Kuwait Finance House Berhad

On the court record

An Islamic bank litigating the everyday enforcement of financing guarantees and a landmark Federal Court challenge to sections 56 and 57 of the Central Bank of Malaysia Act 2009 on the Shariah Advisory Council's binding rulings.

Kuwait Finance House (Malaysia) Berhad is an Islamic financial institution, and it appears in the corpus in litigation ranging from the routine enforcement of Islamic financing guarantees to a landmark constitutional challenge to the role of the Shariah Advisory Council. It appears as plaintiff, defendant, intervener and respondent across the High Court and Federal Court.

At the constitutional level the bank was a respondent in a Federal Court challenge to the validity of sections 56 and 57 of the Central Bank of Malaysia Act 2009. The question was whether those provisions — which make the rulings of the Shariah Advisory Council binding on the courts in Islamic finance disputes — unconstitutionally vested judicial power in the Council contrary to the separation of powers, and whether they contravened Article 74 read with the Ninth Schedule and Article 121 of the Federal Constitution. That is a question going to the heart of how Islamic banking disputes are adjudicated in Malaysia.

The bank's other appearances are more conventional financing litigation. In a civil suit on Islamic financing guarantees, the court considered whether a letter of demand had been duly served by registered post, the effect of a deemed-service provision, and whether a "principal debtor" clause dispensed with the need for a prior demand on the guarantor. It was also involved in a judicial-management matter as an intervener, on an application for leave nunc pro tunc under section 410(c) of the Companies Act 2016 to proceed against a company under a moratorium, and in an application to amend a statement of defence to add a counterclaim said to be designed to nullify an existing injunction order. Together these matters place the bank at both the everyday and the constitutional ends of Islamic-finance litigation. That span, from a routine demand on a guarantee to a challenge going to the constitutional architecture of Islamic-finance adjudication, marks the breadth of the bank's exposure.