Mediation in Islamic Banking Dispute in Malaysia

Mediation, as its name suggest, is a way of helping conflicting parties to compromise with each other by listening to what each party has to say in a situation that had caused the misunderstanding or argument. This would then allow a mutual understanding that is more preeminent between the parties in order to have a peaceful resolution instead of resorting to violence. It could be able to prevent any harm that could come from the disagreement and it is also a way to provide or to build a consensual relationship between any conflicting parties. Malaysia practises a secular court system which comprises of civil and Islamic court jurisdiction. According to Article 121(1A) of Federal Constitution, exclusive jurisdiction has been conferred on Syariah court in the administration of Islamic law, provided its jurisdiction is only confined to the matters that fall within State Boundaries. Syariah court jurisdiction is only applicable to Muslims meanwhile non-Muslims are still subjected to civil court jurisdiction. In general, any Islamic financial or banking disputes will fall within the jurisdiction of civil court due to the fact that Islamic banking and Takaful are considered as under the item 'finance' provided in the First List, Ninth Schedule of Federal Constitution. Therefore, in light of this, Islamic financial issues including its commercial dealing, regulation or incorporation will be heard by civil court. This paper is going to discuss about mediation in Islamic Banking dispute in Malaysia and its conflict of jurisdiction. At the end of this paper, we will understand the concept of mediation that been practiced and applied in Islamic Banking dispute in Malaysia.