Constitutional Court Clarifies Term “High Court” under Bankruptcy Law
On September 29, 2026, the Constitutional Court of the Republic of Indonesia (the “Court”) pronounced its decision in Case No. 243/PUU-XXIV/2026 concerning the judicial review of Law No. 37 of 2004 dated October 18, 2004, on Bankruptcy and Suspension of Debt Payment Obligations (the “Bankruptcy Law”).
The case was submitted by ST Luthfiani, S.H., M.H., Syamsul Jahidin, S.I.Kom., S.H., M.I.Kom., M.H.Mil., Henoch Thomas, S.H., S.E., M.M., and Kharisma J. Subakti, S.H., M.M. (collectively, the “Petitioners”). The Petitioners generally challenged the constitutionality of the phrase “high court” or “pengadilan tinggi” in the Explanation to Article 127(1) of the Bankruptcy Law against Article 28D(1) of the 1945 Constitution of the Republic of Indonesia (the “Constitution”).
We set out below the key arguments of the Petitioners and the Decision of the Court.
♦ Petitioners’ Arguments
The Petitioners argue that the Elucidation of Article 127(1) of the Bankruptcy Law, which reads as follows:
“a “court” in this paragraph means a district court, a high court or the Supreme Court,”
creates ambiguity and disharmony with other provisions. In particular, the reference to the a “high court” is considered inconsistent with Article 11(1) of the Bankruptcy Law, which stipulates that the legal remedy against a judgment on a petition for a declaration of bankruptcy is an appeal on cassation to the Supreme Court. The inclusion of the “high court” pursuant to the Elucidation of Article 127 of the Bankruptcy Law gives rise to an interpretation that a legal remedy in bankruptcy proceedings may be pursued through an appeal to the High Court, and therefore contrary to the principle of legal certainty as guaranteed under Article 28D(1) of the Constitution.
The Petitioners further argue that, as a matter of legal drafting principles, an Explanation should not add to or alter the substantive norm set out in the main provision. In this regard, they consider that removing the reference to the “high court” would provide legal certainty.
In addition, the expert in the case raised a further issue concerning the use of the word “pengadilan” (court) in Article 127(1) of the Bankruptcy Law, which reads as follows:
“In the event that there is a rebuttal while the Supervisory Judge is unable to reconcile the two parties, even though the dispute has been submitted to the court, the Supervisory Judge shall instruct both parties to settle the dispute in court,”
should be capitalized as “Pengadilan” or “Court”. This would mean that the term “Court” refers to the definition provided in Article 1 point 7 of the Bankruptcy Law, which provides:
“Court is the Commercial Court within the general courts.”
♦ Decision
The Court partially grants the Petitioners’ petition. The Court holds that the wording of Article 127(1), particularly the second reference to “pengadilan” (court), requires clarification to ensure legal certainty. Accordingly, the Court declares Article 127(1) conditionally unconstitutional, unless interpreted to mean that, where an objection may not be resolved amicably by the Supervisory Judge, the parties must resolve the dispute “di Pengadilan” (before the Court), referring to the Commercial Court. Notably, although the Petitioners did not specifically request a revision of the wording of Article 127(1) of the Bankruptcy Law, the Court takes the step of correcting the provision even though the Petitioners had not asked for this, in order to ensure legal certainty.
The Court also declares the Elucidation of Article 127(1) of the Bankruptcy Law conditionally unconstitutional, unless the phrase “high court” or “pengadilan tinggi” is to be understood as referring to the district court, high court, or Supreme Court only insofar as the dispute had already been brought before those courts prior to the bankruptcy judgment issued by the Commercial Court. The Court does not remove the phrase “high court” because doing so, the Court views, could create complications with other provisions within the Bankruptcy Law and give rise to legal uncertainty, as it could eliminate the right to appeal to the high court in civil disputes that had been filed before the bankruptcy or suspension of payment obligation decision is issued.
♦ Impact of Decision
Accordingly, the Court does not simply remove the phrase “high court” or “pengadilan tinggi” as requested by the Petitioners. Instead, it provides a conditional interpretation to clarify that the reference to the high court does not establish a right of appeal to the high court in bankruptcy proceedings.
The Court’s ruling is intended to address the legal uncertainty arising from the wording of Article 127(1) of the Bankruptcy Law and its Elucidation. As a result, the Decision draws a clearer line between disputes already pending before the general courts prior to the bankruptcy proceedings and disputes arising within the bankruptcy proceedings themselves that fall under the Commercial Court.
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Shafa Femalea S. Nuswantari (snuswantari@aksetlaw.com) for further information.
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