Fair Interest Rates And Judicial Discretion: A Comparative Study Of Japan And France For Credit Regulation Reform In Indonesia

Abstract

The determination of a fair interest rate in credit agreements is a crucial issue in securing legal certainty and in protecting debtors against the exploitative imposition of excessive interest (woeker). Although Indonesia possesses a historical foundation in the Woekerordonnantie 1938, its current positive law no longer prescribes an explicit maximum interest rate — a statutory vacuum that has given rise to disparity among judicial decisions and to legal uncertainty in adjudicative practice. Employing normative legal research with statutory, historical, conceptual, and comparative approaches, this article examines in depth the interest rate regulatory regimes of Japan and France to formulate an ideal regulatory framework for Indonesia. The findings demonstrate that Japan applies static, tiered statutory interest rate ceilings determined by the amount of the loan principal under the Interest Rate Restriction Act (IRRA), whereas France employs the dynamic taux d'usure system under the Code monétaire et financier, which is revised periodically. The experience of both jurisdictions shows that explicit and transparent limits afford optimal legal certainty and prevent the abuse of circumstances (misbruik van omstandigheden). This study therefore recommends regulatory reform in Indonesia through the enactment of statutory interest rate caps and the issuance of judicial guidelines (SEMA/PERMA) to realize distributive justice and contractual balance.