Re Alias & Khalid: Civil Courts To Defer To Shariah Council’s Rulings

A threefold argument that section 57 of the Central Bank of Malaysia Act 2009 is unconstitutional and why the High Court and the Court of Appeal got it wrong in Mohd Alias Ibrahim v RHB Bank Bhd & Anor [2011] 4 CLJ 654 and Tan Sri Abdul Khalid Ibrahim v Bank Islam Berhad [2012] 1 LNS 634 respectively.

Section 56 of the Central Bank of Malaysia Act 2009 (CBMA) states as follows:

Reference to Shariah Advisory Council for ruling from court or arbitrator

(1) Where in any proceedings relating to Islamic financial business before any court or arbitrator any question arises concerning a Shariah matter, the court or the arbitrator, as the case may be, shall-

(a) take into consideration any published rulings of the Shariah Advisory Council; or

(b) refer such question to the Shariah Advisory Council for its ruling.

(2) Any request for advice or a ruling of the Shariah Advisory Council under this Act or any other law shall be submitted to the secretariat.

Section 57 of the CBMA states as follows:

Effect of Shariah rulings

Any ruling made by the Shariah Advisory Council pursuant to a reference made under this Part shall be binding on the Islamic financial institutions under section 55 and the court or arbitrator making a reference under section 56.

Under section 57 of the CBMA, any ruling of the Shariah Advisory Council (SAC) on a question referred to it by a civil court is binding on the court hearing the particular case.

It is submitted that section 57 is unconstitutional because:

Ground 1: It seeks to limit and remove judicial power on a particular question for adjudication by the civil courts and further, ‘transfer’ the same power to an administrative tribunal, in this case the SAC.

Ground 2: It offends the ‘basic structure’ doctrine of separation of powers under the Federal Constitution.

Ground 3: It offends the principle of access to justice under Article 8(1) of the Federal Constitution.

Ground 1

Article 121 of the Federal Constitution (FC) vests judicial power of the Federation in the High Courts of Malaya and Sabah and Sarawak, the Court of Appeal, the Federal Court and such inferior courts provided by federal law. The courts shall have such jurisdiction and powers as may be conferred by or under federal law. Any attempt to vest judicial power in any tribunal or body that is not a ‘court’ created under Article 121 is ineffectual: The Waterside Workers’ Federation of Australia v J. W. Alexander Limited [1918] 25 CLR 434 at 441

The SAC was not envisaged to be or established as a ‘court’ pursuant to Article 121. The features and functions of the SAC do not appear to fully resemble a ‘court’, for example, it does not decide the entire controversy between the parties and on the issues in dispute.

However, Parliament has carved out an exclusive power to the SAC to ascertain and then determine particular questions referred to it on Shariah law in Islamic banking and financial matters. Any determination is binding on the courts established under Article 121 of the FC.

The question whether any specific function or power does or does not relate to judicial power depends on the nature of the function or power: The Waterside Workers’ Federation of Australia v J. W. Alexander Limited [1918] 25 CLR 434 at 444

It is submitted that in the case of the SAC, the binding nature of its rulings on particular Shariah questions referred to it amounts in pith and substance to an exercise of judicial power. By extension, it is a further usurpation of the civil courts’ judicial power.

As the SAC’s rulings are binding and conclusive, section 57 purports to invest the SAC with powers ‘superior’ to the civil courts in relation to the relevant question in dispute before the said courts. This position in effect subordinates the powers of the civil courts to an administrative tribunal, the SAC. Put another way, it removes judicial power – on the particular question under reference – from the civil courts.

A similar issue arose in Brandy v Human Rights and Equal Opportunity Commission & Ors [1994-1995] 183 CLR 245:

(a) In Australia, a Human Rights and Equal Opportunity Commission (HREOC) was established under the Racial Discrimination Act 1975. The HREOC had powers, among others, to receive complaints of racial discrimination, to hold inquiries into the complaints and to make determinations on the same.

(b) While the determinations were not binding on the parties, the HREOC was required under the Act to file the determinations at the Federal Court registry upon which the lodged determinations would have effect as if they were orders made by the Court.

(c) Thereafter, aggrieved parties could file a review of the determinations and the Court could make such orders as it thought fit including confirming the registered determinations.

(d) The High Court of Australia held that the provisions providing for the registration of the determinations and their enforcement as if they were orders of the Court purport ‘to provide for an exercise of judicial power by the Commission and that the jurisdiction conferred on the Federal Court to review a determination of the Commission does not provide a sufficient answer’. The relevant provisions were declared invalid.

(e) It was also said in Brandy (at 260):

A judicial order made by the Federal Court takes effect as an exercise of Commonwealth judicial power, but a determination by the Commission is neither made nor registered in the exercise of judicial power. An exercise of executive power by the Commission and the performance of an administrative function by the Registrar of the Federal Court simply cannot create an order which takes effect as an exercise of judicial power; conversely, an order which takes effect as an exercise of judicial power cannot be made except after the making of a judicial determination.

By analogy, the binding and conclusive nature of the SAC’s rulings is unconstitutional. Unlike the Act in Brandy, section 57 provides no avenue for a review or an appeal, and this position makes section 57 even more tenuous.

Ground 2

The Federal Court in Sivarasa Rasiah v Badan Peguam Malaysia & Anor [2010] 3 CLJ 507 and the Court of Appeal in Muhammad Hilman bin Idham & 3 Ors v Kerajaan Malaysia & 2 Ors [2011] 6 AMR 481 have recently reinstated the ‘basic structure’ doctrine of the FC in respect of fundamental rights in Part II.

Justice Gopal Sri Ram speaking for the Federal Court in Sivarasa Rasiah (at 515-517) reiterated that the doctrine of supremacy of Parliament does not apply in Malaysia because we have a written Constitution. His Lordship added:

Further, it is clear from the way in which the Federal Constitution is constructed there are certain features that constitute its basic fabric. Unless sanctioned by the Constitution itself, any statute (including one amending the Constitution) that offends the basic structure may be struck down as unconstitutional. Whether a particular feature is part of the basic structure must be worked out on a case by case basis. Suffice to say that the rights guaranteed by Part II which are enforceable in the courts form part of the basic structure of the Federal Constitution. See, Keshavananda Bharati v. State of Kerala AIR [1973] SC 1461.

Although our courts have yet to expressly affirm the full Keshavananda Bharati position of the ‘basic structure’ doctrine that includes the separation of powers between the Executive, Judiciary and Parliament, supremacy of the Constitution, a democratic form of government, and the secular and federal character of the Constitution, it is submitted that a purposive reading of the Reid Commission Report in 1957 supports the argument that separation of powers is part of our FC.

For similar reasons mentioned in Ground 1 above, section 57 represents an ouster of the civil courts’ jurisdiction by a ruling of an administrative tribunal under the branch of the Executive, namely the SAC, regarding the particular question under reference. This is violative of the principle of separation of powers under the Constitution.

Ground 3

In making its rulings, the SAC does not hold open or public hearings and parties in dispute are not heard. There is no known or published guidelines or rules on how the SAC operates, or with regard to its proceedings. It is unclear if the rules of natural justice in the common law ‘administration of justice sense’ are followed. No reviews or appeals may be filed against the SAC’s rulings. It is submitted that these gaps are problematic and constitute a bar on access to justice for litigants.

The Federal Court in Danaharta Urus Sdn Bhd v Kekatong Sdn Bhd (Bar Council Malaysia, intervener) [2004] 2 MLJ 257 has interpreted Article 8(1) of the FC as including the principle of substantive access to justice to our courts. The problems mentioned above taken collectively amount to a violation of Article 8(1) as they prevent substantial and effective access to justice. The litigants’ right to access is rendered illusory when an administrative tribunal may determine important questions of Shariah law without a full and proper judicial process that includes a transparent hearing and the cross-examination of witnesses.

The High Court in Mohd Alias Ibrahim v RHB Bank Bhd & Anor [2011] 4 CLJ 654 (see also Tan Sri Abdul Khalid Ibrahim v Bank Islam Malaysia Bhd & Another Case [2010] 4 CLJ 388 and Tan Sri Abdul Khalid Ibrahim v Bank Islam Berhad [2012] 1 LNS 634) reasoned that the binding nature of section 57 was to create certainty and consistency.

With respect, there is no reason why the approach to take expert evidence on Shariah law – if it is to be treated as ‘foreign’ law – under sections 45 and 46 of the Evidence Act 1950 cannot achieve the same purpose: see Wong Swee Chin v Public Prosecutor [1981] 1 MLJ 212 where it was held that the role of an expert is to assist the judge in coming to his finding, and where there are conflicting opinions, the judge is free to choose which evidence or testimony he prefers but should give his reasons why he preferred one opinion rather than the other.

The individual members of the SAC or the SAC collectively may be considered experts. The SAC’s rulings may be presented in the civil courts as ‘expert evidence’ for one party or both of them. Its rulings should be persuasive at best. It is for the presiding judge to decide which evidence His Lordship or Her Ladyship prefers. In this regard, the SAC through its representative in court should be subject to cross-examination much like any other expert in the course of a trial before the civil courts.

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Life's a sufferance. Lawyering a bore. As Edmund continues various escape techniques to be rid of Lord Bobo’s influence, he crusades with UndiMsia! movers to build strange youth love movements around the country. And so he tweets @edmundbon and practises the black magic art of advocacy at www.BONadvocates.com

Posted on 2 February 2013. You can follow any responses to this entry through the RSS 2.0.

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4 Responses to Re Alias & Khalid: Civil Courts To Defer To Shariah Council’s Rulings

  1. jl

    Thanks for posting this. I'm curious – who reviews decisions made by the Shariah Advisory Council? Are there any provisions for such an event?

  2. Andrew Teh

    The High Court decision in Mohd Alias was upheld in a unanimous decision of the Court of Appeal (Sulong, Ramly Ali & Mohtaruddin JJCA). There was no application made for leave to appeal to the Federal Court.