Malaysian Experience of Shariah Banking

When people refer to Islam as medieval they mean it in a pejorative sense.  Never mind it was the phase where the West moved from "the dark ages" to the renaissance.  In one way Islam may be called medieval is it was in that era that the West went off the rails in relation to usury.  Malaysia has striven to introduce Shariah law in banking in Malaysia, hoping to advance peace and justice its lands.  As in the West, it seems, with much controversy, Malaysia is giving way to usury in much the same way the West did:

3.1 The development of Islamic banking and finance cases
The above tables showed that most cases reported were in relation to al Bay’ Bithaman Ajil (Sale with deferred payment) (BBA) transactions. Phase three (2008and forward) revealed that other Islamic transactions including Bay’ al Inah (salesof buy back), al Murabahah (sales with cost) and al Istisna’ (manufacturingcontract) were argued in court. The tables also laid down three important phases of IBF development. Phase 1 is the initial phase of the development of Islamic banking and finance cases in Malaysia. During this early stage, there were not many casessince Islamic banking and finance system was at its infancy. Phase 2 is the second stage of the development of Islamic banking and finance cases in Malaysia. There
were more Islamic banks and financial institutions being established during this
period, hence various Islamic banking activities took place. This development gave
rise to more legal disputes that had to be resolved in courts. The number of such
cases that were decided and reported during this phase also increased. This phase
witnessed a different approach by the judges in deciding Islamic banking cases.
Courts were seen to be interested in examining critically the underlying principles
under BBA agreements. They examined whether the BBA is contrary to the Islamic
principles or not. Nevertheless, they were silent on the validity and the legality of
profits derived from the facility. They did not discuss the interpretation of  riba’ anddid not declare the profit gained from the BBA as unlawful. In the case of MalayanBanking Bhd v Ya’kup bin Oje & Anor, the learned judicial commissioner evenconsidered istihsan and the concept of equity before a case is being decided. The
third phase of the development of Islamic banking and finance in Malaysia has seen
the judges being more confident and assertive in their decisions. This could be due
to the fact that Islamic banking practice has been established for about two decades
in this country, hence judges have learnt from the earlier cases of Islamic banking
which were controversial and subject to criticisms. Judgments given are also more
consistent. This development is certainly a plus point in Islamic banking and finance
since it will lay down clear judicial precedents which serve as guidelines for future
cases.

I added the emphasis.  These cases were controversial, meaning conservative judges were overruled.  The validity and legality of profits from the BBA is the point, so to skip it is to move along the same lines we did in the West, in which the religious courts (as Shariah courts in Malaysia) deferred to the definitions provided by those who want to in effect practice usury.

It seems to me that in the geography of Islamic law, the Malaysian example in time will not tell us much about whether Shariah law advances peace and justice.  It does tell us whether Islamic or Christian law, when a state administers the law, the results are similar.

I don't think you can either let a state administer laws nor outlaw certain practices.  You must allow panarchy, that is people who consent to a legal framework to be free to contract under such without state interference.  In this way there is order, the opposite of the state, and systems may maintain their integrity and provide example of the benefit.  We cannot know if Malaysian Shariah law brings peace and justice, because it is not quite Shariah, it seems to me.

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