REFERENCE TO THE SHARI AH ADVISORY COUNCIL IN ISLAMIC FINANCE : PRELIMINARY ANALYSIS ON CIVIL COURT DECISIONS

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1 REFERENCE TO THE SHARI AH ADVISORY COUNCIL IN ISLAMIC FINANCE : PRELIMINARY ANALYSIS ON CIVIL COURT DECISIONS Surianom Miskam surianom@kuis.edu.my Noor Aimi Mohamad Puad nooraimi@kuis.edu.my Nurauliani Jamlus Rafdi nurauliani@kuis.edu.my Faculty of Management and Muamalah Kolej Universiti Islam Antarabangsa Selangor (KUIS) ABSTRACT The passing of the Central Bank of Malaysia Act 2009 (CBA2009) on 20 th November 2009 has granted the authority to the Central Bank of Malaysia for (CBM) the establishment of the Shari ah Advisory Council (SAC) as the highest and sole authority for the purpose of Islamic financial business in Malaysia. The intention of the Parliament is to rectify the defunct provision of Section 16B of the Central Bank of Malaysia 1958 (CBA1958) which deals with the binding effect of the Shari ah rulings issued by the Shari ah Advisory Council. The requirement for reference to SAC for ruling from court or arbitrator is expressly provided in section 56 (1) of the CBA2009. Section 57 CBA 2009 further provides that any deliberation of the SAC will bind the court and arbitrator. Issue arises whether or not the Malaysian courts have in fact adhered to the abovementioned statutory provisions. Reference to law journals shows that civil courts have take different approaches in dealing with the requirements of the law. Hence, the objectives of this research is to examine changes introduced to the CBA 2009 relating to the establishment and authority of SAC in Islamic Finance and the impact of changes towards the decision of the civil courts in Malaysian. The study will be using content analysis approach in analysing the phenomena. This paper is expected to give preliminary overview on the effect of CBA 2009 towards the court decision for five year period from 2009 until Field of Research: Shari ah Advisory Council, Islamic Finance, civil court, Central Bank of Malaysia, Shari ah rulings Introduction Islamic finance in Malaysia has experienced tremendous growth since its introduction in 1983 with the passing of the Islamic Banking Act 1983 which led to the establishment of the first Islamic bank in Malaysia i.e. Bank Islam Malaysia Berhad. In more than 30 years operation of Islamic banks in Malaysia it has experienced many changes in the law regulating Islamic financial business in Malaysia especially the introduction of the CBM 2009 which has the effect of repealing the CBA One of the special features of the CBA 2009 in relation to Islamic financial business is the establishment of the SAC as the highest and sole authority for the purpose of Islamic financial business in Malaysia. Since all disputes arising from Islamic financial transactions between the Islamic financial institutions and the customers fall under the jurisdiction of the civil courts and not the Shari ah court, this step has been taken in order to ensure that the decisions made by the civil Kota Kinabalu, Sabah, MALAYSIA. Organized by 418

2 courts are consistent with the Shari ah principles. The intention is clear that is to ensure that any deliberation of the SAC will bind the courts and adhered to all Islamic financial institutions in Malaysia. 2.0 Reference to Shari ah Advisory Council in Islamic Finance: The legal framework in Malaysia 2.1 The Central Bank of Malaysia Act 1958 The establishment of SAC in Islamic Finance was first statutorily provided by the amendment to the CBA 1958 in 2003 to insert section 16B which provides for the establishment of an Advisory Council which shall be the authority for the ascertainment of Islamic law for the purposes of Islamic banking business, takaful business, Islamic financial business, Islamic development financial business, or any other business which is based on Shari ah principles and is supervised and regulated by the CBM. The 2003 amendment was passed with the objective to provide better position on the National SAC whereby it uplifts the position of Islamic banking and finance in Malaysia. It should be noted that an Islamic bank may also seek the advice of the SAC on Shari ah matters relating to its banking business and the Islamic bank shall comply with the advice of the SAC by virtue of section 13A of the Islamic Banking Act 1983 (IBA 1983) and it is mandatory for the Islamic banks to comply with the advice given by the SAC pursuant to such request. (Engku Rabiah, 2008). Section 16B CBA 1958 expressly stated that where in any proceedings relating to Islamic banking business and Islamic financial business which is based on Shari ah principles before any court or arbitrator any questions arises concerning a Shari ah matter, the court or the arbitrator may refer such question to the SAC for its ruling. Any ruling made by the SAC pursuant to a reference by a court, be taken into consideration by the court and if the reference was made by an arbitrator, be binding on the arbitrator. Before the coming into force of the CBA 2009, the SAC has always been considered as an authoritative body with the expertise and competency to provide ruling on Islamic finance issues. According to Ruzian & Noor Inayah (2012) the presiding judge is not precluded from exercising his own discretionary power and has the option whether to refer the issue to the SAC. Reference to the law reports shows that the civil courts have in fact referred to section 16B and acknowledged the requirement of the provision but elected not to refer to the SAC on the ground that the ruling made by the Council has no binding effect on them. 2.2 The Central Bank of Malaysia Act 2009 The legislature had taken step to rectify the above situations by passing the CBA2009 and it is done by granting the authority to the CBM for the establishment of the SAC as the highest and sole authority to be referred by the civil courts in dealing with Islamic banking and finance cases in Malaysia. The law is intended to further enhance and improve the Shari ah governance framework in Islamic financial system with special reference to the establishment of the SAC, its functions, method of appointment, qualification and criteria of the members and the status of Shari ah rulings issued by the SAC under the law. The CBA 2009 further provides that any ruling made by the SAC pursuant to a reference made under Chapter VII shall be binding on the Islamic financial institutions and the court or arbitrator dealing with Islamic banking cases. (Ahmad Suhaimi, 2009). The provision clearly states that any ruling made by the SAC will be binding on the civil court and the arbitrator which means the court and the Kota Kinabalu, Sabah, MALAYSIA. Organized by 419

3 arbitrator must follow the ruling to arrive at their decision and the ruling shall form part of the judgment of the court in Islamic finance cases. (Tengku Hasmuddin, 2009). Ruzian and Noor Inayah (2012) opined that although the new law upholds and binds the parties to the rulings of the SAC, the judges still have the discretionary power and they do not rely solely on the rulings of the SAC but they must decide based on their own understanding of the principles of maslahah and the role of masalah to make sure fair outcome of the case. 2.3 Reference to Shari ah Advisory Council in Islamic Finance: Attitudes of the Civil Courts The CBA 2009 is intended to resolve the issues which have arisen before the coming into effect of the Act especially the legal effect of the rulings issued by the SAC. At this point, issue arises as to whether or not the provision for reference to the SAC by the court is adequate to determine the applicability of the Shari ah rulings and principles in Islamic financial matters. (Engku Rabiah, 2008) Zulkifli (2011) stated that the passive attitude by the civil courts towards referring to SAC to ascertain Shari ah matters related to Islamic financial business shows their uneasiness in accepting Shari ah as one of the sources of Malaysian law. Ruzian & Noor Inayah (2012) commented that the judge in the case of CIMB Islamic Bank Berhad v LCL Corporation Bhd & Anor had interpreted the application of the Resolution of the SAC without the need to confirm with the SAC whether the published rulings is applicable to the issue before the court. However, it is interesting to note that before the coming into force of the Act, the High Court had in referred to the SAC in dealing with Islamic finance case. Relying on the provision of section 16B (8) of the CBA 1958, Dato Rohana Yusuf J in the case of Tan Sri Khalid Ibrahim v. Bank Islam Malaysia Berhad [2010] 4 CLJ 388, after the submissions made before her by both counsels on the Shari ah issue raised; had caused an enquiry to be made to the SAC as to whether a ruling has been made on the status of BBA agreement. The secretariat to SAC responded with a written ruling from the SAC which states essentially, that BBA agreement is acceptable and a recognized transaction in Islam. She had in fact furnished the said written ruling from the Council to both counsels. Raus Sharif JCA in the case of Bank Islam Malaysia Berhad v. Lim Kok Hoe and Anor and other Appeals [2009] 6 CLJ 22 agreed with the observation made earlier by Suriyadi Halim Omar J in the case of Arab Malaysian Merchant Bank Bhd v. Silver Concept Sdn Bhd [2006] 8 CLJ9 and ruled that judges in civil courts should not take upon themselves to declare whether a matter is in accordance to the religion of Islam or otherwise. Thus question whether the bank business is in accordance with the religion of Islam requires consideration and deliberation by eminent jurists who are properly qualified in the field of Islamic jurisprudence. Thus with the introduction of CBA2009, it is imperative for the court to refer to the SAC to ascertain Shari ah related issues, failing which the Islamic finance industry may be exposed to significant Shari ah non-compliance risk. (Zulkifli, 2011) 3.0 Methodology, Findings, Analysis and Discussion 3.1 Research Framework The research framework proposed in this study is to outline the process of accessing evidence related to important aspects of interpreting research findings. It is a concept map as a guide in critically discussing the objective of the study. In light of the review on past literature in previous Kota Kinabalu, Sabah, MALAYSIA. Organized by 420

4 section, the research framework is designed in Figure 1 focusing on reference to the SAC in Islamic Finance. Figure 1: Research Framework Source: Author SAC is an independent advisory body which is established under the subsection 16B (1) of the CBA 1958 and shall be the authoritative body for the ascertainment of Shari ah law in Islamic banking, finance and takaful business. The SAC can be referred to by the court in its proceedings relating to Shari ah matters in Islamic banking and financial business disputes. Under the CBA 2009, the role and functions of the SAC was further reinforced whereby the SAC was accorded the status of the sole authoritative body on Shari ah matters pertaining to Islamic banking, takaful and Islamic finance. The new provision makes it compulsory for the civil courts and arbitrators to refer Shari ah issues to the SAC for determination. Before the implementation of the CBA 2009, too many common law principles and interpretations based on the principle of equity were invoked in the cases decided without referring to the opinion Kota Kinabalu, Sabah, MALAYSIA. Organized by 421

5 of the SAC (Hakimah, 2010). The CBA 2009 is expected to alleviate all the previous problems related to litigation. Hence, this study is targeted to analyse changes introduced to the CBA 2009 relating to the establishment and authority of SAC in Islamic Finance and the impact of changes towards the decision of the civil courts in Malaysia. The analysis will be conducted using content analysis. Content analysis is the best approach in looking at the changes in legal documents. Findings in this study are expected to provide the impact of changes in the legislation towards the court decisions. The findings will give an overall idea to provide recommendations for policy makers for further enhancement. 3.2 Methodology This research is guided by the qualitative method. Qualitative method provides meaningful insights of situations and problems. There are a wide variety of approaches that is commonly used in qualitative method. One of the approaches that will be used in this study is the content analysis. Content analysis refers to a general set of techniques useful for analyzing and understanding collection of texts. It is a useful research technique for analyzing large bodies of text. It offers objective guidelines in the coding of the text and to draw inferences from the data. It helps in the coding of the text according to systematic and objective rules and in drawing inferences from the data. A successful content analysis study is the outcome of a series of good decisions. According to Hall (2008), the researcher can apply content analysis for any kind of text including legal documents such as trial court records, statues and regulations. Content analysis allows a rigorous exploration on documents that can produce a meaningful insight, revealing the unnoticed patterns. In this research, documents such as trial court records, statues and regulations will be analysed critically by applying content analysis approach. For the purpose of this research reference to case law will be made to two main law journals namely the Current Law Journal and the Malayan Law Journal. 3.3 Preliminary Findings and Analysis The changes introduced under CBA 2009 The relevant part of the CBA2009 is Part VII under the heading Islamic financial business which is divided into two chapters i.e. Chapter I Shari ah Advisory Council which consists of section 51 to 58 and Chapter 2 Powers of the Bank which consists of section Section 51 provides that the SAC on Islamic Finance shall be established by the Central Bank of Malaysia and this Council shall be the authority for the ascertainment of Islamic for the purpose of Islamic financial business. The SAC is given authority to determine its own procedures in carrying out their duties under the CBA The Act further clarifies the roles and responsibilities of the SAC as the highest and sole authority in Islamic finance matters. The functions of the SAC are listed under section 52 including to ascertain the Islamic law on any financial matter and issue a ruling upon reference made to it in accordance with Part VII of the Act, to advise the Bank on any Shari ah issue relating to Islamic financial business, the activities or transactions of the Bank; to provide advice to any Islamic financial institution or any other person as may be provided under any written law in force in Malaysia; and such other functions as may be determined by the Bank. Kota Kinabalu, Sabah, MALAYSIA. Organized by 422

6 Section 53 provides that the members of the SAC shall be appointed from amongst persons who are qualified in the Shari ah or who have knowledge or experience in the Shari ah and in banking, finance, law or such other related disciplines and the appointment shall be made by the Yang di- Pertuan Agong on the advice of the Minister of Finance after consultation with the Central Bank. The SAC s remuneration and the terms of reference shall be determined by the CBM. Section 55 further stipulates that the Bank shall consult the SAC on any matter relating to Islamic financial business; and for the purpose of carrying out its functions or conducting its business or affairs under this Act or any other written law in accordance with the Shari ah, which requires the ascertainment of Islamic law by the SAC. In executing its duties and responsibilities, the SAC shall examine and endorse the validity of application of Shari ah in Islamic financial products which are submitted by Islamic financial institutions under the supervision of the CBM. The SAC would also issue Shari ah resolutions and decisions relating to their relevant jurisdictions from time to time. The resolutions issued have been published by the CBM and translated into various languages and is being used as a reference point by industry and academicians around the globe. Section 55 (2) also provides that any Islamic financial institution in respect of its Islamic financial business, may refer for a ruling; or seek the advice, of the SAC on the operations of its business in order to ascertain that it does not involve any element which is inconsistent with the Shari ah. The requirement for reference to SAC for ruling from court or arbitrator is expressly provided in section 56 (1) of CBA2009 which requires the court or the arbitrator to take into consideration any published rulings of the SAC; or refer such question to the SAC for its ruling. It is interesting to note that even though the term may in section 16 of the CBA 1958 was replaced with the mandatory term of shall in section 56 of the CBA 2009, in exercising their power under the said section, the civil court is given the discretion to choose either to take in take into consideration any published rulings of the SAC; or to refer such question to the SAC for its ruling. The cases show that the courts had interpreted the provision to the effect. The binding effect of the ruling of the SAC on the civil court is expressly provided under section 57. This is a step further as compared to the position under the CBA 1958 which provides that the ruling of the SAC is only binding on the arbitrator and the Islamic financial institutions making reference to it. The provision clearly states that any ruling made by the SAC will be binding on the civil court and the arbitrator and the ruling shall form part of the judgment of the court in Islamic finance cases Case Analysis Kuwait Finance House (M) Berhad v. Adil Perdana Sdn Bhd[2011] 1 LNS 424 The court was dealing with an application for Order for Sale under section 256 of the National Land Code arising from financing facilities which consisted of Combined and Interchangeable Line Facilty (CILF Facility) and KFH Ijarah Muntahiah Bitamlik Asset Acquisition Financing-i Facility (Ijarah Facility). See Mee Chun JC did not refer the issue to the Secretariat of SAC and mentioned in the judgement to the effect that such a contention is a mere assertion and goes against the banking documents which have stated the rights and obligation of parties to be in accordance with Shari ah principles Mohd Alias Ibrahim v RHB Bank &Anor [2011] 4 CLJ 654 The constitutional validity of section 56 and 57 of the CBA 2009 was questioned by the Plaintiff whereby the court ruled that the decision making power remain with the civil court and not delegated to the SAC. Mohd Zawawi Salleh J pointed out that if the court refers any question under Kota Kinabalu, Sabah, MALAYSIA. Organized by 423

7 section 56 to the SAC, the SAC is merely required to make an ascertainment and not determination, of Islamic law related to the question. Tthe process employed by the SAC is not a judicial process at all and the function of SAC is confined to the ascertainment of the Islamic law on financial matters. The ruling issued by the SAC is an expert opinion in respect of the Islamic finance matters and it derives its binding legal effect from section 56 and 57 of the CBA 2009 enacted pursuant to the jurisdiction provided under the Federal Constitution CIMB Islamic Bank Berhad v LCL Corporation Bhd & Anor [2011] 7 CLJ 594 It is important to point out that in this case, Mohd Zawawi Salleh J has taken into consideration the published ruling of the SAC in accordance with section 56 (a) of the CBA The judge did not opt to refer the Shari ah issue to the SAC for its ruling as provided under section 56 (b) of the CBA The Shari ah issues raised in that case was on the validity of the BBA facility between the Plaintiff and the Defendant and the issues of ibra as well the issue of ta widh. The court held that the transactions taken place between the parties are sale based transaction be it under the Ist BBA facility or the one under the claim as submitted claimed by the Defendants. The court found no evidence that could lead to the existence of bai alaalbai as argued by the Defendants. In relation to the issues of ibra and ta widh, the learned judge had referred to the Resolutions of SAC on Ta widh, Ibra and Late Payment Charge which resolved that in line with the need to safeguard maslahah (public interest) and to ensure justice to the financiers and customers, Islamic banking institutions are obliged to grant ibra to customers for early settlement of financing based on buy and sell contracts. The granting of ibra must be included as a clause in the legal documentation of the financing to eliminate the element of ghararand the formula of ibra will be determined by the Central Bank. Relying on this Resolution, the court decided that the Plaintiff was not under obligation to grant ibra to the Defendants since the case did not involve early settlement of the financing facility. The judge further referred to the resolution of the SAC passed on 14 February 1998 that ta widh may be imposed on the defaulting customer who fails to meet his obligation to pay the financing based on three conditions i.e. that the amount of ta widh cannot exceed the actual loss suffered by the financier, that the determination of compensation is made by the CBM and that the default or delay of payment is due to the customer s negligence. Based on this Resolution the court decided that the parties were bound by the rate of ta widh as contained in the letter of offer Tan Sri Abd Khalid Ibrahim v. BIMB & Anor [2011] LNS 1259 The Defendant had applied pursuant to section 56 of the CBA 2009 to refer certain questions to the SAC. Allowing the application, the court ruled to the effect that by looking at the purpose of section 56, it is clear that SAC is required to ascertain the applicable Islamic law to the above Shari ah issues. Upon ascertainment of the Islamic law, the court would then apply it to the facts of the present case. The issue of constitutionality of section 56 and 57 of the CBA 2009 was also raised by the Plaintiff in that case. Referring to the decision in the case of Mohd Alias Ibrahim v RHB Bank & Anor, the court pointed out that section 56 and 57 in question are valid federal laws enacted by Parliament pursuant to Item 4 (k) of the Federal List (List I) in the Ninth Schedule of the Federal Constitution and should there any issue concerning a Shari ah matter, the court has to invoke section 56 of the CBA SAC is not in the position to issue a new hukum syara but only to ascertain which one of the available hukum is best applicable in Malaysia for the purpose of ascertaining the relevant Islamic law concerning the question posed to them to be applied in a particular case and SAC cannot be said to perform a judicial or quasi judicial function. SAC is not given authority to decide the issues before the court but only to ascertain any Shari ah issue arising from financial transactions. The authority and jurisdiction to decide still remain with the civil court. Kota Kinabalu, Sabah, MALAYSIA. Organized by 424

8 BIMB v. Rhea Zadani Corporation [2012] MLJU 444 The Defendants had challenged the validity of the Istisna facilities entered into by the parties on the ground of non-compliance with the true concept of Istisna contract in Islam. The court ruled that after referring to the Istisna Facility agreement, it was clearly stated that the terms of the facility were based on the Shari ah principles. The court did not refer the issue to the Secretariat of SAC to ascertain the validity of the contract but rejected the contention of the on the ground that the contention was made without any valid reason according to Shari ah and it was a lawyer s construct defence to avoid the obligations contained in the agreement BIMB v. Mustaffa Yacob &Anor[2012] 1 LNS 548 One of the issues before the court was whether the Plaintiff s claim for ta widh is invalid, null and void. Mohd Zawawi Salleh J had referred to the ruling of the SAC dated 14 February 1998 which resolved that a ta widh can be imposed on the defaulting customer who fails to meet his obligation to pay the financing based on three conditions: that the amount of ta widhcannot exceed the actual loss suffered by the financier, that the determination of compensation is made by a third party i.e Bank Negara Malaysia; and that the default or delay of payment is due to negligence on the part of the customer. Relying on the ruling, the court ruled that the Plaintiff is entitled to the ta widh at the Islamic Inter Bank Money Market rate based on the Istisna Sale agreement signed by the parties CIMB Bank Berhad v Maybank Trustees Bhd and other Appeals[2014] 3 MLJ 169 One of the questions of law brought to the attention of the Federal Court was whether and to what extent can a court of law, to the exclusion of the SAC, determine or ascertain Islamic law for the purpose of Islamic financial business within the meaning of section 56 and 57 of the CBA The High Court in dismissing the claim for pre-judgment interest had referred to the ruling issued by the SAC on 14 February 1998 which resolved to the effect that the High Court may impose penalty charges at the rate of 8% per annum on the judgment sums and the rate is only allowed for actual loss. The court followed the ruling of the SAC and allowed interest at the rate of 8% from the date of judgment till the date of realization. On appeal, the Court of Appeal decided otherwise and allowed the pre-judgment interest at the rate of 3% from the date the default was declared till the date of judgment. The decision was based on the ruling issued by the SAC dated 26 May 2005 which provides that the court may impose late payment penalty charges on judgment debts as decided by the court (compensation) mechanism. The SAC also resolved that the court may impose penalty charges for the actual loss (ta widh) which the SAC agreed to adopt the annual average for overnight rate of Islamic money market of the preceding rate as a reference point Bank Kerjasama Rakyat (M) Bhd v Flavour Right Sdn Bhd & Ors [2012] MLJU 1003 The issue before the court was whether the Plaintiff s claim is tainted with illegality as the Plaintiff imposed and levied interest or riba which is repugnant to Islamic principle rendering the entire claim unenforceable. The court agreed that the loan facilities were in nature of Islamic banking where interest is prohibited under any circumstances. The court answered the issue in negative and stated that the rate of 1% charge is consistent with the rate chargeable for ta widh provided in the offer letters and the loan facilities agreement. However the court did not make any reference to any ruling of the SAC in the judgment Bank Muamalat Malaysia Bhd v Kong Sun Enterprise Sdn Bhd and Others [2012] 10 MLJ 665 The transaction between the parties was Ijaran contract under the concept of AITAB. In arriving at decision that Ijarah is a valid contract the court referred to the Shari ah Resolutions of SAC, Second Edition issued by the CBM. The court also ruled that the witness who had qualification to give view Kota Kinabalu, Sabah, MALAYSIA. Organized by 425

9 in relation to Islamic banking system was the member of the SAC of BNM and not an advocate and solicitor Maybank Islamic Bhd (the successor in title to Islamic Banking Business of Malayan Banking Berhad & Anor v Goh Siew Lan & Anor[2012] MLJU 978 The transaction between the parties was based on BBA financing facilities which were secured by a legal charge over the land registered at Miri Land Registry. In the judgment, the court referred to the Shari ah Resolution of SAC dated 7 June 2010 which resolved that in the public interest and to ensure justice to financiers and customers, the Islamic banking institutions are obliged to grant ibra to customers for early settlement of BBA or Murabahah financing Tan Sri Khalid Ibrahim v BIMB [2013] 3 MLJ 268 The Court of Appeal reaffirmed the decision of the High Court granting the application by the BIMB to refer certain questions to the SAC for its ruling under section 56 of the CBA The court held that section 56 and 57 were valid and constitutional and that it did not contravene the Federal Constitution. By referring to the SAC, the judicial functions of the court were not taken over by the SAC because the duty of the SAC is confined exclusively to the ascertainment of the Islamic law. The court added that under the CBA 1958 the court had discretionary power to refer any Shari ah issue to the SAC whereas under the CBA 2009 the reference was made mandatory. 4.0 Conclusion and Recommendations The CBA 2009 has in fact accorded the SAC with the highest and sole authority for the ascertainment of Islamic financial business. However, the cases show that civil courts still have the discretionary power whether or not to refer any Shari ah related issues to the SAC before making decision in the case before them. In most cases the court opted to refer to the published ruling of the SAC and did not directly refer the matter to the SAC for ruling on the matter. As a matter of fact, the court must consider the facts and background of the individual case by examining the evidence adduced by the parties and submissions from both sides. The fact that the Islamic finance cases are subject to civil law procedure makes it even harder to the presiding judges to arrive at a decision which is consistent with Shari ah principles. Documentations must fulfill not only the requirements under civil law but it must also comply with Shari ah requirements. Thus the time has come for relevant authority to set special procedure in dealing with Islamic finance cases in the civil courts to ensure that the requirements of the law are complied with. The existing legal framework is inadequate to deal with the existing court system since the then IBA 1983 and the newly enforced Islamic Financial Services Act 2013 focus on the procedural rather than the substantive law of Islamic finance. Islamic finance disputes have become more complex and it requires deliberation from qualified people to ascertain the Islamic law on financial matters which can command the confidence of all parties in the reliability and consistency in the interpretation and applications of Shari ah principles related to Islamic finance transactions. At this point the most qualified person shall be the members of the SAC itself. Thus the legislature should consider amending the Evidence Act 1950 to include their testimony as expert evidence in court when dealing with Islamic finance cases. Kota Kinabalu, Sabah, MALAYSIA. Organized by 426

10 5.0 Acknowledgement This paper is under research grant under the Research and Development Centre of KUIS. We would like to thank the Centre, Faculty of Management & Muamalah and KUIS for the financial and technical assistance for this project. 6.0 References Ahmad Suhaimi, Y. (2009). Isu-isu Shari ah Dalam Menjadikan Perundangan Sivil sebagai Rujukan bagi Kewangan Islam. Engku Rabiah Adawiah, E.A (2008), Constraints and Opportunities in Harmonisation Of Civil Law And Shari ah In The Islamic Financial Services Industry, Malayan Law Journal, [2008] 4 MLJ i; [2008] 4 MLJA 1. Engku Rabiah Adawiyah, EA. (2009). Isu-isu Perundangan dan Kehakiman dalam Kewangan Islam. Hakimah, Y. (2010). The new Central Bank of Malaysia Act 2009 (act 701): Enhancing the Integrity and Role of the Shari ah Advisory Council (SAC) in Islamic Finance. ISRA Research Paper. No 6/2010. Hall, A.M. (2008). Systematic Content Analysis of Judicial Opinions. California Law Review.Vol 96: pp1-24. Ruzian, M and Noor Inayah, Y. (2012). Litigation as Dispute Resolution Mechanism in Islamic finance: Malaysian experience. European Journal of Law and Economics Ruzian, M. (2011). Adjudication of Islamic Banking and Finance Cases in the Civil Courts of Malaysia. European Journal of Law and Economics. Tengku Hasmuddin, T.O.( 2009). Isu-isu Perundangan Dalam Kewangan Islam. Zulkifli, H. and Mehmet, A. (2011). An Analysis of the Court s Decisions on Islamic Finance Disputes. ISRA International Journal of Islamic Finance, Vol 3 Issue 2, Kota Kinabalu, Sabah, MALAYSIA. Organized by 427