The business judgment rule as a criminal defense for state-owned enterprise directors in Indonesian corruption cases

Tohom Hasiholan, Abdul Madjid, Nurini Aprilianda & Adi Kusumaningrum

Volume 5 Issue 3, September 2025

Abstract

This article critically examines the application of the business judgment rule (BJR) as a defense mechanism for directors of Indonesian State-Owned Enterprises (SOEs) who face criminal charges. The BJR, widely recognized in corporate law, traditionally protects directors from liability for decisions made in good faith, informed judgment, and absence of conflict of interest. However, in Indonesia, the BJR’s applicability remains contested, especially in criminal proceedings involving SOE directors. The paper explores the doctrinal and comparative legal perspectives on the BJR, analyzing how jurisdictions such as the United States, Australia, and several European countries incorporate the rule into both corporate and criminal law frameworks. Using a qualitative legal research method involving normative juridical approaches and comparative analysis, this study finds that Indonesia lacks a coherent legal doctrine integrating the BJR into its criminal justice system. Judicial decisions in Indonesia display inconsistency in applying the rule, often disregarding directors' business judgment and managerial discretion. The article recommends the formal codification of the BJR within Indonesia’s criminal law context, especially concerning SOEs, to provide legal certainty and protect directors acting in good faith. Such a move would align Indonesia with global corporate governance standards and prevent criminalization of legitimate business decisions.

Keywords

Author information & Contribution

Tohom Hasiholan. Corresponding author. Doctor of Law Program, Faculty of Law, Universitas Brawijaya, Indonesia. Email: hasiholantohom@gmail.com

Abdul Madjid. Doctor of Law, Graduate Program, Faculty of Law, Universitas Brawijaya, Indonesia. Email: majid@ub.ac.id

Nurini Aprilianda. Doctor of Law, Graduate Program, Faculty of Law, Universitas Brawijaya, Indonesia. Email: nurini.aprilianda@ub.ac.id

Adi Kusumaningrum. Doctor of Law, Graduate Program, Faculty of Law, Universitas Brawijaya, Indonesia. Email: adi_ningrum@ub.ac.id

"All authors equally contributed to the conception, design, preparation, data gathering and analysis, and writing of the manuscript. All authors read and approved the final manuscript."

Disclosure statement

Funding

Institutional Review Board Statement

AI Declaration

Notes

Acknowledgement

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Cite this article:

Hasiholan, T., Madjid, A., Aprilianda, N. & Kusumaningrum, A. (2025). The business judgment rule as a criminal defense for state-owned enterprise directors in Indonesian corruption cases. International Review of Social Sciences Research, 5(3), 79-94. https://doi.org/10.53378/irssr.353236