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Chap 3 Legal N SH F.Work of The MIF System
Chap 3 Legal N SH F.Work of The MIF System
Chap 3 Legal N SH F.Work of The MIF System
ISB 658
ISLAMIC FINANCIAL
LEGAL FRAMEWORK
Chapter 3
and finance.
1. AL-QURAN:
■ 4:29: Do not devour others property by wrongful means & the
importance of mutual consent
■ 2:275: Allah permits trade and forbids riba’
■ 2:280: Leniency for debtors
■ 2:282: Write down in writing
2. Al-Sunnah :
■ Ribawi commodities,
■ Trustworthiness,
■ Generosity,
■ Debt
3. IJMA’:
Bay’ salam
BBA
mudarabah contract
4.QIYAS:
muzara’ah
salam contract.
5. ISTIHSAN:
Ijarah
Bay’al-wafa’
6.MASLAHAH MURSALAH:
Additional tax on wealthy citizens in emergency,
prohibition of selling grapes to wine maker
prohibition of sale of arms in civil disturbance
7.ISTISHAB:
Certainty may not be disproved by doubt,
ownership is presumed to remain until transfer of it is Proved
freedom of indebtedness is to be presumed
8.‘URF:
Tailoring, renting without telling the purpose
selling without agreeing on time or mode,
payment by installments
ISLAMIC LAW :
Law of the land before the coming of colonial powers
(defined in ramah v Laton, [1927] 6 F.M.S.L.R.128 (CA).
Risalat Hukum Kanun Malacca
Majalah Ahkam Johor as Malay translation of The
Majelle.
Ahkam Shariyyah Johore Malay translation of Qadri
Pasha of Egypt.
◻ After the coming of The British, English law has
adopted and applied in Malay states and Straits
Settlements (removed Islamic law from Malay
Muslims society except for personal law -before
the independence,
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3.1 The position of Islamic law in the Federal Constitution
▪wakaf,
▪ inheritance,
▪ etc.
(1958)
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Islamic law is a state matter, except in the federal
territories of Kuala Lumpur, Labuan and Putrajaya.
This list clearly shows that the state does not have
the full or exclusive power to legislate on Islamic law
in its true sense. The state legislative assembly may
only enact Islamic law if it concerns matters
specified in Item I and Islamic aspects of other
matters in the State and Concurrent lists, and
residual matter are legislated.
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Wan Asma'- ISB658
The Islamic Banking Act 1983 (Act 276) and
the Takaful (Islamic Insurance) Act 1984 (Act
312) concern the Islamic practice and principles
in banking and insurance. Both fall under the
federal jurisdiction.
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Wan Asma'- ISB658
3.1 The position of Islamic law in the Federal Constitution
Wan Asma'-
ISB658
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3.1 The position of Islamic law in the Federal Constitution
(FC)
Wan Asma'-
ISB658
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3.1 The position of Islamic law in the Federal Constitution
Wan Asma'-
ISB658
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Federal Constitution
Wan Asma'-
ISB658
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Federal Constitution
Wan Asma'-
ISB658
SCHEDULEs :
FIRST SCHEDULE- THIRTEENTH SCHEDULE
◻ NINTH SCHEDULE
LEGISLATIVE LISTS-
List I - Federal List
List II - State List
List III
Article 160 (2) PART XII - GENERAL AND MISCELLANEOUS
Interpretation at p.200 :
“State" means a State of the Federation'
"State law" means -
(a) any existing law relating to a matter with respect to which the Legislature of a
State has power to make law, being a law continued in operation under Part XIII;and
(b) a law made by the Legislature of a State;
"State List" means the Second List set out in the Ninth Schedule.
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Summary
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◻ Articles
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160 “Law”
160 (2) “Malay”
121 (1A)
◻ List 1 Schedule 9 Para 4 and para 7
◻ List 11 Schedule 9 Para 1
◻ Cases :
Ramah v Laton
Che Omar Che Soh V PP
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ARTICLE 121 (1A) OF FEDERAL CONSTITUTION
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ARTICLE 121 (1A) OF FEDERAL CONSTITUTION
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◻ This issue was raised in Bank Islam Malaysia Bhd v. Adnan bin Omar
& Ors.
◻ The defendant raised a preliminary objection that, as the plaintiff
was an Islamic bank, the court had no jurisdiction to hear the case
following the inclusion of Clause (1A) of Article 121 of the Federal
Constitution.
◻ NH ChanJ overruled the preliminary objection that the civil court
cannot exercise jurisdiction over Islamic banking matters based on
the following grounds:
(para 7 ofList I — the Federal List enumerates various matters in respect
of which the Parliament may make the law; included within its scope
are banking.
List II — the State List courts and stipulates that Shariah courts shall
have jurisdiction only over persons professing the religion of Islam.p.272
◻ Since Bank Islam is a body corporate, it does not have a religion
and, as such, will not be subject to the jurisdiction of the Shariah
court.
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JURISDICTION FOR ISLAMIC BANKING CASES
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◻ Abdul Hamid JCA : ONLY the civil court has the jurisdiction to hear
cases involving Islamic banking transactions .
◻ The Shariah court is not an adequate forum to decide over Islamic
banking cases. He argued:
1. Disputes over Islamic banking transactions which have arisen so far
do not involve Islamic law only, BUT involve the applications of other
statutes under the civil law such as the NLC , the Companies Act, the
Contracts Act etc., of which the Shariah court has no jurisdiction and
the Shariah court judges are not trained in and not familiar with.
2. The power of enforcement and remedies available in the Shariah
courts are very limited.
3. Islamic banking customers are not only confined to Muslims but also
include non-Muslims. The Shariah court does not have jurisdiction
over non-Muslims and neither can non-Muslim lawyers appear in the
Shariah court.
4. Shariah court has a limited power of imposing a fine which must not
exceed five thousand ringgit in criminal offences.
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JURISDICTION FOR ISLAMIC BANKING CASES
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3.2 The laws and Regulations which Govern Islamic Finance
Wan Asma'-
ISB658
◻ FSA 2013
◻ IFSA 2013
◻ CBMA 2009
◻ CMSA 2007
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3.2 The laws and Regulations which Govern Islamic Banking and Finance
Wan Asma'-
ISB658
STATUTES
a. STATUTES which are relevant to IBF:
◻ Companies Act 1965 (Act 125)
◻ Contracts Act 1950
◻ National Land Code 1965 (Act 56)
◻ Sale of Goods Act 1957 (Act 382)
◻ Hire-Purchase Act 1967 ( Act 212)
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3.2 The laws and Regulations which Govern Islamic Banking and Finance
Wan Asma'-
ISB658
Procedural Laws
Rules of the Court:
Rules of High Court 1980
Subordinate Courts Rules 1980
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