An Analysis of Dispute Resolution Mechanisms in the Islamic Banking and Finance Industry in Malaysia

Aishat Abdul-Qadir Zubair


Introduction to The Problem: With the increasing boost to the Malaysian Islamic finance industry and the sophistication experienced in the industry with regards to product development, there is a substantial downside of such enviable achievements, which is the gradual surge in the number of disputes involving Sharia-compliant transactions. It is therefore important to analyse the existing dispute resolution mechanisms in the Islamic finance industry in Malaysia.

Purpose/Objective Study: The article aims to analyse the court system as a dispute resolution mechanism as well as the other alternative dispute resolution mechanisms available to parties in resolving the dispute in the Islamic banking and finance industry in Malaysia. 

Design/Methodology/Approach: This study adopts a doctrinal legal method in examining the relevant Islamic dispute resolution mechanisms that are unique to Islamic finance disputes.

Findings: The findings of this research reveal that some issues are causing untold hardships on parties in Islamic finance contractual disputes with the present jurisdiction of the courts in Malaysia. It is in line with the hypothesis of the research that the continued preference for litigation as a means of settling disputes in the Islamic finance industry is not sustainable due to the paradigm shift in dispute resolution involving financial matters globally.

Paper Type: Research Article


Dispute Resolution; Malaysia; Court System; Arbitration; Mediation

Full Text:



Ali, E. R. A. E. (2008). Constraints and opportunities in harmonisation of civil law and shariah in the islamic financial services industry. Malayan Law Journal, 4.

Ali, E. R. A. E., Oseni, U. A., & Zubair, A. A.-Q. (2014). A SWOT analysis of the dispute resolution mechanisms in the islamic finance industry in Malaysia. In Contemporary Issues in Public, Human Rights and Islamic Law: Discussions and Perspectives (p. 612). Grosvenor House Publishing Limited.

Bälz, K. (2004). A murÄbaha transaction in an English court - The London high court of 13 th February 2002 in Islamic Investment Company of the Gulf (Bahamas) Ltd. V. Symphony Gems N.V. & Ors. Islamic Law and Society, 11(1), 117–134.

Bustami, F. S. S., Ahmad, T. A., & Kamal, M. H. M. (2010). Administration of Islamic Law in Malaysia: text and material (2nd ed.). LexisNexis.

Dahlan, N. K. (2018). Alternative Dispute Resolution for Islamic

Finance in Malaysia. MATEC Web of Conferences, 150, 11–20.

Halim, M. ‘Afifi A. (2011). Enhancing the effectiveness of legal infrastructure: a study on legal issues and other challenges of Islamic banking and finance in Malaysia. The 8th International Conference on Islamic Economics and Finance.

Hamzah, W. A., & Bulan, R. (2003). An introduction to the Malaysian legal system (5th ed.). Oxford Fajar Sdn. Bhd.

Hasan, Z. Bin, & Asutay, M. (2011). An analysis of the courts’ decisions on Islamic finance disputes. ISRA International Journal of Islamic Finance, 3(2), 41–71.

Ibrahim, A., & Joned, A. (1995). The Malaysian legal system (2nd edn.) (2nd ed.). Dewan Bahasa dan Pustaka.

Laidin, M. A. (2013). IFSA 2013 prospects and future. International Conference on Commercial Law.

Leibowitz, D., & Lester, C. (2002). Banking and finance disputes in ADR and commercial disputes (R. Caller (ed.)). Sweet & Maxwell.

Leong, C. Y., & Mann, J. C. F. (2012, October). The Asia-Pacific Arbitration

Review 2013: Malaysia. Global Arbitration Review.

Malaysia, B. N. (2013). Financial Stability and Financial Report 2012 (Issue March).

Miskam, S., & Hamid, N. ‘Adha A. (2011). Alternative dispute resolution in Islamic finance: from adversarial to non-adversarial justice. The Secon Asian Business and Management Conference.

Oseni, U. A., & Ahmad, A. U. F. (2015). Dispute resolution in Islamic finance: A case analysis of Malaysia. In Ethics, governance and regulation in Islamic finance (Vol. 4, pp. 125–134). Bloomsbury Qatar Foundation.

Patail, A. G. (2007). Harmonisation of civil laws and sharī‘ah: effective strategies for implementation. The 3rd International Conference on Harmonisation of Civil Laws and Sharī‘Ah.

Yaacob, H. H. (2012). Alternative dispute resolution (ADR): expanding options in local and cross border Islamic finance cases (3rd ed.). ISRA, International Shari’ah Research Academy for Islamic Finance.

Yiam, S. G. (2009). Court annexed mediation. In S. K. Rashid & S. A. Idid (Eds.), Mediation & arbitration in Asia Pacific: conference proceedings (1st ed., pp. 37–42). IIUM Press.



  • There are currently no refbacks.

Copyright (c) 2020 Jurnal Hukum Novelty

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Jurnal Hukum Novelty

ISSN 1412-6834 (Print)

ISSN 2550-0090 (Online)

This journal is licensed under a Creative Commons Attribution 4.0 International License.

Jurnal Hukum Novelty Stats



Jurnal Hukum Novelty has been covered by the following indexing site:




Jurnal Hukum Novelty is member of: