Settlement of Disputes and the Islamic Financial Institutions (IFIs)

Abstract

This paper investigates mechanisms of settlement of disputes at the Islamic Financial Institutions (IFIs) as it is natural to have disagreements between different parties involved in Islamic banking and finance business. The paper adopts a qualitative methodology where the data are taken from journals, books, websites etc. In analyzing the data obtained from the sources, content analysis was used. It is found that dispute settlement at the Islamic Financial Institutions (IFIs) can be both through litigation as well as Alternative Dispute Resolution (ADR). Currently, parties to Islamic banking and finance dispute prefer to settle their dispute amicably through arbitration. Moreover, many arbitration centers on dispute resolution for parties in Islamic banking and finance have been established. However, there are certain challenges in arbitration that need to be overcome for the arbitration to be more effective. The researchers put forward certain recommendations on how to improve arbitration to be more effective in settling dispute between parties in Islamic banking and finance.

Analysis of Challenges and Prospects for Dispute Resolution through the National Sharia Arbitration Board in the Indonesian Legal Context

“…Islamic dispute resolution, rooted in Sharia principles, holds a distinctive place in the broader field of alternative dispute resolution (ADR) [1], [9]. Scholars emphasize the centrality of justice, equity, and fairness in Sharia arbitration, which is based on the Islamic legal tradition [10]. The National Sharia Arbitration Board's operations can be examined through the lens of this conceptual foundation, providing insights into the philosophical underpinnings of Islamic dispute resolution [5].…”

“…Islamic dispute-resolution institutions face various challenges globally, including issues related to infrastructure, procedural complexities, and the integration of traditional and modern legal principles [5], [10], [13]. These challenges have been explored in the context of global trends towards Alternative Dispute Resolution (ADR) mechanisms [14].…”