Definition of Fiducia and Fiduciary Collateral
Before addressing your core question, we will first explain the definitions of fiducia and fiduciary collateral as regulated in the Fiduciary Security Law:
Article 1, Paragraph 1
Fiducia is the transfer of ownership rights to an object based on trust, with the provision that the object whose ownership rights are transferred remains in the possession of the original owner.
Article 1, Paragraph 2
Fiduciary Security is a security right over movable assets, both tangible and intangible, and immovable assets, particularly buildings that cannot be encumbered with mortgage rights as referred to in Law Number 4 of 1996 concerning Mortgage Rights. The object remains in the possession of the Fiduciary Grantor as collateral for the repayment of a certain debt, giving the Fiduciary Receiver a preferred position over other creditors.
In this context, a Fiduciary Receiver as referred to in Article 1, Paragraph 6 of the Fiduciary Security Law is an individual or legal entity that holds a receivable secured by fiduciary collateral (commonly financing institutions or banks), where in the principal agreement the fiduciary receiver is the creditor.
In relation to your question, we assume that you, as a consumer, are the debtor (generally the term “debtor” is synonymous with “consumer”).
We also assume that the fiduciary collateral has been formalized through a notarial deed in accordance with Article 5(1) of the Fiduciary Security Law, which requires fiduciary security over an object to be made in a notarial deed in the Indonesian language, known as the Fiduciary Security Deed, and registered with the fiduciary registration office in accordance with Article 11, which states:
- Objects secured by fiduciary security must be registered.
- If the object is located outside the territory of the Republic of Indonesia, this obligation still applies.
Additionally, regarding fiduciary registration, you should also refer to Government Regulation No. 21/2015 and Minister of Law and Human Rights Regulation No. 25/2021.
Requirements for Pawning
Fundamentally, the term “fiducia” originates from the Latin word fides, meaning trust. Accordingly, the relationship between debtor (fiduciary grantor) and creditor (fiduciary receiver) is a legal relationship based on trust. The fiduciary grantor trusts that the fiduciary receiver will return ownership rights once the debt is paid, and vice versa, the fiduciary receiver trusts that the grantor will not misuse the collateral object under their control.
From this explanation, it can be concluded that the fiduciary grantor merely acts as a borrower or temporary user of the object. Thus, the fiduciary grantor has no authority to transfer ownership or take any proprietary action on the collateral, as the legal title belongs to the fiduciary receiver.
Meanwhile, in pawning, as governed under Article 1152 of the Indonesian Civil Code, the pledged object must be placed under the control of the creditor or an agreed third party. A pledge agreement becomes valid upon the transfer of the pledged item to the possession of the pledgee. This transfer is a material element that validates the pawn. Therefore, the pledged item must be physically controlled by the pledgee, even though legal ownership remains with the original owner.
From practical experience, to legally create a pawn over movable assets, the following requirements must be met:
- Existence of a Pledge Agreement
The debtor and creditor enter into a credit agreement with a commitment to provide movable property as collateral (pledge). This agreement is consensual and obligational in nature. - Delivery of the Pledged Item
Article 1152 of the Civil Code states: “A pledge is nullified if the pledged item is no longer in the possession of the pledgee. However, if the item is lost or taken from their control, the pledgee has the right to reclaim it under Article 1977 paragraph two. If the item is returned, the pledge is deemed never to have been nullified.” This means there is no valid pledge if the pledged item remains in the debtor’s possession by the creditor’s consent. Thus, delivery out of the debtor’s control (called inbezitstelling) is a mandatory condition. Delivery occurs when the debtor physically hands the item over to the creditor or a third party (as the pledgee).
If Fiduciary Collateral Is Pawned Without Consent
Back to your question: Article 23(2) of the Fiduciary Security Law states:
“The Fiduciary Grantor is prohibited from transferring, pawning, or leasing the object that is the subject of fiduciary security to another party if the object is not inventory, unless prior written consent is obtained from the Fiduciary Receiver.”
Not all fiduciary receivers will grant such permission, as they may view pawning the fiduciary object as a risk. Although there may be no immediate issue if the debt is paid off on time, unauthorized pawning without written consent can pose future legal risks.
If written consent is granted, and considering that fiduciary security is a real security right (hak kebendaan), the principle of prior tempore potior jure applies (earlier rights prevail). Therefore, should you wish to pawn a fiduciary object to a third party, prior written consent from the fiduciary receiver is required.
Without it, you may be subject to criminal sanctions under Article 36 of the Fiduciary Security Law, which states:
“A Fiduciary Grantor who transfers, pawns, or leases a fiduciary object as referred to in Article 23(2) without prior written consent from the Fiduciary Receiver shall be punished with imprisonment of up to 2 (two) years and a fine of up to IDR 50,000,000 (fifty million rupiah).”
In practice, the principal financing agreement often includes a default clause prohibiting the debtor from transferring, pawning, or leasing the fiduciary object. If your agreement contains such a clause, pawning the object constitutes a breach of contract, potentially triggering Article 36 of the Fiduciary Security Law.
The law does not explicitly regulate penalties for the pledgee (the person accepting the pledge) in such cases. However, if the debtor defaults and the fiduciary receiver enforces the collateral or files a police report under Article 36, the pledgee may lose any claim to the item and may sue the debtor to fulfill their obligations.
In reality, there have been instances where debtors intentionally pawn or transfer fiduciary objects—such as vehicles—to third parties under the guise of a loan, even when the pledgee is aware the object is under fiduciary security with a financing company. Typically, these pledgees are not official pawnshops but individuals associated with community organizations or NGOs.
Thus, if such a case is reported to the police by the fiduciary receiver under Article 36, the debtor may be criminally prosecuted. Furthermore, the pledgee could potentially face criminal charges for receiving stolen goods (penadahan).
Case Examples
To help clarify, here are two court cases involving violations of Article 36 of the Fiduciary Security Law:
- Rantau Prapat District Court Decision No. 506/Pid.B/2022/PN Rap
The defendant had entered into a vehicle financing agreement secured by fiduciary collateral. The defendant sold the fiduciary object to another party without the creditor’s consent and without settling the debt. The court ruled:- The defendant was proven guilty of “transferring an object under fiduciary security without prior written consent from the fiduciary receiver”;
- Sentenced to 5 months imprisonment and fined IDR 1 million (or 1 additional month imprisonment if unpaid).
- Jember District Court Decision No. 613/Pid.B/2014/PN Jmr
The defendant had a four-wheeled vehicle financing agreement secured by fiduciary collateral. The defendant repeatedly rented the object to others without the creditor’s permission and without full repayment. The court ruled:- The defendant was proven guilty of “transferring a fiduciary object without prior written consent”;
- Sentenced to 3 months imprisonment.
Legal Basis
- Indonesian Civil Code (KUHPerdata)
- Law No. 42 of 1999 on Fiduciary Security
- Government Regulation No. 21 of 2015 on Fiduciary Registration Procedures and Costs of Fiduciary Deed
- Minister of Law and Human Rights Regulation No. 25 of 2021 on the Procedure for Registration, Amendment, and Deletion of Fiduciary Security
