2004 ETLJ 1 A Note on Land Rights in East Timor - Indonesian Government Regulation No 18 of 1991 on the conversion of land rights in East Timor
Introduction and Background
Paragraph 4 of the General Elucidation of Law No 7 of 1976 on the Legalisation of the Unification of East Timor into the Unitary Republic of Indonesia states that, upon integration, the People of East Timor become People and Citizens of Indonesia and all legislation of Indonesia applies in the territory of East Timor.
One law of Indonesia is the Basic Agrarian Law of 1960 (Law No 5 of 1960 on the Basic Principles of Agrarian Affairs – hereafter “the Basic Agrarian Law”). The main intent of the Basic Agrarian Law was to abolish the Dutch colonial land law which had continued to operate in Indonesia since independence in 1942 and to replace it with Indonesia’s own national land law. It repealed all of the principle Dutch land law and all of the provisions of Book Two of the Civil Code “insofar as [they] pertain to soil, water, and the natural resources contained therein, with the exception of the provisions concerning hypotheek (mortgage) which are still effective at the time this act comes into effect”.
The Basic Agrarian Law asserted a new basis for Indonesia’s land law – its adat (customary) law, confirmed the State’s rights in relation to the control and allocation of land and created a new regime of statutory rights. It also included provisions which converted the old Dutch land rights into the new statutory rights. Rights under the Dutch colonial laws which were analogous or similar to the new Indonesian statutory rights were converted into the corresponding Indonesian statutory rights. The Dutch eigendom land right, which was the most complete and strongest Dutch colonial land right in Indonesia, was converted into the Indonesian statutory Right of Ownership. The erfpacht right on large plantations became the Right of Business Enterprise with a term of 20 years and the opstal right and the erfpacht right for residential purposes became the Right of Use of Structures with a term of 20 years. Certain conditions were imposed on the converted statutory rights which required foreigners who held the converted rights to either release them to the State or transfer them to citizens within one year of the enacted of the Basic Agrarian Law. If these conditions were not complied with, the land right was cancelled and the land forfeited to the State.
As an implementing regulation of Law No 7 of 1976 and the Basic Agrarian Law, Government Regulation No 18 of 1991 on Provisions on the Conversion of Land Rights in the Province of East Timor in accordance with the Basic Agrarian Law (hereafter PP18) was enacted on 13 March 1991 and came into force on 1 July 1991.
The Considerations in the preamble of PP18 state as follows:
a. that with the merger of East Timor into the territory of the Unitary State of Indonesia as well as the legalization of the unification of East Timor and the formation of the Province of East Timor by Law No 7 Year 1976, all legislation of Indonesia, including Law No 5 of 1960 on the Basic Agrarian Law has applied in the territory of the Province of East Timor;
b. recalling that land rights under the law in force before the application of Law No 7 of 1976 are different to the rights under the Basic Agrarian Law, then within the framework of the implementation of the Basic Agrarian Law in the Province of East Timor, there needs to be an enactment of provisions on the conversion of land rights under the law in force before the coming into effect of Law No 7 of 1976 to land rights in accordance with the Basic Agrarian Law with attention to the relevant individual land rights.
The General Elucidation of PP18 reads as follows:
With the enactment of Law No 7 of 1976 on the Legalisation of the Unification of East Timor into the Unitary State of Indonesia and the Formation of the Province of East Timor the territory of East Timor formally became a part of the territory of the State of Indonesia. In accordance therewith, since that time, all legislation of Indonesia, including Law No 5 of 1960 on the Basic Agrarian Provisions has legally been in force in the territory of East Timor. In this regard, it is understood that the system of government as well as the land system which applied in East Timor before its unification into the State of Indonesia was very different from the system which applies in the territory of Indonesia. Land rights which applied were very different to the land rights under the Basic Agrarian Law, in regard to their creation as well as the substance of each of the said rights. For land which is directly controlled by the State, that is, land which is not yet encumbered with a right, the provisions of the Basic Agrarian Law can be directly applied, however, for land which is already encumbered with a right before the coming into force of Law No 7 of 1976 ( on 17 July 1976), those which were granted based on Portuguese law as well as those which existed based on adat law, there needs to be adjustments made in order to realise legal unity in the entire territory of Indonesia while still paying regard to rights as well as the holders of rights which already exist. For that purpose, there needs to be issued provisions which regulate the conversion of and rights which existed prior to the coming into force of Law No 7 of 1976 to become land rights under the Basic Agrarian Law. Because the legislation which regulates the said conversion is an implementation of Law No 7 of 1976 and, at the same time, is an implementation of Law No 5 of 1960, then the appropriate form of law is a Government Regulation.
Overview of PP18
Chapter 1 of PP18 defines what conversion of land rights means and contains definitions of the old Portuguese land rights.
Article 1 provides as follows:
1. The conversion of land rights in the Province of East Timor is the change of land rights which existed according to the land law applied in East Timor before the coming into force of Law No 7 of 1976 to become land rights according to the Basic Agrarian Law.
2. The right of propriedade perfeita is the land right under Portuguese law in East Timor, the character of which is complete and absolute, namely, the right to enjoy the produce and use of the land in a full and unrestricted manner provided that it is not in contradiction with the provisions of the law and the rights of other persons, which is evidenced by an “Alvara de Propriedade Perfeita” or in respect of which there was already a decision of the Portuguese Government before the coming into force of Law No 7 of 1976.
3.The right of aforamento is the land right under Portuguese law in East Timor which arises from an agreement over State land where the Grantee of the right is given the authority to fully enjoy the use of the land with the obligation to pay to the State an amount of money referred to as “forro”, which is evidenced by an “Alvara de Concessao Definitif” or in respect of which there was already a definitive decision of the Portuguese Government before the coming into force of Law No 7 of 1976 and the land has not been surrendered by the right holder or his/her legal representative.
4.The right of “arrendamento” is the land right under Portuguese law in East Timor which arises from a lease agreement to enjoy the use of State land with certain limitations and with the obligation to pay rent to the State which rent is referred to as “renda”, which is evidenced by an “Alvara de Arrendamento” or in respect of which there was already a decision by the Portuguese Government before the coming into force of Law No 7 of 1976 and the land is still controlled by the right holder.
The elucidation of Article 1 of PP18 states that [g]enerally, evidence of land rights which were granted by the Portuguese Government were documents which were referred to as “alvara”. Nevertheless, the land rights themselves already existed at the moment the Government issued a definitive decision. Therefore, for the purposes of conversion under this Government Regulation the relevant land rights must be evidenced by reference to the “alvara” or other document which indicates that there was already a definitive decision issued by the government about the relevant right.”
The Conversion Provisions of PP18
Chapter II of PP18 contains the operative conversion provisions in relation to both the old Portuguese land rights and customary land rights in East Timor.
Part 1 The Conversion of Portuguese Land Rights
Part 1 of Chapter II deals with the conversion of the old Portuguese land rights. This regulation is an extension of the principle contained in the Basic Agrarian Law of the conversion of all former colonial land rights. As Parlingdungan notes, “In Indonesia, there is only one system of agrarian or land law which is applicable without exception as has already been applied in other parts of the State of the Republic of Indonesia to former Western land rights, all are covered by the Basic Agrarian Law according to its conversion provisions and there is no exception whatsoever in any area”.
Article 2 converts the Portuguese propriedade perfeita into several different Indonesian statutory rights depending on whether the holder of the right was a citizen, a foreigner, a legal entity, representative of a foreign state, an international agency recognized by the government of Indonesia or a religious or social entity.
A propriedade perfeita, the holder of which was a citizen of Indonesia or a Religious Legal Entity or other Legal Entity referred to in the provisions of Government Regulation No 38 of 1963 , was converted into the Right of Ownership. Under the Basic Agrarian Law, only natural persons who were citizens and a very limited class of legal entities are permitted to hold the right of ownership.
If the holder of a propriedade perfeita the holder was a foreign citizen or legal entity, it was converted into:
a. a 25-year Hak Guna Usaha if the land was agricultural land;
b. a 20-year Hak Guna Bangunan if the land was non-agricultural land.
The propriedade perfeita, the holder of which was a representative of a foreign state, an international agency which was recognized by the Government and which had representation in Indonesia, or a religious entity that used the land for the direct support of the observance of religious duties or religious activities of the relevant religion, was converted into a Hak Pakai which was valid for so long as the relevant land was used for those purposes. In respect of religious entities, the propriedade perfeita could only be converted into a Hak Milik if the land was used, not merely for the support of religious observances or religious activities, but for “the direct needs” of the religion; such as church, mosque, shrine and the like. If the land were used for other activities such as schools, residences for its religious leaders, etc., then the land was converted into the lesser right of Hak Pakai.
[The Catholic Church is one religious entity affected by these provisions and the diminution of any propriedade perfeita which it held in East Timor which was not used for churches, seminaries, and the like.]
Article 3 deals with the conversion of the Portuguese aforamento right.
The aforamento was converted into either a Hak Guna Usaha with a time period of 25 years if the land was agricultural land or a Hak Guna Bangunan with a period of 20 years if the land was not agricultural land.
If the holder of the aforamento was held by a representative of a foreign state or an international agency which was recognized by the Government and had representation in Indonesia or a religious or social entity and the land is used for the direct needs of the observance of religious duties or religious activities of the religion or the social activities of the relevant entity, the aforamento was converted into a Hak Pakai with a validity “for as long as the land is used for [those] activities.
Although not stated in the regulation, the conversion of the aforamento into the Hak Guna Usaha or Hak Guna Bangunan only applied if the aforamento was held by a citizen or Indonesian legal entity. The provision does not deal with the situation of an aforamento held by a foreigner of foreign legal entity but is must be inferred that in these instances, the aforamento was converted into a Right of Use for so long as the land is used for the original intended purpose.
Article 4 converts the arrendamento right.
The arrendamento was converted into a Hak Pakai if the holder of the arrendamento was an international agency which was recognized by the Government and had representation in Indonesia. The Hak Pakai remained valid only for so long as the land was used by that international agency.
If the arrendamento was held by a citizen of Indonesia, a foreigner resident in Indonesia, a legal entity which has been incorporated under Indonesian law and which is domiciled in Indonesia or a foreign legal entity which had representation in Indonesia, it was converted into a Right of Use with a term of 10 years.
Portuguese Land Rights No Longer Exist in East Timor
The fundamental result of these conversion provisions of PP18 is that the old Portuguese land rights no longer exist in East Timor. By this law, they were obliterated and changed into the statutory rights under the Basic Agrarian Law as described above on the date that the regulation came into effect; namely, 1 July 1991. Where the Portuguese rights were converted into the statutory rights of Hak Guna Usaha and Hak Guna Bangunan with limited terms of 25 and 20 years respectively, those rights will expire by efflux ion of time on 30 June 2016 and 30 June 2011. The arrendamento rights converted into the Hak Pakai with a term of 10 years by Article 4(2) have already ceased to exist, having expired on 30 June 2001.
Requirement to Relinquish or Transfer certain converted Rights held by foreigners
Article 5 of PP18 is perhaps the most controversial of the provisions of PP18 although the Article itself merely reiterates the provisions of the Basic Agrarian Law. It restated the requirements in the Basic Agrarian Law that the Hak Guna Usaha and the Hak Guna Bangunan which resulted from the conversion of the propriedade perfeita and the aforamento by Articles 2 and 3 of PP18. If those rights were held by a foreigner or foreign legal entity, they had to be relinquished to the State or transferred to a citizen or Indonesian incorporated legal entity within one year of the coming into force of PP18; that is, within one year of 1 July 1991. If those rights were not so relinquished or transferred, then they were cancelled and the land reverted to the State (land directly controlled by the State) subject only to the general qualification that “the rights of other parties which encumber it will be respected and regulated separately.”
Of course, this requirement was practically impossible to comply with since almost all foreigners or foreign legal entities had fled East Timor either during the civil war in mid-1975 or when Indonesia invaded in December 1975 and scarcely any, if any at all, would have returned to comply with this requirement, presuming that they had become aware of it because of the security situation in East Timor following the invasion. It would have been theoretically possible for those foreigners and foreign legal entities to grant a power of attorney to someone in Indonesia to effect the relinquishment or transfer.
The Purported Suspension of Article 5 of PP18
In the midst of the continuing intense international pressure and criticism of Indonesia over its invasion and integration of East Timor and accusations that the Indonesian government was nationalizing the assets of foreigners in East Timor, Government Regulation No 34 of 1992 was enacted to purport to suspend the provisions of Article 5 of PP18. However, Regulation No 34 of 1992 can not be an effective or awful regulation.
Article 5 of PP18 provides that:
(1) The Right of Business Enterprise and the Right of Use of Structures referred to in Articles 2 and 3, the holder of which is a foreign citizen or foreign Legal Entity must be surrendered or transferred to another party who fulfills the conditions for being the holder of the relevant land rights according to the Basic Agrarian Law within the time limit of one (1) year counted from the date of the coming into force of this Government Regulation.
(2) If the release of the right or the transfer of the rights referred to in paragraph (1) is not undertaken, the said land rights are void by force of law and the land will become land directly controlled by the State with the provisions that the rights of other parties which encumber it will be respected and regulated separately.
Government Regulation No 34 of 1992 on the Suspension of the Provisions of Government Regulation No 18 of 1991
Regulation No 34 of 1992 purported to suspend the operation of Article 5 of PP18. The Considerations section of this regulation stated that:
a. Government Regulation No 18 of 1991 has determined provisions on the Conversion of Land Rights in the Province of East Timor according to the Basic Agrarian Law;
b. to ensure that the implementation can be implemented smoothly and orderly, the implementation of it needs to be done in a staged way; and
c. in the framework of the staged implementation referred to above, it is necessary to delay the implementation of the provisions on conversion in relation to land in respect of which the right is held by foreigners or foreign corporations.
But the elucidation in Article 5 of PP18 explains that:
The provisions of this article are in accordance with the provision in Article 30 paragraph (2) and Article 36 paragraph (2) of the Basic Agrarian Law .
Under these provisions of the BAL, citizens who lost their Indonesian citizenship or who acquired a second citizenship were required to relinquish the rights to the State or transfer them to a citizen within one year of the loss of citizenship or the acquisition of a second citizenship.
Article 1 of PP34 provided that:
The provisions on the time limits for the conversion of land rights which are held by foreign citizens or foreign corporations as regulated in Article 5(1) of Government Regulation No 18 of 1991 Re Conversion Provisions for Land Rights in the Province of East Timor according to the Basic Agrarian Law are delayed until a time which will be further determined by Presidential Decision.
Invalidity of Article 1 of PP34
There are two fundamental and substantive problems with this provision. The first is that it refers to the “provisions on the time limits for the conversion of land rights held by foreign citizens and foreign corporations as regulated in Article 5(1)” of PP18. However, there are no such provisions in Article 5(1) of PP18. Article 5(1) deals with the issue of the requirement for foreigners or foreign legal entities who, as a result of the conversion of the Portuguese land rights they held at the time of the enactment of PP18 became rights which had to be surrendered to the State or transferred to an Indonesian citizen or legal entity which fulfilled the requirements imposed by the Basic Agrarian Law to hold those rights. Such surrenders or transfers had to be effected before 01 July 1992. The one year time period expired at the end of 30 June 1992 and if the surrenders or transfers had not been effected by then, then the rights were forfeited and the land became State land in accordance not only with Article 5 of PP18 but, more importantly, in accordance with the provisions in Articles 30 and 36 of the Basic Agrarian Law. So the drafting of Article 1 of PP34 of 1992 is completely and utterly erroneous and is, therefore, a meaningless and invalid provision.
But there is an even more critical aspect of Article 1 of PP34 which renders it a void provision. This article is contained in a Government Regulation which seeks to suspend not only the provisions of Article 5 of PP18 but also the substantive principles of the Basic Agrarian Law. A Government Regulation may amend another Government Regulation. But a Government Regulation can not operate to suspend the provisions of a higher level legislation such as a Law (Undang-Undang).
The general hierarchy of law-making instruments in the Indonesian legal system, in descending order of force, is as follows:
1.Constitution (Undang-Undang Dasar)
3.Government Regulation (Peraturan Pemerintah)
4.Ministerial Regulation (Peraturan Menteri).
Just as a Law can not override the provisions of the Constitution, neither can a Government Regulation override the provisions of a Law. Nor can a Ministerial Regulation override the provisions of a Government Regulation.
Accordingly, because Article 1 of PP34 of 1992 purports to suspend the operation of provisions of the Basic Agrarian Law, it is not a valid provision. PP34 is an unlawful provision because it is ultra vires and must be struck down. It was beyond the legitimate legislative competence of the President to enact this provision. The only way the provisions of Article 5, and, therefore, the provisions of Articles 30(2) and 30(6) of the Basic Agrarian Law could have been suspended would have been through a Law (Undang-Undang) enacted by the People’s Representative Assembly of Indonesia. It was beyond the President’s legislative powers to enact Article 5 of PP18.
Consequently, the provisions of Article 5(1) of PP 18 must be considered to be lawful and valid. As the elucidation of Article 5 states: “The provisions of this article are in accordance with the provision in Article 30 paragraph (2) and Article 36 paragraph (2) of the Basic Agrarian Law.” Therefore, any loss of rights by foreigners that occurred by the operation of this Article, or, more correctly, by the operation of Articles 30(2) and 36(2) of the Basic Agrarian Law, occurred on 30 June 1992 and the land, upon that date, became State land.
An observation by a leading Indonesian land lawyer, Parlindgungan, about the purported suspension of Article 5 of PP18 was that “ the problem of the delay of the said Article may also be considered form the political aspect because there are those parties who do not want integration raise the issue that the Government of Indonesia is implementing confiscation of land rights owned by foreigners or foreign legal entities as well as the Catholic church which owns a lot of assets in the form of land and feel that there is a change in their ownership which they have controlled for many years” .
Conversion not dependent on Registration
It should also be pointed out that the conversion of the old Portuguese land rights was not dependent on the registration of the conversion by the National Land Agency. Registration neither created the right nor conferred any additional substance or validity to it. Registration was a mere administrative act which generated evidence of the existence of a right and of the identity of the right holder. That is also one of the reasons described above why Article 5 of PP18 was also defective. It was drafted in terms of the time permitted to foreigners to register the conversion. But the conversion of the old Portuguese rights occurred upon the coming into force of PP18 on 1 July 1991 by virtue of the operation of Regulation and had nothing to do with registration. Under the negative land right registration system adopted in Indonesia under Article 19 of the Basic Agrarian Law, registration had no other function – it was declarative only. This was confirmed also by several decisions of the Indonesian Supreme Court.
Is PP18 void for other reasons
The only other ground upon which it might be argued that PP18 is of no effect would have to be based on the exceptions to the application of Indonesian law in East Timor which was effected by UNTAET, the Constitution, Law No 2 of 2002 on the Interpretation of the Applicable Law as at 19 May 2002.
The applicable law of East Timor, as from 25 October 1999 is based upon the Indonesian law by Section 3 of UNTAET Regulation No 1 of 1999 on the authority of the Transitional Administration in East Timor , by Article 165 of the Constitution of the Democratic Republic of East Timor , Law No 2 of 2002 on the Interpretation of the Applicable Law as at 19 May 2002, and by Law No 9 of 2003 on the Interpretation of Article 1 of Law No 2 of 2002 and Sources of Law.
The exceptions to the Indonesian-based applicable law of East Timor are:
- those laws of Indonesia which, by Section 3(1) of UNTAET Regulation No 1 of 1999 “conflict with the standards referred to in section 2 , the fulfillment of the mandate given to UNTAET under United Nations Security Council resolution 1272 (1999), or the present or any other regulation and directive issued by the Transitional Administrator”; and
- those laws which are inconsistent with the Constitution or the principles contained therein.
Nothing in the provisions of the Basic Agrarian Law, PP18 or the Constitution of RDTL falls within these exceptions. Under international law, a State may enact laws relating to the forfeiture of land rights in its territory held by foreigners provided that compensation is paid or an adequate opportunity is provided in the law for the foreigners to transfer the rights to a citizen of that State. This opportunity was provided for in Article 5 of PP18 and also exists in the relevant provisions of the Basic Agrarian Law.
Article 5 of PP18 is a valid provision; being a reiteration of the provisions of the Basic Agrarian Law and any right lost by foreigners under that Article are gone.
PP34 of 1992 is an unlawful regulation and its purported suspension of Article 5 of PP18 should be held to be of no effect.
Warren L. Wright
28 February 2004