Blazing the Trail : The Institutional Framework for Dispute Resolution in Malaysia’s Islamic Finance Industry

2012 ◽  
Vol 4 (2) ◽  
pp. 159-165 ◽  
Author(s):  
Umar A. Oseni ◽  
Abu Umar Faruq Ahmad
Keyword(s):  
Dispute Resolution ◽  
Institutional Framework ◽  
Islamic Finance ◽  
Finance Industry

Towards a global hub

2016 ◽  
Vol 58 (1) ◽  
pp. 48-72 ◽  
Author(s):  
Umar A. Oseni ◽  
Abu Umar Faruq Ahmad
Keyword(s):  
Dispute Resolution ◽  
Legal Framework ◽  
Institutional Framework ◽  
Islamic Finance ◽  
Legal Analysis ◽  
Content Type ◽  
Finance Industry ◽  
Recent Developments ◽  
Islamic Financial Institutions ◽  
Resolution Processes

Purpose – The paper aims to examine significant developments in the institutional framework for dispute resolution in the Islamic finance industry in Malaysia. Malaysia, as part of its efforts to consolidate its enviable Islamic finance industry, has strengthened its institutional framework for dispute resolution. Design/methodology/approach – Data for this study were collected from both primary and secondary legal sources. Through a conceptual legal analysis, the institutional frameworks of dispute resolution in the Malaysia’s Islamic finance industry are studied. Findings – The study finds that Malaysia is far ahead of other jurisdictions by a significant margin in spearheading reforms in the emerging global Islamic finance industry. The dispute resolution framework has been largely affected by the recent reforms. Research limitations/implications – Other jurisdictions may borrow a leaf from Malaysia’s initiative in providing a robust legal framework for dispute management in the Islamic finance industry. Practical implications – Apart from adopting Malaysia’s framework and possibly adapting it to suit their specific local variations, other jurisdictions may also encourage Islamic financial institutions to incorporate effective dispute resolution processes in Islamic finance contracts. Originality value – This study critically discussed most recent developments in the institutional framework on dispute resolution in the Islamic finance industry in Malaysia.

Judicial Challenges Facing the Islamic Finance Industry of Nigeria

2021 ◽  
Vol 29 (2) ◽  
pp. 244-262
Author(s):  
Zakariya Mustapha ◽  
Sherin Kunhibava ◽  
Aishath Muneeza
Keyword(s):  
Dispute Resolution ◽  
Judicial System ◽  
Islamic Finance ◽  
Curricular Reform ◽  
Legislative Reform ◽  
Finance Industry ◽  
Financial Regulations ◽  
Contractual Agreements ◽  
Civil Courts ◽  
Fundamental Requirement

A fundamental requirement of Islamic financial practice, Shariah-compliance covers all aspects of the transaction from contractual agreements to execution to dispute resolution. Thus a sound judicial system with in-built Shariah-compliance mechanisms is indispensable to facilitate the execution of such contracts and to ensure the sustainability of the practice. In Nigeria, this system is still under development with the judiciary the most readily available option for dispute resolution. However, comprised merely of civil courts with jurisdiction to hear Islamic finance cases, these mechanisms subject the industry to possible legal and Shariah-compliance risks. Having conducted a series of interviews with experts, this study recommends: constitutional and legislative reform to grant jurisdiction to existing civil courts; the Financial Regulations Advisory Committee of Experts (FRACE) should be statutorily entitled to offer binding advice to courts; the practice itself should be enshrined in appropriate legislation; and there should be curricular reform to ensure judges and lawyers are adequately trained/educated in the particulars of Islamic finance.

Dispute Resolution in the Islamic Finance Industry

2020 ◽  
pp. 804-833
Author(s):  
Camille Paldi
Keyword(s):  
Dispute Resolution ◽  
Common Law ◽  
Legal Framework ◽  
Islamic Finance ◽  
Finance Industry ◽  
The Common ◽  
Law Courts

A unique and independent legal framework is important to effectively adjudicate Islamic finance disputes, Sukuk bankruptcies, and Takaful disputes. Currently, these disputes are being adjudicated in common law courts or ineffective arbitration centres where often the Islamic finance transaction is inadvertently converted into a conventional transaction due to the common law nature of the dispute adjudication. In this chapter, a framework is proposed for Islamic finance dispute resolution in the form of the Dubai World Islamic Finance Arbitration Centre (DWIFAC), DWIFAC Jurisprudence Office, the Sukuk Bankruptcy Tribunal (SBT) and the Takaful Tribunal (TT).

scholarly journals A JUDICIAL PERSPECTIVE ON ISLAMIC FINANCE LITIGATION IN MALAYSIA

1970 ◽  
Vol 21 (2) ◽  
Author(s):  
Tun Arifin Bin Zakaria
Keyword(s):  
Dispute Resolution ◽  
Financial Services ◽  
Legal Framework ◽  
Islamic Finance ◽  
Finance Industry ◽  
International Recognition ◽  
The Future ◽  
Competitive Products ◽  
Civil Courts

In the last four decades, Malaysian jurists and Sharî’ah scholars have immensely contributed to the field of Islamic finance sufficient to attract international recognition and acceptance. This has turned Malaysia to a vibrant global hub for Islamic financial services. In furtherance of this enviable position, a new legal framework was recently introduced which is expected to reemphasize the pragmatic and resilient nature of the Islamic finance industry. This paper therefore provides a judicial perspective on the recent reforms in the legal framework of Islamic finance industry, examines the dynamics of Islamic finance litigation, and highlights the important role of the judiciary and other dispute resolution institutions in shaping the future of the industry. In Malaysia, the nature of the trading concepts, upon which the Islamic finance facilities are based, are the major sources of disputes since the Islamic finance industry operates within a conventional framework and related disputes are litigated in the civil courts. It is therefore argued that the biggest challenge for the courts in the exercise of its judicial function is the application of relevant laws to Islamic finance transactions. The paper concludes that strengthening the legal architecture of the industrywill necessarily lead to the development of competitive products that are not only Sharî’ah-compliant but alsoconventionally viable. This can be achieved through the channelling of Islamic finance disputes to an alternative forum for appropriate dispute resolution. ABSTRAKDalam empat dekad yang lalu, cendekiawan Malaysia dan pakar Syariah telah memberi sumbangan yang besar kepada bidang kewangan Islam yang cukup bagi menarik pengiktirafan dan penerimaan antarabangsa. Ini telah menjadikan Malaysia suatu hab global bertenaga untuk perkhidmatan kewangan Islam. Bagi meneruskan kedudukan yang dicemburui ini, satu rangka kerja undang-undang baru telah diperkenalkan baru-baru ini yang diharap lebih menekankan kepada lumrah pragmatik dan berdaya tahan industri kewangan Islam. Oleh itu, kertas kerja ini memberikan perspektif kehakiman terhadap pembaharuan mutakhir dalam rangka kerja undang undang industri kewangan Islam, mengkaji dinamik litigasi kewangan Islam, dan menjelaskan peranan penting badan kehakiman dan institusi-institusi penyelesaian pertikaian yang lain dalam membentuk masa depan industri ini. Di Malaysia, lumrah konsep perdagangan, yang mana menjadi dasar kemudahan kewangan Islam, adalah punca utama pertikaian sejak industri kewangan Islam beroperasi di dalam rangka kerja konvensional dan pertikaian berkaitan telah dilitigasikan di mahkamah sivil. Maka ia telah dibahaskan bahawa cabaran terbesar bagi mahkamah pada menjalankan fungsi kehakimannya adalah aplikasi undang-undang yang berkaitan dengan urus niaga kewangan Islam. Kertas kerja ini menyimpulkan bahawa pengukuhan rangka kerja undang-undang industri akan membawa kepada pembangunan produk yang berdaya saing yang bukan sahaja patuh Syariah tetapi juga berdaya maju dari sudut konvensionalnya. Ini boleh dicapai melalui penyaluran pertikaian kewangan Islam kepada forum alternatif untuk penyelesaian pertikaian yang sesuai.

scholarly journals Managing Shariah Non-Compliance Risk via Islamic Dispute Resolution

2019 ◽  
Vol 13 (1) ◽  
pp. 2 ◽  
Author(s):  
Maria Bhatti
Keyword(s):  
Dispute Resolution ◽  
Institutional Arrangements ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Legal Analysis ◽  
Normative Approach ◽  
Banking And Finance ◽  
Finance Industry ◽  
Governance Systems ◽  
Shariah Governance

This article discusses Shariah non-compliance risk as a form of operational risk intending to ensure that operations in the Islamic and banking finance industry comply with Shariah procedures. In the field of Islamic finance, Shariah non-compliance risk refers to the possibility that Islamic finance transactions may be challenged based on Shariah non-compliance. This article uses a comparative and normative approach as well as a legal analysis of the case of Beximco. The article proposes the management of Shariah non-compliance risk by augmenting the effectiveness of Shariah governance systems with Islamic banking and finance arbitration; arbitration should be an enforced part of Islamic finance institutional arrangements—as it always has been classically—to provide flexibility for dispute resolution. To this end, the article examines contemporary implementations of Shariah arbitration rules to assess how Shariah non-compliance risk can be better managed via Islamic dispute resolution procedures.

scholarly journals Court referral and Nigeria's Financial Regulation Advisory Council of Experts (FRACE)

2019 ◽  
Vol 11 (2) ◽  
pp. 206-225
Author(s):  
Zakariya Mustapha ◽  
Sherin Kunhibava ◽  
Aishath Muneeza
Keyword(s):  
Dispute Resolution ◽  
Financial Regulation ◽  
Common Law ◽  
Advisory Council ◽  
Islamic Finance ◽  
Content Type ◽  
Finance Industry ◽  
Legal Risks ◽  
Civil Courts

Purpose This paper aims to highlight resolution of Islamic finance dispute by common law-oriented courts in Nigeria with respect to Sharīʿah non-compliance and legal risks thereof, as well as the lesson to learn from Malaysia in that regard. This is with view to ensuring Sharīʿah compliance and legal safety of Islamic finance practice as prerequisites for sustainability of the Nigerian Islamic finance industry. Design/methodology/approach A qualitative method was used; interviews were conducted with different categories of experts and primary data collected in relation to Sharīʿah non-compliance and legal risks in adjudicating Islamic finance dispute by civil courts and the role of expert advice as basis for court referral to Financial Regulation Advisory Council of Experts. A doctrinal approach was adopted to analyse relevant legislative provisions and content analysis of secondary data relevant to applicable provisions in matters of finance before civil courts. Findings The paper discovers an indispensable role of conventional financial regulations in sustaining Islamic finance industry. Appropriate laws for Islamic finance under the conventional framework foster legal safety and Sharīʿah compliance of Islamic finance activities in related cases handled by courts. Nigeria civil courts can aid sustainability of Islamic finance when so equipped and enabled by laws that address apparent Sharīʿah non-compliance and legal risks in judicial dispute resolution. Inadequate legal provisions for dispute resolution breeds Sharīʿah non-compliance and legal risks in Islamic finance, undermine its prospects and stand inimical to its sustainability. Research limitations/implications This research is limited by its focus on Sharīʿah non-compliance and legal risks alone, which emanate mainly from judicial resolution of Islamic finance dispute by Nigerian civil courts. Practical implications This research seeks to motivate a determined and deliberate regulatory action and change in approach towards addressing apparent risks associated with Islamic finance while resolving disputes therein by civil courts. It has implications on common law jurisdictions generally that adopt similar approach as Nigeria's while introducing Islamic finance into their conventional finance framework. Originality/value Dispute resolution and other regulatory functions of civil courts are important to Islamic finance though apparently overlooked while introducing Islamic finance in Nigeria as in other emerging jurisdictions. This research ascertains the role of the civil courts as indispensable for Islamic Financial Institution (IFIs) operations and demonstrates that such courts are needed for the development and sustainability of Islamic finance industry. The research demonstrates the end-to-end requirement of Sharīʿah compliance of Islamic financial transactions as absolute and needs be ensured and guarded at dispute resolution level by properly equipped courts.

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