View - ResearchGate

Aishath Muneeza, Ismail Wisham, Rusni Hassan,
International Islamic University Malaysia
to provide an opportunity to conventional banks to open an
Islamic window. Since that time, the growth of Islamic
banking in Indonesia has been progressing steady and fast.
In the past, there was confusion on the question which
forum was competent to settle Islamic banking disputes: civil
court or religious court. Both regarded themselves to be
competent to settle such disputes. But the problem was that
the jurisdiction of the civil courts did not extend to Shari’ah
matters, within which Islamic banking disputes apparently
came. On the other hand, the jurisdiction of the religious
courts was limited to Personal law matters which did not
cover banking disputes, and was confined to a) marriage, b)
inheritance, testamentary succession, hiba and waqf. There
was no possibility of any deviation as the matter was clearly
spelled out in section 49 of the Act No. 7 of 1989
In the absence of an appropriate body to take charge of the
settlement of Islamic banking disputes, an initiative was
taken by the Indonesia Council of Religious Scholars to set
up BAMUI (Indonesian Muamalat Arbitration Body) in 1993.
The name of this body was changed in 2003 to Basyarnas
(National Shari’ah Arbitration Body). However due to very
poor knowledge of the Islamic law of arbitration possessed by
the banks and their banking costumer complainants, the
National Shari’ah Arbitration Body could not function
effectively due to the fact that a dispute cannot be arbitrated
unless there is an arbitration agreement between the parties
(i.e., the bank and customer) was not fully appreciated by
the parties. Consequently, disputes brought for arbitration
by both of them were lacking necessary legal foundation and
could not thus be legally arbitrated. Any award made in such
arbitration was not enforceable.
As a result of this problem, most of the cases involving
Islamic banking disputes continued to be taken to the civil
courts, notwithstanding the questionable knowledge of the
judges of such courts of matters relating to Islamic banking
and finance.
This incongruity was rectified in February 2006 through Law
No. 3 of 2006 which amended Law No. 7 of 1989 and
expanded the jurisdiction of the Religious courts to cover
219