JOBNAME: No Job Name PAGE: 1 SESS: 21 OUTPUT: Sat Jul 4 16:00:47 2015 //mlja/2015/Vol3/mlja2015_3_00002 ENSURING SHARIAH COMPLIANCE AT THE COURTS AND THE ROLE OF THE SHARIAH ADVISORY COUNCIL IN MALAYSIA* DR.SHERIN KUNHIBAVA** According to the Islamic Financial Services Act 2013, an Islamic financial institution must comply with Shariah, this includes Shariah compliance for all its products and services. There are in place a number of mechanisms to ensure that the products and services of an Islamic financial institution are Shariah compliant especially at the product development and application stage. However at the product enforcement and dispute resolution stage, Shariah compliance is an issue. This research investigates Shariah compliance at the dispute resolution stage by analysing past case law in Malaysian courts where Shariah compliancy has been disputed. The changes in the laws and cases during each period are also discussed. This research recommends that the role of the Shariah Advisory Council of Bank Negara be extended to more than just ‘ascertaining Islamic law’. It also recommends allowing other parties to seek advice from the Shariah Advisory Council, that the resolutions of the Shariah Advisory Council are updated regularly, and the questions referred to it by the courts and arbitrators are recorded in a standardised manner. Keywords: Shariah Compliance, Shariah Advisory Council, Dispute Resolution, Islamic Banking and Finance Cases, Central Bank of Malaysia Act 2009, Islamic Financial Services Act 2013, Practise of Islamic banking, Ascertainment of Islamic Law. INTRODUCTION Shariah compliance is at the heart of Islamic finance; it is what distinguishes Islamic finance from conventional or commercial finance. Shariah compliance is also a head to toe requirement since all the ‘activities, operations, business and aims’ of an Islamic financial institution (‘IFI’) must comply with Shariah: s 28(1)of the Islamic Financial Services Act 2013 . Thus in an IFI Shariah compliance is required in three stages: at the product development stage, during the product application, and lastly at the enforcement, and possible dispute resolution of the product and transaction. At the product development stage, Shariah compliance is achieved through firstly the consultation, vetting procedure and approval of the individual [2015] 3 MLJ xxi Ensuring Shariah Compliance At The Courts And The Role Of The Shariah Advisory Council In Malaysia