided into three, Acts
 William Chindrawa

against the law on purpose, Acts against the law without fault (without an element of
intent or negligence), and Acts against the law due to negligence. In light of the above,
the main difference between the two civil lawsuits are 1) breach of contract claim arises
of the unfulfillment of an obligation under a contract by one of the contracting parties
whereas tort arises out of an unlawful act that causes damage to another person or
property owned by another, be it through commission or omission.

2. a Pursuant to Article 1 (3) of Law No. 25 of 2007 regarding Capital Investment, Joint
venture is defined as “an investment activity to do business in the territory of the
Republic of Indonesia which is carried out by foreign investment, both from outside and
within the country.”

Joint venture is an external business growth that must be carried out by foreign investors
with domestic companies. This is because the business is classified as important for the
country's growth. Meanwhile, businesses that are prohibited in joint ventures are fields
related to national defense, such as weapons and war machines. These are the
restrictions under the Investment Law in Indonesia. As such, JVCo’s business activity is
in no way restricted by the applicable laws and regulations in Indonesia.

The Laws and Regulations that govern Joint Venture include but not limited to:

a) Law No. 1 of 1967 concerning Foreign Investment

b) Government Regulation No. 7 of 1993 concerning Shareholders of Foreign Investment

Companies

c) Governmental Regulation No. 20 of 1994 regarding Share Ownership in Companies

established in the framework of foreign investment

d) Decree of the Minister of State for Mobilizing Investment Funds/Chairman of the

Investment Coordinating Board Number 15/SK/1994 concerning provisions for the
implementation of share ownership in companies established in the framework of foreign
investment
 William Chindrawa

e) Law No. 25 of 2007 concerning Investment as amended by Law No. 11 of 2020

regarding Job Creation.

Similar to the establishment of a domestic company in Indonesia, albeit a bit different, a

joint venture entails the involvement of a foreign investor or company, consequently,
pursuant to Article 1 (3) Law No. 25 of 2007 concerning Investment, joint venture falls
under the scope of Foreign Capital Investment. With that in mind, for Foreign Investment
joint ventures, domestic capital is at least 51% of the total capital of the joint venture
company. However, this percentage of ownership can be greater or smaller, depending
on the line of business that the joint venture company will enter into. Pursuant to Exhibit
1 of Presidential Regulation No. 49 of 2021 regarding Business Field of Capital
Investment, the toy industry falls under No. 246 with KLBI (Business Code) 32402 and is
considered as a prioritized business field. Accordingly, the company established on that
field will receive fiscal or non-fiscal incentive. The fiscal incentive includes 1) income tax
for Investment in certain business fields, 2) corporate income tax deduction, and 3)
Reduction of corporate income tax and net income reduction facilities in the framework
of Capital Investment and reduction of gross income in the context of certain activities.

The Key Stakeholders among others are the Ministry of Law and Human Rights for the
establishment of the Joint Venture in Indonesia, the Investment Coordination Body
(BPKM) as they will review the risk attached to business field of your company by way of
risk-based assessment, the Shareholders of the Company,

2b. Limited liability company under the Indonesian Law is required, especially foreign
owned company, to follow all of the requirements of the Indonesian Company Law such
as approval from the ministry of law and human rights affair for the making of Article of
Association and Deed of Establishment, and an annual financial report that must be
made annually during the general meeting of shareholders. As such, these regulations
must be complied with by the joint venture company.
 William Chindrawa

3. Legal due diligence is a thorough inspection or investigation activity carried out by a

legal consultant or corporate lawyer in a business transaction to obtain material
information or facts in order to evaluate the condition of a company or the object of a
transaction. Legal due diligence entails the investigation into all of the legal aspects that
both companies to a transaction are associated with. For example, when there are two
companies that plan to enter into a purchase and supply agreement, as a corporate
lawyer, legal due diligence is conducted to verify whether all of the permits and legal
documents are already sufficient for the transaction to be carried out as if there are
missing documents that are prerequisites to the authorization of the transaction, the
company that the corporate lawyer represents will be held liable for its own negligence
and giving reasonable assurances to the other contracting party that the legal
documents are already complete. Usually in an international commercial transaction
involving two different contracting parties domiciled in different countries, corporate
lawyer must look into the laws and regulations where the business activities or
transaction is going to be carried out. Having said that, if the seller, represented by the
corporate lawyer, fails to fulfil one of the requirements such as ministerial approval of the
transaction, then business costs are going to be incurred by the negligent party and the
other contracting party will be indemnified against such damage. To put it simply, legal
due diligence is the bread and butter of corporate lawyer and it is to be conducted for
any business transaction involving any party.

4. Governmental Regulation in lieu of Law No. 2 of 2022 replaces the current Job Creation
Law, however, some of the provisions are applicable provided that the provisions are not
contrary to the stipulations within the aforementioned governmental regulation. Now this
Governmental Regulation in lieu of Law will later be promulgated as a Law (undang-
undang) through the House of Representative (DPR) ’s discussions. Consequently,
without the DPR’s discussion and approval by the President of Indonesia, the
Governmental Regulation cannot be promulgated into a Law. It will affect the
implementing regulations of Law No. 11 of 2020 regarding Job Creation as the
implementing regulations will now have to be amended based on the new provisions in
the Governmental Regulation in lieu of Law.