On November 25, 2021, the Constitutional Court (the "Court") issued the decision No. 91/PUU-XVVII/2020 (the "Decision No. 91") in relation to a petition for a formal review (the "Petition") of Law No. 11 of 2020 on Job Creation (the "Job Creation Law"). The Petition was submitted by 6 (six) petitioners on October 15, 2020.
- The Petition
In essence, the Petition sought the Court to conduct a formal review of the Job Creation Law (as opposed to a review of substance), and to determine the Job Creation Law to be unconstitutionally promulgated and shall thus be null and void based on the following conditions:
- The omnibus law method of the Job Creation Law is a vague method. It is unclear whether the Job Creation Law is a new law, an amendment of a law, or a revocation of law, as regulated under Law No. 12 of 2011 on Enactment of Laws and Regulations as amended by Law No. 15 of 2019 (the "Law No. 12/2011");
- The omnibus law method is not recognized under Law No. 12/2011;
- There are certain differences in the contents of the Job Creation Bill (the "Bill") agreed by the President and the House of Representatives with the contents of the Job Creation Law (that is promulgated by the President); and
- The promulgation of the Job Creation Law did not fulfill the principles that need to be fulfilled in the preparation and promulgation of new laws.
- Legal Considerations in Decision No. 91
In the Decision No. 91, the Court sets out the following key considerations:
Construction of a new, an amendment, or a revocation law must adhere to Law No. 12/2011
The Court considered that the Job Creation Law, which amends 77 (seventy seven) existing laws and revokes 1 (one) law, is not in compliance with Law No. 12/2011. The Court held that the format of a law, as set out in the Law No. 12/2011, must be adhered to when constructing and promulgating a new law, an amendment of a law, or a revocation of a law. The Court's judges had determined that the Job Creation Law is unconstitutional because it does not comply with Law No. 12/2011. But please see further considerations below.
The usage of omnibus law method in Job Creation Law is not necessarily unconstitutional
The Court held that an omnibus law is a law that relates to or deals with numerous objects or items at once, including many matters or having various purposes. The Court considered that the omnibus law method used for the Job Creation Law is not necessarily unconstitutional in and of itself. However, in constructing a new law (including an omnibus law), the method that will be used shall be limited to the methods that are already recognized and regulated by the Constitution and its extension (i.e., Law No. 12/2011).
Since Law No. 12/2011 does not recognize the omnibus law, then the Job Creation Law does not meet the requirements under Law No. 12/2011.
Substantial differences between the Bill and the promulgated Job Creation Law
In the process of enacting a new law, the President and the House of Representatives may agree on a bill which contains the provisions that would later be enacted as a law. Such agreed bill shall be considered as the final form of the law which would then be promulgated into a law. However, the Court noted that there are at least 9 (nine) different provisions between the Bill and the promulgated Job Creation Law. These differences render the Job Creation Law unconstitutional due to non-compliance with Law No. 12/2011.
Job Creation Law does not fulfill the principle of public participation
The Court held that there were several public discussions held in the preparation of the Job Creation Law. However, the Court noted that such public discussion did not discuss the contents of the academic draft and the actual amendments in the Bill. Additionally, the Court noted that the academic draft and the Bill were not easily accessible to the public. Therefore, the Court held that the preparation of the Job Creation Law did not fulfill the principle of public participation.
Court recognizes importance of Job Creation Law
The Court held that it understood and acknowledged the paramount importance of the substance of the Job Creation Law. However, such paramount importance should not give a 'free pass' for the Government and the House of Representatives to ignore the Constitution and Law No. 12/2011 in approving and promulgating the Job Creation Law.
Accordingly, rather than outright declaring the Job Creation Law to be unconstitutional, the Court decided to declare the Job Creation Law to be conditionally unconstitutional. In addition, the Court allowed the Government and the House of Representatives to rectify the Job Creation Law in compliance with the Constitution.
Dissenting opinions of Judges
We note that 4 (four) Judges had dissenting opinions in the Decision No. 91. The four Judges were outnumbered as there are 9 (nine) judges in the Constitutional Court. The four dissenting Judges generally held that the Job Creation Law is formally constitutional.
Two of the four dissenting Judges (Mr. Arief Hidayat and Mr. Anwar Usman) held that the fact that Law No. 12/2011 did not regulate the usage of the omnibus law form shall not cause the Job Creation Law to be unconstitutional since the omnibus law form is not in contradiction with the Pancasila and the Constitution. Furthermore, these dissenting Judges held that the format of a law as set out in Law No. 12/2011 is a mere guideline and is therefore unnecessary to be strictly and rigidly construed. In conclusion, these dissenting judges had deemed that the Job Creation Law is not formally unconstitutional since the omnibus law form is permissible under the Constitution and Law No. 12/2011. However, we note that these dissenting Judges also held that a material review of the Job Creation Law is necessary, specifically regarding its amendments to the law on manpower.
The other two dissenting Judges (Mr. Manahan M.P. Sitompul and Mr. Daniel Yusmic P. Foekh) also held that the Job Creation Law is constitutional. Generally, the basis of their dissenting opinion is the same with the basis of the other two dissenting Judges. However, we note that these dissenting Judges also held that all the principles of law making have been fulfilled by the Job Creation Law and that Law 12/2011 must be amended to include omnibus law format within 2 (two) years as of the Decision No. 91.
- Decision No. 91 Declarations and Orders
Based on the above considerations, the Court issued the following declarations and orders in the Decision No. 91:
- Declares the construction of the Job Creation Law contradicts the Constitution and is conditionally not legally binding if not "rectified" within 2 (two) years;
- Declares the Job Creation Law to still be valid until the above rectification is made within 2 (two) year period;
- Orders the lawmakers to rectify the Job Creation Law within 2 (two) years and that the Job Creation Law shall become permanently unconstitutional if the rectification is not made within 2 (two) years;
- Declares that if the necessary rectification were not concluded within the 2 (two) years period, then the laws, articles, or provisions of the laws that were revoked or amended by the Job Creation Law shall be reinstated and be valid; and
- Orders the Government to refrain from taking any strategic action/policy which has broad impact, and restricts the issuance of new implementing regulations related to the Job Creation Law.
- Legal Consequences of Decision No. 91
We set out below our preliminary views on legal consequences that may arise out of the Decision No. 91.
Uncertainty of Rectification to Job Creation Law
Based on the Decision No. 91, the Job Creation Law is essentially conditionally unconstitutional due to the following reasons:
- The format of the Job Creation Law is not yet regulated in Law 12/2011;
- There are different provisions between the Bill and the promulgated Job Creation Law; and
- The preparation of Job Creation Law did not fulfill the principle of public participation.
As set out above, there are several rectifications that must be made to the Job Creation Law within 2 (two) years. However, unfortunately, the Constitutional Court did not specify as to what rectification that are required to be made to the Job Creation Law.
Based on the Decision No. 91, the current format of the Job Creation Law is not made accordance with the format set out in Law No. 12/2011. Even the current format of the Job Creation Law (i.e. the omnibus law format) is not recognized under Law No. 12/2011. In the consideration of the Decision No. 91, the Court states that lawmakers shall form a legal basis for the omnibus law format. However, we believe that there might be several issues which may arise from the said approach, including whether such new legal basis may be retroactively applicable to the Job Creation Law.
We also note that the Job Creation Law is declared to be conditionally unconstitutional by the Court due to the difference in provisions between the Bill and the promulgated Job Creation Law. This issue may be addressed by returning the provisions of the enacted Job Creation Law to the one that were agreed by the House of Representatives and the President. However, returning such provision to the Bill may cause other new issues, since the Bill contained numerous wrong references and missing provisions. In addition, any amendment to the Job Creation Law will require the approval of both the House of Representatives and the President.
Furthermore, the Decision No. 91 is unclear on the actions that the lawmakers need to take for the Job Creation Law to be able to fulfill the principle of public participation. Even if the lawmakers were to hold several public participation sessions, it will still raise a question whether such sessions would be satisfactory to solve the said issue.
Given the above, we find that the Decision No. 91 creates uncertainty for the rectification and the status of the Job Creation Law. We find that there is a high possibility that the Job Creation Law might not be able to be rectified in time or the rectification would be deemed unsatisfactory.
Government limitation in conducting strategic and broad impact actions/policies
The Decision No. 91 orders the Government to refrain from taking any strategic action/policy which has broad impact in relation to the Job Creation Law. We note that this order was not even requested in the Petition.
We also view that the Court may not have the authority to issue such limitation. According to Article 24C paragraph (1) of the Constitution, the authority of the Court is to review a law against the Constitution, to decide the authority dispute between government institutions whose authority is granted by the Constitution, to decide the disbandment of political parties, and to decide on election disputes.
Accordingly, we believe that the Decision No. 91 would give rise to numerous questions as to whether such order would be effectively applicable and whether there would be any possibility to enforce this order, if at all.
No new implementing regulation to Job Creation Law
Although the Decision No. 91 declared that the Job Creation Law, and consequently its existing implementing regulations, to remain valid within the above 2 (two) year period pending the required rectification, the Decision No. 91 ordered the Government not to issue new implementing regulations of the Job Creation Law.
The prohibition for the government in issuing new implementing regulations of the Job Creation Law may cause massive legal uncertainty that arises from the inconsistency of the amended and revoked provisions of the laws by the Job Creation Law and the older and currently applicable implementing regulations.
Decision No. 91 might impact other laws created in an omnibus law format
Given that the Court finds that the current omnibus law format in the Job Creation Law is not in accordance with Law no. 12/2011, the Decision No. 91 might impact other laws which were created in an omnibus law format. Considering that the President had promulgated Law No. 7 of 2021 on the Harmonization of Tax Regulations, which also uses the omnibus law format, there is a possibility that the said law might be petitioned for a formal review to the Court by using the Decision No. 91 as its legal basis.
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