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JRI RESOURCES SDN BHD v KUWAIT FINANCE HOUSE [2019] - Coggle Diagram
JRI RESOURCES SDN BHD v KUWAIT FINANCE HOUSE [2019]
First issue: Whether ruling of Shariah Advisory Council under Section 57 of CBM Act 2009 concluded or settled dispute between parties.
Rationale
The ruling was not for a "determination" of dispute between the parties but for the "ascertainment" of the applicable Islamic law for the purposes of the Islamic financial business.
The legislature employed the word "ascertain", not "to determine" under 4(k) of Federal List under 9th Schedule to the FC
The duty of SAC is confined exclusively to the ascertainment of the Islamic law on financial matters or business. The judicial function is within the domain of the court to decide on the issues which the parties has sought.
The ruling under S. 57 does not "determine" the liability of the borrower under the Islamic facility. The determination of the borrower's liability was decided by the presiding judge, not the SAC..
[3.3]
Mohd Alias Ibrahim v RHB Bank Bhd & Anor [2011] -
The application and the final decision always remains with the court
[3.2]
Tan Sri Abdul Khalid Ibrahim v Bank Islam Malaysia [2012] -
The function of SAC is to ascertain Islamic financial matters only. Not to hear evidence nor decide case.
[3.1] S. 56 & 57: The duty of SAC is confined only to the ascertainment of Islamic law on financial matters or business.
Comments
The exercise of power shall not be overlapped. Once issue is being brought before the court, it is within the court judicial power as to decide the issue sought by the parties.
Only such decision will be settled and concluded the dispute between both parties.
Holdings
The ruling under S.57 of the Central Bank of Malaysia Act 2009 does not conclude or settle the dispute between the parties.
Concurrent and Dissent
Concurrent
"Ruling" under S.56(2) was not for "determination", but for the "ascertainment" of the application" of the Islamic law "for the purpose of the "Islamic financial business".
The legislature, under 4(k) of Federal List under 9th Schedule provide the words "ascertain", not "to determine".
Having no power to determine, the ruling under S.57 did not conclude or settle the Islamic financing issue.
The SAC thus cannot determine the liability of the borrower. Such determination was decided by the presiding judge at the court.
Dissent
S. 56 & 57 is a binding ruling of the SAC.
Thus, judges shall be prohibited from determining the substantial issues of the disputed parties. The ruling of SAC shall become the ruling of the trial judge.
The legislative purpose is to take away from the Civil Court it judicial power and place it with SAC on issues relating to Shariah matters.
FACTS OF THE CASE
PARTIES:
1.)
Applicant
/ defendant is the
JRI Resources Sdn Bhd
2.)
Respondent
/plaintiff is the
Kuwait Finance House (Malaysia) Berhad
; President of Association of Islamic Banking Institutions Malaysia & Anor
PROCEDURAL HISTORY:
1.) High Court proceedings:
Resp/plaintiff brought action against applicant/def
Applicant/defendant failed to pay amount outstanding under facility granted by the resp/plaintiff
On later date, resp/plaintiff had also applied for summary judgement; in which it has been granted
2.) Court of Appeal proceedings:
Applicant/defendant applied to COA against summary judgment
Argue that; failure to pay due to failure to carry out major maintenance works on the vessels by the resp/plaintiff
Contended, it is resp/plaintiff's duty as the owner
Also submitted the HC erred in not seeking a ruling on Shariah compliance issue
COA had allowed the appeal and refer the issue of Shariah to the Shariah Advisory Council
3.) Meeting for SAC rulings:
Both respondent and applicant present during the proceeding with SAC
Both had brought their expert opinions which were in conflict
SAC rulings; negotiation to determine which party will bear the maintenance cost is allowed, as long as it has been agreed by the parties
Upon receiving this ruling, the High Court had scheduled a hearing
However, the applicant/def had applied to the Federal Court for reference to determine whether the provisions that enable SAC to make rulings are constitutionally valid
Hence, the present case
JUDGMENT
The Federal Court in this case had:
Dismissed the application
Held that the ss 56 and 57 of the 2009 Act were not in breach of the Federal Constitution
Order the case to be remitted to the High Court for further directions
Second issue: Whether ss 56 and 57 of the Central Banks of Malaysia Act 2009 are unconstitutional for taking away the power of judiciary
Holding
Sections 56 and 57 of the Central Bank of Malaysia Act 2009 were constitutional.
Rationale
Doctrine of Separation of Powers
An integral element of our constitutional design.
Changed over time
Overlap and blending of functions, results in complementary activity by different branches that makes absolute separation of powers impossible.
Recognises the functional independence of the three branches of Government:- the legislature,judiciary and executive.
Judicial Power
Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat and another case [2017] 5 CLJ 526
the test 'whether there has been a take-over of the judicial power of the court by non-judicial personages
Two features
Exercised in accordance with judicial process of judicature
Vested only in persons appointed to hold office
Mohd Alias bin Ibrahim v RHB Bank- SAC does not perform judicial function; does not give final decision in dispute between parties.
Concurrence and Dissent
Concurrent
No judicial power vested in the SAC, hence, the SAC does not usurp the judicial power of the court.
Section 56(1) gives option to the court or arbitrator whether to take into consideration the published ruling of the SAC or refer the Shariah issue to the SAC for ruling
Ruling of SAC does not amount to a judicial decision.
Power to ascertain Islamic law for the purposes of Islamic financial business is a legislative power and is not inherent for integral to judicial function.
Principles of separation of power did not apply to invalidate any legislative delegation of powers to the SAC
Dissenting
'Flexibility' of separation of powers allows an 'overlap and blending' of functions between the branches; so they can exercise the powers of another.
Power of the courts is a natural and necessary, not just to the separation of powers, but also to the rule of laws.
Features of judicial power
the exercise of an adjudicative function
finality in resolves disputes
enforceability of its own decision
Comments
The introduction of sections 56 and 57 should be made clear interpretation in the exercising of powers
Third issue: Whether ss 56 and 57 of Central Bank of Malaysia Act violate doctrine of separation of power
Holding
The principle of separation of power did not apply to invalidate any legislative delegation of powers to the SAC.
Rationale
The doctrine of separation of powers is not rigid, fixed or static but continues to evolve. The separate roles or powers between the executive, legislative and judicial should be respected and remain inviolate in order to serve the efficient operation of the Government.
The doctrine of separation of powers at some time allows one branch of government to exercise part of the powers of another branch and the delegation of power by one branch of the Government to another only if it necessary.
Concurrent
In identifying the Islamic law for the purpose of Islamic financial business falls under the legislative power which the powers and discretion on such matters are not integral to the judicial function.
It is the power of the Parliament to assign or to delegate its power of ascertaining the applicable of the Islamic law to any Islamic financial business to any branch of the government or to administrative body.
It falls within the matters that one branch of government may exercise the functions of another branch which it indicates that Parliament may decide on the exercising Islamic Law.
The ascertainment of Islamic laws for the purposes of Islamic financial business are a power delegated by the legislative branch to the judicial branch and the SAC which the provisions did not violate the separation of power.
Dissenting
The fundamental reasons on the doctrine of separation of power is to ensure a proper mechanism of checks and balances in order to avoid tyranny or arbitrary Government.
The overlapping functions between branches of Government neglect the fundamental separation of judicial power from legislative and executive power which it may cause an insult to the doctrine of power.
The rule of law requires that every power should have limit in exercising their power.