Islamic Contracts in a Secular Court Setting? Lessons From Malaysia

Abstract

AbstractThe judgement in the Kuala Lumpur High Court in the case of Affin Bank Berhad v. Zulkifli Abdullah ([2006] 1 CLJ 438) illustrates the difficulty in cases where Islamic principles such as Bay' Bithaman Ajil or BBA are litigated in a court of law where Islamic Shariah is little understood. From the traditional Islamic law perspective the legal basis arrived at in the judgement is questionable. In the light of this complexity, this article attempts to analyse the effect of the judgement to the principles of Islamic contracts used in banking products and services in Malaysia with reference to the sources used in the creation of the contracts and forum to settle disputes between Islamic Banks and their customers. In conclusion, this article would argue for the appropriate application of the Shariah in the above matters through the promulgation of a specific law in relation to Islamic contracts in banking and finance or alternatively a special procedure to be introduced enabling all matters relating to the question of Shariah be referred to the Shariah Courts for decision.