Force Majeure and Credit Restructuring: A Doctrinal Perspective on the Resolution of Non-Performing Loans Caused by Natural Disasters

Tarmizi Tarmizi; Atika Sandra Dewi

doi:10.58829/lp.12.2.2025.326

Authors

Tarmizi Tarmizi Universitas Amir Hamzah, Medan, Indonesia
Atika Sandra Dewi Universitas Amir Hamzah, Medan, Indonesia

DOI:

https://doi.org/10.58829/lp.12.2.2025.326

Keywords:

Credit Restructuring, Doctrinal Perspective, Force Majeure, Natural Disasters, Non-Performing Loans (NPLs)

Abstract

This study analyzes the legal relationship between force majeure and credit restructuring in Indonesia, particularly in addressing non-performing loans (NPLs) caused by natural disasters. It examines how force majeure is applied in credit agreements and how credit restructuring serves as a legal and financial mechanism to manage disaster-related credit distress. Using a doctrinal legal approach, the study reviews statutory provisions, banking regulations, and relevant literature, including Articles 1244 and 1245 of the Indonesian Civil Code and OJK Regulation No. 40/POJK.03/2019. The findings indicate that although Indonesian law recognizes natural disasters as potential force majeure events, their application in credit agreements is not automatic. Debtors must prove a direct causal link between the disaster and their inability to perform contractual obligations, which often leads to legal uncertainty and inconsistent interpretation. At the same time, credit restructuring, through rescheduling, reconditioning, and restructuring, provides a more practical response to financial distress. However, it operates separately from the force majeure doctrine, resulting in limited legal integration. The study also highlights that credit restructuring thus plays a dual role: supporting financial system stability and contributing to socio-economic recovery, particularly for micro, small, and medium enterprises.

References

Admiral, Admiral, Fadhel Arjuna Adinda, Rosyidi Hamzah, Maisa Maisa, and Ridwan Arifin. “Impossibility of Performance in Environmental Contracts: A Case Study of the Merapi Volcano Eruption and Its Impact on Contractual Obligations.” Indonesian Journal of Environmental Law and Sustainable Development 4, no. 2 (2025): 177-216.

Amri, Rizkan Zulyadi, Zaini Munawir, and Mahalia Nola Pohan. “Legal Review of Late Payment of Syndicated Bank Credit Agreements Due to Covid-19.” (2020): 232-241.

Andrés, Iñigo, and Álvaro Vidal Olivares. “Los efectos del incumplimiento contractual causado por caso fortuito en tiempos de pandemia CoViD-19/The effects of Contractual Non-performance caused by Force Majeure.” Revista de Derecho Civil 7, no. 3 (2020): 123-161.

Arias, Diego. “Management of Weather and Ecosystem Risks in Latin America: the New Financial Instruments of Transfer.” REVISTA DEL CLAD REFORMA Y DEMOCRACIA 55 (2013): 49-+.

Aufa, Muhammad Fikri, and Fadia Fitriyanti. “The Integration of Alternative Dispute Resolutions Institutions in the Financial Services Sector with POJK No. 61/POJK. 07/2020.” Veteran Law Review 5, no. 2 (2022): 102-114.

Badan Nasional Penanggulangan Bencana. Buku data bencana Indonesia tahun 2023. Retrieved in January 23, 2026 from https://www.bnpb.go.id/buku/buku-data-bencana-indonesia-tahun-2023.

Badriyah, Siti Malikhatun, R. Suharto, and Retno Saraswati. “The restructuring of credit and lease agreements and its impact on micro, small, and medium-sized enterprise and insolvency risks amid the pandemic: a normative juridical method.” Corporate Law & Governance Review 6, no. 3 (2024): 34-52.

Bayliss, Christopher, Roberto Guidotti, Alejandro Estrada-Moreno, Guillermo Franco, and Angel A. Juan. “A biased-randomized algorithm for optimizing efficiency in parametric earthquake (Re) insurance solutions.” Computers & Operations Research 123 (2020): 105033.

Berger, Klaus Peter, and Daniel Behn. “Force majeure and hardship in the age of corona: a historical and comparative study.” McGill J. Disp. Resol. 6 (2019): 76.

Berndt, Antje, Robert A. Jarrow, and ChoongOh Kang. “Restructuring risk in credit default swaps: An empirical analysis.” Stochastic Processes and their applications 117, no. 11 (2007): 1724-1749.

Bos, Jaap WB, Runliang Li, and Mark WJL Sanders. “Hazardous lending: The impact of natural disasters on bank asset portfolio.” Economic Modelling 108 (2022): 105760.

Brahmana, Rayenda, C. Puah, and Michael Chai. “Natural disaster and local bank non-performing loan: Case of Nias tsunami 2004.” Economics Bulletin 36, no. 4 (2016): 2413-2421.

Cendhani, Cindy, Dita Elvi Kusuma Putri, and Ezra Tambunan. “Legal consequences of presidential decree number 12 of 2020 on the implementation of private contracts.” Lex Scientia Law Review 4, no. 2 (2020): 55-76.

Collier, Benjamin L., and Volodymyr O. Babich. “Financing recovery after disasters: Explaining community credit market responses to severe events.” Journal of Risk and Insurance 86, no. 2 (2019): 479-520.

Cortés, Kristle Romero, and Philip E. Strahan. “Tracing out capital flows: How financially integrated banks respond to natural disasters.” Journal of Financial Economics 125, no. 1 (2017): 182-199.

de Paul Kambou, Sansan Vincent. “Debt relief instruments and external debt dynamics following natural disasters in developing countries.” International Economics (2025): 100624.

Disemadi, Hari Sutra, and Ali Ismail Shaleh. “Banking credit restructuring policy amid COVID-19 pandemic in Indonesia.” Jurnal Inovasi Ekonomi 5, no. 02 (2020): 244-262.

Erdem, Fatih Buğra. “Boundaries of force majeure in shipbuilding contracts pursuant to the recent judgment of RTI Ltd v. MUR Shipping.” Global Trade and Customs Journal 20, no. 9 (2025): 54-79.

Guo, Yuanyuan, Hazlina Shaik Md Noor Alam, and Nur Khalidah Dahlan. “Comparative research on force majeure system in contract law.” International Journal of Criminal Justice Sciences 19, no. 1 (2024): 99-116.

Hadiputranto, Mikael Ananda Septian. “Keabsahan perjanjian Kredit Usaha Rakyat atas pencantuman klausula restrukturisasi berdasarkan Peraturan Otoritas Jasa Keuangan Nomor 40/POJK. 03/2019.” (2020): 561-583.

Hariyono, Hariyono, Rudi Purwono, Ni Made Sukartini, Sri Pantja Madyawati, and Adrian Chrisnahutama. “Post-eruption economic recovery: Strengthening livelihoods in Lumajang Indonesia after Mount Semeru disaster.” Central Community Development Journal 5, no. 1 (2025): 1-13.

Hasna, Hasna. “Force Majeure in Aircraft Lease Agreement and Covid-19: Indonesian and English Law Perspectives.” Padjadjaran Jurnal Ilmu Hukum (Journal of Law) 9, no. 1 (2022): 89-110.

Hennings, William C., Sarah A. Abdellatif, and Awad S. Hanna. “Proper risk allocation: Force majeure clause.” Journal of Legal Affairs and Dispute Resolution in Engineering and Construction 14, no. 1 (2022): 04521048.

Himmah, Dinda R., and Tazqia Aulia Al-Djufri. “Supervening Events in Indonesian Commercial Contracts and Notes on the UNIDROIT PICC in Relation to COVID-19 Health Crisis.” Journal of Central Banking Law and Institutions 1, no. 2 (2022): 237-266.

Ilya, Kokorin. “Force Majeure and unforeseen change of circumstances. The case of embargoes and currency fluctuations (Russian, German and French approaches).” Russian Law Journal 3, no. 3 (2015): 46-82.

Indonesia, P. R. (2007). Undang-Undang Republik Indonesia Nomor 24 Tahun 2007 tentang Penanggulangan Bencana.

Isanov, K. “The legal nature of force majeure.” RA. J. Applied Res 7 (2021): 2683-2686.

Ivanov, Ivan T., Marco Macchiavelli, and João AC Santos. “Bank lending networks and the propagation of natural disasters.” Financial Management 51, no. 3 (2022): 903-927.

Iversen, Gudmund R., and Mary Gergen. Statistics: The conceptual approach. Springer Science & Business Media, 2012.

Januarita, Ratna, and Yeti Sumiyati. “Legal risk management: Can the COVID-19 pandemic be included as a force majeure clause in a contract?.” International Journal of Law and Management 63, no. 2 (2021): 219-238.

Kadri, Farid, Babiga Birregah, and Eric Châtelet. “The impact of natural disasters on critical infrastructures: A domino effect-based study.” Journal of Homeland Security and Emergency Management 11, no. 2 (2014): 217-241.

Lai, Shaojie, Lihan Chen, Qing Sophie Wang, and Hamish Anderson. “Natural disasters, trade credit, and firm performance.” Economic Modelling 116 (2022): 106029.

Law Number 10 of 1998 concerning Amendments to Law Number 7 of 1992 concerning Banking. State Gazette of the Republic of Indonesia 1998 Number 182.

Law Number 24 of 2007 concerning Disaster Management. State Gazette of the Republic of Indonesia 2007 Number 66.

Mann, Thomas. The Oxford guide to library research. Oxford University Press, 2015.

Meher, Montayana, and Ningrum Natasya Sirait. “Standard contracts in bank credit agreements.” In E3S Web of Conferences, vol. 52, p. 00029. EDP Sciences, 2018.

Momberg, Rodrigo. “Some Reflections on Force Majeure Clauses in Modern Contracting.” Latin American Legal Studies 11, no. 2 (2023): 255-294.

Nguyen, Huan Huu, Anh Chieu Hoang Phan, Nghi Thuc Thuy To, Nguyet Minh Song Nguyen, and Tram Bao Huynh Nguyen. “Banking in the storm: How natural disaster influence non-performing loans and the path to sustainability in Vietnam.” Journal of Climate Finance (2025): 100076.

Nomor, P. O. J. K. (2019). 40/POJK. 03/2019 tentang Penilaian Kualitas Aset Bank Umum. Lembaran Negara Republik Indonesia Tahun.

Nugraheni, Ninis, Hening Prabawa Arifanda, and Alifihan Astaftiyan. “Public procurement contract for goods and services following the presidential decree number 12 of 2020 on the stipulation of the coronavirus disease (COVID-19) pandemic as a national disaster.” PADJADJARAN Jurnal Ilmu Hukum (Journal of Law) 7, no. 2 (2020): 3.

Nugraheni, Ninis. “Force Majeure Parameter in Goods and Services Procurement Contract by The Government.” Croatian International Relations Review 28, no. 89 (2022): 259-268.

Nurdany, Achmad, Hasan Al Banna, Dwi Marlina Wijayanti, and Abdul Qoyum. “Covid-19 pandemic and the banking risk mitigation: A lesson from the Indonesian credit restructuring policy.” Iranian Economic Review 27, no. 4 (2023): 1341-1360.

Nurhasanah, Neneng, Ahmad Hasan Ridwan, and Uus Rustiman. “Force Majeure from the Perspective of Islamic Economic Law: A Critical Review of Shari'ah Banking's Response to COVID 19 in Indonesia.” J. Int'l L. Islamic L. 20 (2024): 137.

Pangesti, Listyaning Velisa, and Dyah Rahmawati Hizbaron. “An Overview on Determinant Factors of Coastal Community Resilience at Bantul, Yogyakarta, Indonesia.” IDRiM Journal 16, no. 1 (2026): 534-562.

Peraturan Otoritas Jasa Keuangan Nomor 40/POJK.03/2019 tentang Penilaian Kualitas Aset Bank Umum. Berita Negara Republik Indonesia Tahun 2019 Nomor 1329.

Peraturan Otoritas Jasa Keuangan Nomor 61/POJK.07/2020 tentang Lembaga Alternatif Penyelesaian Sengketa Sektor Jasa Keuangan. Berita Negara Republik Indonesia Tahun 2020.

Puelinckx, Alfons H. “Frustration, Hardship, Force Majeure, Imprevision, Wegfall der Geschaftsgrundlage, Unmoglichkeit, Changed Circumstances-A Comparative Study in English, French, German and Japanese Law.” J. Int'l Arb. 3 (1986): 47.

Putri, Mutia Kartika. “Implications of the Covid-19 pandemic on business contracts implementation.” Indonesia Private Law Review 4, no. 1 (2023): 9-18.

Rahmawati, Syifa Fitri, and Rusli Subrata. “Pemahaman Terhadap Wanprestasi Debitur: Implikasi Terhadap Manajemen Risiko Kredit di Sektor Perbankan.” Hukum Inovatif: Jurnal Ilmu Hukum Sosial dan Humaniora 1, no. 3 (2024): 285-297.

Rasuh, Daryl John. “Kajian Hukum Keadaan Memaksa (Force Majeure) Menurut Pasal 1244 Dan Pasal 1245 Kitab Undang-Undang Hukum Perdata.” Lex Privatum 4, no. 2 (2016): 155727.

Saad, Wala, Suhail Al-Ahmad, and Tareq Hammad Almubaydeen. “The Impact of Emergency Circumstances on an Employment Contract.” In From Machine Learning to Artificial Intelligence: The Modern Machine Intelligence Approach for Financial and Economic Inclusion, pp. 613-621. Cham: Springer Nature Switzerland, 2025.

Sakinah, Nailia Andriani, and Suherman Suherman. “Pelaksanaan Konsep Restrukturisasi Kredit Pada Lembaga Bank dan Non Bank (Studi Pada KCP BCA Syariah Bogor dan PT Pegadaian (Persero) Bogor).” Jurnal Hukum Bisnis Bonum Commune (2021): 61-74.

Siahaan, Rudy Haposan, and Rika Fatimah PL. “The Concept of Welfare State in Indonesia as a Strategic Move to Win People Trust Through Economic Sustainability: Good Governance and Bank Conduct on Bank Debt Cancellation Due to Natural Disasters.” Mediterranean Journal os Social Sciences 5 (2014): 312-341.

Sinilele, Ashar, and Syahrul Alim. “Implementation of Hardship Principles on Financing Agreements Islamic Bank Due to Corona Virus Disease 2019.” Jurnal Hukum Novelty (1412-6834) 13, no. 2 (2022): 731-762.

Soepriyanto, Gatot, Meiryani, Ridho Bramulya Ikhsan, and Leony Rickven. “Analysis of countercyclical policy factors in the era of the COVID-19 pandemic in financial statement fraud detection of banking companies in Indonesia.” Sustainability 14, no. 16 (2022): 10340.

Sudrajat, Tatang. “The Combination of Normative Juridical Methods and Literature in Educational Administration Research.” In Proceedings of International Conference on Social Science, Political Science, and Humanities (ICoSPOLHUM), vol. 3, pp. 00026-00026. 2022.

Susanti, Ida. “Ethical and legal aspects of disaster response under Indonesian legal system.” In MATEC Web of Conferences, vol. 229, p. 04006. EDP Sciences, 2018.

Thaler, Thomas, and Sven Fuchs. “Financial recovery schemes in Austria: how planned relocation is used as an answer to future flood events.” In Financial Schemes for Resilient Flood Recovery, pp. 46-62. Routledge, 2021.

Weber, Ron, and Oliver Musshoff. “Risk-contingent credit for sovereign disaster risk finance.” International Journal of Disaster Risk Reduction 56 (2021): 102105.

Widjaja, Gunawan. “Impact of COVID-19 pandemic to the payment obligations to Banks and Financial Institutions; a perspective from Indonesian laws and regulations.” Hamdard Islamicus 43 (2020): 545-574.

Wijayanti, Riska, and Ani Yunita. “Covid-19 Pandemic as the Reasoning of Force Majeure towards Financing in Islamic Banking.” Jurnal Hukum Islam 18, no. 2 (2020): 219-234.

Yulianto. A Comparative Analysis and Overview of Indonesian & Global Debt Restructuring Policies Amid the Covid-19 Pandemic. Croatian International Relations Review 12, no. 3 (2022): 11-31.

Zimneva, Svetlana, Nazreen Shaik-Peremanov, and Irina Pluzhnik. “Applying Force Majeure Events in Russian and South African Law: A Comparative Evaluation.” BRICS LJ 12 (2025): 43.