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Aishath Muneeza, Ismail Wisham, Rusni Hassan,
International Islamic University Malaysia
in civil courts. This problem was realized at the outset when
banking documents were first drafted for use by Bank Islam
and a great deal of caution was exercised to ensure their
compliance with the above-stated requirements. Over the
years these documents have been modified and improved
upon. The validity of some of these documents was
challenged in the courts but, favorably, none of those
challenges have been successful.
There are multitudes of existing laws (including procedural
laws) that need to be amended to make them applicable to
Islamic banking. Some of these are: the Contracts Act 1950,
the National Land Code 1965, the Stamp Act 1949, the
Companies Act 1965, the Malay Reservations Enactment of
the various States of Malaysia, The Rules of the High Court
1980 and the Subordinate Courts Rules 1980 and others. A
comprehensive study of all such legislation must be made
and appropriate amendments passed by Parliament. As an
interim measure, a general all-embracing provision may be
enacted in the IBA and BAFIA to deal with situations of
conflict among the laws that may be applicable and
uncertainty in the law. 1
This section empowers conventional financial institutions to
carry on Islamic banking business to the same extent as an
Islamic bank, removing in the process the prohibition
against the carrying on of Islamic banking business by any
person not in possession of a license under the IBA. Indeed,
the latter can do more since s. 124 (1) also authorizes them
to do Islamic financial business, although considering the
definition of the latter term (which is identical to that of
Islamic banking business), it is difficult to see what would
come within that term that is also not within the term
Islamic banking business.
The Rules of the High Court 1980 and the Subordinate
Courts Rules 1980 were drafted in the year shown in their
titles. This was before Islamic banking was introduced into
this country and, naturally, the peculiarities of claims made
1 Section 2 of IBA and section 2 of BAFIA provides that Islamic banking
and/or Islamic financial business means “any financial business, the aims
and operations of which do not involve any element which is not approved
by the Religion of Islam.”
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