Differences between-islamic-and-conventional-laws

BWFS2033 REGULATION IN ISLAMIC FINANCE AND BANKING
Page | 1
REGULATION IN ISLAMIC FINANCE AND BANKING
(BWFE3193)
1st SEMESTER, SESSION2017/2018
Group Assignment: Differences between Islamic and
Conventional Law
Lecturer Name:
Dr. Yusuf Sani Abubakar
Prepared by
Date of Submission: November 19, 2017
Name Matric No.
1. Sman Tairos 230698
2. Mst MoniraParvin 230903
3. Ezurabinti Mohamad Moin 231765
4. Nurul Syafikabinti Mohd Kassim 233822
5. Nur Raihanna binti Ghazali 233827

Page | 2
Table of Contents
1.0 Introduction............................................................................................................................. 3
2.0 Definition of Islamic and Conventional laws........................................................................ 4
2.1 Islamic Law........................................................................................................................... 4
2.2 Conventional law................................................................................................................... 4
3.0 Comparison of Islamic and Conventional Laws .................................................................. 5
3.1 Source of law......................................................................................................................... 5
3.2 Temporary and Permanent .................................................................................................... 7
3.3 Goals behind the Laws .........................................................Error! Bookmark not defined.
3.4 Future Knowledge............................................................................................................... 10
3.5 Universality of law.............................................................................................................. 11
4.0 Essential Concept of Islamic Law........................................................................................ 13
4.1 Al-Ahkam Al-Tafsiliyyah (Detail Rules)............................................................................ 13
4.2 Al-Ahkam Al-Ijmaliyyah (General Rules).......................................................................... 13
5.0 Application of Islamic Law and Conventional Law in Banking and Finance................. 14
5.1 Application of Islamic law in Malaysia Banking and Finance ........................................... 14
5.2 Application of conventional law in Malaysia Banking and Finance .................................. 15
6.0 Conclusion ............................................................................................................................. 16
References.................................................................................................................................... 17

Page | 3
Differences between Islamic and Conventional laws
1.0 Introduction
In society the law has been known as mandatory regulatory system which is enforce on
day to day human life interaction from general to specific. Law is established to ease human life
and to create a peaceful society. Law or legal system plays significant role in a society. It is
created in the mean to regulate, control and punishment on abusive behavior of citizen.
Moreover, law is also act as important guidelines or framework that govern upon the behavior of
people, trading activities including financial transaction. The establishment of legal system is to
solve conflict of interest, to make sure that human right is respected, women and children are
taking care and environment is protected and etc. Correspondingly with regard to banking and
finance, law and regulations are imposed to ensure a fair trading, both depositor and financiers’
rights are protected and to provide as a guideline in payment system. Merely, this shows how
important to have legal system in a society to regulate a good relationship with each other.
However, the law of a society can be seen as seen a norm of conduct for inhabitants and
different culture have different norm therefore created different laws among different nations.
Particularly, there are two main types of legal system that implemented in various countries
namely civil law and common law. Both civil law and common law are known as conventional
law and many countries in the world merely following the conventional law especially the
Western countries.
On the other hand in Muslim community, there are two different types of law that govern
the Muslim societies which are Islamic law and conventional law. Both of the law differ from
each other in terms of their purpose and characteristics. Islamic law is addressed and practiced in
the countries where Islam is practiced. Further there is also some countries like Malaysia,
Nigeria, Bangladesh, Pakistan and many more following both Islamic and conventional laws. In
addition, Islamic law and conventional law both are addressed with the core purpose of bringing
peace and harmony in human society however these both types of law differ from each other in a
number of ways. Further from the aspect of banking and finance, these both types of law
different from each other in terms of characteristics, essential concepts, practice and application.

Page | 4
2.0 Definition of Islamic and Conventional laws
2.1 Islamic Law
Shariah literally means “the way to a watering place”. It is the path that must be followed
by Muslims, and governs man in conducting his life in order to realize the Divine Will. It
includes all forms of behavior, spiritual, mental and physical (Rachaga, 2011).
Islamic law or Sharia law is the law of Islam. The Sharia law is cast from Muhammad's
words, called "hadith," his actions, called "sunnah," and the Quran, which he dictated. Sharia law
itself cannot be altered, but the interpretation of Sharia law, called "fiqh," by muftis (Islamic
jurists) is given some latitude.
As a legal system, Sharia law is exceptionally broad. While other legal codes regulate
public behavior, Sharia law regulates public behavior, private behavior, and even private beliefs.
Compared to other legal codes, Sharia law also prioritizes punishment over rehabilitation and the
penalties under Sharia law favor corporal and capital punishments over incarceration. Of all legal
systems in the world today, Sharia law is deemed the most intrusive and restrictive.
2.2 Conventional law
Conventional law usually refers to the law which is created by human with the purpose of
establishing a legal system which can be used to eradicate the wrongdoing from our society.
Conventional law are classified into two main legal systems which are civil law and common
law. Both of the law are differ from each other but also share similar characteristic.
Civil law is also known as Roman law which was originated in Europe. Civil law is the
law which main principles have been codified in a referable system which serves as the main
source of guidance for the civil law.
Meanwhile, Common law is also known as English law refers to the law which is created
by the judge. It is derived from custom and judicial precedent rather than statutes. Common law
is the body of customary law, based upon judicial decisions and embodied in reports of decided
cases, that has been administered by the common-law courts of England since the Middle Ages
(Andrew D.E. Lewis, 2017). The common law is utilized in the common wealth countries such
as England, Canada, Wales, Ireland and the US.

Page | 5
3.0 Comparison of Islamic and Conventional Laws
The differences between Islamic law and conventional law are noticeable in terms of five
characteristics which are source of law, temporary and permanent, goals behind the laws, future
knowledge and universality of law.
3.1 Source of law
We can differentiate the differences between Islamic law and conventional law by
looking at their sources of law. Particularly, the law governs on conventional banking and
finance is rooted from the laws of nation which are common and civil law.
Common law also known as British law that is based on judicial decision (precedents).
In common law, the principle of judicial decision usually made in the higher courts and it is
based in large on statutes which the judges are supposed to apply and interpretation. The
countries that implemented common law are such as England, Wales, Northern Ireland and the
US. Civil law on the other hand is originated from Roman law which is based on the codification
system in the Corpus Iuris Civils of Justinian. The civil law is based on codes which contain
logically connected concepts and rules, starting with general principles and moving on to specific
rules. Further, civil is mainly utilized by the continental of Europe, Latin American and Brazil
(Pejovic, 2001). Both civil law and common law are man-made laws which is varied based on
the particular nation law.
However, Islamic law is a divine law which popularly known as Shariah law. Shariah
is the law that governs all aspect of life of Muslim people including the relationship between
man and God (Allah) and mam to man, the ruling on faith and daily life (Fiqh) and morality
(Akhlaq). According to Kunhibava (2008), there are four main sources of Shariah: the Holy
Quran, the Sunnah/Hadith, Ijma and Qiyas. These sources however are classified into two types
of sources: primary and secondary sources. Primary source comprises of the Holy Quran and
Sunnah/Hadith and the rest fall under secondary source of Shariah.
However, there few other sources that also contribute to the Shariah law such as urf
(custom or usage), Istihsan, Maslahah Mursalah, Istishab, Sadd Al-Zhara’I and Fatwa of a
sahabah. All of these are secondary source of Shariah, however in this paper is focus only on
four fundamental sources

Page | 6
Al-Quran is the most important source to refer since Quran is the speech of Allah (s.w.t)
to the Prophet Muhammad (p.b.u.h) in its precise meaning and wording, and transmit to us by
tawatur (ISRA, 2012). Al-Quran is the original and eternal source of Islamic law which contains
all the fundamental directives and instructions of Allah (s.w.t). Al-Quran is the last and complete
edition of Divine Guidance and is the only book of Allah which has not been distorted. Its
primary purpose is to awaken in man the higher consciousness of his relation with Allah and the
universe. The legal injunctions of the Al-Quran are code of conducts for Muslims in all aspect of
their life. Example, Quran prohibit riba & allows trade (ISRA, 2012).
The Sunnah which known as traditions of Prophet Muhammad (p.b.u.h) is the second
source of Shariah. Technically, the sunnah denotes to all that is narrated from the Prophet
(p.b.u.h) including his actions, saying and whatever he has tacitly approved. The authority of
sunnah is deduced from Al-Quran via several injunctions that order and command the believers
to follow the instructions and injunctions from the Prophet Muhammad (p.b.u.h). The sunnah
explains and further elaboration of the meaning in the Quran which was not detailed. Moreover,
sunnah also supports the ruling that already stated in the Quran (ISRA, 2012). Likewise, the
Hadith is referring to various collection texts reports the words, actions and habits of the
Prophet Mohammad (p.b.u.h) during his lifetime (Huda, 2017).
Ijma is the third sources of Shariah law. It is defined as consensus of opinion which
means the general agreement or consensus of the mujtahids (the learned scholars of Islam), or an
agreement of the Muslim jurists of a particular era on a question of law (Pejovic, 2001). Ijma is
supported by a saying of the Prophet, “My Ummal will never be united on error.” Therefore,
some of the Islamic jurists or Fuqaha are of the opinion that ijma is the voice of Ummah through
the Ulama (Farooq, 2013).
Qiyas means to measure, accord or equality. According to Farooq (2013), qiyas is
defined as individual reasoning to make decision on a new problem arrived by comparing
parallel between the two cases. Furhter Kunhibava (2008), stated that qiyas is analogy of the
mujtahids with regard to certain difficult and doubtful questions of doctrine or practice, by
comparing them with similar cases already settled by the authority of the Al-Quran and Sunnah
and thus arriving at the solution of undecided questions. In addition, qiyas is also one of the
important sources of Islamic law.

Page | 7
3.2 Temporary and Permanent
Islamic law is from Allah S.W.T, promises to His servants to believe in Him who can bring
happiness in the world and in the Hereafter. Although basically the Islamic law with
conventional laws has a fairly similar aim of protecting the public interest and teaching the
offender itself not to repeat, but if we see it smoothly and deeper we will find there some
differences.
The Islamic law is the creation of Allah S.W.T. The Most Wise and The All Knowing, of
course the law he created was appropriate for every time and place. Therefore Islamic law in all
areas does not change and change according to time and place. While the conventional law
always accepts changes according to the circumstances, times and places and the wishes of the
lawmakers.
Every Muslim must trust the truth Allah S.W.T creation and obey it, and must endeavour
to uphold it. If a citizen who dares to criticize his country's laws can be considered as
contemptuous and degrading the law, then it is a bigger mistake if a Muslim dared to criticize
Islamic law as outdated and incompatible with time. The person is not only challenging the
wisdom and power of Allah S.W.T., but it can affect his faith as a Muslim. Islamic law is based
on the main source of the Quran al-Karim. Shariah is based on fact and reality. Shariah is the law
that Allah transmitted to his creatures through the Quran and also as-Sunnah. Shariah is different
from any human creation law because it is based on the Quran and as-sunnah and because of that
shariah is permanent and relevant.
Conventional laws can still be amended and altered, according to the time-cycle and
subject to the government. The law of human creation is allowed to appeal or to pay the reduced
penalty. This makes sometimes laws of human creation possible to be unfair and penalties
imposed are not commensurate with convicted offenses. Conventional law creation is only
effective when the offender is still alive. However, the Islamic law will remain in force even if
the offender has died.
Conventional laws are created by humans to control human behaviour itself. Even today,
there are many rules of human creation that arise which is traffic rules, land rules, office rules,

Page | 8
administrative rules and others. Conventional law made by humans are less respected by humans
and cannot educate human beings. Examples of traffic rules: A person who is sued by the police
for driving a vehicle without a license, even though he is good at driving, will pay the penalty
imposed on him but his dissatisfaction remains in him. Compared to the Islamic laws, is sacred
because it comes from Allah S.W.T with the nature of perfection. Islamic law such as the law of
hudud and qisas are permanent until the Day of Judgment no one has the right to refrain from
committing according to Islamic law. Allah S.W.T abolishes the perpetrator's sin. In other words,
someone who commits adultery, then executes hudud zina on it, then his/her sins are wiped out
and he/she will be raised in the hereafter without sin, again if he/she repents before he dies. This
is a privilege of Islamic laws and regulations inherent in Islam.
3.3 Goals behind the Laws
Islamic law is the law created by Allah SWT for universal well-being. That's why it's
universal. Among the differences in Islamic law with conventional laws in terms of teaching,
Islamic law is more educated either to the individual or to the community as tarbiah is the
essence of teaching in Islam. It is not intended to punish merely an even more enlightening
individual to life.
From the suitability, Islamic law is a general appropriate for every place and time as well
as suitable for all races. The basis of this law is unchanged but its implementation is in
accordance with the local suitability and in accordance with the particular ones.
Conventional laws are design to organize society in civilized ways, and to promote
certain philosophy, agenda and ideology. Conventional law is the law of the relationship between
government and individuals. Public law covers criminal law, administrative law, and
constitutional law. The criminal law is the list of acts that are deemed to be offenses by a country
and a person convicted of offense by the court shall be punished in accordance with the law of
that country. Thus, conventional law was held to control and regulate the lives of the people and
to stem the tyranny. Examples of such criminal laws are identifying people's unpopular
behaviour such as stealing, injuring people, robbing or killing. The above acts will be punished
according to criminal laws such as penalties, imprisonment, whipping or death.

Page | 9
Shariah is not just to organize society, or promote certain ideology, but its main goals are
to improve on social welfare of the society, establish justice, create peace and harmony in
society. In order to maintain life and pass the torch to generations to come, Shariah aims to
protect progeny. By protecting progeny it will lead to the peace and harmony society. Every
child has the right to grow amongst a family. This family is obligated to take care of the children
and develop them. Marriage is very valuable in Islam and it has a big part in Islamic Shariah
teachings and rules. Sexual relations other than in marriage are impermissible and same-sex
marriage is strictly forbidden.
Family life is a natural will, everyone will try to get an ideal partner with it to ensure a
harmonious family life because the marriage is very much preferred by Islam and therefore the
law protect marriage from sexual partners or people who are banned from the family. Accusing
someone, especially women, having unlawful sexual intercourse should be punished for
spreading rumours that can destroy marriages. Men and women in the community must protect
their sanctity, diminish their views, and deal with one another professionally and in brotherhood.
All of these teachings are to ensure that healthy families are established and children grow up in
healthy families.
Everyone has the right to own and protect their property. Shariah seeks to protect the
wealth and wealth of the people. Theft is a prohibited offense and will be penalized by law if it
does. Shariah also controls dealings, fraud and usury is strictly forbidden. Shariah also
encourages us to increase wealth and ensure that wealth does not reach the hands of those who
waste it. The poor have the right to wealth by rich people through charity. Usury is forbidden
because it is a cause of vain wealth and puts it in the hands of some rich.

Page | 10
3.4 Future Knowledge
Shariah is the legal code for the Islamic way of life that has been revealed by Allah swt
for man and commands us to follow it. Allah's law is perfect and comprehensive so it does not
need to be changed. Allah says that His Sunnah cannot be changed, it means there is a way to
achieve dignity and honor and He does not change it, and there is also a way leads to hardship
and it is also unchanged. God said:
That was the law of Allah in the case of those who lived before and there will never be
any change in the law of Allah. (Surah al-Ahzab, 33:63)
It means that the practice of God in the case of sinners and the hypocrites who gave
ultimatum to them, He initially sent prophets to them and made good and evil and truth and
falsehood clear to them.
In conventional laws which also known as human laws relies on past experience,
practices from the past and culture to obtain new rulings. It has no knowledge of the future, so
people make laws cannot cope the test of time. Human-made laws are formulated by human
beings whose knowledge is still lacking somewhere. Human can only predict what will happen
in the future but they do know if it will happen. Furthermore, if they know some human traits,
they still will not know all human traits. Therefore, this law does not suitable for all nature and
environment.
Not only that, Human-made laws, are exposed to errors, errors, and omissions, and they
are human. Therefore, they are never free from mistakes and errors, and are always need to be
altered in accordance to situation. Allah says: “Had it been from other than Allâh, they would
surely have found therein many a contradiction” (An-Nisâ’:82). For man-made or positive
laws, they are made in accordance to the wishes of the person who created them, and according
to their nature, interests and the environment.

Page | 11
3.5 Universality of law
Islam is a universal religion in that its Prophet was sent to all peoples of the world,
regardless of their race, colour, culture, traditions and geographical location, as the Qur’an states,
“We have only sent you (O Muhammad) as a mercy to all the worlds.” (Surah Al-Anbiyaa’,
21:107)
That is why Islam respects all human traditions and does not want Muslims to change
their own traditions unless they violate some Islamic teachings. Therefore, any tradition contrary
to the teachings of Islam must be altered and replaced by a better alternative, because after Allah,
the All-Knowing, the All-Knowing, who commands and forbids what He pleases and we need to
follow His law.
Indeed, the universe can not exist if it is not for universal law created by Al'lah to
govern unity and order in the created universe. Objects, from the smallest to the greatest, can not
function independently of unchanged laws that can not be reduced to determine their destiny.
Therefore, life itself will not survive without this internal and external direction which can
inadvertently realize the divine harmony miracle. God's law is perfect for all countries, countries
and all the time.
These universal laws of Allāh (s.w.t) are not just restricted to matters pertaining to nature
alone, rather they extend to the manner in which Allāh (s.w.t) deals with mankind, whether that
be related to the way in which Allāh (s.w.t) guides, brings happiness, provides, gives victory,
destroys nations, relieves people from distress, causes progress, failure and gives safety, and
more. Many of these laws (sunan) that are related to societies and human interaction are fixed
and determined just like the universal laws are too. Thus if a believer wants to understand how
Allāh (s.w.t) interacts with His creation it is a necessity that he studies and reflects over
such sunan which have been mentioned throughout the Qur’ān and Sunnah.
An example of such sunan is the way in which Allāh (subḥānahu wa ta’āla) deals with
the hypocrites. Allāh (subḥānahu wa ta’āla) says:
“If the hypocrites and those in whose hearts is disease and those who spread rumors in al-
Madīnah do not cease, We will surely incite you against them; then they will not remain your

Page | 12
neighbors therein except for a little. Accursed wherever they are found, [being] seized and
massacred completely. [This is] the established way (sunnah) of Allāh with those who passed
on before; and you will not find in the way (sunnah) of Allāh any change.”[5]
However, for man-made laws, it is not universal. This is because laws are made for a
particular country, and each country has its own laws and it applies only to the country's
territory. For example, Australia applies the general legal system of Britain while Russia follows
a civil law system.
Another example is the application of hudud that most Muslim countries like Malaysia
do not accept hudud sentences in their criminal justice system. As we have been taught by
Muslims that the implementation of hudud can reduce crime, but in Malaysia there is an
argument that the Malaysian Penal Code is ineffective in addressing increasing crime. Perhaps,
the violence and cruelty of hudud punishment would be a major barrier. However, the evidence
is in statistics.
Countries that adopt hudud like Sudan, Nigeria, Pakistan and Saudi Arabia have shown
no evidence that hudud prevents or decreases crime rates. What is worse, the implementation of
hudud in some countries is actually causing injustice to victims of crime.
For example, in Pakistan crime rates rose even when hudud was introduced in 1979. The
Council of Islamic Ideology Board itself stated in 2006 that hudud laws did not reduce crime in
Pakistan. In fact, hudud crimes have been reduced due to enforcing Islamic law codes. In fact,
the council stated that "crime rate increases is despite the fact that confidence levels are higher
than liberation".

Page | 13
4.0 Essential Concept of Islamic Law
4.1 Al-Ahkam Al-Tafsiliyyah (Detail Rules)
Shariah contains categories and matters concerning Islamic law known as the fiqh. . Fiqh
is Islamic jurisprudence which deals with the observance of rituals, morals, and social legislation
in Islam. Branches of fiqh includes Fiqh Ibadat, Fiqh Muamalat, Fiqh Munakahat and Fiqh
Jinayat.
 Fiqh Ibadat
The rules of ritual purification between man and Allah (SWT) such as
prayer, fasting, zakat, jihad and some other forms of worship are dealt under this
heading. Most of these rules deal with the rights owed to Allah s.w.t by the
individual alone or by the community as a whole.
 Fiqh Muamalat
Rules governing trade transactions between parties involved such as security
of debts, contracts, business organization, and will.
 Fiqh Munakahat/Usrah
Rules relating to family law such as marriage, divorce, estate, care and
other things that related. Even in conventional law also contains this rule known
as personal law.
 Fiqh Jinayat
Fiqh Jinayat is a criminal law in Islam that deals with major offences like
zina, theft (sariqah), robbery, murder and other matters collectively known as
hudud laws, an Islamic punishment that are mandated by Allah (SWT).
4.2 Al-Ahkam Al-Ijmaliyyah (General Rules)
Usul al-fiqh has been defined as principles or methodology used by the jurists
(mujtahid) to deduce the practical Shari`ah ruling from their sources. Usul al-fiqh is the only
Islamic scientific manhaj in the conduct of Islamic law. It is the procedure in understanding and
exposing the Qur'an and al-Sunnah when formulating the law.

Page | 14
Examples of the pieces of Al-Quran verse below:
“O ye who believe! Devour not each other’s property in defiance of the law, but let there be
amongst you traffic and trade (sale) by mutual consent and good-will, nor kill or destroy
yourselves for verily Allah has been to you Most Merciful” (al-Nisa’, 4:29)
 The Qur`an is the source of the Shari`ah and the text or verse is the specific
provision which provide of the rule or law (hukm).
 This paragraph explains the transaction law in general, more specifically to trade
transactions, trade and business transactions. In this verse Allah forbids believers
to eat, exploit, use, (and any other forms of transgression) the property of others
with the wrong way, that is not permitted by the Shari'ah. We can make
transactions on the property of others by trading on a mutual basis, mutual
respect. And in this verse God also forbids suicide, either killing oneself or killing
each other. And Allah explains all this, as a manifestation of His love, because
Allah is Merciful to us
5.0 Application of Islamic Law and Conventional Law in Banking and
Finance
5.1 Application of Islamic law in Malaysia Banking and Finance
The main principle of Shariah law in application to banking and finance is the prohibition
of Riba, Gharar and Maysir. As an alternative of conventional banking, Islamic banking operates
solely on profit and loss sharing. Profit is to be distributed according to the pre-determined ratio
in the agreement but the loss is to be borne in proportion to capital contribution between both
party. The shariah ruling in banking is to help each other and remove harm (Elmi, 2012). The
products and services provided by Islamic banking institutions must be shariah compliant which
is in accordance to main concept of prohibition of riba, gharar and maysir.
Currently the legal system in Malaysia is pursuing two different tract of legal system
namely civil courts and Islamic Sharia courts. However, the Islamic shariah court is enforced on
Muslim Malays only where it is applicable to religious and moral charges. Meanwhile, the non-
Muslims are required to follow secular laws that deal with the same matters. Further, in Malaysia

Page | 15
there are two main states that following Islamic law strictly which are Terengganu and Kelantan.
(Hays, 2015).
In addition in banking and finance prospective, Malaysia has its own law and regulation
which is used to govern the Islamic banking and financial institutions namely Islamic Financial
Service Act 2013 (IFSA2013). However, IFSA2013 is the replacement of the earlier Act which
was Islamic Banking Act 1983 (IBA1983). Thus, all the Islamic financial institutions in
Malaysia are obliged to follow the rule and regulation given by IFSA 2013 in their
establishment, management and day to day activities.
Furthermore, each and every Islamic banking and financial institutions must establish
their own Shariah Advisory committee to ensure that every business transaction pursued by the
institution is compliant with shariah principles. According to IFSA2013, every Islamic banking
and financial institution shall have its own shariah committee which to make sure that all times
the operations, business, affairs and activities are in compliance with Shariah.
5.2 Application of conventional law in Malaysia Banking and Finance
Conventional Banking and finance is referred to the institution which mainly operating
business activities via lending and receiving deposits based on interest based system. The
conventional banking institutions earn their profit by charging interest on customer. Malaysia has
been committed to a gradual and progressive liberalization of financial sector by implementing
rules and regulation which can create a strong bone and linkage with global economy.
Malaysia is a country that follow dual legal system such as conventional and Islamic law.
The main regulatory body for banking and financial institution in Malaysia are Bank Negara
Malaysia (BNM), Security Commission (SC) and Labuan FSA. BNM has power to act as
regulator, supervisor and controller over banking and financial institution in Malaysia.
In order to regulate the conventional banking and financial institutions, BNM has issued
the Financial Service Act 2013. The FSA2013 is the core statute which govern the conventional
financial industry. Further, FSA2013 replaced the Banking and Financial Institutions Act 1989,
the Insurance Act 1996, the Payment System Act 2003 and the Exchange Control Act 1953.

Page | 16
Therefore, all conventional financial institution need to conduct its activities in accordance with
FSA2013.
6.0 Conclusion
In conclusion, law plays a very significant role in order to establish a peaceful society and
eradicate crime and inhuman acts. Without law, our society is at mess whereas everybody follow
their own desire without caring for other which can lead to conflict and chaos in our society.
From the religion aspect, the law has been divided into two main subsection namely Islamic law
and conventional law. Islamic law is the Shariah which is derived from four main sources: the
Holy Quran, Sunnah/Hadith, Ijam and Qiyas. On the other hand, the conventional is man-made
law that is created from people experience and thought. The conventional law varies based on
culture and nations. Further, the conventional law comprises of two main legal system which are
civil law and common law. In addition, the Islamic law differ from conventional law in terms of
five main characteristics. They are source of law, temporary and permanent, goals behind the
law, future knowledge and universality of law. However in terms of Islamic law, it has its
essential concepts of detail rules and general rules. Furthermore, the banking and financial
institutions in Malaysia are regulated by dual legal system namely Islamic and conventional law.
Hence, the Islamic and conventional banking and financial institution has its own legal binding
such IFSA2013 and FSA2013. In addition, all banking and financial institution either Islamic or
conventional are under supervise of Bank Negara Malaysia in terms of their regulatory system.

Page | 17
References
Andrew D.E. Lewis, A. R. (2017, October 26). Common Law . Retrieved from Encyclopaedia
Britannica: https://www.britannica.com/topic/common-law
Elmi, N. A. (2012, March 17). Application of Islamic legal maxim to Islamic Banking and
Finance . Kuala Lumpur, Selangor, Malaysia.
Farooq, U. (2013, April 2). Secondary Sources of Islamic Law, Ijma, Ijtehad, Qiyas & Urf.
Retrieved from Social Science and law: http://www.studylecturenotes.com/social-
sciences/law/412-secondary-sources-of-islamic-law-ijma-ijtehad-qiyas-a-urf
Hamza, W. (2012, October 5). Quick Links. Retrieved November 1, 2017, from
http://www.islamicity.org/8569/objectives-of-sharia/
Hays, J. (2015, June 23). Islamic Law in Malaysia. Kuala Lumpur, Selangor, Malaysia.
Huda. (2017, June 23). What Is the Importance of the "Hadith" for Muslims? Retrieved from
ThoughtCo: https://www.thoughtco.com/hadith-2004301
ISRA. (2012). Islamic Financial System: Principles & Operation. Kuala Lumpur: ISRA.
Kunhibava, S. (2008). Understang the sources of law that govern Isalmic Banking. The Law
Review, 12-20.
Malaysia, L. o. (2013, March 22). Islamic Financial Service Act 2013. Kuala Lumpur, Selangor,
Malaysia.
Numan, D. (n.d.). Buku Agama Islam Terbitan. Retrieved November 14, 2017, from
http://www.darulnuman.com/index.php?option=com_content&view=article&id=92&I
temid=154
Pejovic, C. (2001). Civil law and Common law: Two different paths leadign to the same goal.
VUWLR, 817-841.
Rachaga, S. K. (2011). Shariah and Law in Relation to Islamic Banking and Finance. Research
Gate, 543-557.

Differences between-islamic-and-conventional-laws

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Differences between-islamic-and-conventional-laws

Similar to Differences between-islamic-and-conventional-laws (20)

More from Tairos Sman

More from Tairos Sman (7)

Recently uploaded

Recently uploaded (20)

Differences between-islamic-and-conventional-laws