I. Introduction

The terminology of Constitution, based on Black's Law Dictionary is defined as follows:
" The fundamental and organic law of a nation or state, establishing the conception, character, and organization of its government, as well as prescribing the extent of its sovereign power and the manner of its extension"
Based on the definition abovementioned, the fundamental and organic law of Indonesia, in the very broad sense is a administrative law and in the more specific sense is a law which stipulates on how the government officer enforce their authority in organizing the nation and also stipulates the limitation of the authority thereof. Thus, in a very simple way, the constitutional law under Indonesian law is defined as law of state and/or government structure.
Considering that Indonesian constitutional law is a law concerning on state structure, we have to firstly understand about what is "state" defined.
I would like to refer to the book written by Prof. DR Mr. LJ Van Appeldorn regarding "An Introduction of Law" (or "Pengantar Ilmu Hukum" which is in Bahasa) whish was published in Indonesia on May Year 1954, to draw the definition of "state, which is as follows:
The terminology of "state" is referring to the persons who have a highest authority over the nation;
"State" is a union of people which lives under the highest authority of which is stipulated by one law.
"State" is referring to a certain territory where a nation live thereon, under one highest authority.

"State" is an asset which is controlled by the person who hold highest authority , to be used for all benefit of the nation.
Prof. DR Mr. LJ Van Appeldorn , however, has made a bottom line of those mentioned above definition by saying that "state" is a legal entity which consists of 3 main part namely (i) people, (ii) government and (iii) territory. As state is a legal entity, it should need then the institutions to enforce the will of state.
II. State and Its Authority
The very basic principle essence of state is an authority. Historically there were 2 basic type of authority applied by any nation in the world, they are ( I) Monarchy and (ii) Republic. These 2 types, however, is still having improvisation by many nations, form time to tie, until now, so they have changed into the new ones.
"Monarchy", based on Black's Law Dictionary, is defined as " A government in which a single person rules, with powers varying from absolute dictatorship to merely ceremonial" and "limited monarchy" as "A monarchical form of government in which the monarch's power is subject to constitutional or other restraints" also termed " constitutional monarchy"
While "Republic" is said as " A system of Government in which the people hold sovereign power and elect representatives who exercise that power. It contrast on the one hand with a pure democracy, in which the people or community as an organized whole wield the sovereign power of government, and on the other with the rule of one person (such as king, emperor, czar, or sultan."
Indonesia is one of nations in the world which uses republic system of government. The system is stipulated in a Law called Constitution of Republic of Indonesia which is enacted in 1945 ("Undang Undang Dasar 1945" in Bahasa), which will be further explained in part III and IV below. (It is further referred to as "Constitution of The Republic of Indonesia Year 1945")
III. Constitution in Indonesian
The constitution in Indonesia is adopted from Dutch Law consisting of:
1. Constitution of The Republic of Indonesia Year 1945
This law stipulates the very basic right and obligation of any Indonesian citizenship against state of Indonesia and also right and obligation of the State against people of state of Indonesia (vice versa).

2. Other laws and regulations which has are of the implementation of Constitution of The Republic of Indonesia Year 1945, These would be, for example, laws regarding the general election, laws regarding the structure of organization of province, etc.

3. Custom applied by people since long time ago, which is usually not of a written commitment but is respected by the people.

IV. Constitution of The Republic of Indonesia Year 1945

The Constitution of The Republic of Indonesia Year 1945 are providing articles regarding (i) Form of Government and Sovereignty of the State; (ii) Peoples Congress; (iii) Executive; (iv) Council of State; (v) The Ministry; (vi) Local Administration; (vii) Council of Representatives; (viii) Finance; (ix) The Judiciary; (x) Citizenship; (xi) Religion; (xii) Defense; (xiii) Education; (xiv) Social Welfare; (xv) Flag and Language; (xvi) Amendments.

Constitution of The Republic of Indonesia Year 1945 ("Constitution") is opened by the paragraphs saying that any colonial system in this world is contrary to humanity and justice, and must therefore be abolished. The struggle for independent Indonesia has come to a successful stage, and the Indonesian people are on the very threshold of Indonesian State which is independent, united, sovereign, just and prosperous.

Further, the constitution also determined that the establishment of a national Indonesian Government is for: (i) nurturing the Indonesian People and their territories for promoting welfare, for uplifting the standard of living and for participation in the founding of a world order, based on independence, eternal peace and social justice; (ii) The national independence is set up as a republic with sovereignty vested in the people ; (iii) the basis of the such sovereignty are believe in all embracing God, in righteous and moral humanity and the unity of Indonesia and (iv) democracy which is guided and led by the people trough consultation so that there shall result social justice for the whole Indonesian people.

The executive power is conducted by the President and shall be assisted by a Vice President. The president ‘s action shall be firstly approved by the Council of Representatives.

The obligations of the President among other things are (i) by approval of the Council of Parliament, to enact the necessary ordinances to put the laws into enforcement; (ii) to be commander in chief of the Army, the Navy and the Air Force; (iii) by approval of the Council of Parliament by approval of the Council of Parliament, to declare war, make peace and conclude treaties with other countries; (iv) to appoint ambassadors, diplomatic minister and councils.

In doing those actions, the President shall be assisted by a Council of Ministers which have been appointed by the President.

The legislative power is on the hand of Council of Representatives, the organization of which shall be stipulated by a law. The obligations of the Council Representatives are among other things (i) to enact public rules and regulations, to approve any President's actions; (iii) to approve the state budget, form of tax, currency denomination and the value thereof.

The judiciary power shall be vested in the Supreme Court and the subordinate courts, the organization and competence of those courts shall be provided by a law.

The operation of commercial business activity
Under Australian legal system (New South Wales)

To understand how the business activity operates in Australia, we should know how is the legal system in Australia, particularly who has the power to make laws regarding the business activities conducted in Australia, and also how the applicability, the validity of such laws and the interpretation of laws.

There are some distinctive features of the legislative power under Australian legal system, thus I will divide this letter into the following parts and titles mentioned below based on those features. Comparatively, I will also put an illustration of the legislative power under Indonesian legal in one part.

I. Introductory;
II. The Legislative Powers of the Federal and the States;
III. The Constitutional Basis for Major Statutes that Regulate Business;
IV. The Role of the High Court of Australia in Interpreting the Constitution and Other Statutes;
V. Conflicts between State and Federal laws;
VI. The Difference Between The Legislative Power of The Federal Parliament and That of A Unitary System;
VII. The Legislative Power under Indonesian Legal System;
VIII. Conclusion;


Firstly, I would like to take the definition the word of "legal system" described by Michael K. Meek which is as follows:
A legal system may be defined as that framework of rules and institutions within a community or a state, which at any given point in time, the citizens have agreed will regulate and be binding upon themselves in their relations with one another and the community or the state.

Australia inherited its legal system from England at the time of colonization which is the federal legal system. The most distinctive feature of the federal legal system is that there are 2 legal systems applicable for each citizen in Australia, one is of the federal or Commonwealth and the other one is of the state. Australia has 6 states which are (A) New South Wales, (B) Victoria, (C) Queensland, (D) South Australia, (E) Western Australia, (F) Tasmania.

As it is the federal legal system, Australia has also a federal system of government . Under this federal system of government, the powers to govern are distributed between the federal government and also government of the 6 states. The structure of government of the federal and the states are the same, they have three separated arms of government which are the parliament, the executive and the judiciary. The duties and power of that 3 arms are: (a) the parliament who has the legislative power to create laws which reflect the government policy , (b) the executive who has the executive power to administer the laws (c) the judiciary has the judicial power to interpret and apply the laws of the government. The legislative powers of the parliaments are listed in their separate constitutions. Please note however that the law applies to all Australian in all states; while the state law applies to the Australians in the relevant state. Thus the constitution made by the Federal Parliament which is called "Commonwealth of Australia Constitution Act" (referred to as the "Constitution") apply to all states in Australia.

As to the Judiciary, there are also 2 kind of judicial power as the consequence of the federal system: (A) the federal judicial power and (B) the state judicial power. The federal judicial power is vested to the federal court; while the state judicial power is vested to the state court. Thus there are 2 court system, the federal court system and the state court system. However, the High Court of Australia, as its name implies, is the highest court in both in the state and federal system of courts.

Thus the business activity of shoes selling in Australia is governed by kind of laws, laws issued by the Federal Parliament and the state parliament of the New South Wales (the parliament of 6 states jointly and severally, as it may be relevant, further referred to as the "State Parliament").

II.The Legislative Powers of the Federal and the States

Due to the fact that the legislative power is hold either by the Federal Parliament and State Parliament, the power of the Federal Parliament has many limitations. The Constitution sets out how the legislative power is distributed between the Federal Parliament and the State Parliament . It provides specific areas where the law making power was given to the parliaments. Those areas are either given exclusively where only the Federal Parliament could pass it, and given concurrently where both of the State Parliament and Federal Parliament could pass it. Meanwhile matters which are not dealt with in the Constitution remained within the power of the State Parliament. It is section 52 of the Constitution which provides the exclusive power of the Federal Parliament and section 51 provides the concurrent power of the Federal Parliament and the State Parliament. In relation with the parliaments, John Carvan said that most parliament in Australia consist of two groups of politician. We call these groups Houses of Parliament, which are the "lower" house and the "upper" house. The Federal Parliament has a Lower House, the House of Representatives and an Upper House, the Senate. While the State Parliament consist of three parts. The Lower House. The Upper House and the Governor.

III. The Constitutional Basis of the Federal Parliament to Make Statutes Regulating Business

Statutes are the acts of parliament or law made by parliament. The statutes may be made by the Federal Parliament and may be made by the State Parliament. The statutes are also including the laws related to the business activities where the function of which are to determine the rights, duties and obligations of persons involved in business, maintaining balance between the interests of those in business and serve persons as producers and consumers, buyers and sellers, lenders and borrowers, also regulating the business transactions, including the business of shoes selling in Australia. The major statutes which are relevant to this kind of business, which are made by the Federal Parliament, are including the Corporations Act 2001 (Cth) and the Trade Practice Act 1974 (Cth) (referred to as "TPA"). The Corporations Act 2001 (Cth) is relevant because it regulate how the organization should be made in doing such business which is appropriate to maintain all matters such as the business partner, the capital and so on, whether it is in the form of proprietorship, partnership, joint venture, co-operative, the company and many more. While TPA should also to be considered by our friend as it regulates the consumer protection. The activities on commercial business, are mostly regulated by the TPA, those would be including the commercial or business dealing, the profit making and also including the banking transactions, movement of goods and persons, dealings between the company or co-operative with the members.

The legal basis of the Federal Parliament in enacting those statutes is the section 51 (xx) of the Constitution which stipulates the legislative powers of the Federal Parliament with respect to foreign corporation and trading or financial corporations formed within the limits of the commonwealth.

IV.The Role of the High Court of Australia in Interpreting the Constitution and other Statutes

As already mentioned in part 2 above, The judicial power is the power to interpret and enforce laws including the Constitution and the other statutes enacted by the parliaments.

As to the interpretation of the Constitution, I would like to take one example of how the High Court of Australia interpreted the Constitution in the case of NSW v Commonwealth . The case is about the Federal Parliament passed the Corporations Act 1989 which was regarded as a national Companies Act, more particularly on trading and financial corporations as well as banking corporations.

The facts of the cases are as follows:
New South Wales stated that that based on the section 51 (xx) of the Constitution, the Federal Parliament has the right to legislate for the incorporation of trading and financial corporations. Based on such view, the Federal Parliament enacted the Corporations Act 1989 (further referred to as "Corporations Act 1989"), the chapter 2 of which provided that the establishment of trading and financial corporation should be firstly applied according to the procedure provided in section 114 to 125 of the Corporations Act 1989. One of the procedure stated that to be valid established under the Corporations Act 1989, a company should wholly or substantially engage in trading or financial activities after certain period of "dormancy" under section 153(2) of the Corporations Act. If not, the company then should be winding up by the company itself, the Australian Securities Commission and also by the court. It therefore concluded that according to the Corporations Act 1989, it was unlawful to incorporate a company under the company law of a state if the company wanted to engage in trading or financial securities based on section 114 of the Corporations Act 1989. This Corporations Act 1989 was actually one of the Federal Parliament's attempts of creating one national corporation law applied the same to all states.

The decision of the Australia High Court, to be sum up, stated that the correct interpretation of section 51 (xx) of the Corporations Act 1989 was that the Federal Parliament can not make a law for the incorporation of corporations engaging in the business of trading or financial as the words "formed within the commonwealth" meant "already formed" considering their plain meaning and the drafting history. Thus the incorporation should be conducted based on the relevant company law made by the State Parliament, instead of the Corporations Act 1989.

Due to that Australia High Court's decision, the Commonwealth Parliament afterward made some another efforts to replace the Corporations Act 1989 by held some other sorts of form of cooperation between all states to legislate the national corporation law applied to all states. Until finally it reached the Corporations Act 2001, which is of the uniform laws of corporation and valid until now.
As to the interpretation of other statutes by the High Court. There are some opinions from experts as to the rule and principles to interpret the statutes, some principles of interpretation. John Carvan stated that the principles of interpretation of the courts (including the High Court) are as follows :‘1.The Act is to be read as a whole. 2. Words are presumed to have consistent meanings throughout the whole of the statute. 3. Technical words should be given in their technical meeting.'

V. Conflicts between State and Federal laws

As already stated in previous part, there are some areas where both Federal Parliament and State Parliament can make laws as specified in section 51 of the Constitution. Consequently there are two laws provide the same subject which have the same validity. This will sometime create conflict between those laws consequently. It is the section 109 of the Constitution which overcome that problem. This section stipulate that if there is a conflict between laws made by the Federal Parliament and the State Parliament for the same subject, then the laws made by the Federal Parliament will prevail. The laws made by the State Parliament ,can, however, be excluded from those areas it they are contradictory with those of the Federal Parliament.

VI.The Differences between the Legislative Power of the Federal Parliament and that of a Unitary System

The legislative power of the Federal Parliament differs from that of a unitary system in the following ways:

- the legislative power of the Federal Parliament is distributed to the State Parliament, while the legislative power under unitary legal system is only hold by the central parliament;

- The legislative power of central parliament under unitary legal system may also distribute its power to the territorial parliament as you may also know very well about this, however such distribution is only for the administration matters or the arm's length of the MPR. Again the distribution of such power is not to be used to establish its own territorial government.

VII. The Legislative Power under Indonesian Legal System

Indonesia has the unitary legal system where the legislative power under this system only vested to the central parliament which is called "Majelis Permusyawaratan Rakyat" or The People's Consultative Assembly (referred to as "MPR") . The members of the MPR are including "Dewan Perwakilan Rakyat" or the House of Representatives (referred to as "DPR"). The MPR has issued the supreme law of Indonesia namely the "1945 Indonesian Constitution" which applies to all Indonesians and all territories. It is true that there also the parliament mostly in each territory which is called "Dewan Perwakilan Rakyat Daerah" or the "Territorial House of People Representative (referred to as "DPRD"), however the legislative power of the DPRD is not to make other laws but it is only for the administration or of the representatives of or the arm's length of the MPR.

The constitutional basis of the legislative power of the MPR to make laws is the article 3 of 1945 Indonesian Constitution. However, the implementation of the laws made by the MPR is through the DPR, the President or the ministers for some more specific regulations. Thus the most distinctive feature of the legislative power in Indonesia is that it is vested only to the MPR, but in reality, the President and the ministers, in exercising the executive powers, have also the right to enact some laws and regulations as long as these laws have the nature of merely implementing the laws made by the MPR. The laws related to the business transactions in Indonesia, made by the MPR, are including the "Banking Law 1992" (amended in 1998), "Company Law 1995", "Capital Market Law 1995" and "Antimonopoly Law 1999". However there are numbers of regulations made by the President and the ministers to implement these laws.

The role to interpret the 1945 Indonesian Constitution and other laws is vested to a court namely the "Constitutional Court" which has the special jurisdiction to hear cases involving the constitutionality of particular legislation, results of a general election as well as actions to dismiss a President from office and other matters relating to the 1945 Indonesian Constitution. Thus the role of Constitutional Court is to interpret the 1945 Indonesian Constitution only. However the interpretations of the laws other than the 1945 Indonesian Constitution is vested to other courts.

Under Indonesia legal system, the conflict of laws like in Australia is never happened, as the laws made by the MPR is applying to all Indonesian in all territory.


1 Komentar

Fri, 23 Dec 2011 @10:21


There's a terrific amonut of knowledge in this article!

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    There's a terrific amonut...
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