House Explains MUI’s Authority Over Fatwa on Sharia Banking
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House Commission III member Arsul Sani testifying at a judicial review hearing of the Sharia Banking Law, Tuesday (3/8/2022). Photo by Humas MK/Bayu.


Tuesday, March 8, 2022 | 20:43 WIB

JAKARTA, Public Relations—The Constitutional Court (MK) held another material judicial review hearing of Law No. 21 of 2008 on Sharia Banking on Tuesday, March 8, 2022 in the plenary courtroom. The case No. 65/PUU-XIX/2021 was filed by Rega Felix, who challenges Article 1 point 12 and Article 26 paragraphs (1), (2), and (3) of the Sharia Banking Law.

The bench, chaired by Chief Justice Anwar Usman, heard the House of Representatives (DPR) and the president (Government). The Head of the Advocacy Bureau of the Ministry of Finance (MoF) Tio Serepina Siahaan stated that the Government wasn’t ready to testify and requested an extension, which it had conveyed in a letter addressed to the Court’s Registrar’s Office.

MUI Fatwas

Meanwhile, House Commission III member Arsul Sani testified that the Sharia Banking Law has granted the Indonesian Ulema Council (MUI) an authority to issue fatwas (edicts) in relation to laws or contracts that form the basis for sharia banking products and services. This authority is implemented by its National Sharia Board (DSN-MUI). The fatwas are now issued by the OJK (Financial Services Authority), previously by the Bank of Indonesia (BI) in its regulations.

“This is acknowledgment that MUI is the authorized institution that issues fatwas that are used as bases in sharia banking business,” he said.

Arsul further explained that the phrase “sharia principle” in Article 1 point 12 of the Sharia Banking Law refers to the Islamic law principle in banking activities based on fatwas issued by the authorized institution. This is reinforced by Article 26 paragraph (2) of the Sharia Banking Law.

“The ‘sharia principle’ issued by the MUI as fatwas clearly provides restriction that the fatwas used and referred to in sharia banking activities are those issued by the Indonesian Ulema Council (MUI), not by any other civil or religious organizations or institutions. In addition, the principle of legal certainty also drove the legislatures to grant the MUI the authority on issuing fatwas since it is a council that have ulemas as members,” he explained.

According to the House, fatwas are not laws nor regulations. The MUI is also not a lawmaking institution based on Law No. 12 of 2011 in conjunction with Law No. 15 of 2019 on the Formation of Legislation.

Arsul emphasized that in order for fatwas to be applied to sharia banking activities, the legislatures authorized lawmaking institutions in sharia banking: BI and currently the OJK, in accordance with the development of legislation in the banking sector. To adopt the fatwas issued by the MUI, in this case by the DSN-MUI, they can be made statutory provisions that are binding and apply broadly.

“If the Petitioner intends that fatwas be issued by BI or the OJK, this will actually create new problems in the community considering that BI or the OJK do not have the competence to assess and understand Islamic law as ulemas do. Thus, it is clear that the regulation of institutional authority as referred to in the a quo article, including its authority in sharia banking, has provided legal certainty for sharia financial business actors and the public,” he stressed. 

Delegation of Authority

Next, the House responded to the Petitioner’s argument that Article 1 point 12 and Article 26 paragraphs (1), (2), and (3) of the Sharia Banking Law had allowed the nongovernmental institution MUI and thee state institutions BI and the OJK to delegate unspecified authority to a lower-level provision or what is known as delegasi blangko, which has led to disharmony of the regulations on sharia banking as well as legal uncertainty. The House asserted that delegation of authority based on Appendices No. 198 and No. 200 of the Lawmaking Law, which stipulates that if the legislatures are to delegate a provision or a rule, there must be clear requirements regarding of the content to be delegated, the type of delegation, and the type of regulation. Any delegations that do not comply with this stipulation falls under the category of delegasi blangko. The prohibition such a delegation is stipulated in Appendix No. 210 of the Lawmaking Law. The House believed the Petitioner had not clearly described what the delegation was meant.

In addition, the House also emphasized that based on Article 26 paragraphs (1) and (2) of the Sharia Banking Law, the legislatures had clearly given the MUI an authority to issue fatwas regarding sharia principles in business activities as referred to in Articles 19, 20, and 21.

Meanwhile, Article 26 paragraph (3) of the Sharia Banking Law stipulates that fatwas issued by the MUI must be strengthened by further regulations, in this case laws and regulations, namely BI and OJK regulations.

“The a quo law clearly regulates the scope of the content and provisions delegated by the legislatures to the MUI as well as to BI and the OJK. Thus, in this case, the Petitioner needs to clarify what kind of delegasi blangko in the a quo article he meant,” Arsul Sani said. 

Also read:

Stipulation of Sharia Banking Principles Challenged 

Petitioner Revises Material Judicial Review Petition of Sharia Banking Law 

The material judicial review case No. 65/PUU-XIX/2021 on Sharia Banking Law was filed by Rega Felix. At the preliminary hearing on Thursday, January 6, the Petitioner asserted his constitutional loss due to the ambiguous sharia banking provision. He claimed that Article 1 point 12 and Article 26 paragraphs (1), (2), and (3) of the Sharia Banking Law allows the Indonesian Ulema Council (MUI) and the Bank of Indonesia (BI) or the OJK (Financial Services Authority) to delegate unspecified authority to a lower-level provision or what is known as delegasi blangko, which has led to disharmony of the regulations on sharia banking as well as legal uncertainty.

He believes that the a quo law in general only regulates sharia banking, but not the principles of transactions in sharia banking (especially ownership right). As such, sharia principles that must be regulated in a law is not regulated in the a quo law. Instead, through Article 26 paragraphs (1), (2), and (3), it delegates the authority to form regulations to the MUI to issue a fatwa (edict), which is then further regulated in a BI or OJK regulation after the enactment of Law No. 21 of 2011 on the OJK.

Due to the ambiguous interpretation of the regulation, he added, it seems as if the OJK could forsake regulating those principles in a POJK (OJK regulation). This delegasi blangko and dualism of authority have led to public perception of dichotomy between the state and religious law, compelling them to believe “it is better to follow religious law than state law.” On the other hand, he said, the practices of sharia banking constitute undisguised riba (usury) that is common among conventional banks. This, he asserted, is because there are many conflicting notions in the state law.

The Petitioner stressed that this must be addressed, or it would lead to the ruin of sharia banking due to weak foundation. He believes this has harmed his constitutional rights as a sharia banking customer.

He also argued that Article 26 of the a quo law “forces” MUI, BI, or the OJK to regulate something that is supposed to be regulated in a law.

Therefore, in his petitum, the Petitioner requested that the Court order lawmakers to form a law that regulates material rights in sharia banking transactions or to amend the Sharia Banking Law in relation to that matter. 

https://www.youtube.com/watch?v=UhfM87Krjek

Writer        : Utami Argawati
Editor        : Nur Rosihin Ana
PR            : Tiara Agustina
Translator  : Yuniar Widiastuti (NL)

Translation uploaded on 3/9/2022 14:27 WIB

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.


Tuesday, March 08, 2022 | 20:43 WIB 342