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emphasising justice, transparency, and partnership. One of the key financial instruments in Islamic

banking is the profit-sharing agreement, which governs the distribution of profits and losses between

the bank and its customers based on pre-agreed ratios. This system, particularly through contracts

economic conditions, and the information imbalance between the bank and customers. Resolving

such disputes is vital for maintaining the credibility and sustainability of Islamic banking. Moreover,

understanding and refining dispute resolution mechanisms is critical in ensuring Islamic banking

aligns with Sharia principles while fostering public trust and participation in the sector.

arbitration, and litigation in religious courts (Tim Bank Mega Syariah, 2023). Studies have noted that

while non-litigation mechanisms are often faster and more cost-effective, public understanding and

institutional frameworks still need to be enhanced to ensure fairness and transparency in the

resolution process (Efendi & Bakhri, 2018). Despite these efforts, gaps remain in understanding how

preemptively mitigated.

frameworks can be improved to support Islamic banking institutions and their customers in resolving

disputes efficiently and justly.

Islamic banking. Various dispute resolution mechanisms, both through litigation in religious courts

and non-litigation such as Sharia mediation or arbitration, will be analysed in the context of their

compliance with Sharia principles and effectiveness in resolving disputes fairly and quickly. Thus, this

research is expected to improve the understanding of the dispute resolution process in the Islamic

banking sector and support the development of Islamic banking in Indonesia.

The normative juridical analysis aims to understand how these legal provisions are applied in settling

Islamic banking disputes and whether there are gaps or discrepancies in their implementation.

Empirical Method

Islamic law practitioners, Islamic banks, customers, or mediators in non-litigation dispute resolution

institutions. The empirical data is used to understand how profit-sharing agreement disputes are

resolved in practice, the effectiveness of various settlement mechanisms, and the challenges faced in

the process.

With this method, researchers can identify gaps between legal rules and their implementation in the

for customers. Instead, Sharia Banks apply the principle of profit sharing or Misbah. Through Misbah

or profit sharing, the bank and the customer will get a legitimate profit in Islamic Shariah to avoid

usury. The calculation itself has been determined from the beginning through the contract. Simply

put, profit sharing provided at Sharia Banks is a substitute for the interest method in conventional

banks. Sharia financial institutions and customers will share profits and risks in the concept of profit

sharing. This is a special attraction for customers who want to avoid the practice of usury, which is

forbidden in Islam. The provision of profit sharing also has definite rules according to the fatwa of the

Indonesian Ulema Council (MUI), the Financial Services Authority (OJK), and the provisions of the

percentage proportion has also been determined in the contract agreed by both parties. However, in

practice, determining the amount of this ratio is influenced by various factors, among others. One

factor that affects the level of profit sharing received by customers is the composition of fund

placement. In other words, the determination of profits between one customer and another can differ

according to the amount or composition of funding. As is known, the profit-sharing portion obtained

by the Sharia Bank will be used to finance the bank's operational activities. This gain becomes the

bank's fair profit itself, where the amount depends on each bank's effectiveness level. In other words,

Syari'ah gets a balanced margin (profit), which is also much greater. In this case, Syari'ah Bank's profit

has an expectation and an opportunity to get a much greater profit than conventional banks.

Conventional banks, for example, only get monthly from the capital 2 per cent per month, 2 per cent

of the capital he gave. If the Sharia Bank can be more, maybe it can reach 10 per cent, but sometimes

it can also be less than 2 per cent or potentially minus. The minus is what the Sharia Bang is not ready

to accept. Bank Syari'ah wants only profit and continues to profit.

fatwa of the National Sharia Council of the Indonesian Ulema Council (DSN-MUI). The portion of the

Nisbah that is determined is the Nisbah multiplied by the average debit balance divided by the ceiling,

so the ceiling is multiplied by sales. When Bank Syari'ah facilitates financing at the financing ceiling,

it is reported, where are the sales, how much COGS is so many times so many, no need to place people.

settlement shall be conducted by the contents of the Agreement; (3) Dispute settlement as referred

to in paragraph (2) shall not be contrary to the Sharia Principles. In the Explanation of Article 55

paragraph (2), it is stated that what is meant by "dispute resolution shall be conducted under the

contents of the Deed" is an effort through a. deliberation; b. banking mediation; c. the National

Shari'ah Arbitration Board (Basyarnas) or other arbitration institutions; and d. through a court within

the General Court.

which originally, as stipulated in Article 49 of Law No. 7 of 1989, was only tasked and authorised to

examine, decide, and resolve cases at the first level between people who are Muslims in the fields of

a) marriage, b) inheritance, wills and grants made under Islamic law, and c) waqf and shadaqah. With

the amendment of the Law, the scope of duties and authority of the Religious Courts was expanded.

people who are Muslims" is including people or legal entities that automatically submit themselves

voluntarily to Islamic law regarding matters that fall under the authority of the Religious Court by the

provisions of this Article." From the explanation of Article 49, all customers of Sharia financial

institutions and financing institutions or conventional banks that open Sharia business units are

automatically bound by the provisions of Sharia economics, both in the implementation of contracts

and dispute resolution. The disputes in the field of Sharia economics, which are the authority of the

Religious Court, are:

to resolve sharia economic cases are only religious courts. Efforts to resolve sharia economic disputes

through out-of-court channels can be pursued using consultation, negotiation, mediation,

conciliation, expert judgment, and arbitration mechanisms. As explained in the previous description,

after the issuance of Constitutional Court Decision No. 93/PUU-X/2012, there is expected to be a

surge in sharia economic cases that will enter the Religious Courts. To anticipate the above possibility,

religious courts must prepare themselves to handle shari'ah economic disputes properly to increase

the trust and satisfaction of justice seekers towards them. To find out the extent of the readiness of

the Religious Courts to resolve Sharia economic cases after the enactment of Law No. 3 of 2006, there

aspects of regulations/laws. The study of the three aspects above is in line with what Soerjono

Soekanto stated that in order for laws or regulations to function or be effective, four factors influence,

namely: First, the law or regulation; second, the officers who enforce it, third, the facilities that are

expected to support the implementation of the law, and fourth, the citizens affected by the scope of

the regulation Efendi (Soekanto, 1986, p. 35).

courts refers to the State which aims to prosper the lives of its citizens equally, and the state is

required to provide the best and widest possible services to the community by having equal legal

standing and obtaining legal protection and the fulfilment of certainty, justice and legal benefits

against religious court decisions that have absolute authority in resolving Islamic economic cases in

only Al Qur'an and Sunnah, which are used in every settlement of Sharia economic disputes as a

reference without any other source of legal consideration, such as Indonesia; there are still mixed

legal norms in deciding sharia economic cases in the Religious Courts and even procedural law still

uses civil procedural law as is done in the district court so that the results decided by the judges do

not reflect the purity of sharia in their decisions because there are still many imbalances and

partiality.

dispute cases include:

banking disputes and special judicial institutions or bodies developed in the general judicial

environment, such as the Corruption Court, Human Rights Court, Children's Court, Fisheries Court,

and Commercial Court. There are also special courts within the state administrative judiciary, such as

the Tax Court, and even in other fields; there are also new ideas to establish special judicial bodies

dealing with separate areas of development to provide better guarantees to fulfil a sense of justice for

the wider community. The importance of reforming the judicial system also has an impact on whether

the performance of the judiciary is good; it will produce quality court decisions, where these decisions

can later become a new source of law in society.

deviates from Islamic economic law in connection with certain actions and certain people. Harriman

Satria said that regarding the conception of Islamic banking law, the applicable principle is lex

specialist derogate legi general, that Islamic banking law overrides or defeats Sharia economic law, in

material law, which regulates the substance of the law itself and, in turn, will be tested through

procedural law, with the hope that every decision of this special Islamic banking court reflects the

satisfaction of justice seekers and the creation of legal certainty, justice, and expediency.

necessarily concentrated in certain areas of court competence because it will be burdensome for

debtors who will file a lawsuit. Those plaintiffs living in small towns will find it difficult to file a lawsuit

if they go to a big city, especially if the plaintiff does not have many funds and access to support. Hence,

the specialty is only in its competence to litigate in the religious court of the respective region where

the Islamic banking case occurs.

or appointment of judges is based on the election results. When there is a Shari'ah economic dispute,

they can be involved in the assembly team. Judges must deeply understand Sharia economic law and

banking to help enlighten other judges, at least when an ad hoc judge can give colour to the decisions

made in every Sharia economic decision. Ad hoc judges can be involved not only in certain religious

courts but also in certain city district religious courts.

resolve Sharia economic cases, which are still the competence of religious courts, including

inheritance disputes, grants, wills, and infaq sadaqah. Sharia banking courts in the religious courts as

special courts are part of an effort to resolve Sharia banking disputes more professionally, and every