A search for solutions in Dutch law for problems of nationalization in Indonesia.

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Graduation thesis
Author: Roeland Kort
Student number: 187402
Education: HBO-Rechten
University: NHL-Hogeschool
Client: HWMA Law Offices
Location: Jakarta
Date: February 4 2014
„To what extent does Dutch law provide solutions for the requirements regarding the need for more than one shareholder
in a systemic bank in Indonesia in the case of an acquisition of such a bank by the Indonesian state, and especially for the
problems that arise due to the conflict of law and hierarchy of laws in the Indonesian legal system?‟

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Graduation thesis
Roeland Kort
HBO-Rechten
NHL Hogeschool
Mentor
Relinde Vos
Company Mentors
Ahmad Hidayat
Kukuh Hadiwidjojo
Classification: Public
„To what extent does Dutch law provide solutions for the requirements regarding the need for more than one shareholder
in a systemic bank in Indonesia in the case of an acquisition of such a bank by the Indonesian state, and especially for the
problems that arise due to the conflict of law and hierarchy of laws in the Indonesian legal system?‟

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Preamble
In front of you lies the final version of my comparing research for my graduation. I started working on
my graduation-internship at HWMA Law Offices in February 2014 and researched a whole other topic.
However, this topic proved not to be sufficient to graduate, so something different was needed. I had
to search for a new research topic.
Mr. Kukuh Hadiwidjojo was of great help at that moment because he quickly offered me a different
topic which would not only resolve my problem, but also help to get more insight in a topic he has been
working on. And so, a week before I left Jakarta to go home, I was relieved to find a new topic to work
on.
The topic of this research is as follows: The Indonesian state acquired Century Bank after it failed. This
acquisition disclosed several problems coming from conflicts between the „Company Law 2007‟ and
the „Deposit Insurance Corporation Law 2004‟. This research will compare these topics and its
problems to their Dutch counterparts and describe any solutions that come from Dutch law. The
research is of major importance because if solutions are found, this can save a lot of money in the
future. Indonesia has lost a lot of money with the transaction and hopefully this can be prevented in the
future. It also affects the Indonesian legal system to make it more reliable and clear for its users. In the
research, several chapters will disclose the relevant information, the problems and the solutions for the
topic. At the end, this will lead to the conclusion of the research which answers the central research
question:
„To what extent does Dutch law provide solutions for the requirements regarding the need for more
than one shareholder in a systemic bank in Indonesia in the case of an acquisition of such a bank by
the Indonesian state, and especially for the problems that arise due to the conflict of law and hierarchy
of laws in the Indonesian legal system?‟
After the conclusion, several recommendations on the topic will be given.
I started working on my topic from the Netherlands, but stayed in contact with the office in Jakarta. The
office has been of great help to me and provided me with a lot of information to continue my research.
Although the research had its problems, for example a lack of concentration at the start, I think I have
learned many lessons in this period. It was my first major research I got to do alone and it truly feels as
something that I can be very proud of. I managed to put myself on a disciplined scheme to work on the
research and learned to qualify gathered information better. But the biggest lesson I have learned
simply comes from living and interacting with people abroad. There are so many things I have learned
in the few months in Jakarta and the contact I had with the people there after I left, that it is too much
to describe here. What I can say is that I definitely feel a better man and I strongly recommend every
other student to spent time abroad if possible.
To inform the reader completely, a quick warning is necessary. The name of the Indonesian bank that
will be researched in this paper is Century bank. However, when it was acquired by the Indonesian
state, one of the changes applied was a change of name. Thus, Century bank is now continuing
business under its new name: Bank Mutiara. Besides the change of name, the bank has recently been
sold to a new owner. Although this doesn‟t affect the point of view of the research, which looks at the
problems of the acquisition of Century Bank and the solutions Dutch law offers, it is important to know.
Finally, the English translations of Indonesian laws are not always translated officially by the
Indonesian state.
Before we will commence with the research, I want to dedicate this last alinea to thank several people.
First of all I want to thank HWMA Law Offices and all of its employees. They all have been of
tremendous help and I have felt very welcome in my time at the office. I especially want to thank Mr.
Kukuh Hadiwidjojo and Mr. Ahmad Hidayat. They both have helped me very well with my research.
The have provided me with information, interviews and always answered my many emails. I also want
to thank Oktarina Dwidya Sistha from IDIC (Indonesia Deposit Insurance Corporation), who has
helped together with her team to provide me with answers on my questions for IDIC.
In the Netherlands I want to give a special thanks to Mrs. Relinde Vos. She has been my mentor for
the complete time I have worked on my thesis and has been of great help. Every appointment Mrs.
Vos always had a lot of feedback and she was a good partner to discuss with.

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This concludes the preamble of my paper. I think what the reader will read in the following pages will
give a complete point of view on the topic and provide several solutions that can be of great help to
resolve the problems. If the reader has any questions or wants to discuss a matter with me, do not
hesitate to contact me.
Enjoy reading!
Yours sincerely,
Roeland Kort
7 januari 2015

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Table of contents
Table of contents........................................................................................................ 5
List of Abbreviations/Definitions.................................................................................. 7
Summary .................................................................................................................... 9
Introduction............................................................................................................... 11
Chapter 1: Historical context & Legal system. .......................................................... 13
Chapter 2: Current rules and regulations.................................................................. 17
Paragraph 1: The working of nationalization............................................................. 17
Paragraph 2: Applicable rules and regulations in Indonesia..................................... 19
Paragraph 3: Applicable rules and regulations in the Netherlands ........................... 21
Paragraph 1: The shareholders of Century Bank ..................................................... 24
Paragraph 2: Conflicting laws ................................................................................... 25
Paragraph 3: The hierarchy of law............................................................................ 26
Chapter 4: Dutch solutions ....................................................................................... 28
Paragraph 1: Conflict regulations ............................................................................. 28
Paragraph 2: Change of law..................................................................................... 28
Paragraph 3: Interventiewet...................................................................................... 29
Paragraph 4: Implementing law ................................................................................ 30
Chapter 5: Conclusion .............................................................................................. 31
Paragraph 1: Conflict regulations ............................................................................. 31
Paragraph 2: Change of law..................................................................................... 32
Paragraph 3: Interventiewet...................................................................................... 32
Paragraph 4: Implementing law ................................................................................ 33
Paragraph 5: Answer to central research question................................................... 33
Chapter 6: Recommendations.................................................................................. 35
Bibliography.............................................................................................................. 36
Annex ....................................................................................................................... 40
Annex 1: Interviews with Mr. Hadiwidjo .................................................................... 41
Annex 2: Contact with Kukuh.................................................................................... 45
Annex 3: Interview IDIC............................................................................................ 47
Annex 4: Interview de Gier ....................................................................................... 49
Annex 5: Law 24 of 2004 concerning Deposit Insurance Corporation 2004 ............. 51
Annex 6: Law nr. 40 of 2007 on Limited Liability Company ...................................... 64

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Annex 7: Research Matrix ........................................................................................ 98

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List of Abbreviations/Definitions
 HWMA Law Offices: The office where the research was performed. The name contains the
first letters of the lawyer‟s family name: Hadiwidjojo Wirya Muhktar Ardibrata;
 Century Bank: A major bank in Indonesia;
 ABN Amro: One of the four major banks in the Netherlands;
 IDIC: Indonesia Deposit Insurance Corporation;
 President Suharto: Second president of Indonesia, from 1967 until 1998;
 BI: Bank Indonesia;
 EU: European Union;
 ECB: European Central Bank;
 ESCB: European System of Central Banking;
 Wtk: Wet toezicht kredietwezen;
 Wft: Wet financieel toezicht;
 DNB: Dutch National Bank;
 „Adat‟ law: Customary law in Indonesia, different in every community;
 Burgerlijk Wetboek: The Dutch lawbook;
 BW: Burgerlijk Wetboek;
 MPR: Majelis Permusyawaratan Rakyat Republik Indonesia (A combination of the House of
Representatives and the Senate);
 DPD: Dewan Perwakilan Daerah (the Senate);
 DPR: Dewan Perwakilan Rakyat (House of Representatives);
 SNS Reaal: One of the four major banks in the Netherlands;
 Interventiewet = Wet bijzondere maatregelen financiële ondernemingen;
 KSSK: Komite Stabilitas Sistem Keuangan (Financial System Stability Committee);
 Fortis: A Dutch/Belgian bank who was the owner of ABN Amro when it was acquired by the
Dutch state;
 NV: Naamloze Vennootschap;
 AFM: Autoriteit Financiële Markten;
 SER: Sociaal Economische Raad;
 NLFI: NL Financial Investments;
 BV: Besloten Vennootschap;

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 MPR Decree: A legal order issues by the MPR;
 Conflict regulations: Provide a structure to find solutions for conflicts.

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Summary
In 2008 the Indonesian state acquired Century Bank from its shareholders. This resulted in several
legal problems. Several laws were not complied with and there were legal actions that conflicted with
each other. After instruction from Mr. Kukuh Hadiwidjojo a thesis has been written to research this
topic and it had as its goal to find solutions provided by Dutch law. To find these solutions, a
comparison is made with the ABN Amro case in the Netherlands, which is very similar. This resulted in
the following central research question:
Following the problem and the goal of the research, the structure of the research will exist of the
following sub questions to support the central research question:
1) What are the applicable rules and regulations for the nationalization of shares of Century Bank
by the Indonesian state?
2) What are the applicable rules and regulations for the nationalization of shares of ABN Amro by
the Dutch state?
3) What were the conflicts between the „Deposit Insurance Corporation Law 2004‟ and the
„Company Law 2007‟ when both are applied to the acquisition of Century Bank in Indonesia?
4) How would Dutch law solve the aforementioned conflicting rules of the „Deposit Insurance
Corporation Law 2004‟ and the „Company Law 2007‟?
5) What recommendations can be made to improve the rules and regulations regarding the
acquisition of a systemic bank by the Indonesian state?
The acquisition of a company in the Netherlands is regulated via several laws and additional
regulations. The process of the acquisition of a company is specifically regulated in Book 2 and Book 7
of the Dutch Civil code. There are a few articles that cover the acquisition of shares from a company in
this book and that are important to comply with for a complete acquisition of a company, or in the case
of this research, a Dutch bank. Because the procedure is a contract, the Contract law in book 6 of the
Civil code is also applicable.
The Dutch nationalization regulation at the time of the acquisition of ABN Amro is hard to describe
compared to the clear scheme of acquisition in Indonesia. When ABN Amro was acquired by the
Dutch state, there was no special process of nationalization for banks. To be exact, the acquisition
was a normal process of buying a company according to a contract in the Netherlands. The Dutch
state offered a price higher than the market price of ABN Amro to the owner of the assets (Fortis) and
took control of the company. When this process of acquiring is followed, the regulation specifically for
merging, acquisition and parting is applicable.
The acquisition of a company in Indonesia is regulated specifically in one law: „Company Law 2007‟.
All relevant articles are specified here and offer information for the acquisition of a company. However,
because the acquisition of Century Bank is a nationalization it is mostly based on „Deposit Insurance
Corporation Law 2004‟. It offers help for the acquisition of a failing bank and also regulates the
government company IDIC, which acquired Century Bank for the government.
IDIC acquired the bank according to a very simple scheme. Depending on the factors, for example the
teamwork with existing shareholders, it acquires almost all the shares or all the shares of the failing
bank. After that, the bank was reorganized structurally and financially and it was intended to be
divested within three years.
At the moment of writing, Century Bank has been sold to J-trust, which indicates the end of the rescue
process. This did not go exactly as planned in the scheme, because the divestment took 1 year longer
than the intended term. As for the Dutch nationalization regulation, the Interventiewet/Intervention Law
was developed and introduced in 2012, which offers a better and clearer scheme for acquisition of a
company by the Dutch state.

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The problems that originated form the acquisition of Century Bank specifically are conflicts between
„Company Law 2007‟ and „Deposit Insurance Corporation Law 2004‟. The first problem is that there is
only one technical shareholder in Century Bank, which is IDIC. There is a small amount of 0,004%
shares for others, but they have no influence at all. The second problem is that there are opposing
laws that conflict with each other, the regulation for shareholders as major example. Adding to the
problem is that there is no conflict regulation to resolve these problems. It can cost money, deadlines
and bad communication with persons who depend on the law. There is currently no official structure to
resolve these problems. The third problem that originates from the conflicting laws is the hierarchy of
laws. There is no clear structure to decide which law will go first. This becomes clear in the conflict
between Company Law 2007‟ and „Deposit Insurance Corporation Law 2004‟. Both laws have a similar
hierarchical position, although IDIC thinks that it can deviate from the law using „Deposit Insurance
Corporation Law 2004‟. However, this is not official and makes the problem more confusing for
involved parties. The lack of conflict regulation is also an issue here.
The Dutch legal system offers several solutions for these problems and these are covered step by
step. The first solutions are the implementation of conflict regulation. This is the best solution to
resolve the problems that are researched, because they offer a structure to resolve conflicts. The
second solution is a change of law. The Dutch law is simple and gives room to be flexible in a
company. If the Indonesian law was to be changed to become simpler, conflicts would not grow so
fast. It would for example, be a solution for the requirement regarding shareholders in Century Bank.
The third solution is a unique Dutch aspect, the Intervention Law. If this law would be introduced, it
would offer more information of the role of the government and the position of the law, resulting in less
conflicting matters. The final solution for the problems is a better implementation of the law. In the
research it has become clear that the law is not always abided, causing trouble for cases as Century
Bank. If the law was abided in the Century Bank case, then there would be no problem with the
amount of shareholders in Century Bank.
In conclusion, the Dutch legal system offers many solutions for the problems in the Century Bank
case. The Netherlands have learned a lot from their own case with ABN Amro and have put what they
learned into better regulations. The aforementioned solutions could be used to benefit the Indonesian
legal system and it would be helpful for the Indonesian government to learn from it. The only subject
that does not provide a direct solution is a change of law, because it is not clear if there are particular
reasons for the requirements Indonesian law has.

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Introduction
2008 2012 2014 2015
Economic Crisis Introduction of
Interventiewet
Start of
research
Completion
of research
Acquisition of
Century Bank
Interventiewet
used to save SNS
Reaal
Century
Bank is sold
to J-Trust
Acquisition of
ABN Amro
Figure 1
This research has been written after instruction of HWMA Law Offices in Jakarta. HWMA Law offices
is a relatively new law office that lies in the south of the city and has its main activities mostly in the
field of Company law and International Trade law. Although it is relatively new, the office already has a
lot of clients with many different legal problems for which the office tries to find solutions. It has a small
team of employees and four partners, but more employees are expected due to the growth of the
company. This is because of the work of the company, but also because of the continuously growing
demand for lawyers in Jakarta and the fact that the law in Indonesia is still in development.
Problem
In 1998 the Indonesian banking crisis occurred and because of that a lot of things changed. Relevant
regulation was changed, the consumer‟s opinion became different and several banks were closed or
merged. Following these major changes, in 2008 Century Bank eventually was considered as a failing
bank. Supervision on the bank was not enough, so later that year the Indonesian state decided to
acquire Century Bank because of its systemic importance for the market. The bank could be
reorganized both financially and structurally and made ready for the market. However, it soon became
clear that there were many legal problems.
Right now Century Bank does not comply with several laws. The first problem is the shareholders of
Century Bank, because now the bank only has one shareholder where it needs two. The laws that
regulate these important issues, the „Company Law 2007
1
‟ and the „Deposit Insurance Corporation
Law 2004
2
‟, conflict with each other. This on its own is another problem, which also causes problems
for HWMA Law Offices. An example is the confusion that arises, because it is not clear which law to
apply. Finally, there is no clear hierarchy between the laws. Following these problems, it is unclear
how to comply with the laws. It can also cause problems with the interpretation of the law and the
consequences of these problems are that HWMA Law Offices is at risk for potential problems due to
these issues, for example financial risks by not applying the law in a right way. Also, if not acted upon
right now, it will repeat itself again in the future. These issues and uncertainties need to be dealt with,
because abuse and adverse consequences need to be prevented.
In 2008 the Dutch state faced a similar problem in the Netherlands, when ABN Amro was acquired by
the state. This procedure of nationalization was very similar but didn‟t face the problems that occurred
in Indonesia. Because of that a comparison to the Century Bank case will be made and aspects of the
ABN Amro case used to find a solution for the problems of the Century Bank case.
Goal
The goal of this research is to find solutions for the problems that currently exist concerning the laws
regarding the acquisition of a systemic bank by the Indonesian state. First, an answer will be given to
the central research question to decide to what extent there are any solutions to be found in Dutch law.
If so, these solutions will be offered to HWMA Law Offices in February 2015 in the form of several
recommendations.
1
See: Annex 6
2
See: Annex 5

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Central research question
Because of this the research will focus on the possibility to use knowledge from the ABN Amro case in
the Netherlands, as a solution for the problems in the nationalization of a systemic Indonesian bank.
This was stated in a central research question as follows:
Sub questions
Following the problem and the goal of the research, the structure of the research will exist of the
following sub questions to support the central research question:
1) What are the applicable rules and regulations for the nationalization of shares of Century Bank
2) What are the applicable rules and regulations for the nationalization of shares of ABN Amro by
the Dutch state?
3) What were the conflicts between the „Deposit Insurance Corporation Law 2004‟ and the
„Company Law 2007‟ when both are applied to the acquisition of Century Bank in Indonesia?
4) How would Dutch law solve the aforementioned conflicting rules of the „Deposit Insurance
Corporation Law 2004‟ and the „Company Law 2007‟?
5) What recommendations can be made to improve the rules and regulations regarding the
acquisition of a systemic bank by the Indonesian state?
Research methods
The method of research for this paper is to perform a practice-oriented legal research that compares
Indonesia to the Netherlands. Via this method, the relevant legal basis for the problems and the
solutions can be researched and compared to each other. It can give the best chance to get a good
understanding of the subject.
In this thesis the various sub questions of the research will be answered and concluded with an
answer to my central research question and several recommendations. First the regulations regarding
the nationalization of Century Bank and ABN Amro will be covered. After this, an insight will be given
in the problems that are currently occurring due to the acquisition of Century Bank by the Indonesian
state. Next the possibilities for the use of Dutch law to find solutions for the problems that are occurring
due to the acquisition of Century Bank by the Indonesian state will be discussed. Finally, the central
research question will be answered in a conclusion and several recommendations to advance the law
regarding the acquisition of a systemic bank by the Indonesian state will be done.
To provide answers and recommendations, various methods of research will be used
3
. These are
basis research methods: Internet research, Literature research, Case law and interviews. Internet
research can give me a way to find a lot of information in a fast way. This can give me general and
more profound information, to build a good basis for the research. Literature will be helpful to find
profound information. There are a lot of documents regarding this case, and this can help to get a
better view of the topic.
Interviews with experts can be very helpful to find information that is experienced first-hand. An
interview with IDIC could provide a whole other point of view on the case, which will balance the
research with a different point of view. Finally, Case law can provide information about the
considerations behind actions made in the Century Bank case and the ABN Amro case, providing a
better understanding about decisions made.
Many sources will be added, which are for example paper-articles, relevant laws and important
documents.
3 See: Annex 7

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Financial information
To develop a good understanding of the Century Bank case and the ABN Amro case, a simple
overview of the financial numbers is provided:
Nationalization Century Bank Purchase by J-Trust Nationalization ABN Amro
6,762 trillion Rupiah 4,41 trillion Rupiah 16,8 billion Euro
Figure 2
Chapter 1: Historical context & Legal system.
Introduction
There are a lot of different events, periods and people which had influence on Banking law in
Indonesia and the Netherlands, bringing Banking law in both countries to the point where it now is. To
understand the development of the law and how the system works anno 2014, a brief overview of the
history of Banking law
4
in Indonesia and the Netherlands will be given, followed by a summary of the
applicable legal systems and regulators. After this, the definition and workings of the banks in
Indonesia and the Netherlands will be explained together with the framework of the national system. At
the end of this theoretical framework, a brief description of earlier research on this matter will be given.
The history of Indonesian Banking law
The history of Indonesian Banking law cannot be seen separate from the colonial influence the Dutch
had in Indonesia. Before the year 1966 there was almost no financial system. The cause for this can
be found in the period Indonesia had to recover from the Dutch colonial influence. In the years after,
the Indonesian state had to deal with fiscal deficits and hyperinflation. Only when President Suharto
came into power in Indonesia, the banking system of Indonesia emerged
5
.
The development of the Indonesian banking system had several phases
6
. The first, from 1966 until
1972, can be identified as a formative phase. Commercial banks were allowed by the government and
there were major financial deregulations following the allowance of accounts for foreign money. An
important moment in this period was the forming of the Indonesian Central Bank (BI) in Law 13 of
1968
7
. The second phase, running from 1973 until 1982, can be identified as a period where many
policies were changed due to the oil crisis. The third phase, from 1983 until 1991, was a period of
financial reformation. There were many changes and new banking licenses were introduced. Also,
regulations on deposits and the branches of banking were reduced. The fourth phase ran until 1997,
when the Indonesian Banking Crisis arose. In this period the financial system expanded and banks
became larger. On the other hand, the Indonesian Central Bank strengthened its control over non-
bank financial institutions and it became more selective in its licensing policy. The fifth phase has its
start in 1998, the year that the Indonesian Banking Crisis was at its height and a long, still going on,
period of financial restructuring started. Several banks were closed or merged with each other.
In a legal context, the years 1998 and 1999 were of major importance. In 1998 the new Banking law,
„Law number 10 on banking‟, was enacted. One section this law mandated was the Deposit Insurance.
This was done together with the „Republic of Indonesia‟s Presidential Decree Number 26 of 1998
regarding the Guarantee on Liabilities of Commercial Banks‟ and the „Republic of Indonesia‟s
Presidential Decree Number 193 of 1998 concerning the Guarantee on Rural Banks Payment
Responsibility‟
8
. In 1999 the New Central Bank Act established Bank Indonesia as an independent
Central Bank, which allowed the Central Bank to act independent and without political responsibility.
1998 was also the year that Indonesia had just become a free and democratic state, because
President Suharto
9
resigned. This caused major developments in Indonesia, due to which the
4
The theoretical framework is specifically for Banking law, since this is the applicable regulation
5
Hamada IDE Research Paper No. 6 2009
6
Asia Resource Centre for Microfinance „Bank Indonesia‟, BWTP
7
Srinivas/Sitorus Paper 2004 p. 6;
8
LPS, „The History of IDIC‟, 2011
9
Cochrana, The New York Times, May 19 2013

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economy of the country grew enormously. Together with the lessons learned from the Indonesian
Banking Crisis of 1998, many regulations have been restructured. Protection of consumers became an
important aspect of the banking system, so to prevent further problems and to guarantee deposits on
banks, the Indonesian state established the Law Deposit Insurance Corporation in 2004. This law
became particularly important when Century Bank collapsed and people needed reinsurance for their
money.
Since the Indonesian banking crisis there were a lot of changes in the Banking law and other
regulations that are applicable. This has been an ongoing process by the Indonesian state and its
official governmental organizations, inducing changes to make the law better.
The history of Dutch Banking law
The basis
10
for the current legal system in the Netherlands was laid during the era of French
annexation of the Netherlands. The French introduced the French Civil Code and the Code Penal.
After the French empire of Napoléon was driven away from the Dutch Empire, much of the French law
remained in the Netherlands. However, in the following years a lot was changed due to the aversion by
the Dutch against everything that was French. This resulted in re-codification of most of the Dutch law,
including the Dutch Banking law in 1863. This was the first Banking law in the Netherlands, following a
brief enumeration for banks in 1814.
The first Banking law remained in operation until 1937, when a new Banking law was introduced that
changed the proceedings and activities of the banks in the Netherlands. Eight years later, in 1945, the
Dutch had developed new ideas about the position of the bank and the role it had to fulfill in the
economy. This resulted in two new laws: the „Naastingswet‟ and the Banking law of 1948. The mission
of these laws was to provide a better position for banks in the community and to give them a position
apart from the Dutch State. Since that moment a bank in the Netherlands was independent from the
Dutch state-policy. Soon after this important change, other developments already arose. The
Netherlands became part of the European Union (EU) and participated in European regulations,
meaning it had to implement new regulations in the Dutch Legal System. This resulted in a change of
Dutch Banking law in 1998. In this change of law, several new articles were added to the law to
comply with the ECB (European Central Bank) and the ESCB (European System of Central
Banking)
11
.
In 1978 the „Wet toezicht Kredietwezen (Wtk) was introduced, which regulated the supervision of
creditors in the Netherlands. This was a start for supervision policies, which did not exist in this form
yet. Several other supervision laws followed, when eventually they were all put together in the „Wet
Financieel Toezicht (Wft) in 2007. This assembly of laws followed the reorganization of Financial
Supervision in 2002
12
. Since the economic crisis in 2008, the financial supervision has increased even
more with several new policies
13
that regulated the functioning of companies, the tasks of DNB (the
Dutch National Bank), codifications for banks
14
and more.
Legal System of Indonesia
The Legal System of Indonesia
15
is based on the Civil law System the Netherlands introduced during
their occupation of the country. In 1945, a new constitution was introduced which took the Dutch Civil
System as a starting point but introduced many different regulations. Currently, the Indonesian Legal
System can be stipulated as Civil law. However, it differs from other Civil law countries because there
is a so-called „Adat‟ law, which means customary law. These are laws that are customary for groups of
people, islands, regions and other communities. „Adat‟ law is used in Indonesia because of the many
islands and the great cultural diversity in the country. Such laws are used in villages and districts for
several topics and can differ per culture. Indonesia also uses Shari ‟a in banking, marriage and legacy
law. However, compliance hereto is not required.
10
R. Lesaffer, „A short legal history of the Netherlands‟, in
H.S. Taekema, Understanding Dutch Law, 2004, p. 31- 58
11
Kamerstukken II 1997/1998: 25719, nr. 3, Memorie van toelichting
12
DNB, „Wet op het financieel toezicht (Wft), 1 september 2011
13
Rijksoverheid, „Toezicht op de financië sector‟, 2015 (online)
14
NIBC Bank, „Dutch Banking Code‟, 2015
15
ASEAN Law Association, „Legal system in Indonesia: Chapter 2‟, Jakarta: ALA 2005

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Legal System of the Netherlands
The Legal System of the Netherlands is a Civil law System, which the Indonesian Legal System is
based on. The current constitution was last revised in 1983 and since then a lot of additional laws have
been added. It is more straightforward as the Indonesian law, because there is no „Adat‟ law and Shari
„a. Regulation for businesses mostly falls under the regime of „Het Burgerlijk Wetboek/Civil Code‟ and
some basic regulation is described in the constitution. Although there is no „Adat‟ law and Shari „a in
the Netherlands, the country has to deal with a different aspect, namely European regulation. The
European Union decides on a lot of regulation, which members of the Union have to implement in their
legal system. Due to much European regulation, many changes have already been made to the Dutch
Legal System and this is continuously adapted to by the Dutch legal system.
Regulators in Indonesia
The two institutions that hold the legislative power in Indonesia, the House of Representatives (DPR)
and the Senate (DPD), carry out the regulation of laws in Indonesia
16
. Besides these two institutions,
there are several other sources of law. In the MPR Decree III/2000 on „The Sources of Law and the
Hierarchy of Laws and Regulations„
17
, there is given an official hierarchy of laws and regulation in
article 2 of the Decree. According to this article it becomes clear that also the MPR
18
, the Government,
President and Regional Government can regulate laws in Indonesia. The power to regulate laws is
written in the constitution of Indonesia
19
. Unfortunately, the process of regulating, the so-called
parliamentarian history, is not or in some cases limited recorded
20
.
Regulators in the Netherlands
In the Netherlands the regulators of laws are strictly separated between several parties. This is
implemented according to the Trias Politica system. However, in practice there is no strict separation.
The parliament, town councils/provincial states and government can make regulations for the country.
For the first two institutes this is a task they can perform, but not the main task. It is the government
that has as its main task to regulate and to carry out any regulations. It shows that the separation is
not strict in practice. The parliament and the town councils/provincial states have as their main task to
audit the government and local governments. Besides that, they can also make laws for local
purposes. The ministers of the government can also make laws, but these laws should be controlled
by the parliament
21
. In the Netherlands there is also a hierarchy of law
22
, although this is fairly different
then in Indonesia, due to the European involvement in the legal system.
The Indonesian banking sector
23
The Indonesian banking sector has faced major changes since the banking crisis hit the country in
1998
24
. Several banks were nationalized, merged or liquidated and a lot of regulations were
changed
25
. Since then the banking sector in Indonesia has been restored and has grown enormously.
The numbers of profit, clients etc. have increased fast. After the changes in the Indonesian banking
sector in 1998 there are now 120 commercial banks. 4 of them are owned by the Indonesian state.
The banking sector in Indonesia has several main activities, which consist of providing loans and
saving accounts for consumers, banking for businesses and private banking for capital. However, the
Indonesian banking market has differences with a regular banking sector in a country. Important
differences are the „rural banks‟. These banks are microfinance institutions and there are 1600 of them
in Indonesia. They account for less than 2% of the total banking assets, but they are becoming
increasingly important for Indonesian consumers and the market. Another difference with a regular
banking sector is Shari „a banking. Several banks in Indonesia offer financial services that comply to
Shari „a law, which has its own specific regulations. People choose for these banks for religious
reasons and should be accounted for.
16
Kimbrough e.a. 2011
17
National Democratic Institute (NDI) 2000, Appendix 2, p. 28
18
A combination of the House of Representatives and the Senate: See note 15
19
Republic of Indonesia, „The 1945 constitution of the Republic of Indonesia‟, Article 20-22
20
The state gazette is corrupt, thus not easy accessible
21
De Rechtspraak, „ De Nederlandse Rechtstaat‟, De Rechtspraak (online)
22
Janssen 2010, p.87 Figure 5.3
23
Global Business Guide Indonesia (GBG) 2014
24
NRC Economie, August 22 1998
25
See: The history of Indonesian banking law, p. 13

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The Dutch banking sector
26
The Dutch banking sector is relatively big for a small country like the Netherlands. It is four times the
size of its economy, which means it is one of the biggest banking sectors of the world. Together with
the fact that the Dutch banking sector provides work for over 100.000 people, it can be said that
banking is very important for the Dutch economy.
The Netherlands has four major banks that account for more than 90% of the market. These banks
are: ING, Rabobank, ABN Amro and SNS Bank. Together with several small banks and foreign banks
they form a total of around 287 banks in the Netherlands. The activities of the Dutch banks are
standard in the international banking market. The banks provide loans, saving accounts and other
activities for consumers, provide banking for businesses and private banking for capital. One important
characteristic the major banks in the Netherlands have is that SNS Bank and ABN Amro are
nationalized by the Dutch state. Because of this, these banks have several restrictions to prevent
unfair competition.
Earlier research
When searching for scientific literature for this topic, there were no documents other than this one that
cover the same problems and form of research in a comparative form. Therefore, the research done in
this document is relatively new and it can possibly disclose new problems and solutions for existing
problems. The following chapters containing the research will cover this and give answers on the sub
questions and ultimately the central research question.
26
Banken.nl, „Nederlanse Bankensector‟, 2011 (online)

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Chapter 2: Current rules and regulations
In this chapter the current rules and regulations of Indonesia as well as the Netherlands are covered,
to provide a good background and theoretical basis on the subject. First the working of nationalization
in Indonesia and the Netherlands is covered. After that, the first two sub questions will be answered.
This will provide an in depth look at the current applicable rules and regulations for the nationalization
of shares of Century Bank and ABN Amro.
Paragraph 1: The working of nationalization
To establish a good sense of how nationalization works in Indonesia and the Netherlands, a brief
description of the process will be given in this paragraph. However, there was not much information to
be found about nationalization before 2010. The information that could be found is used in this
research, but it was impossible to find everything because sometimes access was denied or help was
not given.
Nationalization in Indonesia
In Indonesia the process of nationalization of a bank is described in a very simple figure on the official
website of IDIC.
Figure 3
27
When a systemic bank in Indonesia is failing, the bank will be put under surveillance by the KSSK
28
. If
the bank fails, IDIC will acquire the bank to rescue it. The rescue of the bank will be performed with or
without the help of shareholders. The amount of capital IDIC invests in the failing bank depends on the
participation of the shareholders. After the acquisition, the necessary steps will be taken by IDIC to
rescue the bank. This is for example a change of the board of directors or investing extra liquidity. The
deadline for this rescue process is after three years, but can be extended with two extra years. After
this term, the rescues bank needs to be sold and operate as a normal public bank again.
27
LPS, „Mekanisme Resolusi Bank‟, 2011 (online)
28
Financial System Stability Committee. See: Annex 1

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For Century Bank this exact process of nationalization is followed by using above scheme. The
shareholders of the bank did not want to participate in the rescue, so IDIC had to invest 100% of the
capital into Century Bank. The necessary steps have been taken and the divestment has already
happened. For an outsider it may look that shareholders in a systemic failed bank get a free pass to do
what they want, since eventually IDIC will rescue the failing company. However this is not the case. If
they do not participate in the rescue of the company, the shareholders will lose all their shares to IDIC,
for the price after failing. This is less than the previous worth of the shares. On the other hand
incentives are given to participate in the rescue of the systemic bank, for example help to restore the
previous worth of the shares.
At the moment of writing, Century Bank has been sold to J-trust
29
, which indicated the end of the
rescue process. This did not go exactly as planned in the scheme, because the divestment took 1 year
longer than the intended term.
Nationalization in the Netherlands
The Dutch nationalization regulation at the time of the acquisition of ABN Amro is hard to describe
compared to the clear graphic provided for Indonesian nationalization described before. When ABN
Amro was acquired by the Dutch state, there was no special process of nationalization for banks. To
be exact, the acquisition was a normal process of buying a company
30
on the basis of a contract in the
Netherlands
31
. The Dutch state offered a price higher than the market price
32
of ABN Amro to the
owner of the assets (Fortis) and took control of the company. When this process of acquiring is
followed, the regulation specifically for merging, acquisition and parting is applicable
33
.
The Interventiewet
However, in 2012 the so-called „Interventiewet/Intervention law‟ was introduced in the Netherlands
34
.
The introduction of this law was motivated by the observation that the procedures to resolve problems
in the financial sector were in some cases inadequate. There was for example a lot of focus on the
individual company, but less on the complete financial system. This became clear when Fortis failed.
In light of this, the Dutch state decided to give more possibilities to intervene in financial companies.
The goal of this law was to give more possibilities to deal with failing financial companies and reach a
more stable financial system
35
.
The Intervention law provides a clear regulation and enough possibilities for the government to help a
financial company that is failing. One possibility that was provided for the government is expropriation.
This term handles the nationalization of a company by the Dutch state if this is absolutely necessary. It
is described as the „Ultimum remedium‟ and can only be used in extraordinary matters that seriously
and immediately endangers the financial stability of the Netherlands. As was already explained, this
procedure was not used in the ABN Amro case. However, the procedure has already been used for
the nationalization of another failing bank, SNS Reaal, and worked as intended
36
.
SNS Reaal
SNS Reaal was a Dutch bank that was operating on the Dutch market for consumers and businesses
in banking- and insurance business. The bank did not have enough capital-buffers to continue
business and needed a major investment. After private investment did not work out, the Dutch state
decided to intervene and nationalize the bank based on the Intervention law on 1 February 2013
37
. If
this had not been done, the failing of SNS Reaal would have substantial consequences for other
business, consumers and the state. It would cost a lot of money and economic downturn, because
SNS Reaal was a bank of systemic importance. The use of the Intervention law made it possible for
the Dutch state to intervene quickly and potentially save huge amounts of money. It is seen as the last
29
Festiani, Republika, November 20 2014
30
According to specialized lawyer Mr. De Gier Zie interview
31
Article 6:213 BW e.v.
32
Rapport Commissie de Wit 2012
„Rapport Parlementaire Enquêtecommissie Financieel Stelsel‟: Hoofdstuk 4
33
Title 7 of Book 2 BW
34
Kamerstukken I 2011/2012, 33059 A, (online)
35
Kamerstukken II 2011/2012: 33059, nr. 3, p. 1
36
Government of the Netherlands, „State of the Netherlands nationalizes SNS Reaal‟, 2013 (online)
37
Van Kampen, NRC, February 1 2013

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effort to save a company and was published as a solution after the unstructured handling of ABN
Amro.
Sub-conclusion
In 2008 both the Netherlands and Indonesia were at different places regarding the regulation for
nationalization. At the time, nationalization in the Netherlands was performed on the same legal basis
as any other acquisition. Only the Dutch Contract law and Merger law
38
were used. Although this was
very simple, it was maybe too simple for complex situations as the ABN Amro case, hence the
Intervention law.
In Indonesia there was already regulation for the handling of failing systemic banks. This was a
comprehensive scheme and worked in the case of Century Bank. However, not all steps in the
scheme were complied with by IDIC. The last step, the divestment of Century Bank, eventually took a
year longer to comply with since Century Bank has been sold in 2014. In the Netherlands the
regulation for the handling of failing banks has developed and resulted in the Intervention law, while in
Indonesia it has stayed the same. It can be concluded that in both countries there is now a good and
comprehensive theoretical basis for the handling of a failing systemic bank.
Paragraph 2: Applicable rules and regulations in Indonesia
What are the applicable rules and regulations for the acquisition of shares of Century Bank
In this paragraph the current rules and regulations for the acquisition of shares in Indonesia are
covered to provide a theoretical insight on the case.
The nationalization of Century Bank was officiated on 21 November 2008
39
in a meeting which was
attended by the finance minister of Indonesia and the prime directors of Century Bank, the Chief
Executive of IDIC, the president of Century Bank and the Governor of Bank Indonesia. It was decided
in this meeting that IDIC acquired Century Bank from its shareholders. After severe liquidity problems
it was necessary to save the bank, because of its systemic importance for the country‟s banking
system. Century Bank was a listed public company and it was possible for the shareholders to work
together with IDIC to save the bank
40
. However, the shareholders did not want to help, thus IDIC
acquired almost 100% of the shares of Century Bank
41
.
The process of the acquisition of shares from a company/bank in Indonesia is regulated in several
laws. There are a few laws that are applicable to every form of acquisition and there is also a law that
is specifically for the acquisition of a bank by the state of Indonesia, which is specifically important for
this research
42
. In this chapter the various laws will be analyzed in order of importance.
Process of nationalization in Indonesia
For general acquisition the most important law is the „Company Law of 2007‟, in which in article 1
number 11 the definition of an acquisition is regulated:
„11. „Acquisition‟ means a legal action taken by a legal entity or individual person to acquire shares in a
Company resulting in the passing of control of the Company.‟
However, the acquisition of Century bank has not been done exactly according to the „Company Law
of 2007‟. As earlier described in this research
43
, the bank came under supervision of the KSSK after
the Indonesian state decided the bank needed supervision
44
. The KSSK concluded after supervision
that Century Bank needed to be rescued. Thus, they handed over shares of Century Bank to the IDIC
38
See heading: Nationalization in the Netherlands, p.18
39
Dewi/Ardian, Viva.co.id, November 21 2008
40
See figure 1
41
Hadiwidjojo Paper 2013
42
Law nr. 24 of 2004 concerning Deposit Insurance Corporation 2004
43
See: chapter 2, paragraph 1, „Nationalization in Indonesia‟
44
Juoro, The Jakarta Post, December 2 2009

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to help the bank recover. The IDIC (Indonesian Deposit Insurance Corporation) is an organization that
is based on the „Law Deposit Insurance Corporation 2004‟ and has the task to guarantee deposits to
consumers and handle failing banks. Hence their relevance to this thesis. IDIC acquired the shares of
Century Bank relatively easy, because the previous shareholders didn‟t want to be involved with the
rescue of the bank. IDIC offered the previous shareholders a part in the rescue to maintain financial
stability, but the shareholders decided to reject the offer. So IDIC acquired Century Bank without
involving any of the previous shareholders. All these actions came forth from articles in the „Law
Deposit Insurance Corporation 2004‟, namely 21, 26, 40 and 41, to help a bank recover if it is
needed
45
.
‘Law Deposit Insurance Corporation 2004’
The „Law Deposit Insurance Corporation 2004‟ in particular is important in the case of the acquisition
of Century Bank. Basically, the whole acquisition of Century Bank is based on this law and also the
organization that manages the shares of Century Bank, IDIC, comes forth from this law
46
. But the „Law
Deposit Insurance Corporation 2004‟ has been amended twice to arrange a more specific regulation
for the handling of failing banks that pose as a systemic threat. The amended regulations that were
created are specifically helpful for the Century Bank case. The two regulations
47
give a specific and
extensive overlook on the legislative basis and actions in case of a failing bank that poses as a
systemic threat. Since Century Bank was seen as a failing bank that also posed as a systemic threat
for Indonesia, these amendments apply to this case. The amendments were helpful to give a complete
sight of actions that were done or could be done.
Other relevant regulations
Besides these two major laws and amendments there are several acts and regulations that are
relevant for this topic. One of them is the „Central Bank law on Bank Indonesia‟
48
, assigning the
regulatory and supervisory governmental functions in the national banking sector to Bank Indonesia.
This law is relevant to the acquisition of Century Bank because of the information that needs to be
published by Century Bank and the acquiring partner and because of the consequences the
acquisition has on the market and relevant parties
49
. Another law is the „Banking Law of 1998‟
50
, which
regulated the need for a company to get approval from Bank Indonesia for the acquisition of a bank
51
.
However, since Century Bank is acquired by the Indonesian state the law is not applied in this case.
The article elucidates that approval is needed to prevent monopolies. With the takeover of Century
Bank by the Indonesian state, this is not relevant because it is about the rescue of a bank of systemic
importance.
A different reason why BI did not have to give specific approval for the acquirement was the fact that it
had Century Bank already under its supervision. When it was decided that action was needed by the
state to preserve the bank, it could be taken immediately without approval.
Although the acquisition of Century Bank has been based mostly on the „Law Deposit Insurance
Corporation 2004‟, the „Company Law 2007‟ is also applicable with different kinds of articles. Century
Bank was still a publicly owned company when it was acquired and so compliance with the law was
needed on important issues; for example dealing with shareholders, terms, information and payments.
The fact that Century Bank was public also meant that the „Capital Market Law
52
‟ was applicable.
An acquisition covers many areas in the law and the reasons for this are the many stakeholders in the
acquisition. Besides the shareholders, companies, government and communities there are also the
employees of the company and tax payments. Both company elements add additional interests to the
acquisition of shares from a public company that have to be taken into account. Therefore the „Labor
law
53
‟ and „Tax law
54
‟ of Indonesia also have to be taken into account to ensure the good practice of an
45
See annex 3, question 2
46
See note 7
47
„Indonesia Deposit Insurance Corporation Regulation Number 5/PLPS/2006‟ and „Indonesia Deposit Insurance
Corporation Regulation Number 3/PLPS/2008
48
Law nr. 23 of 1999 on Bank Indonesia, as amended
49
Darini, Norton Rose Fullbright, May 2012, Q 2 (online)
50
Law nr. 7 of 1992 Concerning Banking as amended by Act 10 of 1998
51
Article 28 of Law nr. 7 of 1992 Concerning Banking as amended by Act 10 of 1998
52
Law nr.8 of 1998 Concerning Capital Market
53
Law nr. 13 of 2003 concerning manpower

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acquisition of shares from a public company in Indonesia. To keep this research focused; this will not
be covered any more.
The shareholders
The shareholders are also of major importance in the case of the acquisition of Century Bank by the
Indonesian state. Since the current shareholders have the shares of the bank in their possession and
can help the Indonesian state with the rescue of the bank
55
, they play a vital role in the nationalization.
Century Bank was a public company and because of that the relevant regulation for shareholders was
described in the „Company Law 2007‟, providing general articles, handling of shares and the General
Meeting of Shareholders
56
. In light of the possible rescue of Century Bank with help of the
shareholders, the „Law Deposit Insurance Corporation 2004‟ also has important regulation concerning
the shareholders that covers the procedure of rescue with or without their help
57
.
Sub-conclusion
The regulation that is needed for the acquisition of a company is provided by the Indonesian legal
system. Although the case of Century Bank is difficult, due to the fact that it is a failing bank of
systemic importance that has been acquired by the Indonesian state, there is a good legislative basis
for cases like this. Later in this research a better insight will be given in the applicable rules and
regulations for the issues regarding the acquisition
Paragraph 3: Applicable rules and regulations in the Netherlands
What were the applicable rules and regulations for the acquisition of shares of ABN Amro
by the Dutch state?
In this paragraph the current rules and regulations for the acquisition of shares in the Netherlands are
covered to provide a theoretical insight on the case.
The nationalization of ABN Amro by the Dutch state was officiated on 3 October 2008
58
. The Dutch
state made a deal with „Fortis Groep‟, the sole shareholder of ABN Amro to buy all the assets of ABN
Amro for an amount of 16.8 billion euro`s. After this the Dutch state became the sole shareholder of
the bank. ABN Amro was a listed Dutch „NV‟ (naamloze vennootschap) when the state nationalized
the bank, but trading of the „NV‟ was suspended because of the nationalization.
The acquisition of a company in the Netherlands is regulated via several laws and additional
regulations. The process of the acquisition of a company is specifically regulated in two books of the
Dutch Civil code
59 60
. There are a few articles that cover the acquisition of shares from a company in
this book and that are important to comply with for a complete acquisition of a company, or in the case
of this research, a Dutch bank. Because the procedure is a contract, the Contract law in book 6 of the
Civil code is also applicable.
Since ABN Amro is a bank, the research deals with a company that is working in the financial market
of the Netherlands. This financial market is being supervised by the „Autoriteit Financiele Markten
(AFM)‟
61
, an organization that solely exists for the specific reason of supervising companies. The
organization judges the behavior of the financial organizations in the Netherlands and screens their
compliance with the law. Compliance with the law depends on several important laws
62
, for example
the law „Algemene wet bestuursrecht/General Administration Law‟ and „Wet toezicht effectenverkeer
1995/Law on supervision of securities commerce 1995‟. However, there is one law that stands out in
54
Law nr. 7 of 1983 concerning Income tax as lastly amended by Law nr. 36 of 2008
55
See annex 5: Section four of chapter 5
56
See annex 6: General provisions, Shares (part five) and Chapter VI
57
See annex 5: Section four and five of chapter five
58
Dirks, De Volkskrant, October 3 2008
59
Title 7 of Book 2 BW
60
Art. 6:213 BW e.v.
61
AFM, Homepage: www.afm.nl, 2015
62
AFM professionals, „Wetgeving en regels‟, 2015

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its importance in the particular case of the acquisition of ABN Amro by the Dutch state. This is the „Wet
op het Financieel Toezicht/Law on Financial Supervision‟
63
Law on Financial Supervision
This law is specifically made to govern the supervision of financial organizations in the Netherlands,
and as is the case with IDIC, AFM is also based on this law
64
. More importantly, there is a section
65
in
this law that governs extraordinary measures to ensure the financial stability of the financial market.
Seeing the topic of this section, these are some important applicable articles to the acquisition of ABN
Amro by the Dutch state. However, this section has been changed in 2012 with the implementation of
the Intervention law
66
. This law has been created to prevent cases similar as the ABN Amro case.
Since it had not been created yet when the ABN Amro case was running, it was not used to resolve
the situation with ABN Amro. Only the older version of this section of the „Law on Financial
Supervision‟ that was used in 2008 can be applied
67
. There were only a few laws at that time where
could be worked with in the ABN Amro case. But only the use of an emergency regulation
68
and a
curator
69
proved to be not sufficient to ensure financial stability in the financial market.
The rights of employees
In above alinea there is spoken about the process of acquisition and the applicable laws. However,
there are several other factors in the acquisition process and the employee is one of the most
important factors in the Netherlands. The rights of the employees are taken into account and have an
important position. Since it represents a major difference with the applicable rules and regulations for
an acquisition of shares in Indonesia, it is an important topic to cover in this chapter.
The country has many laws, treaties and organizations that are solely there to protect the rights of the
employee. In the BW this becomes clear when studying section 8, title 10 of book 7 BW. The articles in
this section protect the rights of an employee in case of an acquisition, and describe that the rights of
an employee will move from the current employer to the acquirer. The owners switch, but the
employees stay employed by the company. It protects the employees for being suddenly fired in case
of an acquisition. This protection is also regulated in the European Transfers of Undertakings
Directive
70
, which aims to protect the rights of employees in case of transfers of undertakings,
businesses or parts of businesses. The national law and the European Directive both are applicable to
all versions of an acquisition, meaning that this also should apply to the acquisition of ABN Amro.
At last, there is an important regulation that is made for the protection of employees. This is the „SER
Fusiegedragsregels 2000‟
71
regulation. The goal of this regulation is to protect the rights of the
employee of a company in cases that can affect the employees and work councils due to
consequences of an acquisition. It governs certain ways for a company to work with the employees
after an acquisition. The regulation for behavior after an acquisition is only applicable
72
in several
cases. These regulations and treaties prove that protection of the employees is an important matter in
the Netherlands. The employees have a right to receive information, cannot suddenly be fired after a
takeover and have the possibility to advise the involved companies. Besides these regulations and
treaties, the unions also have an important role in accepting any acquisition. This will prevent any
delay and will provide the various organizations with information about legal, economic and social
consequences of the acquisition, but also give them the possibility to give input of information on the
subject.
The laws that govern the acquisition of a company and the laws regarding employees have now been
covered. Normally this would cover the applicable rules and regulations for the acquisition of ABN
Amro, but because in this case the buying party is the Dutch state and the fact that ABN Amro is a
63
See note 11
64
Art. 1:15 Wet financieel toezicht (WFT)
65
Chapter 6 of WFT
66
See note 33
67
Chapter 6 of Wet op het financieel toezicht – Valid on October 3 2008
68
Art. 3:160 Wet op het financieel toezicht – Valid on October 3 2008
69
Art. 1:76 Wet op het financieel toezicht – Valid on October 3 2008
70
Eur – Lex March 12 2001: Document 32001L0023
71
Hoyinck 2000
72
Art. 2 of SER Fusiegedragsregels 2000

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financial institution, there are several other laws that are important to comply with. First, we have to go
back to the Law on financial supervision. Not only is this law important for its part in the financial
supervision, it is also important in the process of acquiring ABN Amro.
Compliance with DNB and the Dutch State
The reason why this law is also it important in the process of acquiring ABN Amro is because in this
law there are several articles that regulate the „Verklaring van geen bezwaar/Declaration of no
objection‟
73
. These articles state that if any party aims to acquire 10 percent or more
74
of the shares of
a financial institution, the Dutch Central Bank (DNB) needs to give a Declaration of no objection for this
deed
75
. According to several criteria to ensure a good view of the parties, risks and specific amounts of
money, the DNB approves the acquisition via the Declaration of no objection.
Because the Dutch state had performed a legal act governed by private law by acquiring the shares of
ABN Amro, there needs to be complied with the „Comptabiliteitswet/Accountancy law‟
76
. In this law is
stated that any participation in a private company by the Dutch state needs approval by the Dutch
„Staten Generaal/States General
77
. Since this is the case for the acquisition of ABN Amro by the Dutch
state, it is officially needed to comply with what is stated in this article. The last law
78
that will be
covered is one that is not directly applicable to the acquisition of ABN Amro by the Dutch state.
However, it is a relevant law because it governs the bylaws for NLFI
79
, the organization that was
started in 2011 and manages the shares of ABN Amro bought by the Dutch state. It is similar to the
IDIC in Indonesia, although it does nothing more than managing the shares. The articles in the law
specify the managing tasks and also give the possibility to the NLFI to advice the state of options to
sell the shares in the case the bank is ready for that.
The shareholders
Although in the ABN Amro case Fortis was the sole owner of ABN Amro, subsequently their shares,
normally the shareholders are important in case of an acquisition. The most important right of the
shareholders would be the General Meeting of Shareholders
80
regulated in the Civil code, in which
they can accept or decline the acquisition of the company. Other rights and duties are regulated in the
shares section
81
but can also be inserted in the articles of association
82
. These rights give several
possibilities to obtain information, votes and more.
Sub-conclusion
The acquisition of shares from a company as ABN Amro is clearly regulated and provides good
information. Besides these articles there are several other laws, regulations and organizations that
have influence on the acquisition of shares from a company, as is described in this chapter. Also the
earlier described „Intervention Law‟ has influence, although this was in 2012. All these factors in the
acquisition of shares of a company are the result of a long process of development in the Netherlands,
which provided a clear, comprehensive and trusted legal basis. It is regulated strictly, but easy to work
with because it is open and clear for users.
73
DNB, „Aanvraag verklaring van geen bezwaar‟, August 22 2014 (online)
74
Art. 1:1 WFT under „Gekwalificeerde deelneming‟
75
Art. 3:95 WFT
76
Art. 34 sub 5 Comptabiliteitswet 2001 – Valid on October 3 2008
77
The Dutch parliament, existing of the first and second chamber.
78
Wet stichting administratiekantoor beheer financiele instellingen
79
NLFI, Homepage: www.nlfi.nl, 2015 (online)
80
Section four of Book 2 BW
81
Section two of Book 2 BW
82
Van Zeijl 2009, p. 120

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Chapter 3: Conflicts between laws in Indonesia
What are the conflicts between the ‘Deposit Insurance Corporation Law 2004’ and the
‘Company Law 2007’ when both are applied to the acquisition of Century Bank in
Indonesia?
This thesis has been written because Mr. Kukuh Hadiwidjojo pointed out several problems that he
discovered during the research for his paper
83
. Since then there has been worked on the topic for a
long time and a lot of research has been done and information has been gathered. In this research it
was discovered that the problems originate from one source: the conflict between the „Deposit
Insurance Corporation Law 2004‟ and the „Company Law 2007‟. This chapter will discuss the conflict
between these laws and the problems that originate from this conflict.
Paragraph 1: The shareholders of Century Bank
The first problem to cover in this chapter is the conflict between the „Deposit Insurance Corporation
Law 2004‟ and the „Company Law 2007‟ regarding the shareholders of Century Bank. The „Company
Law 2007‟ formulates that two shareholders are needed in a company
84
, whereas the „Deposit
Insurance Corporation Law 2004‟ describes in several articles that IDIC can act as sole shareholder of
a bank that is of systemic importance
85
. Technically Century Bank has now two shareholders; IDIC
and the previous shareholders for an amount of 0, 004%
86
. However, these previous shareholders
only have a really small amount of shares which also have almost no value. The shares have almost
no value anymore because the previous shareholders will be compensated for the price it was worth
when the bank was acquired by IDIC, in case Century Bank‟s shares will be on sale again
87
. There is
no need or incentive for the shareholders to value the shares, because they are assured of their
money when Century Bank will be sold again.
Adding to the idea that the 0,004% of shares for other shareholders is a technicality, is the fact that the
shareholders have given all their rights and powers to IDIC
88
. This gives IDIC the power to act as sole
shareholder of Century Bank, even if there are still other shareholders. What makes the position of the
previous shareholders even less is the fact that they rejected to take part in the rescue of Century
Bank
89
. Since the shareholders only have a minuscule portion of shares with a minimal value and also
have given up their control of Century Bank, they are actually just „technical‟ shareholders. They have
shares in their possession but are stripped of their rights as shareholder, for example the General
Meeting of Shareholders, title of ownership and other interests. So although there is complied with the
terms of the „Company Law 2007‟ in technical way, in reality this is not the case since there is no
second shareholder with actual rights and other powers.
On 20 November 2014 Century Bank was sold to an outside party
90
by IDIC, after a long process of
rescue which ended with the sale. The buying party was the Japanese finance company J-Trust. This
was a chance for IDIC to resolve the problem of requirements for shareholders in Century Bank
because it could demand compliance with the law. However, it has become clear that even after the
transaction there is still not complied with the requirements for shareholders. Because the buying party
is foreign, there are other regulations that apply to the case. This gives another chance to create better
compliance. The Indonesian government regulation 29/1999 states that the foreign company can only
control 99% of the shares
91
. The other 1% has to be in the possession of Indonesian citizens or
companies. However, in the situation of the sale of Century Bank there is only 0.1% in domestic
possession.
83
See note 40
84
See annex 6: Art. 7
85
See annex 5: Art. 6 sub 2 and art. 40 sub a
86
Hadiwidjojo Paper 2013, Chapter: IV. 2
87
See annex 5: Art. 42 sub 6 and art. 29
88
See annex 5:”Section four and five of chapter five
89
See annex 3: Question 2
90
Festiani, Republika, November 20 2014
91
Art. 3 and 4 of Government Regulation nr. 29 of1999 concerning Share purchase of Banks

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Sub-conclusion
It can be concluded that IDIC was the only shareholder in control of Century Bank, which causes the
conflict between the „Deposit Insurance Corporation Law 2004‟ and the „Company Law 2007‟. This
way of acting is a temporary solution for handling a failing bank and does not solve the problem in a
long-term
92
. The conflict can cause confusion for shareholders in other possible failing banks,
wondering what their position will be when IDIC will acquire the failing bank. Repeating this temporary
solution will not only cause confusion, it can also cost a lot of money. The failing and handling of
Century Bank has brought enormous losses to the Indonesian state so it is in the interest of the state
and the public that the same actions will not be repeated again in the future
93
. Besides these
consequences IDIC can also become liable for any action performed by the bank, because the
provisions regarding personal liability
94
have not been followed. Since the bank has been sold to
another party, this is all now theory.
However, even after selling the bank, the problem regarding the requirements for shareholders keeps
existing and is in need of a solution. It seems IDIC wants to handle the case quick and for them
compliance with the law is not a priority.
Paragraph 2: Conflicting laws
The conflict between the „Company Law 2007‟ and the „Deposit Insurance Corporation Law 2004‟ is an
individual problem as well, because it causes confusion over what law parties should use when two
articles are contradicting. There is no regulation in Indonesia regulating the settling of conflicts
between laws, making the handling of a conflict a complicated issue. The conflict between the
described regulations is a good example.
The „Company Law 2007‟ regulates very clearly that a company needs to be established by at least 2
persons. It states:
“The Company shall be established by 2 (two) or more persons based on a notarial deed drawn up in
the Indonesian language.
95
”
Shortly after this article it determines that these persons need to be shareholders:
“Each founder of the Company is obliged to subscribe shares upon the establishment of the
Company.
96
”
These two articles together conclude that two shareholders are needed in a company. However, the
„Deposit Insurance Corporation Law 2004‟ incorporated the possibility into the law for the IDIC to
diverge from the law and act as a single shareholder. Various authorities are given to the IDIC when
acquiring a bank, which gives them the power to act as a sole shareholder. It states:
“(2) IDIC may carry out the resolution and handling of Failing Bank with the following authorities:
a) to take-over and exercise all rights and powers of the shareholder, including right and power of
the GSM;
b) to possess and manage assets and liabilities of the Failing Bank that is rescued;
c) to review, annul and terminate and/or alter any contracts between the Failing Bank that is
rescued and third parties that are burdensome to the bank;
d) to sell and/or transfer Failing Bank assets without debtor consent and/or Failing Bank
liabilities without creditor consent
97
.”
When the „Deposit Insurance Corporation Law 2004‟ discusses the handling of a failing bank without
the support of the shareholders, applicable for the Century Bank case, the law repeats itself saying:
92
See annex 1: interview June 13 2014
93
McLeod 2005
94
See annex 6: Art. 3
95
See annex 6: Art. 7 sub 1
96
97

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“As of the date as the IDIC determines to perform the handling of the Failing Bank as stipulated in
Article 39, in accordance with provision of this Act:
a) The IDIC shall take over all the rights and powers of the GSM, the title of ownership,
management, and / or other interest on the bank
98
;”
The problem regarding this conflict is that there is no official way to resolve it. There is no regulation
for this at all. In International law and Dutch law there are so called conflict regulations
99
. In case there
are conflicts between treaties and laws (in international context) or national laws, the parties can rely
on these regulations to provide a clear guideline to solve the problem. One example of conflict
resolving using these regulations is the rule of „Lex specialis derogat legi generali‟. This rule means
that in case of conflict between laws, the special law gets priority above the general law. In the
Netherlands this is a very common theory. National laws can be measured via this regulation and new
laws from the EU can be handled via this system to assure a good implementation of these laws in the
Dutch legal system.
In Indonesia the theory of conflict regulation is known, but not yet implemented in the legal system. Mr.
Kukuh Hadiwidjojo knows of it
100
and calls it a possible solution for the problem of the conflicting laws.
However, he also says that the government and a lot of other legal offices in Indonesia are not ready
for this theory. All these parties need time to adjust, educate their people of the theory and implement
it into their daily work system. This was evidenced by the interview with IDIC
101
, where the
organization called the conflict of law not really a problem and did not see the need to resolve the
issue. IDIC already used the „Deposit Insurance Corporation Law 2004‟ before looking at the
„Company Law 2007‟. The organization prioritized the „Deposit Insurance Corporation Law 2004‟ since
that is the foundation of their work. For other departments of the government, law offices and all sorts
of other organizations there is however still the conflict and confusion.
Sub-conclusion
In conclusion, it is clear that the opposing laws and lack of conflict regulation can create problems. The
„Deposit Insurance Corporation Law 2004‟ gives IDIC carte blanche to do whatever they want, thus
giving them the possibility to oppose various laws. These cause problems regarding money, deadlines
and interaction with people and other companies who depend on the laws. Opposing laws are not new
in the legal world and happen everywhere in the world. However, the difference is that in countries as
the Netherlands there are conflict regulations for these problems. These conflict regulations are not
implemented in Indonesia and thus there is no good way to solve the problems regarding conflicting
laws.
Paragraph 3: The hierarchy of law
The third problem regarding the conflicts between the „Deposit Insurance Corporation Law 2004‟ and
the „Company Law 2007‟ is the hierarchy of law in Indonesia. The „Deposit Insurance Corporation Law
2004‟ and the „Company Law 2007‟ have the same hierarchical status in the hierarchy of law in
Indonesia
102
. This causes problems when these laws are in conflict with each other, since there is no
clear solution to decide which law to use as legal basis when both are applicable to the case. This is
now the case for Century Bank.
This comes back to the earlier described problems regarding the issue with shareholders, where there
is a legal requirement to have two shareholders in the one law, whereas the other law gives room to
deviate from this requirement. There is no clear hierarchy that gives priority to one law when conflict
arises, so there is no binding thought that gives a legal basis on how to approach this problem by law.
IDIC and other governmental departments do not see this as a problem. IDIC is very clear in its
statement that it uses the „Deposit Insurance Corporation Law 2004‟ before implementing Company
Law
103
. It seems that this is clear within the organization because they are working on the basis of the
98
See annex 5: Art. 40 sub a
99
Wet & Recht 2015
100
See annex 2
101
See annex 3
102
National Democratic Institute (NDI) 2000
103
See annex 3: Question 11

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„Deposit Insurance Corporation Law 2004‟. However, this doesn‟t provide a concluding answer for
outside parties. Mr. Kukuh Hadiwidjojo describes this as confidence the IDIC has because they are
sure that other parties will understand the situation they are in, in light of the problems Century Bank is
having
104
. This should give them the possibility to deviate. Mr. Kukuh Hadiwidjojo adds to this note that
many institutions and laws are not adapted to each other. This adds to the problem of hierarchy,
because there only will be problem solving when an actual problem is found, as now is the case for
Century Bank. When institutions and laws are adapted to each other in a proactive way, actions and
new laws can be made that do not conflict each other in the hierarchy.
Regarding the problem of hierarchy of laws, the lack of conflict regulations as previously described is
also a part of this problem. When there is a conflict of hierarchy, there is no official regulation to
resolve the problem on a legal basis.
Sub-conclusion
In conclusion, it is clear that there is no framework to find solutions if there are two laws that conflict
with each other because of their similar place in hierarchy. This becomes very obvious in the two
relevant laws, „Company Law 2007‟ and „Deposit Insurance Corporation Law 2004‟. It seems that IDIC
thinks they can deviate from the law, but this is without knowledge of other parties. So instead of
resolving the issue, it becomes more confusing. Together with the other paragraphs, the shareholders
in Century Bank and the conflicting laws, several issues come forth from the acquisition of Century
Bank by the Indonesian state. In the next chapter several solutions coming from Dutch law will be
spoken of and compared to the aforementioned issues.
104
See annex 1: November 13 2014

of 98
Chapter 4: Dutch solutions
How would Dutch law solve the aforementioned conflicting issues of the ‘Deposit
Insurance Corporation Law 2004’ and the ‘Company Law 2007’?
When reading this research, it might seem that Indonesia doesn‟t have its legal system in order and
that it is highly necessary to use foreign laws to boost development. However, it is the contrary.
Indonesia has an advanced legal system and many things are regulated well. The government is for
example very thorough when it comes to foreign investment and has an extensive list of conditions
and forbidden actions. However, there are still several legal problems as were described in the
previous chapters. In this chapter there will be taken a look at the Dutch law for similar topics and the
solutions it can possibly provide for these problems.
Paragraph 1: Conflict regulations
Dutch law and International law provide a good solution for all three problems, namely the conflict
regulations
105
. Although these have no official legal basis in Dutch law, they are common theory in the
legal profession in the Netherlands and internationally. Implementing these regulations would mean
that for all described problems, a simple comparative research would suffice to decide which law has
to be applied.
The conflict regulations cover three different regulations. First of all there is „(Lex specialis) derogat
legi generali‟. This specific rule states that when using this regulation, the special law will be used
before the general law. IDIC already implements this rule (not clear if IDIC is aware of this or the do it
unknowingly), because it uses the „Deposit Insurance Corporation Law 2004‟ before implementing
„Company Law 2007‟. It offers a clear solution for conflict between laws if a special law is involved.
Because of this, it is a good rule to implement and resolve the problems regarding the requirements for
more than one shareholder in Century Bank and the conflict between „Deposit Insurance Corporation
Law 2004‟ and „Company Law 2007‟.
After Lex specialis, there is „(Lex superior) derogat legi inferiori‟. This term describes that in case of
conflict of law, the law that is higher in hierarchy will be used before the law that is lower in hierarchy. It
offers a solution for conflict of law between regulations of different hierarchy and thus uses the
hierarchy of laws to decide on the matter. However, this specific regulation does not provide a solution
for the problems of this research.
The last rule conflict regulation provides is „(Lex posterior) derogat legi priori/anteriori‟. This rule
implies that in case of conflict, younger laws will be used before older laws. This is something that
usually always applies to new laws, because it normally has a regulation that has a better sense of
time and has cleared previous mistakes from the law. Naturally the old law is also revoked (the
„Company Law 1995‟ for example has been revoked when the „Company Law 2007‟ came in its place).
However, conflicts can still arise between laws from different years. This is also the case for the
„Deposit Insurance Corporation Law 2004‟ and „Company Law 2007‟ and so it makes the rule a
possible solution for the problems of this research.
Sub-conclusion
These conflict regulations provide a simple solution for specific kinds of problems, especially in the
range of conflicting laws. This makes it an excellent solution for all problems between the „Deposit
Insurance Corporation Law 2004‟ and the „Company Law 2007‟. If implemented in Indonesia, a simple
comparison would suffice and prevent the problems that follow.
Paragraph 2: Change of law
A different solution that could be used for the conflict between the „Deposit Insurance Corporation Law
2004‟ and the „Company Law 2007‟ regarding the shareholders of Century Bank is much more
extensive. This is namely because there needs to be made a change of law. As is clear now, to start a
company in Indonesia there need to be at least two shareholders. However, in the Netherlands this is
105
Wet & Recht 2015

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different and simpler. Here it is possible to start a company with just one shareholder. This applies to
the Dutch „BV‟
106
as well as the „NV‟
107
. If this would be made possible in Indonesia, the whole problem
regarding the requirement for more than one shareholder in Century Bank would be swept away. IDIC
would stand in its right on their amount of possession of the Century Bank shares and no discussion
would be needed anymore.
Sub-conclusion
A simplification of the law would provide an answer for the problems regarding the shareholders of
Century Bank. In the Dutch articles that cover the establishment it is described as follows:
„The company will be established by one or more persons by a notarial deed‟
108
If such sentence would be implemented into the next version of the Company law, problems of conflict
with a regulation such as the „Deposit Insurance Corporation Law 2004‟ would be simply avoided. But
there could be a reason that two shareholders are needed to start a company in Indonesia. This could
be a part of the culture, where there is more „we‟ than in the Netherlands. Or it could be to prevent
corruption, because there is always a second shareholder to audit. It would be an extensive solution
because of the change of law, but also very hard because there could be a function for the
requirement of two shareholders.
Paragraph 3: Interventiewet
When in 2008 the ABN Amro case was in progress in the Netherlands, there was a lot to be learned by
the Dutch government. Major cases similar to this were rare and as became clear
109
, the Dutch law
didn‟t provide a thorough regulation for nationalization. Therefore, the Dutch government developed
the Intervention law to provide clearer, better and more extensive regulations for cases similar to ABN
Amro. It was issued in 2012 and first used in 2013, for the case of SNS Reaal. The Intervention law is
a part of the Wft and gives government the possibility to supervise businesses at risk. The Intervention
law gives them the possibility to actively work together with a failing company and help them get out of
trouble by intervening in the company. As a final course of action the government can expropriate the
failing company and settle the company`s problems with as little as possible financial consequences.
This is only allowed in extraordinary matters that seriously and immediately endangers the financial
stability of the Netherlands.
The Intervention law would provide a solution for Indonesian nationalization regulation because it gives
the possibility for the government to deviate from the applicable law. For example, it gives the
possibility to expropriate the failing company when deemed absolutely necessary to prevent
substantial financial consequences for businesses, consumers and the state. This would occur without
taking in account all the requirements described in the applicable law
110
. It is a special law and in
regard to regulations for public companies, it will go first before other laws when there is a failing
company. The problem of hierarchy between the „Deposit Insurance Corporation Law 2004‟ and the
„Company Law 2007‟ would not be an issue anymore, because it is clear that the Intervention law is a
special law and has priority before any other law.
Sub-conclusion
When implementing parts of the Intervention law into the Indonesian legal system, the problems
regarding the conflict and hierarchy between the „Deposit Insurance Corporation Law 2004‟ and the
„Company Law 2007‟ would be resolved quickly. The conflict of law would not be an issue because it
would be clear that the special law would have the room and possibility to deviate. The unclear
hierarchy wouldn‟t be a problem anymore, because special law would be considered before regular
law. Conflict regulation again plays a major part in this case to make it work.
106
Art. 2:175 lid 2 BW
107
Art. 2:64 lid 2 BW
108
See note 104 and 105
109
See: chapter 2, paragraph 1 „Nationalization in the Netherlands‟
110
Title 4 and 7 of book 2 BW

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Paragraph 4: Implementing law
One issue that comes forth from the problems regarding the shareholders in Century Bank, the conflict
of law and the hierarchy of law, is that law in Indonesia is not always implemented as it should. In this
case there are various examples. The first example of course is the problem of the shareholders in
Century Bank. The law specifically states that two shareholders are needed in a company. Technically
Century Bank met this requirement; however the law was bend very far because the small group of
shareholders besides IDIC does not possess any rights or value.
When Century Bank was sold to the Japanese finance company J-Trust in November, there was a
chance for IDIC and the Indonesian government to comply with the law again. However, there was still
not met with the law because the requirement for 1% of domestic shareholders was not complied with,
confirming that actions are done according to what comes well and not what is required by law.
Additionally, the sale of Century Bank to J-Trust happened a year after the initial deadline,
transgressing the requirement to sell Century Bank within 5 years
111
.
It seems that in some cases actions are based on what comes well financially and what costs less
work. This is a major difference from the Netherlands, where law is implemented according to what is
actually regulated. If there is any deviation, this would get approval from new regulation. In the
Netherlands the law is implemented structurally and this gives companies and consumers a notice on
what to expect. In Indonesia this is different, because IDIC can decide to depart from the law without
providing a clear notice to the involved parties. If in Indonesia the law would become as trustworthy as
in the Netherlands, this would prevent a lot of problems, for example the problem regarding the
shareholders of Century Bank.
Sub-conclusion
There are several problems regarding the law in Indonesia, for example corruption. However, also the
implementation of law is considered not trustworthy. Several problems in this research come forth from
actions that diverge from what is regulated, causing a wrong implementation of the law. In the
Netherlands this is not an issue and the law is structurally implemented the right way. If regulators, and
more important, organizations similar to IDIC would work more according to the law, a lot of problems
would be prevented. The Dutch implementation of law would be a great example for this.
111
See annex 5: Art 42 sub 1 and 4

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Chapter 5: Conclusion
After several months of research and extensive elaboration of the retrieved data, an answer can be
given to the central research question. The central research question is:
The central research question covered three problems in the Indonesian Century Bank case:
1. At the start of the research, Century Bank only had one shareholder as a result of the
application of the „Deposit Insurance Corporation Law 2004‟. This doesn‟t agree with
„Company Law 2007‟, which states that companies need more than one shareholder;
2. The „Company law 2007‟ demands that a company has more than one shareholder. However,
„Deposit Insurance Corporation Law 2004‟ states that a bank in financial danger needs help no
matter what. It doesn‟t matter if there is not complied with the law. Both laws are in conflict
with each other because of this, causing confusion about what law needs to be applied. There
is no clear regulation for this;
3. „Company Law 2007‟ and „Deposit Insurance Corporation Law 2004‟ have a similar hierarchal
status. Therefore there is no law that naturally comes before the other. Because of this it is not
obvious which law to follow.
The retrieved data has provided me with several arguments to answer the central research question.
The data was retrieved by researching the Century Bank case in Indonesia and the ABN Amro case in
the Netherlands, because of their similarities. By comparing the cases to each other it was expected to
find particular details that could help answer the central research question. The goal was to eventually
provide solutions for the aforementioned issues.
In the previous chapter, several solutions for the researched problems coming from Dutch law were
discussed and they will be used as arguments for the answer on the central research question.
Paragraph 1: Conflict regulations
The first argument that is important to discuss is the implementation of conflict regulations. In the
Netherlands and internationally these are already used, but Indonesia lacks conflict regulations. Off all
the ways
112
there are to find a solution for a conflict in the regulations, the implementation of conflict
regulations is by far the best solution for the problems of the Century Bank case. It offers solutions for
all the problems of the Century Bank case, thus being a major asset to implement in the Indonesian
legal system. Besides this, it provides a structural conflict regulation for future cases and international
cases. The problems that are researched in this thesis could be resolved relatively easy and would not
be a big issue anymore in the future. Internationally it gives a structure to work better together with
other countries when there is a conflict, using the conflict regulations.
On the other hand, if conflict regulations would be introduced in Indonesia, it could lead to many new
cases from old conflicts. After all, there can be a lot of other conflicts in different areas of law that need
solutions and since there was never a framework to resolve conflicts, all of the sudden everybody
would have a way to come to a solution for the problem. This could lead to problems for departments
of the government, because they are not prepared for the work coming from conflict regulation. An
example of this comes from the interview of IDIC
113
, in which they do not recognize the conflict of law.
Government institutions do not think of long term solutions and think other government institutions will
understand situations where not everything is right
114
.
However, this should not stand in the way of implementing conflict regulations in Indonesia. It is
internationally used, so it is possible to find help to implement the system, for example from the
Netherlands. The Indonesian legal system is also still very young, as it only freely developed after the
112
National Indonesian law or „Adat‟ law
113
See annex 3
114
See annex 1: November 13 2014

A search for solutions in Dutch law for problems of nationalization in Indonesia.

A search for solutions in Dutch law for problems of nationalization in Indonesia.

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A search for solutions in Dutch law for problems of nationalization in Indonesia.