10 Critical Insights on Force Majeure in Bali and Lombok: Safeguarding Lease Agreements and PT PMA Investments

Introduction

Bali and Lombok have become two of the most attractive destinations in Indonesia for long-term villa rentals, co-living spaces, and commercial leases. Bali, with its thriving tourism and creative economy, attracts thousands of digital nomads and foreign entrepreneurs each year. Lombok, on the other hand, is rapidly emerging as an investment hotspot, boosted by the Mandalika Project, eco-tourism initiatives, and new infrastructure developments. Both islands now serve as hubs where lifestyle and business opportunities intersect, making property leasing a popular option for individuals and companies, including those operating through PT PMA structures.

Yet, with growing opportunities come unique risks. Investors, landlords, and tenants face challenges that are often beyond their control. Natural disasters like volcanic eruptions, earthquakes, and floods can disrupt lease agreements. Government policy shifts, such as new zoning or tourism regulations, may restrict property use. Unexpected global crises, including pandemics, can also halt operations, limit tenant access, and impact rental income.

This is where Force Majeure in Bali and Lombok plays a crucial role. By including properly drafted force majeure clauses in lease agreements, both landlords and tenants can ensure their contracts remain enforceable even when unforeseen circumstances arise. Far from being a formality, these clauses act as vital safeguards that protect the interests of all parties, reduce disputes, and provide a legal framework for navigating uncertainty in a high-growth, high-risk market.

Understanding Force Majeure in Indonesian Law

In Indonesia, the concept of force majeure is regulated under the Civil Code (KUHPerdata), Articles 1244 and 1245. These provisions state that a party cannot be held liable for failing to perform contractual obligations if the failure is caused by circumstances beyond their control, which could not have been foreseen or avoided. In other words, force majeure is a legal shield that excuses non-performance when unforeseen events make it impossible to carry out an agreement.

When compared with international standards, Indonesia’s interpretation is fairly consistent with civil law jurisdictions, where force majeure is generally codified in law. In contrast, common law systems such as the UK and the US rely heavily on explicit contract wording, and absent a clause, parties may struggle to invoke force majeure. In international business, contracts often adopt FIDIC standards, which provide a detailed framework for handling events like war, natural disasters, and government actions.

Under Indonesian law, the list of events that may be classified as force majeure includes natural disasters such as earthquakes, volcanic eruptions, and floods, as well as human-made disruptions like war, strikes, government policy changes, or pandemics. These events must genuinely prevent contractual performance, not merely make it inconvenient or more costly.

In practice, force majeure has significant implications for lease and property agreements. For example, if a villa in Bali becomes inaccessible due to volcanic activity, tenants may be temporarily excused from paying rent. In Lombok, if new government regulations restrict commercial activity in certain zones, landlords may not be able to enforce prior obligations. Depending on the wording of the contract, force majeure can result in delayed obligations, renegotiation, or even termination without liability.

Thus, the careful drafting of clauses related to Force Majeure in Bali and Lombok ensures that landlords, tenants, and investors are legally protected. Without such provisions, parties risk prolonged disputes and financial losses when unexpected events occur. Properly defined, Force Majeure in Bali and Lombok provides a balance between fairness and legal certainty in the face of unpredictability.

The Role of Force Majeure in Lease Agreements

Lease agreements are central to Bali and Lombok’s growing property market, particularly in the areas of long-term villa rentals, co-living spaces, and commercial leases. With demand from digital nomads, expatriates, and businesses establishing PT PMA entities, contracts have become increasingly sophisticated. Yet, despite thorough planning, unforeseen events can quickly disrupt property use and lead to disputes between landlords and tenants. This is where force majeure clauses play a vital role.

Typical risks in lease agreements include property damage caused by natural disasters, government actions such as zoning changes or revoked permits, and large-scale disruptions like pandemics. For example, if a commercial tenant in Lombok loses their business license because of sudden regulatory changes, or a villa in Bali becomes uninhabitable after heavy volcanic ash, tenants may be unable to fulfill their rental obligations. Without a clear legal safeguard, landlords might push for payment while tenants argue for relief, creating conflicts that could escalate to litigation.

By incorporating a well-drafted clause on Force Majeure in Bali and Lombok, both landlords and tenants gain protection from such scenarios. These clauses clearly define what qualifies as force majeure, outline obligations during the event, and determine whether the contract should be suspended, renegotiated, or terminated. This proactive approach reduces uncertainty and ensures that both sides are treated fairly.

For instance, if a tenant is unable to use a villa in Bali due to volcanic ash disruptions, a force majeure clause could temporarily suspend rent payments until the property becomes habitable again. Similarly, in Lombok, if government zoning changes suddenly prohibit commercial activity in a leased space, the tenant may be released from the contract without penalty.

In essence, Force Majeure in Bali and Lombok lease agreements ensures business continuity, reduces disputes, and protects the long-term trust between property owners and tenants. In regions where natural and regulatory uncertainties are common, these clauses are not just optional—they are indispensable.

Long-Term Villa Rentals and Co-Living Agreements

Bali has long been a global hub for villa rentals, attracting expatriates, digital nomads, and foreign investors seeking luxury accommodations for extended stays. With its blend of tourism and lifestyle-driven demand, long-term villa leases have become an essential part of the island’s property economy. Meanwhile, Lombok is carving its own niche, especially near Mandalika, where new infrastructure projects and eco-tourism development have spurred interest in co-living hubs designed for remote workers and sustainable communities.

While these rental and co-living arrangements present lucrative opportunities, they also carry significant risks. Contracts may be frustrated by government moratoriums on building permits, delays in infrastructure projects, or unforeseen natural disasters such as volcanic eruptions, earthquakes, or floods. These events can render villas or co-living facilities temporarily uninhabitable or entirely unsuitable for use, creating tension between landlords and tenants.

This is why Force Majeure in Bali and Lombok clauses tailored specifically for long-term villa rentals and co-living leases are essential. A properly drafted clause can address three critical areas:

1. Rent Suspension – If a villa in Bali becomes unusable due to volcanic ash or a co-living space in Lombok is affected by infrastructure delays, the clause can suspend rental obligations during the affected period.
   
2. Termination Rights – In cases where the property remains uninhabitable for an extended time, tenants may be granted the right to terminate the lease without incurring penalties, providing fairness and clarity.
   
3. Clear Definition of Covered Events – Defining which events constitute force majeure—ranging from natural disasters to government policy shifts—helps prevent disputes by setting clear expectations.
   

By incorporating Force Majeure in Bali and Lombok into these agreements, both landlords and tenants ensure balanced protection. In a market shaped by rapid development and environmental volatility, these clauses help maintain trust, reduce legal disputes, and provide investors with the confidence that their rental ventures are safeguarded against unpredictable risks.

Ultimately, whether it is a beachfront villa in Bali or a modern co-living hub in Lombok, legal resilience through force majeure clauses strengthens the sustainability of long-term leasing arrangements. 

Commercial Leases: Hotels, Retail, and Offices

For many foreign investors entering Indonesia, leasing commercial property is the first step to establishing a strong presence. PT PMA structures often lease hotels, beach clubs, restaurants, retail outlets, or office spaces in Bali and Lombok, tapping into the booming tourism and business sectors. However, while these opportunities are lucrative, they are also vulnerable to unforeseen disruptions.

The hospitality industry provides a clear example. In Bali, resorts and beach clubs rely heavily on uninterrupted tourism flows. Similarly, in Lombok, new hotels and retail spaces around Mandalika depend on seasonal visitors and large events. Yet, external shocks such as global pandemics, natural disasters, or sudden regulatory changes can bring operations to a halt. The COVID-19 pandemic, for instance, forced widespread closures of bars, restaurants, and offices, leaving businesses unable to generate income while still bound by lease obligations.

This is where Force Majeure in Bali and Lombok becomes a vital safeguard in commercial lease agreements. Well-drafted clauses can provide three main protections for businesses:

1. Rent Deferment or Suspension – During periods when a property cannot be used due to force majeure events, rent obligations may be suspended or deferred until operations resume.
2. Renegotiation Rights – A clause may allow landlords and tenants to renegotiate terms when long-term disruptions occur, such as extended government restrictions on tourism-related businesses.
3. Contract Exit Options – In severe cases, businesses may terminate the lease without penalties if the property remains unusable, preventing further financial losses.

By embedding Force Majeure in Bali and Lombok into commercial leases, PT PMA companies and local landlords strike a fair balance between risk and responsibility. These clauses not only minimize legal disputes but also encourage flexibility in business relationships, ensuring that investors, tenants, and property owners can adapt to unforeseen challenges.

In fast-evolving markets like Bali and Lombok, where external risks are inevitable, force majeure clauses are no longer optional—they are a strategic necessity for sustainable commercial ventures.

Force Majeure for PT PMA Companies

Foreign investors setting up PT PMA companies in Bali and Lombok face unique risks when entering into lease or development agreements. Unlike local businesses, PT PMA entities are often bound by stricter compliance requirements and carry larger financial exposure. For this reason, robust force majeure protection is not just advisable—it is essential.

International investors typically expect contracts that reflect global standards of risk management. However, the definition and application of force majeure under Indonesian law can differ significantly from common law jurisdictions. Without careful drafting, vague or overly broad language may lead to disputes when unforeseen events occur. A strong Force Majeure in Bali and Lombok clause ensures alignment with both investor expectations and Indonesian legal frameworks.

Key considerations for PT PMA companies include:

1. Clarity in Language – Contracts should specifically list covered events (e.g., volcanic eruptions, earthquakes, government moratoriums, or pandemics) to avoid ambiguity.
2. Legal Alignment – The clause must comply with Articles 1244–1245 of the Indonesian Civil Code while ensuring enforceability in local courts.
3. Insurance Integration – Pairing force majeure clauses with business interruption insurance strengthens financial protection for foreign investors.

For example, a foreign investor leasing land in Lombok to build a resort may face construction delays due to unexpected government infrastructure policies or volcanic activity. A well-drafted force majeure clause would allow the investor to suspend obligations, renegotiate timelines, or even exit the agreement without penalties.

Ultimately, Force Majeure in Bali and Lombok provides PT PMA companies with a safety net, balancing international expectations with local legal realities and safeguarding long-term investments.

Common Pitfalls in Drafting Force Majeure Clauses

While many contracts in Bali and Lombok include force majeure provisions, problems often arise when these clauses are drafted without precision. A common mistake is relying on generic or “copy-paste” templates that fail to account for the unique risks of the region. For instance, a clause drafted for use in Europe may not cover local realities such as volcanic eruptions or government moratoriums on land use.

Another pitfall is failing to define clear obligations during force majeure events. Tenants and landlords often disagree on whether rent should be suspended, deferred, or still payable when a villa, co-living space, or commercial property becomes unusable. Ambiguity here frequently leads to disputes. Similarly, many contracts do not distinguish between partial and total inability to perform. A hotel that can operate at 50% capacity due to zoning restrictions faces a very different situation than one forced to close entirely. Without clear wording, each party may interpret their rights differently.

Lessons from past crises underline these risks. During the COVID-19 pandemic, many businesses in Bali and Lombok faced prolonged shutdowns, but vague clauses left landlords and tenants in conflict over payment obligations. Likewise, volcanic eruptions disrupted villa rentals, exposing weaknesses in contracts that failed to list natural disasters explicitly.

To avoid these pitfalls, engaging qualified notaries and legal counsel in Bali and Lombok is essential. They ensure that Force Majeure in Bali and Lombok clauses are customized, legally enforceable, and aligned with both Indonesian law and investor expectations. For PT PMA companies and private investors alike, tailored drafting prevents disputes and provides genuine protection when unforeseen events strike.

Best Practices for Drafting Force Majeure in Bali and Lombok

Menyusun klausul force majeure dalam kontrak properti atau sewa di Indonesia tidak bisa dilakukan sembarangan. Baik di Bali maupun Lombok, setiap wilayah memiliki dinamika bisnis yang berbeda sehingga Force Majeure in Bali and Lombok harus disesuaikan secara spesifik. Langkah pertama yang paling penting adalah bekerja sama dengan notaris lokal dan penasihat hukum berpengalaman. Mereka memahami hukum nasional sekaligus praktik regional yang dapat memengaruhi keberlakuan kontrak.

Beberapa elemen kunci yang wajib ada dalam klausul force majeure antara lain:

1. Definisi peristiwa – Klausul harus secara jelas menyebutkan bencana alam (gempa, erupsi gunung berapi, banjir), pandemi, kebijakan pemerintah, hingga keadaan darurat lain yang relevan.
2. Prosedur pemberitahuan – Pihak yang terdampak wajib memberi pemberitahuan resmi dalam jangka waktu tertentu agar klaim force majeure sah secara hukum.
3. Suspensi vs terminasi – Penting untuk membedakan apakah kewajiban kontrak hanya ditunda sementara atau dapat diakhiri sepenuhnya.
4. Mekanisme penyesuaian sewa – Untuk kontrak villa, co-living, atau ruang komersial, klausul sebaiknya mencakup opsi penangguhan atau penyesuaian pembayaran sewa selama properti tidak bisa digunakan.

Dari sisi regional, Bali memiliki karakter kontrak yang erat kaitannya dengan sektor pariwisata. Oleh karena itu, klausul Force Majeure in Bali and Lombok di Bali perlu fokus pada gangguan bisnis akibat penutupan destinasi wisata, pembatasan perjalanan, atau bencana alam yang memengaruhi okupansi villa dan hotel. Sementara itu, Lombok yang sedang berkembang dengan proyek infrastruktur besar, memerlukan klausul yang memperhatikan potensi keterlambatan pembangunan, moratorium lahan, atau perubahan regulasi investasi.

Sebagai panduan praktis, investor asing disarankan membuat checklist sederhana sebelum menandatangani kontrak: apakah definisi force majeure sudah jelas, prosedur pemberitahuan diatur, ada pilihan suspensi/terminasi, serta mekanisme sewa yang fleksibel. Dengan pendekatan ini, Force Majeure in Bali and Lombok dapat menjadi instrumen perlindungan nyata, bukan sekadar formalitas dalam kontrak.

Future Outlook: Stronger Investor Protection

Ke depan, arah regulasi Indonesia semakin jelas dalam memberikan perlindungan yang lebih kuat bagi investor, baik di Bali maupun Lombok. Pemerintah terus mendorong reformasi hukum properti dengan menekankan transparansi kepemilikan tanah dan kepastian hukum dalam kontrak sewa maupun jual beli. Langkah-langkah ini memberi sinyal positif bagi investor asing yang mengandalkan stabilitas regulasi.

Salah satu perkembangan penting adalah digitalisasi kontrak dan catatan tanah melalui sistem berbasis daring di Badan Pertanahan Nasional (BPN). Dengan adanya pencatatan digital, risiko tumpang tindih sertifikat atau kehilangan dokumen fisik dapat diminimalkan. Hal ini mempermudah proses due diligence, serta memberikan kepercayaan lebih kepada pihak asing yang berinvestasi di sektor properti maupun usaha berbasis PT PMA.

Selain itu, tren global juga mendorong semakin banyak kontrak di Indonesia yang mengadopsi klausul standar force majeure. Hal ini memberikan konsistensi dan meminimalisir sengketa hukum, terutama untuk kontrak jangka panjang di bidang perhotelan, villa rental, co-living, dan komersial.

Pada akhirnya, meskipun teknologi dan regulasi semakin modern, perlindungan hukum tetap membutuhkan klausul yang tepat. Force Majeure in Bali and Lombok akan terus menjadi elemen penting untuk menjaga keberlanjutan investasi. Dengan adanya reformasi hukum, digitalisasi, dan adopsi praktik terbaik, investor dapat lebih yakin bahwa mereka memiliki fondasi kontrak yang adil dan berdaya tahan terhadap ketidakpastian.