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JRI Resources Sdn Bhd v Kuwait Finance House (M) Bhd (President of…
JRI Resources Sdn Bhd v Kuwait Finance House (M) Bhd (President of Association of Islamic Banking Institutions Malaysia & Anor, interveners) [2019] 3 MLJ 561
Facts
In 2008, Kuwait Finance House (Malaysia) Berhad (“KFH”) granted JRI Resources Sdn Bhd (“JRI”) various Islamic credit facilities (“Facilities”), including four Ijarah Muntahiah Bitamlik Facilities (“Ijarah Facilities”). The Facilities were for the purposes of facilitating the leasing of ships by JRI from KFH and were guaranteed by three individuals (“Guarantors”).
The lower Court of Appeal ordered the Shariah compliance element in the said facility agreements to be referred to the Shariah Advisory Council (SAC) of the Bank Negara Malaysia (BNM), as stipulated in the Central Bank of Malaysia Act 2009 (CBMA 2009).
In its appeal to the Federal Court, JRI challenged the role of SAC.
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JRI’s contended that sections 56 and 57 of the CBMA take away judicial power of the High Court from determining any question concerning a Shariah matter and gives it to the SAC, a non-judicial body not provided for under the Federal Constitution (“Constitution”).
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The introduction of sections 56 and 57 of the CBMA is well intended as the provisions seek to achieve certainty in Islamic banking principles by vesting the interpretation of such principles in the SAC which comprises individuals of vast experience and knowledge in various fields, especially in finance and Islamic law.
Whether the power conferred on the SAC to make rulings which are binding on the court amounts to the exercise of judicial power?
The majority judges were of the view that the SAC does not encroach into the realm of judicial power as the trial judge remains responsible for deciding the dispute based on its facts and by applying the SAC’s ruling.
The minority judges on the other hand, took the opposite view and maintained that in substance, the SAC exercises judicial power as the trial judge is bound to follow the SAC’s ruling on the question of Islamic law referred to it.
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