Legal Updates for July 2019

Shariah Advisory Council: Judicial Body or Statutory Expert?

The Federal Court judgment of JRI Resources Sdn. Bhd. v Kuwait Finance House (Malaysia) Bhd., issued on 10 April 2019, considered the constitutionality and the validity a ruling issued by the Shariah Advisory Council ("SAC") pursuant to a reference by the High Court. The question that arose was whether Sections 56 and 57 of the Central Bank of Malaysia Act 2009 ("CBMA"), which compelled the court or arbitrator to refer a dispute relating to Islamic finance to the SAC, whereupon any ruling of the SAC on the same, would be binding on that court or arbitrator, had the effect of usurping judicial power such that the judge was prevented from determining the issue and the parties' rights and liabilities at hand. In this article, we unravel the premise of the judgement, which sets the boundaries for judicial power and recognises whether the SAC emulated such power when it ascertains Islamic law in relation to Islamic finance and issues a ruling that is binding upon courts or arbitrators.