The Institutional Framework for Alternative Dispute Resolution in Islamic Finance : Evidence from Malaysia

Abu Umar Faruq Ahmad; Hakimah Yaacob

doi:10.12816/0045552

Article Details

The Institutional Framework for Alternative Dispute Resolution in Islamic Finance : Evidence from Malaysia

Authors:

Abu Umar Faruq Ahmad | Hakimah Yaacob

Publisher:

Islami Bank Training and Research Academy

Main Topics:

Islam, Bábism & Bahá"í Faith

Journal:

Journal of Islamic Economics, Banking and Finance 2016 Vol.12 Issue 2, pp.169-202

Document Type:

Article

Publication Date:

5/2016

Document Language:

English

Document ID (Org No.):

115437

Frequency:

Quarterly

pISSN:

20704658

DOI:

10.12816/0045552

Descriptors:

Keywords:

Abstract:

 Islamic finance, which spurns activities outlawed by Islam, is considered a viable ethical alternative to conventional financing. The traditional court system applicable for Islamic finance in most countries, has proven to be inadequate, particularly in its application and interpretation of the Sharī‘ah. Malaysia has consistently proved its prime position in blazing the trail in most legal and regulatory issues in the Islamic finance industry. The key objective of the study is to examine the institutional framework for alternative dispute resolution (ADR) in the Islamic finance industry in Malaysia. In line with this objective, the research attempts to: a) make a conceptual analysis of effective ADR processes in Islamic law; b) discuss the importance and rationale of ADR in Islamic finance; c) delineate the evolution and features of ADR mechanisms in Malaysia; d) explore avenues for ADR applicable for Islamic finance in Malaysia; e) discuss the legal and regulatory framework applicable for these institutions in relation to Islamic finance; and f) propose the best mechanism in settling dispute via ADR in Islamic finance. The methodology chosen for this study is to undertake the direct observation from legal and regulatory perspectives, and an analysis of some landmark cases of Malaysian courts. The study finds that there is a pressing need of the consolidation of the existing bodies rather than duplicating efforts in the establishment of more ADR bodies that is aimed to help handle Islamic finance disputes. The recommendations put forward for this study are expected to help drastically reduce the existing tension in the Islamic finance industry, which is occasioned by the increasing number of cases in the court and the attendant misapplication of underlying principles of Islamic financial contracts brought before the courts.

Article Details

The Institutional Framework for Alternative Dispute Resolution in Islamic Finance : Evidence from Malaysia

Authors:

Abu Umar Faruq Ahmad | Hakimah Yaacob

Publisher:

Islami Bank Training and Research Academy

Main Topics:

Islam, Bábism & Bahá"í Faith

Journal:

Journal of Islamic Economics, Banking and Finance 2016 Vol.12 Issue 2, pp.169-202

Document Type:

Article

Publication Date:

5/2016

Document Language:

English

Document ID (Org No.):

115437

Frequency:

Quarterly

pISSN:

20704658

DOI:

10.12816/0045552

Descriptors:

FINANCING

DISPUTE SETTLEMENT

ECONOMIC CONFLICTS

ISLAMIC LAW

ISLAMIC BANKING

MALAYSIA

Dispute Resolution

Legal Framework

Alternative Dispute Resolution Mechanisms

Islamic Finance

Malaysia

Sharī'ah-Compliant

Issues

Article Details

Authors: Abu Umar Faruq Ahmad | Hakimah Yaacob

Publisher: Islami Bank Training and Research Academy

Main Topics: Islam, Bábism & Bahá"í Faith

Journal: Journal of Islamic Economics, Banking and Finance 2016 Vol.12 Issue 2, pp.169-202

Document Type: Article

Publication Date: 5/2016

Document Language: English

Document ID (Org No.): 115437

Frequency: Quarterly

pISSN: 20704658

DOI: 10.12816/0045552

Descriptors:

Issues

Authors:

Abu Umar Faruq Ahmad | Hakimah Yaacob

Publisher:

Islami Bank Training and Research Academy

Main Topics:

Islam, Bábism & Bahá"í Faith

Journal:

Journal of Islamic Economics, Banking and Finance 2016 Vol.12 Issue 2, pp.169-202

Document Type:

Article

Publication Date:

5/2016

Document Language:

English

Document ID (Org No.):

115437

Frequency:

Quarterly

pISSN:

20704658

DOI:

10.12816/0045552