Judgments in Private Contracts and Shari‘ah Compliance in Malaysia: An Initial Perspective

Abdul Majid Tahir, Mohamed and Noor 'Ashikin, Hamid and Khairun-Nisaa, Asari and Maheran, Makhtar and Mohd Lotpi, Mohd Yusob (2015) Judgments in Private Contracts and Shari‘ah Compliance in Malaysia: An Initial Perspective. In: World Islamic Social Sciences Conference, 1 December 2015, Putrajaya.

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Abstract

Malaysia is regarded as one of Islamic countries. This can be seen from its history and constitution. Consequently many practices, including statutory laws and decided cases, have Islamic influence. This can be seen in various legislation enacted by Parliament and state legislatures. For instance, the passing of several ‘Islamic legislation’ in non-personal matters, such as banking and finance matters. Also, Parliament has enacted procedural law that has some provisions, reflecting Islamic law influence. Prior to 2012, judgments, including judgment enforcements, were subject to the statutory rate of interest under the Rules of High Court 1980. Such rate of interest is clearly riba, prohibited by the Shariah. However after the coming into force of the Rules of Court 2012, the judgments for litigations in Islamic banking and finance are subject to late payment penalty. This change is applauded for Islamic banking and finance contracts. However, what is the position of private contracts? Thus this study is to examine the position of the existing law governing judgments in private contracts from the perspective of Shariah compliance. The study will be based on qualitative methodology where data from primary and secondary legal sources were analysed. Our initial study showed that the law is silent on that issue. In practice, such private contracts are apparently not subject to the above legislation governing Islamic banking and finance. The findings also prompted a further research be carried out. The hope is that that the new research would significantly benefit individual Muslims who are really conscious of Shariah compliance relating to judgments in private commercial contracts in Malaysia.

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