This area of arbitration is so new that lawyers including Michael Schneider, president of the Swiss Arbitration Association, and Cecil Abraham, senior partner of Malaysian law firm Zul Rafique & Partners, sought clarification on its basic framework.
Secondly a judge and the court have to apply the law strictly in procedure and in ruling on disputes. In contrast, an arbitrator, who is meant to be an expert in the matter of the dispute, can use legal principles if they so wish, but could also bend and modify rules in finding the best solution for parties.
Perhaps most crucially for international disputes, Othman says: "In terms of enforceability there is a brighter picture when using arbitration in the face of multiple laws."
The flexibilities accorded to arbitrators make their rulings easier to enforce as compared to court judgments. Arbitration also guarantees privacy for parties who choose to stay away from public scrutiny.
These all sound favorable for parties looking to settle disputes, but most Malaysian Islamic banks and Takaful operators shy away from arbitration, citing hefty costs, said Hakimah Yaacob of the International Shari'ah Research Academy for Islamic Finance.
Othman admits that costs for arbitration may in some cases exceed litigation, but parties are guaranteed awards and rulings from experts, as well as a speedier process. With this area of arbitration still in infancy, many teething issues abound.
As reported in The Islamic Globe last week, the KLRCA will work with Fiqh and Shari'ah specialists to incorporate the provisions of the UN Commission on International Trade Law rules into its 2007 Islamic arbitration guidelines.
By Emmy Abdul Alim
source: The Islamic Globe