Not Paying Debt, a Criminal or Civil Violation?

Lately, many clients of Lilo Agung & Co have been questioning their business partners who have not fulfilled their obligations by the agreed deadlines for various reasons, causing both material and immaterial losses. Therefore, it is good to review this concept in a light discussion this time.

Debt usually arises from an agreement between two or more parties, an agreement synonymous with the concept of civil law. Legally, this breach is known as “default.” What is default? In his book, Prof. Yahya Harahap in “Legal Aspects of Agreement” explains that “default is the execution of an agreement that is not on time or not done properly or not done at all.” Furthermore, Subekti in his book “Contract Law” defines “default as a situation where the debtor does not do what was promised, is negligent, breaches the contract, including doing something that should not be done.”

The Civil Code in Article 1238 states, “default is described as a situation where the debtor is declared negligent by a warrant, or by a similar act, or based on the strength of the agreement itself, namely if this agreement results in the debtor being considered negligent by the lapse of the specified time.”

Next, what matters can be categorized as forms of default? In practice, there are 4 forms of default, namely:

1. Not doing what was agreed upon in the agreement;
2. Performing, but not as agreed;
3. Doing what was agreed upon but late; and/or
4. Doing something that according to the agreement should not be done.

The Civil Code has regulated several actions that can be taken by the creditor in the event of default, including:

1. Requesting the execution of the agreement, even if the execution of the agreed performance is late;
2. Requesting compensation for the losses suffered;
3. Demanding the execution of the agreement accompanied by compensation for the losses suffered;
4. Cancelling the agreement;
5. Cancelling the agreement accompanied by compensation for the losses suffered due to the late execution of the agreement.

The consequences of compensation for default that must be fulfilled by the debtor to the creditor include:

1. Costs (kosten), namely all expenses that have been actually incurred by one party;
2. Losses (schaden), namely losses in the form of creditor’s property caused by the debtor’s negligence; and
3. Interest (interessen), namely losses in the form of lost profits already anticipated or calculated by the creditor.

On the other hand, many parties feel that it is not enough if it is only brought to the realm of Civil Law and ask for it to be processed criminally. The question is whether there are Criminal Law clauses that protect such actions?

Article 372 of the Criminal Code states, “Anyone who deliberately and unlawfully possesses an item that entirely or partially belongs to someone else, but is under their control not because of a crime, is threatened with embezzlement, with a maximum imprisonment of 4 years or a maximum fine of IDR 900,000.00 (nine hundred thousand rupiah).”

Article 378 of the Criminal Code states, “Anyone who, with the intention of benefiting themselves or others unlawfully, using a false name or false dignity, with deceit, or a series of lies, drives another person to hand over an item to them, or to give a debt or erase a debt, is threatened with fraud with a maximum imprisonment of 4 years.”

Article 486 of Law Number 1 of 2023 concerning the Criminal Code

“Anyone who unlawfully possesses an item that is partly or entirely owned by someone else, which is under their control not because of a criminal act, shall be punished for embezzlement with a maximum imprisonment of 4 years or a maximum fine of category IV, which is IDR 200,000,000 (two hundred million rupiah).”

Article 492 of Law Number 1 of 2023 concerning the Criminal Code

“Anyone who, with the intention of benefiting themselves or others unlawfully, by using a false name or false position, using deceit or a series of false words, persuades someone to hand over an item, give a debt, make a debt acknowledgment, or erase a debt, shall be punished for fraud with a maximum imprisonment of 4 years or a maximum fine of category V, which is IDR 500,000,000 (five hundred million rupiah).”

Criminal Law, which has the characteristic of providing a deterrent effect and is retributive using legal instruments, is actually the last recommended resort considering the principle of Ultimum Remedium. However, as long as it can be proven and meets the elements in specific case handling, criminal law instruments can also be used as a solution aimed at achieving Restorative Justice, which is the resolution of cases through dialogue and mediation involving the victim and the reported party through the authorized law enforcement in Indonesia.