Abstract
The adjudication of Islamic banking and finance (IBF) laws in Malaysia is unique given the Malaysian parallel legal systems. Although IBF is a branch of Islamic law, the civil court has the appropriate jurisdiction to decide the cases. This is due to the fact that banking falls under the items 7 and 8 of the Federal List of the Federal Constitution. The trails of decided cases showed that there are problems in resolving IBF cases in the civil courts. This paper aims to discuss the adjudication of Islamic Banking in the civil courts. The authors employed the method of legal documents analysis in analyzing the IBF cases. The analysis highlighted four obstacles in adjudicating IBF in civil courts, namely; inadequacy of existing legal framework, complications of legal documentation, competency of civil court judges and expert evidence. It also analysed the four approaches adopted by the civil courts in deciding IBF cases; the ‘parties to be bound by their agreement’, the ‘strict adherence to civil law’, the ‘justice and equitable’ and the ‘looking into the substance’.
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Notes
Habib Rahman (2006) maintained that BBA is a sale and purchase and not a financing contract.
Abdul Rani (2007) maintained that Islamic banking is a fair and equitable transaction based on the concept of Istihsan (jusristic preference) in order to avoid rigidity and unfairness that might resulted from the literal application of the law.
Abdul Hamid (2009) of the view that the application of Islamic banking laws is the process of harmonization between Islamic and civil laws.
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Acknowledgments
We thank the panel of reviewers and organizing committees of Second Terengganu International Business and Economics Conference 2010(TiBEC II) held on 5–7 of August 2010 hosted by Faculty of Business Management UITM Terengganu Malaysia for conferring the article as “Best Paper Presented”. The article is part of research findings of the National University Malaysia Research University Grant (UKM-GUP-JKKBG-08-04-016) and Action Research Grant (UKM-PTS-0018-2009).
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Markom, R., Pitchay, S.A., Zainol, Z.A. et al. Adjudication of Islamic banking and finance cases in the civil courts of Malaysia. Eur J Law Econ 36, 1–34 (2013). https://doi.org/10.1007/s10657-011-9249-4
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DOI: https://doi.org/10.1007/s10657-011-9249-4