Dispute Resolution of Islamic Financial Institutions, Court Litigation and Negotiation

Dispute resolution in the Islamic financial sector is one of the current debates among regulators and Sharia scholars. When Islamic financial institutions have a dispute with their customers, have to search for a solution. The first step for the Islamic financial institutions for resolving the dispute is to start negotiation with their clients. Islamic financial institution negotiates with the client through Shariah supervisory committee members. Sharia scholars of the committee are experts in Shariah law. These Shariah members have an excellent reputation and well-known in society. Hence, the negotiation starts with the client resolving the dispute in order to not go to court. The advantages of the negotiation are taking less cost and less time and it is confidential which is very important for the Islamic financial institution. However, the decision that is reached by negotiation maybe not binding on the parties which consider a disadvantage of the negotiation method. If the parties could not resolve the dispute by negotiation, then the case will go to court. Most of the courts either based on the civil or common law system. Therefore, the decision made by these courts maybe not the right decision as the judges decide on the Shariah case according to civil or common law. Despite the court process take long time and is costly, but the decision that is made by the court is binding on the institution and the client. Some countries decide on Islamic financial legal cases in Shariah courts, such as the Kingdom of Bahrain. In a country like the UK, the decision on the Islamic financial cases will be under the English law system. Therefore, the Bahraini approach is an ideal solution, and the Malaysian approach is one of the best solutions, as the court refers to Shariah Advisory Council when the case is about Islamic finance.  Purpose of This Paper: This paper purposes to observe the dispute resolution of Islamic financial legal cases and find solutions for the disputes between the Islamic financial institutions and their customer according to the current legal system in the world.  Research Method: This research applies a qualitative descriptive method and analysis legal cases related to Islamic finance.  the researcher describes the dispute resolution of Islamic financial institutions and then analyses the result of the research. The data collection for this research is from primary and secondary sources. Thus, court cases, books, journals, and related websites are the main source for data collection for this study. Findings: It is found that the current legal court system in many countries is not proper for resolving issues that arise between Islamic financial institutions and their clients. Thus, dispute resolution in the Islamic financial industry needs to be resolved by negotiation and mediation between the Islamic financial institutions and their customers. Furthermore, the courts have crucial rules in resolving these issues. However, lack of the Shariah courts in many countries in the world makes civil or common law courts decide on the issues, which judges are appointed on these courts do not have Shariah background. Keywords: Dispute resolution, Civil law court, Common law court, Negotiation, and Court litigation. DOI: 10.7176/IAGS/90-04 Publication date: March 31st 202

Legal Protection of Islamic Banks, Challenges and Solutions

The Islamic banking industry is an important part of the financial system in any country that has this type of banking. Islamic banking institutions are regulated by several laws and regulations as same as conventional banks. The Islamic banking Act and general banking law, financial laws, and other related laws are the main piece of law for organizing the Islamic banking system. One of the main challenges that facing Islamic banking institutions is the lack of a legal framework to protect Islamic banking and manage these banks. The legal framework of the Islamic banking industry includes special Islamic banking law and other laws that have relation to Islamic banks such as finance law and company law. The two main legal challenges of Islamic banking institutions is lack of legal framework and lack of Sharia court to deal with disputes and issues relating to Islamic banking cases. thus, it is necessary for Islamic banking institutions to have special Islamic banking law and provisions in other law that they regulate Islamic banking institutions. Therefore, enacting Islamic banking law and amending some other laws to include the Islamic banking industry is needed. Furthermore, establishing a Sharia court to settle Islamic banking cases when there are disputes. Alternatively, appointing Shariah experts and professionals in Islamic banking issues in civil court can be an alternative solution for dealing with Islamic banking cases. Purpose of The Paper: The purpose of this study is to find out the legal challenges that face Islamic banks, and then find proper solutions for these challenges. Methodology and Approach: The qualitative method-based is applied for this study as qualitative research is a proper method for conducting this type of research. The study uses various documents and content analysis approach to understand and analyse the nature of legal challenges of Islamic banking institutions. In this paper, both primary and secondary materials are part of the data collection. Thus, Acts, books, academic journals are used for collecting data for the purpose of this research.  Findings: It is found that the current legal framework of the Islamic banking industry needs to be reformed to be a proper legal framework. Therefore, related laws and regulations to Islamic banks should be amended to cover Islamic banking institutions. In addition. Islamic banking Act is necessary to be enacted for regulation Islamic banks. Furthermore, establishing a Sharia court or appointing qualified Shariah scholars in civil court is necessary for resolving legal challenges that face Islamic banking institutions. Keywords: Islamic Banking, Legal Issues, Shariah Court, Civil Court DOI: 10.7176/JLPG/107-10 Publication date:March 31st 202

Evaluation of the UK Islamic Banking System, Challenges and Prospects

Under the UK financial law, Islamic banks are treated in the same way as conventional banks-there is no special Islamic banking law, nor is there any provision under the current banking law system for Islamic banks. The Financial Services Authority (FSA), the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) regulate and supervise all financial institutions, and this includes Islamic banks. However, the only official document to mention Islamic banks is a paper issued by Her Majesty’s Treasury, which simply explains Islamic banking rather than setting out any rules or regulations. The UK banking system’s policy is to not favoritise any specific type of financial institution; all institutions are treated equally, without giving Islamic banks a special treatment.The UK government has tried to facilitate and assist Islamic banks with developing and conducting their activities effectively. many obstacles that previously faced Islamic banks in the country have either been removed or at least reduced to some extent.  These efforts have been made to open the gate for Islamic banks to enter the UK banking market and develop their business there. For example, as described in this paper, some changes have been made concerning tax regulation and legislation to help facilitate Islamic banking transactions.  In addition, the Islamic Bank of Britain’s definition of ‘deposit’ has been modified to become more acceptable. Generally speaking, the Islamic banking industry in the UK is managed and organised very well, regardless of there being no special Islamic banking law. However, some issues are still existing and faced by Islamic banks in the UK, such as lack of Islamic banking law, shortage of experts, and lack of transparency. Thus, this paper evaluated and criticised the Islamic banking system of the UK and attempted to find out solutions for all these issues. Keywords: the United Kingdom, Islamic Banks and Challenges DOI: 10.7176/PPAR/10-8-04 Publication date:August 31st 202

Islamic Banking Industry of Turkey: Challenges and Opportunities

Islamic banks have a crucial role in developing any country's economy. In a country like Turkey with the majority of people are Muslim, Islamic banks could have a vital role in developing a country’s financial system. The Islamic banking industry in Turkey faces several challenges which affect Islamic banks negatively. Firstly, the lack of a proper Islamic banking legal framework which includes the lack of a special Islamic banking Act. This issue is considered a main legal challenge for Islamic banks in the country. Thus, enacting Islamic banking law and amending current financial laws is the main key to developing the Islamic banking sector in the country.  Secondly, the lack of qualified Islamic banking experts both staff and managers is another main challenge for Islamic banks in Turkey. Therefore, Islamic banks with the cooperation of the Central Bank of Turkey should have a special plan and program for educating Islamic banking staff. Thirdly, the Lack of public awareness is another challenge that faces Islamic banks in Turkey. The public of Turkey does not have sufficient information about Islamic banking principles. As a result, most of the people of Turkey invest in conventional banks rather than Islamic banks. Therefore, Islamic banks must provide information about Islamic banking products and use various methods to reach the public. In addition, the Central Bank of Turkey should have an important role in resolving issues of Islamic banks in Turkey.   Purpose of This Paper This paper proposes to examine the Islamic banking industry in Turkey according to the modern Islamic banking system. In addition, the challenges facing Islamic banks in Turkey are examined to find solutions for these challenges. Research Method This research applies a qualitative descriptive method and analyzes legal cases related to Islamic banks in Turkey. The researcher describes the challenges of the Islamic banking industry in Turkey and then analyses the result of this paper. The data collection for this research is from primary and secondary sources. Hence, Acts, books, journals, conference papers, and online sites are the main sources for data collection for this study. Findings The research found that the Islamic banking industry of Turkey has various issues. These issues impact negatively Islamic banks in the country as a result, slow down the development of the Islamic banking industry. Lack of proper legal framework, shortage of manpower and experts in the industry, and lack of awareness are the main challenges facing Islamic banks in Turkey. Therefore, this paper found proper solutions for these issues which assist the Islamic banking industry in this country. Keywords: The Islamic banking industry in Turkey, Islamic banking Law, Legal issues, Human capital issues, and Public awareness. DOI: 10.7176/JLPG/147-02 Publication date: March 28th 202

A Critical Evaluation of the Legal and Sharia Aspects of the Iraqi Islamic Banking System, Using the Case Studies of Malaysia and Bahrain

In Iraq, like other countries, the Islamic banking industry plays an important role in developing the country’s economic system. The Islamic banking industry of Iraq is regulated by the Islamic Banking Law, 2015. However, Iraq’s Islamic Banking Law of 2015 consists of an incomplete set of rules and regulations. The law does not contain certain fundamental elements such as the licensing requirements. In addition the law does not determine the highest Sharia body in case of Islamic banking problems. Thus, the Islamic banking industry in Iraq is also regulated by the Banking Law 2004 and the Central Bank Law 2004 but they do not make specific reference to Islamic banking. Therefore, the Islamic banking industry in Iraq faces challenges which are both legal and Sharia in character. In this context, the lack of a comprehensive Islamic banking legal framework and unclear relationship between the CBI and Islamic banks are the two main legal problems. Accordingly, the Islamic banking industry of Iraq is regulated by conventional laws and this may result ultimately in legal problems for the Islamic banking system. The Sharia challenge faced by the Islamic banking industry in Iraq is the lack of a proper Sharia framework. In effect, the Sharia supervision of the Iraqi Islamic banking system is not as robust as it should be. Thus, a central Sharia board does not exist and the individual Sharia supervisory boards of Islamic banks are not sufficiently strong because there is a shortage of qualified Sharia scholars to act as members of the Sharia supervisory boards of Islamic banks. In addition, the shortage of qualified Islamic banking experts is another important problem for the Islamic banking system of Iraq. The lack of Sharia scholars for the Sharia supervisory boards of Islamic banks and the lack of qualified staff to run the Islamic banking industry are the main human resource challenges faced by the Iraqi Islamic banking system. Thus, this thesis attempts to find solutions for these problems affecting the Iraqi Islamic banking industry. In this regard, the thesis considers the Islamic banking systems of both Malaysia and Bahrain. Both of these countries are developed and successful and each has a proper regulatory framework for its Islamic banking industry. In Malaysia, the Islamic Financial Services Act 3013 (IFSA) is a special law for the regulation of the Islamic financial sector including Islamic banks. Similarly in Bahrain, Volume 2-Islamic Bank is a set of regulations which govern Islamic banks. In addition, both countries have a proper Sharia regulatory and supervisory system because they have a sufficient number of Sharia scholars to supervise their Islamic banking business. Furthermore, many qualified Islamic banking experts can be found in Malaysia and Bahrain as those countries house universities and centres that offer Islamic banking degrees or courses. By drawing inspiration from the Malaysian and Bahraini Islamic banking industries, Iraq can develop and improve its own Islamic banking industry. This can be done by amending the Islamic Banking Law, 2015 and establishing a central Sharia board, similar to Malaysia’s Sharia Advisory Council. In addition, the Banking Law 2004 and the Iraqi Central Bank Law 2004 should be amended so as to cater more to the Islamic banking industry. It is the responsibility of the Central Bank of Iraq to resolve all problems that are faced by Islamic banks in the country. By drawing judiciously on the Bahraini and Malaysian experiences, CBI regulators will be able to reform the Iraqi Islamic banking industry and find solutions for both legal and Sharia challenge

Skill Issues for Islamic Financial Institutions-Reasons and Solutions

This study focuses on the skill issues of the Islamic financial institutions that impact on the industry negatively. For the Islamic financial industry to develop according to the standard level, it needs proper skills. Therefore, this paper clarifies the issue first and then reasons for skill gaps in the Islamic financial industry. Shortage of centers and training courses for creating talents in Islamic finance field slows down the industry. In addition, the current unqualified staff of Islamic financial institutions effect on the Islamic financial industry. Shortage of skills in the Islamic finance field is not always due to the insufficient number of staff, but because that current staff do not possess all related Islamic financial knowledge, such as legal, Shariah and modern finance system. Therefore, this paper presents suitable methods for developing and producing Islamic finance professionals. Establishing centers and colleges for producing knowledgeable Islamic financial staff is an important method for developing the Islamic financial industry. In addition, opening training courses by Islamic financial institutions can also be a good tool for developing necessary skills of the current Islamic financial employees. Keywords: Islamic Finance, Skill Issues and Islamic Financial Institutions DOI: 10.7176/JLPG/89-14 Publication date:September 30th 201

Sharīʿah Regulation and Supervision of the Iraqi Islamic Banking System

Abstract This article critically evaluates the Sharīʿah regulation and supervision of the Iraqi Islamic banking system. Due to the country’s incomplete Islamic banking framework and lack of qualified Sharīʿah scholars, the Iraqi Islamic banking system is somewhat ineffective. In Iraq both the internal and external Sharīʿah supervisory systems in the Islamic banking sector are weak. The internal Sharīʿah supervisory system suffers from a shortage of qualified Islamic banking experts. At the same time, there is no effective external Sharīʿah supervisory system due to the lack of a Central Sharīʿah Board. This article examines the Sharīʿah supervisory system of the Iraqi Islamic banking industry by using case studies on Malaysia and Bahrain, both of which have a developed Islamic banking system. The Sharīʿah supervisory systems in these two countries are examined in order to propose an effective and comprehensive Sharīʿah regulatory and supervisory framework for the Iraqi Islamic banking industry.</jats:p