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JRI Resources Sdn Bhd v Kuwait Finance House [2019] MLJU 275 - Coggle…
JRI Resources Sdn Bhd v Kuwait Finance House [2019] MLJU 275
FACTS OF THE CASE
:
KFH commenced legal proceeding upon default of JRI’s in monthly payment and obtained summary judgment against them together with compensation fees & guarantors to recover.
Court of Appeal
JRI contended clause 2.8 of the Ijarah facilities agreement does not Shariah-compliant. Further submitted the High Court also erred in not seeking a ruling on this issue from the Shariah Advisory Council (SAC) pursuant to s. 56 of Central Bank of Malaysia Act 2009 (CBMA).
The appeal was allowed, set aside summary judgment, and directed the matter be referred to SAC, which provided that the clause was Shariah-compliant.
Purpose: to facilitate leasing of ship which have 3 guarantors.
Federal Court
JRI appeal whether s. 56 and s. 57 of CBMA was constitutionally valid. It was due to the fact that CBMA by that section takes away judicial power of High Court from determining matter concerning Shariah matter and vest it to SAC, a non-judicial power not provided under the Federal Constitution.
It was argued that SAC has only the power to ascertain and rule on the Shariah issue and present it to the court. Reaffirm COA’s decision.
Kuwait Finance House (Malaysia) Bhd (KFH) granted JRI Resources (JRI) Islamic credit facilities including Ijarah Mumtahiah Bitamlik (Ijarah).
LEGAL ISSUES
Whether s. 56 and s. 57 the CBMA 2009 are constitutional as provision require the court to refer Shariah matters that may arise in any proceeding in relation to Islamic finance to the SAC for its ruling and said rulings shall be binding on the court.
COMMENTS
The introduction of s. 56 and s. 57 of CBMA is well intended as the provision seeks to achieve certainty in Islamic banking principles by vesting the interpretation of such principles in the SAC which comprises individuals of vast experience are knowledge in various fields, especially in finance and Islamic law.
Judiciary makes history by convening nine-members bench.
CONCURRENCE
The function of SAC was merely to ascertain the Islamic matter in Islamic finance matters, but it was the court to apply for the case.
SAC does not exercise judicial power at all.
Both provisions of CBMA does not contravene with Federal Constitution since judicial power still remains to the court
The giving of a binding and authoritative decision does not indicate judicial power and rulings passed by SAC constitutes a form of expert opinion.
DISSENTING
Since the ruling by SAC is binding, it is not open to determine the question of law where the court was unable to reach any other possible outcome .
In the manual issued by Bank Negara Malaysia, the function of SAC is merely to state the Hukum Syarak.
Ruling binding on court and the ascertainment becomes integral part of judicial process of determining right and liabilities of parties.
The task of adjudication has been removed and assigned to SAC.
S. 57 of the Act is unconstitutional as it can be interpreted as removing judicial power from judiciary.
The provisions must be struck down as unconstitutional and void.
JUDGMENT
S. 56 and s. 57 require the court to refer Islamic financial business issues that arise to SAC for its ruling, with such ruling being binding on the court making the reference.
The Federal Court ruled that the SAC rulings are solely confined to Shariah matters and do not have the ‘characteristics of judicial power'.
Federal Court held that s. 56 and s. 57 of CBMA are constitutional.
RATIONALE
The Court may refer to s. 56 and s. 57 of CBMA to refer Islamic financial business issues that arise to SAC for its ruling.
The SAC rulings are solely confined to Shariah matters and do not have the ‘characteristics of judicial power'.