JURIDICAL ANALYSIS OF THE APPLICATION OF SHARIA PRINCIPLES IN THE EXECUTION OF MORTGAGE RIGHTS IN SHARIA BANK

Abstract

Background - Sharia banking in Indonesia is experiencing rapid growth, reflecting increasing public awareness
of the importance of an economic system in harmony with Sharia principles. However, despite this growth, a legal
vacuum remains, hindering the full implementation of Sharia principles, particularly in the area of mortgage rights
execution. Currently, regulations concerning mortgage rights in Sharia banking still refer to Law Number 4 of 1996
concerning Mortgage Rights over Land and Land-Related Objects, which is more suited to conventional banking
practices. The reliance on conventional legal frameworks presents significant challenges for Islamic banks, as
they fail to accommodate the specific requirements of Sharia compliance, which operates under different
principles and procedures than conventional banking.To support the growth of Sharia banking, Indonesia enacted
Law Number 21 of 2008 concerning Sharia Banking, which provides a legal basis for Sharia-compliant banking
operations. However, this law does not specifically regulate collateral rights in Sharia banking, leaving Islamic
banks to rely on fatwas issued by the National Sharia Council of the Indonesian Ulema Council (DSN-MUI), such
as Fatwa No. 68/DSN-MUI/III/2008 concerning Rahn Tasjily and Fatwa No. 92/DSN-MUI/IV/2014 concerning
Financing Based on Sharia Guarantees. These fatwas, however, do not constitute legally binding provisions like
the mortgage law, thus they are ineffective in resolving legal disputes or ensuring comprehensive Sharia
compliance. This legal gap creates uncertainty, which may undermine public trust and cause discrepancies in the
execution of mortgage rights that do not align with the justice principles espoused by Sharia.
Purpose - This research seeks to examine how Sharia principles are applied in the enforcement of mortgage
rights within Islamic banking and to propose policy recommendations for the government to enhance legal
certainty for the public. The study specifically explores the regulatory framework governing mortgage rights and
their execution mechanisms in the context of Islamic banking in Indonesia, aiming to promote the harmonization of
Sharia principles with the national legal system.
methodology - Using a normative juridical approach combined with qualitative analysis methods, the research
reviews relevant laws, DSN-MUI fatwas, and academic literature. The findings reveal notable discrepancies
between the ideal Sharia principles and the reality of current regulatory practices, highlighting critical gaps that
undermine the justice and credibility of Islamic banking operations.
Findings - This study highlights legal challenges in the execution of mortgage rights by Islamic banks, which do
not fully conform to Sharia principles. These challenges stem from the absence of explicit and comprehensive
regulations based on Sharia principles to guide the execution process, resulting in legal uncertainty and potentially
compromising justice for the involved parties.A notable finding of this study is that Islamic banks often depend on
conventional legal frameworks, which are not tailored to address the distinct principles and practices of Shariacompliant financial transactions. This dependency leads to discrepancies between the operational methods of
Islamic banking and the core values of Sharia, thereby amplifying the difficulties in achieving legal certainty and
maintaining public trust.
Originality - This research makes a valuable contribution to the legal field by identifying the gaps in the legal
framework regarding the execution of mortgage rights in Islamic banking, particularly in Indonesia. While previous
studies have examined various aspects of Islamic banking, few have specifically focused on the intersection of
Sharia principles and the execution of mortgage rights within the current legal system. This study stands out by
highlighting the discrepancies between Sharia-compliant banking practices and conventional legal frameworks,
proposing practical solutions to resolve these issues and improve legal certainty. Additionally, it offers policy
recommendations aimed at better aligning the regulations governing Sharia principles with national law, a topic
that has not been thoroughly addressed in the existing literature.