Environmental Liability and Dispute in Indonesia

Indonesia’s environmental laws impose strict liability on polluters, requiring compensation and restoration for environmental harm, and provide for administrative and criminal penalties, as well as allowing environmental organizations to sue for preservation.

Indonesia’s environmental laws hold polluters strictly liable for damages, meaning no fault needs to be proven. The laws cover compensation, restoration, and penalties for environmental harm. Administrative sanctions include fines and license revocation, while criminal penalties include imprisonment and fines. Disputes can be settled in or out of court, with environmental organizations allowed to sue for preservation.

Civil Environmental Liability: Strict Liability

Strict liability has been regulated under Indonesian environmental law since 1982. The law of 1982 regulates that polluter is responsible to compensate to those who suffered losses due to his right violation of a proper and healthy environment. On an activity involving a certain resource, that responsibility is strict, and it is selectively imposed according to the laws and regulations. This law of 1982 is then repealed by the 1997 law which specifically governs the strict liability provision.

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The 1997 law regulates that the party responsible to a business and/or activity which its business and activity causes huge and important impact to the environment, by using the hazardous and toxic materials, and/or producing hazardous and toxic waste, is strictly responsible to the losses caused, with an obligation to compensate over the losses directly and immediately when the pollution and/or damage of environment occurs. The elucidation of the law explains that the strict liability means no obligation to prove a fault element by the claimant. This strict liability is excluded when the alleged party can prove that the pollution and/or damage occurs due to:

1. Natural disaster or war;
2. Force majeure; or
3. Third party action.

The current law was promulgated in 2009 and then amended in 2023 by the promulgation of the Job Creation Law (“Indonesia Environmental Law”). It stipulates a similar provision to the previous law, namely, “Every person whose action, business, and/or activity uses B3, producing and/or managing B3 waste, and/or causing serious threat to the environment is strictly responsible to the losses occurred out of its business and/or activity.” Its elucidation explains the same meaning of ‘strict liability’ as under the 1997 law, namely, no obligation to prove the ‘fault’ element. There is the same exception as per the 1997 but regulated through its implementing GR on Environment.

On a strict liability claim, the judge is authorized to implement the strict liability to the defendant if the claimant can prove:

1. Business or activity of defendant is a business or activity using and managing the B3 materials, producing or managing the B3 waste, and/or causing serious threat to the environment;
2. There exists a loss of environment, property, and healthy because of an active or passive action by the defendant; and
3. There exists a causality showing that such suffered losses are due to the dangerous business or activity of the defendant.

In assessing action, business or activity causing a ‘serious threat,’ the judge considers whether such activity or business, licensed or not:

1. Has caused impact or has potential impact for contamination or damage to the environment and wide natural resources;
2. Has caused impact or has potential impact that is hard to be restored;
3. Has caused impact or has potential impact that is hard to be prevented;
4. Has caused impact or has potential or the impact is highly endangering the safety and health of the people so that its handling cannot be delayed; and/or
5. Does not have any conformity between the nature of the activity and environment or the place of such activity is conducted.

The law regulates that a party that transfers, changes the nature and form of business, and/or activity of a business entity that has violated the law, will not be released from its legal responsibility and its liability. This means, despite transfer, mergers, or acquisitions of a company having the business or activity, or the asset that was used for business or activity, the party violating the law, in this regard the environmental law, will still bear its liability to compensate and to do certain action.

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One of the cases concerning strict liability is a lawsuit filed by the Ministry of Environment and Forestry, as plaintiff, against PT Waringin Agro Jaya, as defendant, alleging that the defendant committed a fire. The evidence is based on the principle of strict liability, as a result of a fire in the Defendant’s oil palm plantation. The lawsuit was granted at first instance, then upheld on appeal and cassation. In Decision No. 456/Pdt.G-LH/2016/PN Jkt. Sel, Judex Facti considered,

“That based on the description of the article regarding strict liability, it is no longer necessary to dispute whether the Defendant committed any fault or not in the land fires on land under its management for cultivating oil palm plantations.”

Judex Facti also considered,

“That by granting the Defendant the right to conduct business activities on the land, the Defendant is responsible for any incidents or events occurring on the land under its management that lead to a serious threat to the environment.”

Further, Judex Juris in Decision No. 1561 K/Pdt/2018 considered,

“That the Defendant’s land has experienced repeated fires due to human actions, not natural causes. Therefore, the Defendant, as the landowner, must be held responsible for the environmental damage caused by these fires.”

Environmental Administrative Sanction

The Indonesia Environmental Law and GR on Environment regulate the imposition of administrative sanction by the central or regional government for violation of environmental legal norms which the GR on Environment regulates it in more detail.

The administrative sanctions include:

1. Written reprimand;
2. Government’s coercion;
3. Administrative penalty;
4. Freezing of business license;
5. Revocation of business license.

The administrative sanction is determined based on the supervision minutes and report of supervision.

The written reprimand is implemented when the responsible party of business and/or activity violates the provisions under the business license, government’s approval or regional government’s approval related to the environmental approval and laws and regulations on the environment.

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The government’s coercion is implemented when the responsible party of business and/or activity does not implement the instruction in the written reprimand within the determined period. This coercion may be immediately implemented when there exists:

1. A very serious threat to human and environment;
2. Greater and wider impact if the contamination or damage is not stopped immediately; and/or
3. Greater damage to the environment if the contamination or damage is not stopped immediately.

This government’s coercion may be in the form of:

1. Temporary stoppage of production;
2. Relocation of production facility;
3. Closure of channel of wastewater dumping or emission;
4. Demolition;
5. Seizure of goods or equipment that is potentially causing violation;
6. Temporary partial or wholly stoppage of business or activity;
7. Obligation to draft an evaluation document of environment or management document of environment;
8. Other actions intended to stop violation and to recover the environment function.

The central government is authorized to appoint third party to do the recovery of the environment function caused by the contamination or damage of the environment by the costs of the responsible party.

When this government’s coercion is not implemented, the next sanction will be on the administrative penalty which will be calculated based on the percentage of violation multiplied by the largest penalty value. Further, the administrative penalty may be imposed when the responsible party:

1. Does not have an environmental approval but already had a business license;
2. Does not have an environmental approval and business license;
3. Do actions exceeding the wastewater quality standard or emission quality standard, as per the business license;
4. Does not do obligation under the business license related to the environmental approval;
5. Preparing environmental analysis impact report without competence certification of its drafter;
6. Due to its negligence, doing an action causing excess of air ambient quality standard, water quality standard, seawater quality standard, disturbance quality standard (including noise, smell, and vibration), and/or environmental damage quality standard, which is not in compliance with its business license related to the environmental approval; and/or
7. Due to its negligence, do actions causing the environmental contamination or damage and not causing human health danger, injury, serious injury, and death of a human.

The administrative penalty will be determined based on the occurrence of each violation that may be calculated from 2.5% to 10% multiplied by investment value of business with the maximum value of IDR 3 billion, calculated cumulatively.

Read Also: The Power of Discretion: Navigating State Administrative Jurisprudence on Environment

The freezing of business license is implemented when the responsible party of business or activity:

1. Does not comply with the government’s coercion;
2. Does not pay the administrative penalty; and/or
3. Does not pay the late penalty of the government’s coercion.

The revocation of business license is implemented when the responsible party of business or activity:

1. Does not implement its obligation under the government’s coercion;
2. Does not pay the administrative penalty;
3. Does not pay the late penalty of the government’s coercion;
4. Does not implement its obligation in the freezing of business license or government’s approval; and/or
5. Do contamination or damage of environment that cannot be recovered.

Criminal Environmental Liability

The criminal provision under the Indonesia Environment Law is considered as a felony. The criminal provisions are regulated from Article 98 to 115 of Indonesia Environment Law. They cover several subjects namely the criminal offense by the responsible party of business or activity, any person (individual or business entity), and officer. They cover several offenses, namely:

1. Action exceeding the various quality standards whether due to its intention or negligence;
2. Actions releasing or distributing artificial genetics product to the environment instrument violating the laws and regulations;
3. Non-management of B3 waste;
4. Waste dumping or material to the environment instrument without permission;
5. Importing waste to the country;
6. Importing B3 waste to the country;
7. Importing prohibited B3 waste to the country;
8. Land burning;
9. Doing business or activity without license causing victims or damage to health, safety, or environment;
10. Officer issuing the environmental approval without environmental impact analysis or environmental management or supervision effort;
11. Officer intentionally not doing the supervision of business or activity of the responsible party which causes the contamination or damage of environment as well as the loss of human lives;
12. False or misleading information required for the supervision and law enforcement of environment;
13. Not doing the government’s coercion;
14. Intentionally hindering, disturbing, or failing the investigator or authorized officer of environment.

Except for one criminal offense, namely on the offense by an officer intentionally not doing the supervision of business or activity of the responsible party which causes the contamination or damage of environment as well as the loss of human lives, the rest of the offenses are imposed with imprisonment and penalty.

When the criminal offense is conducted by, for, or on behalf of a business entity, that criminal offense and penalty is imposed to the business entity (Decision No. 118/Pdt.G/LH/2016/ PN.Plk.) and/or the person giving the order of such offense or their leader. When the offense is conducted by a person based on the employment relationship or other relationship within the business entity working framework, the criminal sanction is imposed to the person giving the order or their leader without considering whether such offense is individually or jointly conducted.

Read Also: Environmental Dispute: Unlawful Act by State and/or Government Institution in the Severe Smoke Fog due to Forest Fires

In the case of Republic of Indonesia vs PT. Kalista Alam on Land and Forest Fire, the judge considered that a criminal liability must be assigned individually to each perpetrator. If the company is deemed liable, it must bear responsibility for its action, and if the company’s organ (including the director) is also found liable, they must also be held accountable for its action. The Supreme Court further argued that individual liability and corporate liability are distinct legal matter, even when the criminal act in question may be a result from the same conduct and appear interconnected.

In addition to the imprisonment and penalty, a business entity can be imposed with additional criminal penalty or disciplinary actions in the form of:

1. Confiscation of profit obtained from the criminal offense;
2. Closure of all or part of business or activity location;
3. Repair due to the offense;
4. Obligation to do what has been neglected; and/or
5. Placement of the company under receivership for not more than 3 years.

The evidentiary instrument for the criminal prosecution of the environment consists of:

1. Witness statement;
2. Expert statement;
3. Letter;
4. Reference;
5. Defendant’s testimony;
6. Other evidence, including, among others, electronic information, magnetic, optic, or its similarity.

Environmental Resolution Dispute

Environmental resolution dispute can be settled within the court or out of court, which will be voluntary decided by the parties. The Indonesia Environmental Law specifically stipulates that the claim through a court may only be lodged after the out of court settlement has been implemented and was declared as unsuccessful by any party or the parties.

The out of court settlement, which may also involve mediator’s or arbitrator’s service, is conducted to reach resolution on the following:

1. The form and amount of compensation;
2. The recovery action caused by the contamination or damage;
3. A certain action to secure non-recurrence of the contamination or damage; and/or
4. An action to prevent a negative impact over the environment.

One of the cases in environmental alternative dispute resolution is a mediation involving PT Palur Raya and Consortium of Waste Victims, consists of Ngringo Community and NGO Workers. The negotiation in this case initially appeared successful, resulting in a detailed agreement covering matters such as environmental management and community development. However, implementation of these provisions has also been inadequate. Thus, whilst mediation may indeed offer an alternative to administrative and judicial enforcement of environmental law, its effectiveness depends on the presence of prospective administrative or judicial sanctions, which provide a pressure for polluters to comply with the terms of mediated agreements.

Read Also: Citizen Lawsuit Mechanism in Environmental Dispute

The people may establish an institution dealing with the environmental resolution dispute which is neutral and impartial. This provision has been regulated under the GR on Institution of Resolution Dispute Services.

As the polluter pays principle, every responsible party of business or activity violating the law causing contamination or damage of environment, that causes losses to other people or environment, is obligated to compensate such losses and/or to do certain action. These certain actions may include:

1. To install or repair a waste management unit so that the waste complies with the quality standard;
2. To recover environmental function; and/or
3. To remove or to destroy the cause factor causing the contamination or damage of environment.

A court may determine the forced money for every day the action is not conducted.

The statute of limitation to claim is generally 30 years as it follows the provisions of Indonesian Civil Code but calculated from when the contamination or damage was known. This statute of limitation is not applicable when the contamination or damage was caused by business or activity using or managing the B3 or producing and/or managing the B3 waste.

When there is similarity of fact or event, legal basis, or nature of demand between the members of group, the people may lodge a class action claim for its own interest or for the interest of the people if they suffer losses caused by the contamination or damage of environment. This claim covers the state administrative claim or civil claim. (Decision No. 374/Pdt.G/LH/2019/PN.Jkt.Pst)

The central government and regional government responsible to the environment sector are authorized to lodge a claim for compensation and certain action (which may include preventive action, restoration, contamination or damage control) against a business or activity that causes contamination or damage of environment causing losses.

Moreover, the environmental organization responsible for the protection and management of environment is authorized to lodge a claim for the preservation of environmental function. This claim right by the environmental organization is reserved only for the organization that:

1. In the form of legal entity;
2. Having confirmation under its articles of association that it is establish for the preservation of environmental function; and
3. Has conducted actual activities according to its articles of association for not less than 2 years.

This environmental organization claim is limited to demand a certain action without any demand for compensation, except for the actual costs or expenditures.

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Reference

Laws and Regulations:

• Law No. 4 of 1982 on Principal Provisions of Environmental Management.
• Law No. 23 of 1997 on Environmental Management.
• Law no. 32 of 2009 concerning Environmental Protection and Management as amended by Law No. 6 of 2023 concerning Stipulation of Government Regulations in Lieu of Law No. 2 of 2022 concerning Job Creation becomes Law.
• Government Regulation No. 22 of 2021 on Implementation of Environmental Protection and Management.
• Supreme Court Regulation No. 1 of 2023 on Guidelines to Adjudicate Environmental Dispute.

Court Decision:

• Supreme Court Decision No. 1554 K/Pid.Sus/2015.
• Supreme Court Decision No. 1561 K/Pdt/2018.
• Decision No. 456/Pdt.G-LH/2016/PN.Jkt.Sel.
• Decision No. 118/Pdt.G/LH/2016/PN.Plk.
• Decision No. 374/Pdt.G/LH/2019/PN.Jkt.Pst.

Others:

• Nicholson, David. ‘Environmental Dispute Resolution in Indonesia’ (Dphil thesis, University of Leiden 2005).