SHARIA BANKING DISPUTES SETTLEMENT: Analysis of Religious Court Decision in Indonesia

Abstract

This study aims to analyze Sharia banking disputes settlement in Religious Court regarding Sharia compliance and state regulations. The data were obtained from the Supreme Court of the Republic of Indonesia website on Profit Sharing (PLS) financing, musyarakah, and non-profit Sharing (non-PLS) financing, murabahah. This is a legal empirical study with a comparative approach. The results showed Sharia banking disputes occurred partly due to the existence of legal loopholes and the general nature of the existing rules, which lead to multiple interpretations. Disputes were mainly caused by default and unlawful acts. Furthermore, there were differences in the judge's decision between the two case studies concerning the fulfillment of legal principles, including benefits, justice, and legal certainty. Regarding the suitability of the contract, in murabahah case, the pillars and conditions have been fulfilled, but there are other factors that damage the contract. Therefore, there is an urgent need to strengthen regulations related to more detailed financing contracts. The regulators are expected to promote an Islamic banking regulatory framework that guarantees legal certainty for both customers and Islamic financial institutions, as well as provide a stronger legal basis for disputes settlement.