BBA: Islamic financial bodies study impact of High Court ruling

By Habhajan Singh
Islamic financial institutions have begun gathering their legal eagles to take a close look at the potential impact of the recent High Court ruling that brought into question some elements of the highly contentious Al-Bai' Bithaman Ajil (BBA) financing facility.
It is understood that some Islamic banks have already requested advise from their panel of lawyers on the potential impact of the ruling by High Court Judge Datuk Abdul Wahab Patail.
Though dated July 18, The Malaysian Reserve understands that the lawyers involved in the cases only got their hands on the written judgement in the last two weeks.
"This is going to be another hot potato for the Islamic finance industry. I must say it is a well-written judgement," says one lawyer familiar with cases pertaining to Islamic finance. Another lawyer said that a careful reading of the 54-page judgement shows that the judge had covered much ground concerning Shariah and Islamic finance.
"It makes (for) instructive reading," he said on the judgement, which runs close to 11,000 words.
In this latest case, Abdul Wahab Patail ruled that the sale element in the BBA is "not a bona fide sale" and he also brought into question the profit portion of the facility.
However, one lawyer said that this decision will not be binding on another High Court judge, who may chose to adopt it, reject it or find a middle ground. The issue may also take a turn if the judgement is overturned by the Court of Appeal. It is understood that the parties involved have filed an appeal.
(The Malaysian Reserve, Sept 8, 2008, p31)