Wednesday, 18 Februari 2026
Adi Jaya (Sunto Legal Consultant)

In business and investment practices, collaboration often begins with an oral understanding between parties. This understanding can occur between local business actors, or between local business actors and foreign partners. However, when investments develop without the support of clear written legal documentation, various legal implications arise that must be understood by both business actors and their legal advisors.

According to Article 1320 of the Civil Code (KUHPerdata), a valid agreement will only be recognized if it meets four main requirements: agreement of the parties, capacity to enter into an agreement, a specific subject matter, and a lawful cause. This provision does not stipulate that an agreement must be executed in writing, so even an oral agreement will be recognized as valid under Article 1320 of the KUHPerdata as long as all the elements mentioned are met. However, if a dispute arises, the obligation to provide proof becomes a key issue. Written evidence such as contracts or cooperation agreements is practically stronger in court than non-written evidence.

In contractual disputes, the party claiming rights must be able to prove the existence of an agreement. Without a written document, evidence relies on other forms of evidence such as electronic communications, witnesses, bank transfers, and even business practices. Therefore, the evidence becomes more complex, requiring analysis of the context and the parties' behavior.

Citing Article 164 of the Indonesian Law (HIR), it explains that in the Indonesian judicial system, written evidence has greater probative value than other forms of evidence. In the absence of a written contract, the risk of a verdict that is less favorable to the claim is very real.

Investment dispute cases can proceed within the realm of Civil Law, such as lawsuits for breach of contract, cancellation of agreements, compensation, or can also fall under the realm of Criminal Law for reports of fraud, depending on the facts and elements of the act.

For example, in a criminal context, Article 378 of the Indonesian Criminal Code regulates fraud. To fulfill the elements of fraud, it is necessary to prove malicious intent (mens rea), deceit, and losses suffered by the other party. Therefore, without a written contract, proving malicious intent becomes more complex and leads to differing interpretations among the disputing parties.

Thus, investments without written documentation tend to increase legal uncertainty in both civil and criminal law, especially when these legal elements must be tested in court.

Investments involving written agreements provide certainty of rights and obligations. This is in line with the principle of pacta sunt servanda, which means agreements must be respected, which is recognized in international law and reinforced in Indonesian domestic legal practice.

In cross-border investment relations, legal aspects must also take into account applicable investment regulations, such as Law Number 25 of 2007 concerning Investment, which regulates the rights and protections of foreign and local investors; and the Implementing Regulations of the Investment Coordinating Board (BKPM), which regulate licensing procedures and investment reporting obligations.

Strong documentation is very helpful in fulfilling administrative obligations and protecting investors' rights as stipulated above.

Without written documentation, investors face risks including: Claims that are difficult to prove in court; Difficulty obtaining adequate compensation; Uncertainty regarding the status of the parties' rights and obligations; and Challenges in distinguishing civil from criminal disputes.

To avoid these risks, recommended best practices include:

1. Drafting and signing a clear written contract from the outset;
2. Include dispute resolution clauses such as mediation;
3. Document all communications and transactions;
4. Use legal counsel from the negotiation phase.

Investment agreements lacking written evidence are not automatically invalid under Indonesian law. However, in terms of legal certainty and the effectiveness of proof, unwritten agreements create substantial uncertainty, especially when disputes arise. This can impact the legal standing of the parties in court, both in civil and criminal matters.

Therefore, developing a strong contractual structure and legal safeguards are crucial preventative measures in ensuring healthy and sustainable investment relationships.

Want Strong Legal Protection in Investment Collaborations?

As a law firm experienced in investment disputes, Sunto Legal Consultant is ready to be your partner in:

✅ Comprehensive investment contract preparation
✅ Pre-investment legal risk evaluation
✅ Assistance in resolving civil and criminal disputes
✅ Effective evidence strategies in court

Contact us for an initial consultation and to protect your rights from the early stages of your investment collaboration.


Source:
1. Civil Code (KUHPerdata)
2. Herzien Indonesisch Reglement (HIR).
3. Criminal Code (KUHP).
4. Law Number 25 of 2007 concerning Investment.
5. ⁠Implementing regulations of the Investment Coordinating Board (BKPM) regarding licensing and investment reporting obligations.