Harmonization of the UNIDROIT Principles into the Indonesian Legal System to Achieve Justice of Factoring Contracts

Abstract

In light of globalization of economy, the need for a new trading model, either at local or international level, as a matter of fact, is also increasingly growing along with time, including the presence of an institution that deals with the issue factoring as well. Referring to the present practice of factoring, there are still some legal problems arising, which is all due to injustice in the making of factoring contract. The underlying problems are: Why can the role of equilibrium and openness principles can ensure the fair factoring contracts for all parties involved, in Indonesia? Why does the contract legal system in Indonesia remain to create legal obstacles in the practice of factoring contract in Indonesia? And, why do we need to harmonize the legal principles of UNIDROIT commercial contract into the system of contract law applicable in Indonesia, most especially in the factoring contract? This dissertation research employs what is so called normative research method departing from literature sources and some qualitative secondary data. Based on the results of analysis, it is discovered that the role of equilibrium and the principles of openness, in order to create a fair factoring contract for all parties involved in Indonesia, are of the essential elements in the making of fair contracts. This conclusion is based on the theory applied by Adam Smith and John Rawls. One of the legal constraints in the development of factoring contract in Indonesia is due to the lack of both arrangement and contents of the Indonesian Civil Code, which is not yet specifically detailing the pre-contractual activities, as a preliminary process that provides opportunities for all parties involved to do negotiation based on the principle of equilibrium and openness. Since the principle of equilibrium and openness is deemed necessary, then the harmonization of the principles of UNIDROIT into the system of contract law applicable in Indonesia is of a way out to fill in the gap of the Indonesian Civil Code – because there are some similarities between the principle of UNIDROIT and the structure of legal components, substance and culture of the Indonesian Legal System. It may be strongly advises the government and the legislative council to soon set up immediate steps to pass a law that is specifically governing the practice of factoring by harmonizing UNIDROIT Principles into the Indonesian Civil Code. Keywords: UNIDROIT principles, fairness, justice, factoring contract