SHARIAsource

The first respondent, the National Shari'a Arbitration Body (Badan Arbitrase Syari'ah Nasional – Basyarnas), had made a decision on 16 September 2009 between the second respondent (PT. Atriumasta Sakti) and the applicant (PT. Bank Syariah Mandiri), ordering the applicant to return to the second respondent IDR 878,791,366. This figure comprised a banking provision cost payment of IDR 350 million, or one per cent of the value of the financing facility worth IDR 35 billion, because the Murabahah agreement between the two parties had been declared invalid by the first respondent; IDR 45,027,000 in project insurance monies; IDR 5,962,700 in upfront employee social security payments; IDR 298,135,000 to the DKI Jakarta Government Construction Structuring and Supervision Services; and instalment repayments of IDR 179,666,666. The applicant was also ordered to return to the respondent any other costs associated, provided those costs could be verified by the Public Accountants' Office. Basyarnas also decided that if the applicant failed to abide by its decision, the respondent could lodge an application with Bank Indonesia (the Indonesian central bank) to hand the applicant an administrative sanction, and reduce the applicant's credit rating.

The court noted that, pursuant to art 70 of Law No. 30 of 1999, as well as the Elucidation of Chapter VII of Law 30, in conjunction with Law No. 7 of 1989 as amended by Law No. 3 of 2006, and Supreme Court Circular No. 8 of 2008, a party to such a dispute may request that a religious court declare a Basyarnas decision null and void. Article 70, however, only applies if: a. the decision was based on the submission of a false document; b. a relevant document was concealed by the opposing party; or c. the decision was based on misleading information. In this instance, the applicant claimed that the first respondent had failed to consider material legal facts to its case, therefore invoking art 70(c). Based on a submission made by the second respondent that the applicant had failed to carry out the second and subsequent stages of liquidation deriving from the Murabahah financing facility, the first respondent had determined that the applicant had defaulted on its agreement with the second respondent. The applicant claimed that the first respondent had ignored the fact that it was actually the second respondent who had defaulted by:

1. failing to produce the original building permit and then failing to the applicant with a copy, pursuant to art 3(1) of the Murabahah agreement;
2. failing to pay the notary, pursuant to art 3(4) of the agreement; and
3. failing to transfer its own self-financing monies, pursuant to art 3(23) of the agreement.

While the second respondent had already shown the applicant a building permit management services contract between it and H. Jayadi Kusumah, as well as proof of payment of a quote for 1 March 2005 for IDR 3,212,500,000 to H. Jayadi Kusumah as a buliding permit enactment management fee, as well as permission for other construction for the Ruko Soho Carbella Square project, the applicant claimed that the first respondent had ignored the fact that the reliability of this quote had not been established. Moreover, the applicant had even requested to see the quote via the Basyarnas secretary, pursuant to trial procedures, but had been denied. This, the applicant claimed, precluded it from carrying out its end of the bargain. In short, the applicant claimed the second respondent had failed to hand over to the applicant its building permit, whereas the second respondent had claimed it had paid IDR 3,212,500,000 to H. Jayadi Kusumah to arrange the building permit and other necessary construction permits.

The applicant also claimed that there was a material disparity between the final draft of the Basyarnas decision and the decision provided to the Central Jakarta Religious Court insofar as the Religious Court had been told that Basyarnas would not accede to claims for damages until their reliability had been verified by the Public Accountant. While the Religious Court declared the Basyarnas decision null and void, the Supreme Court found that the Religious Court lacked the jurisdiction to adjudicate the case, thereby reinstating the Basyarnas decision.

Pursuant to art 67(c) of Law No. 14 of 1985 on the Supreme Court, in conjunction with Law No. 5 of 2004 and Law No. 3 of 2009, the applicant requested the court reconsider (peninjauan kembali) its decision on the grounds that the court had granted more than that sought by the respondents. It alleged that:

1. the court had unnecessarily found that the Central Jakarta Religious Court did not have the jurisdiction to adjudicate the case;
2. that the Basyarnas decision ordered it to return to the applicant other costs not related to the transaction in question; and
3. it had unnecessarily authorised the second respondent to ask Bank Indonesia to sanction the applicant if it failed to comply with its decision.

The applicant also claimed that Basyarnas had made a legal error by directing the secretary to register an official copy of the decision with the Central Jakarta Religious Court registrar, when Law No. 30 of 1999 requires that such decisions be registered with the State Court (Pengadilan Negeri). The applicant also claimed that the Supreme Court, in the first instance, had cited art 55 of Law No. 21 of 2008 on Shari'a Banking, stating that as the dispute was a shari'a banking dispute, the religious courts had jurisdiction, only to then declare the religious courts did not have jurisdiction.

The court dismissed the applicant's review (peninjauan kembali) appeal, ordering it to pay costs of IDR 2.5 million. In doing so, it held that no legal error had been made by the court in the first instance. Rather, that the parties to the dispute had already clearly stated that the dispute would be resolved via arbitration, thereby invoking art 2 of Law No. 30 of 1999, and precluding the state courts and religious courts from having jurisdiction (art 3 of Law No. 30 of 1999). The court also noted that Supreme Court Circular No. 8 of 2008 conflicted with art 59(3) of Law No. 48 of 2009 on Judicial Authority, and had accordingly already been rendered null and void by Supreme Court Circular No. 8 of 2010. Moreover, while the applicant had sought to invoke art 70(c) of Law No. 30 of 1999, it had failed to prove upon what misleading information its opponents' case had rested.

Biography of Mālikī jurist and theologian Abū ʿUmar Yūsuf b. ʿAbd Allāh b. Muḥammad b. ʿAbd al-Barr (368/978–463/1071), known as Ibn ʿAbd al-Barr.

This source is part of the Online Companion to the print edition al-Muwaṭṭaʾ, the Royal Moroccan Edition: The Recension of Yaḥyā Ibn Yaḥyā al-Laythī (Harvard Series in Islamic Law), edited and translated by Mohammad Fadel and Connell Monette (PIL/HUP, 2019).

The applicants claimed that, since 2003, the first applicant had been a customer of the first respondent, via its shari'a Bukittinggi branch (PT. Bank Bukopin Cabang Syari'ah Bukittinggi). Prior to becoming a customer of the first respondent, the first applicant had been a debtor of PT. Bank Rakyat Indonesia (BRI) Cabang Bukittinggi, to which it owed IDR 483,2333,530 as at June 2003. At that time, the first applicant's business was experiencing financial difficulties, leading the first applicant to apply to the first respondent for a financial loan for financial support, as well as to pay his debts with PT. BRI Cabang Bukittinggi. After examining the relevant securities documents, the first respondent agreed to enter into an Al-Murabahah (sale-purchase) agreement with the first applicant. Once the relevant documentation was executed, the first respondent provided to the first applicant IDR 500 million, with which it paid its debt to PT. BRI Cabang Bukittinggi. The first respondent then took from PT. BRI Cabang Bukittinggi the deed of title of a property in the name of the second applicant (the second applicant was already an authorised guarantor pursuant to the agreement between the first applicant and first respondent).

In the Al-Murabahah agreement document the first respondent had agreed to make available items for the first applicant to the value of IDR 500 million, and the first respondent was to sell those items to the first applicant for IDR 794,816,460. (In an Al-Murabahah agreement there is an absolute requirement that there be items for sale subject of the agreement.) As there were no items purchased by the first applicant from the first respondent, the agreement had no legal authority. The agreement was further prohibited, according to the applicants, because it allowed the first applicant to borrow from the first respondent a sum of money, secured by a stationary object (the property) for a period of five years, with an additional payment for the first respondent which, according to Islam, constituted riba (usur or interest).

The Supreme Court, in the first instance, declared that the relationship between the first applicant and first respondent was one based on borrowing a sum of money, secured against a stationary object. Furthermore, that profit instalments provided by the first applicant to the first respondent were to be treated as payment instalments against the debt it owed to the first repsondent, because providing additional payments outside the scope of the principal to the lender would be contrary to shari'a. The other relevant documents, including the debt notice, the applicants claimed, were also null and void.

In addition, another Al-Murabahah agreement had been made by, and before, the first co-respondent, tying the first applicant and first respondent to the sale and purchase of items valued at IDR 581,230,044, with a sale price of IDR 350 million, and a murabahah profit for the first respondent of IDR 231,230,044. This was to be paid in instalments over 60 months, tied to a debt notice and mortgage deed, both of which were prepared by, and before, the first co-respondent, secured by the same property. Similarly, however, this agreement had no object for sale or purchase.

The total of both agreements resulted in the first applicant being in IDR 850 million debt to the first respondent. After the first applicant had paid to the first respondent IDR 363,611,240, the remainder owing, it claimed, was IDR 486,388,760. However, while the first applicant had originally owed PT BRI Cabang Bukittinggi no more than IDR 500 million, it now claimed the first applicant owed IDR 1,376,046,504 (this was the principal debt combined with interest). The first applicant maintained, however, that he had paid to the first respondent IDR 363,611,240 in instalments up until March 2006.

The Bukittinggi State Court had already issued a notice stating that the property held as a security would be auctioned on 16 August 2006. The first applicant, upon becoming aware of the fact that the two Al-Murabahah agreements were null and void, sought to prevent the first respondent from auctioning the property. Despite being made aware of, and reading, the notice, the second respondent went ahead with the auction. Accordingly, the applicants claimed that the auction should have no legal authority, and pursuant to art 49 of Law No. 3 of 2006 on the Religious Judiciary, the civil courts were precluded from resolving shari'a economy-related matters anyway.

The applicants also objected to the conduct of the third respondent, the purchaser of the property and a staff member of the legal team of the first respondent. The applicants alleged that the third respondent knew the auction reserve price and therefore only had to pay a little bit over the reserve to secure the property.

The applicants sought damages for actual loss, as well as pain and suffering. They claimed that the land was worth IDR 2.5 billion, and yet the third respondent had only paid IDR 993,600,000 as the purchase price. Moreover, they sought IDR 500 million in damages for the stress and emotional strain incurred from the entire ordeal.

The Bukittinggi Religious Court (lower court) had declared the two Al-Murabahah agreements null and void, and declared the relationship between the first applicant and first respondent a financial loan (Al-Qardh). The IDR 850 million debt owed by the first applicant to the first respondent was reduced to IDR 486,388,760, taking into account the instalments paid by the first applicant totalling IDR 363,611,240. The first respondent had also been ordered to transfer to the applicants the profit from the auction, minus the remaining debt of IDR 486,388,760, leaving the respondents owing the applicants IDR 447,595,240.

On appeal to the Padang Religious High Court, the decision of the lower court was overturned. The Padang Religious High Court found that the lower court was not authorised to adjudicate the case. Moreover, the Supreme Court, in the first instance, rejected the applicants' cassation appeal, upholding the decision of the Padang Religious High Court.

The applicants used their last avenue of appeal before the Supreme Court (reconsideration or peninjauan kembali) claiming that the Supreme Court's judgment, at cassation level, was erroneous. The applicants asserted that the Al-Murabahah agreements contained an arbitration clause whereby the parties had agreed to resolve any legal disputes before the Indonesian Islamic Civil and Commercial Arbitration Body (Badan Arbitrase Muamalat Indonesia), designating the Bukittinggi State Court registrar's office as the appropriate venue. Whereas, in actual fact, the respondents had submitted their request to seize the property to the Bukittinggi State Court. Moreover, the applicants claimed that the Al-Murabahah agreements failed to meet the following shari'a requirements:

1. interest (riba)-free;
2. the sale-purchase items may not be forbidden (haram);
3. the bank is to finance some or all of the items, pursuant to the agreed-upon classification;
4. the bank is to purchase the items in its own name;
5. if the bank makes representations to the customer that it is purchasing the items, the agreement is executed once the items the bank is purchasing become the property of the bank; and
6. the bank provides all information relating to the items, including cash or credit purchases.

The Supreme Court found that the two reasons submitted by the applicants did not fall under any of the reasons for review (peninjauan kembali) contemplated by art 67 of Law No. 14 of 1985, as amended by Law No. 5 of 2004 and Law No. 3 of 2009. Accordingly, the appeal was dismissed.

Ibn Ḥārith al-Khushanī recorded the following case as a ḥikāya, an anonymous report: A Christian appeared before the judge Aslam b. ʿAbd al-ʿAzīz, petitioning to be executed. The anecdote offers insight into the historical role of judges during a period of religious dissent in the Umayyad Caliphate, while the author's narrative voice demonstrates past judicial approaches to rationality, humor, and violent penalization. 

This text is part of Maribel Fierro, The Judges of al-Andalus, forthcoming.

A Toledan man named Ibn Ḥātim was accused of being a heretic by sixty witnesses on the initiative of a fellow Toledan called Ibn Labīd al-Murābiṭ. The judge consulted with the local jurists, and following their legal opinions, he sentenced the accused to death. However, he granted the accused the right to challenge the witnesses (iʿdhār). Ibn Ḥātim escaped from Toledo and found refuge in the neighboring kingdom of Badajoz. Ibn Labīd went after him, carrying a copy of the judge’s sentence (tasjīl) along with the legal opinions of a number of non-Toledan jurists. In Badajoz, the ruler withdrew his support from Ibn Ḥātim, who fled again, this time to Cordoba. While in Cordoba, the “moral” police arrested Ibn Ḥātim, and the judge imprisoned him, giving him two months to prove his innocence. Unable to do so, Ibn Ḥātim was crucified alive. A number of legal issues arise in the course of this case: should the process of iʽdhār—the right to challenge witnesses—be granted to those accused of heresy (zandaqa)? Should refuge be granted to them? What happens with the estate or inheritance of an executed zindīq? Can a judge reverse a sentence given by another judge? The source is a collection of court cases by Andalusi scholar Ibn Sahl (d. 486/1093), and it is based on information directly available to the compiler, who was also a witness of most of the events described.