Aviation Claims in Indonesia Part III: Fatal Accident Claims - DAC Beachcroft

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Aviation Claims in Indonesia Part III: Fatal Accident Claims

Published 14 marzo 2022

In this Part III of his focus on aviation claims in Indonesia, Hermanto Moeljo shares practical insight into the handling of fatal air accident claims in the jurisdiction[1].

Fatal Accident Claims          

As highlighted in Part I of this series, Indonesia has a rich ethnic and linguistic diversity. It is the fourth most populous country in the world, with a projected further population growth of 63 million people by 2045.[2] As with any jurisdiction, the handling of civil claims will necessarily be shaped by the relevant social, economic and cultural context. This includes claims against air carriers for compensation for injury and/or consequent on death of passengers in air incidents and accidents. For those handling claims in the region, obtaining early input from practitioners with local experience is critical to securing a successful claims outcome.

In this article, we flag some key points of interest relevant to the claims handling in Indonesia of air accident fatal injury claims and include a worked example of an award in Indonesia on a comparison basis to the assessment of the same claim in England and Wales.  

Indonesian Laws of Inheritance 

Indonesian law provides that the beneficiaries of a deceased who are entitled to receive statutory compensation (as discussed below) as a result of a passenger’s death in an air accident are the deceased’s ‘legal heirs’, as identified in accordance with the ‘applicable law’.  Consequently, carriers and their insurers must be careful to ensure that they correctly identify those having entitlement, in order to discharge their legal obligation.

This can be a complex issue in Indonesia since the identification of a deceased’s legal heirs depends on the inheritance law that is applicable in the specific case. Depending on the circumstances the applicable inheritance law might be, (1) Western inheritance law, with the Indonesian Civil Code as the main source of law; (2) Islamic inheritance law (where the Quran (Koran) is the main reference and other guidance such as Islamic Law Compilation and scholar’s opinion must also be taken into consideration); or (3) Customary Law.

Indonesia has the world’s largest Muslim population and Islamic (Sharia) law plays an important part in the legal system, particularly in areas that touch upon family and community life. Islamic inheritance law can differ from secular provisions in many respects, and these can come to the fore in the event of a fatal accident claim, when seeking to identify the person(s) who have entitlement at law to pursue a claim.  Many jurisdictions, including those within the UK, allow individuals free choice as to the manner in which, by reference to a valid will, their estate is to be distributed between identified beneficiaries after death (with provision for challenge in certain circumstances). The Islamic system, in contrast, whilst allowing some latitude, provides for entitlement by heirs, ‘as of right’. Claims handlers presented by those claiming entitlement to pursue a claim as beneficiary, supported by evidence suggestive of disinheritance of other persons, should therefore proceed with caution.

Another aspect of Islamic inheritance law, is that the share of entitlement of legal heirs to the estate is based on gender. The most obvious distinction, when compared to the Civil Code inheritance system, is that under Islamic law, the portion of a deceased’s estate to which a male child beneficiary has entitlement is always greater than the entitlement of a female heir.

Customary law in Indonesia is largely unwritten and so typically in the handling of air accident fatality claims, if the deceased was not a Muslim, on a practical basis, the matter of inheritance falls to be determined by the Indonesian Civil Code. Under the Code, legal heirs are divided into four groups or tiers, ranked by order of marital and familial relationship.  A person falling in a higher group or rank overrides the rights of those lower in the ranking order.  In the top tier is the deceased’s spouse and children.  In the fourth rank, the deceased’s paternal and maternal uncles and aunts.  The Civil Code provision is akin therefore to the rules that apply in the UK on intestate succession. 

In all instances, crucial to establishing entitlement as a beneficiary of a deceased is the ability of a claimant to evidence their familial relationship to the deceased e.g. by a birth or marriage certificate.  In Indonesia, this is not always a straight forward matter. 

Why Documentation is Key

In 2016, 32 million of the 85 million children in Indonesia did not have a birth certificate.  A 2015 survey found that 76% of couples living in the poorest households do not have a marriage certificate although they may have a valid marriage according to their religion.[3] Whilst there has been a notable increase in the overall percentage of children holding formal birth certificates in more recent years (the figure stood at 84% as regards those born in 2018 and was 88% in 2021), there remains  significant regional variation. In Papua province, for example, only 50% of children aged 0-17 years old have a birth certificate.[4]

The situation can present  significant challenge for claims handlers.  Additional measures are often necessary such as requiring formal statements from family members, made before and witnessed by a notary, to confirm claimed familial relationship and to supplement such evidence as can otherwise be verified by available official documents.  

In Indonesia and consequent upon a fatal accident, close family members of a deceased may claim compensation for loss of companionship, love and affection.  The lack of supporting documentation as to familial relationship can often be a complicating factor as regards this aspect of claim also.

Carrier Legal Liability – Domestic Flights  

Indonesian law applies a scheme of statutory compensation for injury and death arising from air accidents. For domestic flights, the primary legislation that deals with the legal liability of the aircraft operator are: (1) Law No. 1 of 2009 concerning Aviation, as amended by the Omnibus Law on Job Creation (“Law No. 1/2009”) and (2) Ministry of Transport Regulation No. PM 77 of 2011 concerning Liability of Air Carrier (as amended by Regulation No. PM 92 of 2011) (“PM77/2011”).  The Directorate General of Civil Aviation, by a Circular Letter that was addressed to the representatives of 51 airlines in December 2011, has made clear that PM77/2011 applies exclusively to domestic flight.

Carrier Legal Liability for Fatal Accidents Pursuant to PM77/2011

A single fixed sum is payable by the carrier (their insurers) as compensation to a deceased passenger’s legal heir(s). The obligation is strict, and arises without need to evidence “fault” on the part of the carrier. The amount that is payable by way of this fixed sum compensation depends on where death of the passenger occurred.  

  • If the passenger died on board the aircraft as result of an air accident or air carriage related occurrence, the carrier is legally liable to pay compensation of IDR 1.25 billion (approx. USD87,000), per passenger.
  • On the other hand, if the passenger died as a result of a purely air carriage-related occurrence but not on the aircraft, to include whilst they were in the course of embarkation or disembarkation, a lesser sum, IDR 500 million (approx. USD35,000) is payable by the carrier. This lower fixed compensation would be applicable if death of a passenger occurred: (a) whilst leaving the airport boarding lounge and heading towards the aircraft, or (b) after disembarkation from the aircraft and heading towards the arrival hall at the airport of destination.   

In each instance, the specified fixed sum is the minimum compensation that must be paid to the deceased passenger’s legal heir(s), as of right. If those bringing the claim can evidence causative omission or deliberate action on the part of the carrier or their agent, the claimants may bring an action before the Court to seek additional compensation. 

Loss of Dependency

Although termed “compensation” neither Law No. 1/2009 nor PM77/2011 inform in clear terms as to just what type of loss(es) the statutory compensation is intended to compensate.  A review of court judgments in Indonesian fatal accident cases, informs that consequent upon a fatal accident, dependants of a deceased typically advance a claim (and secure award) for loss of financial support. 

The familiar multiplier/multiplicand approach to the calculation of damages is adopted, with the award calculated by reference to the deceased’s pre-death annual income, multiplied by the number of years to their expected retirement age.  Resulting awards can be relatively modest when compared to the assessment of damages in other legal jurisdictions, to include those of the United Kingdom (“UK”[5]). In broad brush terms (and we give an example below) a claim for loss of dependency as assessed by the civil court in Indonesia might attract damages that are ten times lower than an equivalent claim assessed in e.g. England & Wales. 

  • As to the multiplier, currently the official retirement age in Indonesia is just 58[6] In the UK the official state retirement age is currently 66 (and due to increase from 2026).  According to the data published by the Indonesian Central Statistical Bureau (BPS), in 2020, the life expectancy for Indonesian men was 69.59 years, while women tend to live longer (73.46 years).[7] There is therefore always the potential for argument by claimant dependants for the adoption of a higher multiplier, pegged in some respect to the deceased’s life expectancy rather than the much lower official retirement age.  But, in simple terms and as regards the death of a 30 year-old, on an Indonesian damages assessment (and as a starting point) the multiplier would be 28 years but 36 years in England & Wales. 
  • As to the multiplicand, typically salary levels in Indonesia (across the board) are significantly lower than in other jurisdictions. For example, a teacher in Indonesia who assumes the status of Civil Servant (Pegawai Negeri Sipil), depending on their rank would typically earn a basic monthly salary of IDR1,560,800 / USD108, up to IDR5,901,200 / USD412 (equating to an annual salary of USD1,296 to USD4,944). Compare this to the salary that their counterpart might earn in the UK.  Pay scales for qualified teachers in the UK vary between the countries that make up the UK.  Currently, as concerns England & Wales the range, starting at the level of a newly qualified teacher is GBP25,714 with the potential (on promotions) to receive a salary up to GBP41,604[8] (equating to an annual salary in USD terms of USD34,232 to USD55,386). 
  • The salary levels quoted are gross, not net. For current purposes, let’s assume a reduction of 15% on these gross figures, for tax and other deductions, so to realise a net salary. The loss of dependency claim consequent upon the death of a 30 year old teacher in Indonesia might attract an award of between USD30,845 to USD117,691.  In England & Wales, by reason both of the higher multiplier and multiplicand as outlined above, the award might be between USD1,047,499 and USD1,694,812. 
  • Note, as in any jurisdiction, in Indonesia salary levels vary significantly, reflecting the skill and qualifications called for by a particular position or profession. For example, a  bus driver might earn IDR2,400,000/USD167 up to IDR4,800,000/USD334 max a month (USD2,004 to USD4,008 per annum). A senior chartered accountant might earn upwards of USD8,364 per annum.  An indicative annual salary for a GP is in the order of approx. USD10,500 and with specialist hospital consultants having the potential to earn upwards of USD66,900 per annum. 
     

Conclusion

The details of an individual claim will of course create claim-specific issues.  However, the above serves to highlight some issues of a general nature that arise on consideration of claims consequent upon fatal air accidents in Indonesia.  It flags also the imperative of local knowledge and experience:  absent appropriate local legal involvement, there is a real risk of loose-ends with the potential to cause a headache for carriers and their insurers: an individual who may later claim entitlement as a legal heir – but who was not included in the original settlement of the claim – may seek to disrupt the earlier settlement by bringing another claim against the carrier with resultant impact for insurers.  


Hermanto Moeljo based in our Singapore office, is an Indonesian qualified lawyer admitted to the Indonesian Bar in 2010 and is a Registered Foreign Lawyer in Singapore. He has almost a decade of experience in handling aviation insurance claims both in Indonesia and Singapore, from major losses to general aviation claims.  He is a native Indonesian language (Bahasa Indonesia) speaker and fluent in English.

[1] Hermanto’s series looking at aviation claims in Indonesia can be found here: Part I and Part II

[2] Official documents system of the United Nations

[3] Plan international

[4] Badan Pusat Statistik - percentage of coverage birth of birth certificate 

[5] The UK enjoys three separate legal jurisdictions: England & Wales, Scotland and Northern Ireland.

[6] Government Regulation Number 45 of 2015.

[7] Badan pusat statistik

[8] National education union  

Authors

Hermanto Moeljo

Hermanto Moeljo

Singapore

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