Islamic Banking & Finance

In this practice area

Islamic Banking and Finance collects the disputes arising from financing structured on Shariah principles, distinct from conventional banking. The judgments concern the enforcement of Islamic financing facilities, the Shariah compliance of the underlying contracts, and the constitutional framework governing the resolution of Shariah questions in the civil courts. Because many judgments are written in Bahasa Malaysia, the area is a good illustration of the bilingual character of the corpus.

The enforcement of financing facilities is a central subject. Judgments address the tawarruq (a commodity-based financing arrangement) and murabahah structures, default in repayment, and summary judgment — penghakiman terus (summary judgment) — on an Islamic financing facility where the customer has failed to make payment. The courts consider the concept of gharar (uncertainty), the rebate known as ibra' (a rebate on the financier's entitlement), and alleged defects in the prescribed forms, such as a Form 16D said to fail to crystallise the exact sum due.

The constitutional dimension is a distinct strand. Judgments examine section 57 of the Central Bank of Malaysia Act 2009, the binding effect of a ruling of the Shariah Advisory Council on the High Court, and whether that provision vests judicial power in the Council contrary to Article 121 of the Federal Constitution. Evidence and procedure recur in Malay, including a sijil keberhutangan (certificate of indebtedness) treated as conclusive evidence unless a manifest error — kekhilafan nyata (a plain error) — is shown, and objections under section 23 of the Evidence Act 1950 to a document marked tanpa prejudis (without prejudice).

The cases sit mainly in the High Court, with appeals to the Court of Appeal and the Federal Court. As a whole the area shows how the Malaysian courts enforce Islamic financing agreements and test their Shariah compliance — giving effect to the specialised framework of the Central Bank of Malaysia Act 2009 while working within the constitutional boundary between the civil and Shariah jurisdictions.