I. Overview
If property damage occurs due to our rectification construction, our company commits to assuming compensation liability. Adhering to Indonesia’s local principle of “Restitutio ad integrum” (full restoration), priority will be given to repair and reinforcement, followed by financial compensation. For cases involving force majeure or pre-existing structural defects, liability allocation will be determined based on Indonesian law and contractual agreements. Our Contractor’s All Risks (CAR/EAR) insurance policy ensures coverage capacity for compensation funds.
II. Definition of Responsible Entities
⑴Full Contractor Liability (Our Company)
Under Article 1365 (Tort Liability) and Article 1367 (Employer Liability) of the Indonesian Civil Code, our company bears full responsibility for structural damage caused by operational errors, construction defects, or inadequate monitoring.
⑵Joint Liability and Third-Party Liability
Subcontractors/Suppliers: If caused by the fault of third-party subcontractors or material suppliers, our company, as the general contractor, will first compensate and then seek recourse.
Owner’s Fault: If the geological survey (Soil Investigation) data provided by the owner is seriously inaccurate or if the owner arbitrarily alters the building structure, responsibility shall be shared proportionally.
⑶Non-Contractor Liability (Exclusion Clause)
Pre-existing Defects: Structural defects documented prior to construction.
Force Majeure: Includes frequent seismic events, volcanic eruptions, floods in Indonesia, and work stoppages caused by government orders.
Neighbor Interference: Settlement caused by nearby construction sites’ water pumping, deep foundation excavations, or burst pipes in surrounding public infrastructure.
III. Standard Compensation Process (Localized for Indonesia)
| Steps | Specific Operations | Responsible Party | Completion Deadline |
| 1. Emergency Response | If any abnormality is detected, immediately stop work and notify the owner and supervising engineer (Konsultan Pengawas) within 2 hours. | Contractor | Within 2 hours |
| 2. Joint Survey | Invite an independent third-party appraisal institution with LPJK (Lembaga Pengembangan Jasa Konstruksi) qualification or university experts (such as ITB/UI) for appraisal. | Both parties jointly appoint | 7-14 days |
| 3. Repair Solution | Develop a repair plan compliant with SNI (Standar Nasional Indonesia) standards and submit it to the owner for approval. | Contractor | Depending on the scope of work |
| 4. Final settlement | Complete repairs and pay the relevant compensation, then sign the settlement agreement. | Contractor | Within 15 days after the completion of repairs |
IV. Scope of Compensation (in accordance with Indonesian market standards)
(1) Direct losses: Costs for wall reinforcement, foundation treatment, and decoration restoration that comply with SNI standards.
(2) Indirect losses:
Temporary relocation (Uang Kontrak): If the property becomes uninhabitable, compensation equivalent to renting a similar-grade property in the vicinity will be provided.
Business interruption losses: For shops or factories, compensation will be calculated based on the net profit loss verified by tax records.
(3) Professional fees: appraisal fees, legal fees (if applicable), and related licensing application costs.
V. Protection mechanism tailored for Indonesia’s national conditions
⑴Pre-construction evidence preservation (SOP pre-construction survey)
Comprehensive photo and video documentation of the property must be conducted and signed by the owner to prevent disputes over pre-existing cracks later.
⑵Insurance protection mechanism
In addition to “All Risks Insurance for Construction,” special emphasis is placed on including “Third Party Liability” (TPL) insurance to ensure coverage for accidental losses involving neighboring residents and passersby.
⑶Community Relations Coordination (Social Impact Management)
When working in Indonesia, respect local community customs (Sosialisasi). In case of large-scale disputes, our company will communicate through local village officials (RT/RW) to avoid the risk of mass protests.
VI. Dispute Resolution Pathways
Friendly Consultation (Musyawarah): Prioritizing resolution through negotiation, aligning with Indonesian cultural traditions.
Arbitration: It is recommended to submit the case to BANI (Badan Arbitrase Nasional Indonesia) for adjudication. Compared to court litigation, arbitration is more professional and efficient in resolving engineering and technical disputes.
Litigation: If arbitration fails, the case shall be submitted to the court (Pengadilan Negeri) where the property is located.
VII. Summary and Recommendations
In Indonesia, deviation correction operations must strictly adhere to the technical standards of SNI 2847:2019 (Concrete Structure Standard) and SNI 1726:2019 (Seismic Code). Our company commits to not only providing financial security but also offering technical endorsement compliant with local engineering regulations throughout the claims handling process.