ARMA Litigation Series: Understanding Special Powers of Attorney and How to Draft Them Effectively
Authors
A Power of Attorney (Surat Kuasa) (“POA”) is a fundamental legal instruments that allows one party (the authorizer) to delegate authority to another party (the attorney-in-fact) to act on their behalf in various legal and administrative matters. Article 1792 of the Indonesian Civil Code (“ICC”) defines a POA as an agreement by which one individual grants authority to another to carry out specific actions in their name.
POA may take different forms depending on the scope of authority conferred. It can be special, limited to one or more specific matters, or general, covering all interests of the authorizer. [1] Additionally, there is exclusive POA (kuasa istimewa), where certain legal actions can only be performed personally by the authorizer. [2] Another form is agency POA (kuasa perantara), in which the attorney acts as an agent or representative to engage in legal transactions with third parties. [3]
Although under the ICC, the POA can be granted either in writing or verbally, in practice, powers of attorney are commonly granted in writing through an official POA, often in order to fulfill administrative requirements by the court or relevant government officials.
In this ARMA Update, we will examine the legal framework surrounding POA in Indonesia, highlighting the key requirements and best practices for drafting an effective special POA.
How to draft a Special Power of Attorney
A special POA is governed by Article 1795 of the ICC, which stipulates that such authorization must explicitly state its purpose and be used solely for a specific matter, for instance, [4] in civil cases, the document must clearly specify the parties involved (e.g., A as the Plaintiff and B as the Defendant), such as in inheritance disputes or specific debt-related cases. Whereas in criminal cases, the document must clearly reference the applicable articles of the Indonesian Criminal Procedure Code (Kitab Undang-Undang Hukum Acara Pidana - KUHAP) relevant to the charges against the designated defendant.
Indonesian law does not prescribe a specific format for a special POA. However, in practice, certain essential elements should be included, as follows:
- Title of the Power of Attorney
In practice, a general POA is titled simply as “Power of Attorney” (Surat Kuasa). However, a special POAshould explicitly state its specific purpose, such as “Special Power of Attorney” (Surat Kuasa Khusus) or a more detailed title reflecting its intended use, such as “Power of Attorney to Encumber a Mortgage” (Surat Kuasa Membebankan Hak Tanggungan).
As a POA is interpreted as a form of agreement, it must be given a clear and specific title to clarify the rights and obligations between the authorizer and the attorney. Moreover, the title of the POA must align with the legal interest being delegated to ensure that the POA effectively confers authority to the attorney. Any inconsistency between the title and the substance of the POA may render the document legally ineffective, thereby preventing the attorney from exercising the powers granted therein.
- Identification of the Authorizer and Attorneys in Fact
The POA must clearly identify both the authorizer and the attorneys, at a minimum stating their names, addresses, and occupations. Additionally, it is advisable to include valid identification numbers.
Furthermore, under Indonesian law [5], in addition to individuals being deemed capable of performing legal acts, legal entities are also recognized as having the capacity to carry out legal actions independently, subject to certain terms and conditions. If the authorizer is a legal entity (i.e., company, foundation, etc), it is essential to ensure that the signatory is duly authorized to represent the entity, such as the President Director of the company. In the event that President Director is unavailable, and another director intends to sign the POA, it must be verified that the company’s Articles of Association explicitly grant such authority to that director.
The POA must include the attorney’s full name, office address, and a statement designating the attorney’s office as the authorizer’s legal domicile for the purposes of the authority granted. Furthermore, the roles of each party whether as the authorizer or the attorney should be clearly stated.
In addition, if a POA is executed outside of Indonesia or intended for use outside the territory of Indonesia, specific requirements regarding the legalization and administration of the POA must be observed. Under Indonesian law, the formal validity of a legal document, including a POA, is primarily determined by the place of issuance or the place where the document is signed. This principle ensures that the document complies with the applicable legal formalities and authentication requirements based on the jurisdiction in which it is executed. As for POAs executed abroad, whether granted by a foreign individual/entity to an attorney in Indonesia or a POA executed in Indonesia for use abroad. Such POAs must be apostilled in accordance with applicable procedures. [6]
With respect to POAs executed abroad, Supreme Court Decision No. 3038 K/Pdt/1981 dated 18 September 1986 stipulates that the validity of a POA executed outside Indonesia must not only comply with formal requirements but must also be legalized by the Indonesian Embassy (KBRI) in the respective country.
Regarding the legalization process, documents issued in Indonesia for use abroad must be legalized by an official designated by the Minister of Law. Conversely, documents issued outside Indonesia for use within Indonesia must be legalized by an official designated at the relevant foreign representative office. [7]
- Legal Basis for Legal Entity to Grant a POA
Essentially, a POA constitutes a legal act. As such, when carrying out a legal act through a POA, it is necessary to confirm the legal basis under the company’s Articles of Association. If the POA is intended to authorize actions governed by the Articles of Association but requires prior approval from the Board of Directors (BOD), Board of Commissioners (BOC), or shareholders, then such approval must be obtained and documented accordingly.
Further, It is important to note that, the POA must be granted by a party with a direct legal interest. This ensures that the appointed attorney acts on behalf of the party granting the authority directly, and not through an intermediary or unrelated third party. Failure to meet this requirement may result in a vague or non-specific POA, which in court proceedings could prompt the opposing party to file an objection (eksepsi), which could result in the court declaring the lawsuit inadmissible (Niet Ontvankelijke Verklaard).
- Scope of Authority
This section details the specific actions or matters for which the POA is granted. For example:
- “To accompany A as the complainant in the alleged criminal act of [criminal act], as regulated and sanctioned under Article [article of alleged criminal act] of the Indonesian Penal Code, allegedly committed by B.”
- “To represent and or accompany A as the defendant in a divorce case filed by B, registered under case number [case number] at the religious court registry on [date].”
The authority granted must be clearly and specifically described to prevent any ambiguity regarding the powers conferred.
- “To accompany A as the complainant in the alleged criminal act of [criminal act], as regulated and sanctioned under Article [article of alleged criminal act] of the Indonesian Penal Code, allegedly committed by B.”
- Date, Place, and Duration of Authority
A Special POA must include the date and place of issuance, as well as the duration of its validity. If the authority is granted for a specific period, the document should clearly state the start and end dates. Alternatively, it may include provisions such as: “valid until revoked by the authorizer” or “effective until the conclusion of the trial at the appeal stage”.
- Affixing Signatures on Stamp Duty
Stamp duty is imposed on documents used as evidence of a civil transaction, including agreements, certificates, statements, and similar documents, along with their copies. Accordingly, a POA must bear a valid stamp affixed above the authorizer’s name in the signature section. To confirm mutual agreement on the contents of the document, both parties must sign in the designated signature section at the end of the POA.
It is crucial to ensure that all aspects outlined above are incorporated into POA. Furthermore, in regard to Special POA for court proceeding purposes, it must meet the formal requirements stipulated in Article 123(1) of the HIR and SEMA No. 1 of 1971 jo. SEMA No. 6 of 1994 which include:
- A clear and specific intention to litigate in a particular District Court with appropriate relative jurisdiction.
- Identification of the parties involved in the dispute.
- A concise and concrete description of the case and the object in dispute.
- The date and the signature of the principal.
Since these requirements are cumulative, failure to meet any of them renders the Special POA formally defective and invalid. Consequently, the opposing party may file an objection (eksepsi) to challenge the validity of the attorney’s authority to represent the principal in court.
Article 1795 of the ICC ↩︎
Article 1796 of the ICC ↩︎
Article 63 of the Indonesian Commercial Code (Kitab Undang-Undang Hukum Dagang) ↩︎
SEMA 6/1994. ↩︎
Law No. 40 of 2007 concerning Limited Liability Company as amended by Law No. 6 of 2023 concerning the Government Regulation in Lieu of Law No. 2 of 2022 concerning Job Creation ↩︎
Article 2 of Minister of Law and Human Rights Regulation No. 6 of 2022 on Apostille Legalization Services for Public Documents ↩︎
Article 4 of Minister of Foreign Affairs Regulation No. 14 of 2022 on the Procedure for Document Legalization at the Ministry of Foreign Affairs ↩︎