View - ResearchGate

The Paradox Struggle Between Islamic and Conventional Banking Systems
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. In
short, the system was vulnerable. The country’s solution was
to amend the laws to enable Shariah Courts with jurisdiction
over the matter. In the perspective of alternatives to dispute
resolution this may have been an unwelcomed move. Instead
of solidifying the arbitration structure of Indonesia, the
problem was once again hurled into the Courts. It has to be
remembered here that Indonesia’s reliance on ADR
institutions stemmed not from the conventional problems of
the Court system i.e. expedient case management, possibility
of mediation, and the other usual pro factors which creates a
push for ADR. Their trust in the system initially stemmed
from their desire to avoid civil court in matters relating to
Islamic finance.
However, it shall be noted here that arbitration is not free
from problems. At one stage or the other reference needed to
be made to the common law and even after the arbitration
award is given, if parties want to enforce the award they still
have to go to court. And this does not lessen burden of the
courts.
Conclusion: What Needs to be Done
Once viewed as a small segment of the financial world,
Islamic banking and finance has emerged as a key player in
global financing in recent years, gaining worldwide
recognition around the world. Today, even global financers
such as HSBC are offering Islam compliant products, such
as the Shariah compliant mortgages the Bank introduced in
2003, in order to attract Muslim customers with
reservations. Today, with products such as HSBC Amanah,
they have gone much further in offering Shariah based
banking products, as a clear sign of its creeping influence.
And today, Malaysia has a full-fledged Islamic system
operating parallel to the conventional financial system.
Nevertheless, practicality of the system was a challenge that
faced the Islamic sibling in its endeavor to replicate the
products and services offered by its conventional brother.
Unlike conventional Banking’s conviction on interest, Islam
222