Product liability of drugs in Indonesia – a legal guide. Prepared in association with ABNR, a leading global law firm, this is an extract from The Pharma Legal Handbook: Indonesia, available to purchase here for USD 99.
1. What types of liability are recognized in your jurisdiction?
In general, product liability in Indonesia is governed under the Indonesian Civil Code and Law No. 8 of 1999 on Customers Protection (“Customers Protection Law”). The liabilities of the business enactors can be divided into 2 types, namely civil liability and criminal liability.
The Consumer Protection Law stipulates that business enactors shall be responsible to pay compensation for damages, contamination and/or loss suffered by consumers as a result of consuming or using the goods and/or services produced or traded by the business enactors. The compensation referred to above can be in the form cash refund or replacement of goods/services which are of the similar type or of comparable in value, or medical treatment and/or provision of sympathetic care in accordance with the prevailing laws and regulations. Moreover, contractual product liability will also apply where a valid contract exists between the business enactors and the consumers under the provisions of the Civil Code.
Please be advised that both the Civil Code and the Consumer Protection Law adopt a system of fault-based product liability. Therefore, the business enactors shall be liable to pay compensation only if it can be proven with valid evidence that the damages were incurred due to the fault of the business enactors. Please note, however, that pursuant to the Consumer Protection Law, the burden to prove the non-existence of a ‘fault’ element is borne by the business enactors.
If a business enactor violates its statutory obligations, it will be subject to both civil and criminal sanctions as stipulated in the Consumer Protection Law and/or in other relevant laws and regulations. The compensation payment shall not release the business actor from its criminal liability. With respect to this criminal liability, pursuant to the Consumer Protection Law, the business enactor holds the burden of proof that the business enactor is not at fault. The business enactor’s burden of proof, however, shall not prevent the prosecutor from submitting evidence regarding the fault of the business actor.
2. How do these types of liabilities apply to the manufacturers of drugs and devices?
The holders of MAs are responsible for the efficacy, quality and safety of the drugs or medical devices. Further, there is no specific regulation on liabilities of the manufacturers of drugs.
As a general rule, the Consumer Protection Law stipulates that the business enactors are prohibited from producing and/or trading goods and/or services, which:
- do not fulfill or conform to the required quality standard and the prevailing laws and regulations;
- do not conform to the net weight/volume and calculation number as stated in the label or the etiquette of the said goods and/or services;
- do not conform to the size, dosage, weight, and calculation number according to the actual measure;
- do not conform to the condition, warranty, superiority or efficacy as stated in the label, etiquette, or description of the said goods and/or services;
- do not conform to a certain quality, level, composition, processing, style, mode or use as stated in the label or description of the said goods and/or services;
- do not conform to the promise stated in the label, etiquette, description, advertisement, or sales promotion of the said goods and/or services;
- do not mention the expiry date or the best usage/utilization period of the said goods and/or services;
- do not comply with the provision to produce the goods according to halal methods, as denoted by the “halal” mark put in the label;
- do not have a label or provide an explanation of the goods including the name of the goods, the size, the net weight/volume, the composition, the direction of use, the manufacturing date, the side effects, the name and the address of the business enactor and other information which must be included in the label;
- do not mention the information and/or direction of use of the goods in Indonesian language pursuant to the prevailing laws and regulations; or
- are goods for trade that are damaged, defective, or used, and contaminated without providing complete and true information about such goods.
3. Does potential liability extend to the manufacturer only or could claims extend to corporate executives, employees, and representatives?
The liable person in this regard will fully depend on further examination of the default concerned. However, speaking of a limited liability, the directors of a company basically shall not be held personally liable for the corporation’s obligations or damages arising from or in connection with any actions or discretions taken by the directors to manage the corporation. Nevertheless, the directors may be held personally liable if it is established that the said obligations or damages were incurred as the result of the directors’ fault or negligence in performing their duties.
If any actions conducted by the Directors can be regarded as criminal offences under Indonesian criminal law, a criminal investigation can be initiated against the said Directors and they may be charged with a criminal offence. A person or corporation, however, can only be held criminally liable if their fault of negligence is proven according to the relevant evidentiary standard.
Similar with the directors, potential liability may extend to the employees or representatives of the manufacturers if it can be proven that there is fault or negligence made by the concerned person.
4. How can a liability claim be brought?
With reference to Consumer Protection Law, consumers can file a lawsuit against a business enactor (the manufacturer) by filing a claim to the Consumer Dispute Settlement Agency (“BPSK“) or filing a civil lawsuit with the relevant district court.
Further, consumers may also file a report to the Indonesian police if there is a criminal element violated by the business enactor. The police will have discretion to follow up the report as well as investigating the alleged violation. If the investigation shows that there is strong evidence against the business enactor, the police will hand over the case to the prosecutor for further processing.
5. What defenses are available?
The Consumer Protection Law also provides certain defenses that may be used by the business enactor (manufacturer) to protect its interests against the consumers’ claim, namely:
- the goods are not intended to be distributed;
- the defect in the goods emerges later;
- the defect in the goods emerges as a result of compliance with the provisions of the goods’ qualification;
- the damage is caused by the negligence of the consumers; or
- the claim period of 4 (four) years after the purchase of the goods, or the passage of the period agreed upon, has lapsed.