Before You Sign a Settlement or Release With a Bali Developer

By Jeremy Jordan, S.H. — licensed Indonesian advocate (advokat), DPN Indonesia, NIA 25.25.32730 · Reviewed 9 October 2026

The situation

Your off-plan villa or apartment deal has gone wrong. The developer offers a way out: a document called a “Settlement and Release Agreement”, a “Termination Agreement” or a Perjanjian Perdamaian. The refund is to be paid later, often in instalments, and in return you are asked to release your claims now.

A settlement can be a sensible way to end a dispute. But under Indonesian law it is designed to be close to final, so the time to protect yourself is before you sign. This guide explains the general rules; your own document and facts decide the outcome.

A settlement is meant to be final

The Indonesian Civil Code (KUHPerdata) calls this agreement a perdamaian (in the original Dutch text, dading): the parties, by handing over, promising or keeping something, end a pending case or prevent one. It is valid only if made in writing (Article 1851).

Between the parties, a settlement has the force of a final judgment of the highest court, and it cannot be challenged on the ground of a mistake about the law or because one side got a bad deal (Article 1858). The exceptions are narrow: it can be annulled for a mistake about the person or the subject of the dispute, and in every case of fraud or violence (Article 1859); a settlement based on documents later found to be false is void (Article 1861).

Courts hold people to what they signed. In 2025 the Supreme Court upheld rulings that a signed settlement letter ending all disputes between the parties binds them as law and must be carried out (MA 3312 K/Pdt/2025).

What exactly are you releasing, and when?

• Scope. A waiver of “all rights and claims” in a settlement is read as covering only what relates to the dispute that led to it (Articles 1854 and 1855). Even so, a broad clause can end your claims: the Supreme Court let stand an appeal ruling that rejected a claim brought despite a signed settlement in which both sides promised never to sue each other, civilly or criminally, and declared that nothing further was owed (MA 1759 K/Pdt/2025).
• Timing. The law lets an obligation depend on a future, uncertain event — suspended until the event happens, or dissolved if it happens (Article 1253). An obligation under a suspensive condition cannot be enforced before the event has occurred (Article 1263). A release that takes effect only when you have received the full settlement sum is therefore a very different document from one that takes effect on signature.
• Nothing is presumed. Replacing an old obligation with a new one (novation) is not presumed; the intention must clearly appear from the deed (Articles 1413 and 1415). Remission of a debt is likewise not presumed and must be proven (Article 1438). The exact wording of the release clause is what a court will read.
• Guarantors. A release given to the main debtor also frees its guarantors (Article 1442). If a director or a related company guaranteed the developer’s obligations, an unconditional release of the developer may release them as well.

If the developer does not pay

A settlement is a two-sided contract. The party who is not paid may choose between demanding performance and asking for the agreement to be dissolved, with compensation (Article 1267). Dissolution for breach must, as a rule, be asked of a court (Article 1266), and a dissolving condition, once it operates, returns matters to where they stood as if no obligation had existed (Article 1265).

In practice, courts have ordered a party to carry on with a settlement it signed (MA 3312 K/Pdt/2025). The Supreme Court has also upheld the cancellation of a notarial settlement deed where the paying side paid only part of the agreed sum — while adjusting the financial consequences itself (MA 4436 K/Pdt/2025). Getting your original claims back is therefore not automatic; it is something to write into the agreement.

Where a settlement has been confirmed by a court and the other side then fails to perform, the Supreme Court has rejected a fresh lawsuit over the same dispute as already decided (ne bis in idem) (MA 1387 K/Pdt/2025). The route then is enforcement of the court-confirmed settlement, not a new case.

Instalments and security

• Court-confirmed settlement (Akta Perdamaian). Courts in Bali apply the procedural code for the regions outside Java and Madura (RBg). Under it, when parties settle in court, a deed is drawn up, the parties are ordered to comply, and the deed has the force of, and is enforced like, an ordinary judgment; no appeal lies against it (RBg Article 154). Parties who settle out of court may file a claim to have their settlement confirmed as an Akta Perdamaian, which must be pronounced within 14 days of registration (Supreme Court Regulation 1/2016, Articles 1(10) and 36). The judge will not confirm terms that are against the law, public order or morality, harm third parties or cannot be carried out (Article 27(2)).
• Notarial acknowledgment of debt (grosse akta). The Notary Law defines a grosse akta as a copy of a deed acknowledging a debt, headed “DEMI KEADILAN BERDASARKAN KETUHANAN YANG MAHA ESA”, which has executorial force (Law 30/2004 as amended by Law 2/2014, Article 1(11); Law 30/2004, Article 55(2)–(3)). The procedural code gives such notarial debt instruments the same force as a court judgment, with enforcement through the court’s ordinary execution rules (RBg Article 258).
• A clear default trigger. A debtor is in default after a formal demand, or by the agreement itself where it says that simply missing the stated date puts the debtor in default (Article 1238). Dated instalments with that wording avoid an argument about whether a further notice was needed.
• Who signs. To settle, a party must have the power to dispose of what is being settled (Article 1852). The Supreme Court upheld a ruling that a notarial settlement made under a power of attorney that had already ended was void (MA 6229 K/Pdt/2024). If you bought together with someone else, note that a settlement made by one interested party does not bind the others (Article 1857).

Signing under pressure, by mistake or after deception

Consent given by mistake, extorted by violence or obtained by fraud is not valid consent (Article 1321). Violence here means pressure that would impress a reasonable person with fear of significant and present harm to themselves or their property, judged with regard to age, sex and position (Article 1324). Fraud counts only where it is clear the other side would not have contracted without the tricks used, and it must be proven, never presumed (Article 1328).

Timing matters. A challenge based on violence is lost if, after the pressure ends, the agreement is approved expressly or tacitly (Article 1327). An action to annul generally lasts five years, counted for violence from when it stopped and for mistake or fraud from when it was discovered (Articles 1449 and 1454).

Courts set a high bar. The Supreme Court has upheld the rejection of claims to undo a settlement for duress where there was no solid proof and the claimant had signed personally (MA 2064 K/Pdt/2025), and where the document itself recited that it was signed without coercion (MA 3116 K/Pdt/2022). If you object to the terms, say so in writing before you sign.

Confidentiality and non-disparagement clauses

These are ordinary contractual promises. A lawfully made agreement binds its parties as law and can be revoked only by mutual consent or on grounds the law allows (Article 1338). Read what the clause covers, for how long, whether it binds the developer too, and what happens if it is breached.

If a draft asks you to withdraw a police report, note that the Civil Code allows the civil consequences of a criminal offence to be settled, but says the settlement does not prevent prosecution by the public prosecutor (Article 1853).

Clauses to ask for before you sign

• Release on payment. The release takes effect only on receipt of the full settlement sum (a suspensive condition, Articles 1253 and 1263).
• A payment schedule with a default trigger. Dated instalments, with missing a date being default without further demand (Article 1238), and the whole unpaid balance falling due at once.
• Reinstatement. On default, the settlement and the release fall away and your original claims revive, with credit for amounts already paid (compare Articles 1265 to 1267).
• Security. Court confirmation as an Akta Perdamaian, or a notarial acknowledgment of debt issued as a grosse akta; any guarantee stays in force until full payment (Article 1442).
• Governing forum. Name where disputes about the settlement will be decided. If you choose arbitration, the district court must decline the case (Law 30/1999, Articles 3 and 11).
• Correct figures and proper signatories. A calculation error in a settlement must be corrected (Article 1864); confirm who signs for the developer and on what authority (Article 1852).

The honest take

A settlement can save years of litigation, and many disputes should end this way. But once signed it is meant to be final, and Indonesian courts hold people to it. Before you sign, have the settlement reviewed together with the original contract, any addenda and your payment record, so that the release depends on payment, a missed instalment has a clear consequence, and your original claims stay alive until you are paid. No outcome can be promised either way.

General information only, not legal advice for your situation. No result is guaranteed. Speak to a lawyer about your specific facts.