The plaintiffs submitted that they had entered into a shari'a credit loan agreement with the first defendant for IDR 2 billion, leveraging six properties in their names as a shari'a credit guarantee. The plaintiffs maintained that they had met their financial repayment obligations to the first defendant, and had always acted in good faith towards the first defendant. The plaintiffs referred to this good faith because they sought to novate the terms of the shari'a credit loan agreement through the Magelang Religious Court, and were concerned that the first defendant would auction the properties, or several thereof, in response, without first going through the court. Indeed, the plaintiffs submitted, the first defendant, through the second defendant, had unilaterally auctioned the plaintiffs' properties, contrary to law, justice and humanity, especially in terms of the shari'a economy. Moreover, that in order for the conduct of the first and second defendant to be legal, they first needed to obtain the recommendation of the interested co-defendant. The plaintiffs submitted that as the first and second defendant had failed to do so, they should be ordered to pay to the plaintiffs IDR 7 million per day for every day they failed to carry out the orders of the Mageland Religious Court. The novation of terms of a contract, the plaintiffs submitted, was regulated in art 180 of the Herziene Inlandsch/Indonesisch Reglement (HIR).
The defendants submitted that a clause in the original agreement stated that any dispute arising would be settled before the National Shari'a Arbitration Body (Badan Arbitrase Syariah Nasional), pursuant to art 59(1) of Law No. 48 of 2009 on Judicial Authority, and arts 2 and (4)(1) and (2) of Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution. The court noted that, pursuant to art 49(i) of Law No. 3 of 2006 on the Religious Judiciary, and art 55(1) and (2) of Law No. 21 of 2008 on Shari'a Banking, the religious courts have the absolute competence to resolve shari'a banking disputes, provided the agreement in dispute does not specify otherwise. As the parties had specified otherwise, the court found that art 1338(1) of the Civil Code (Kitab Undang-Undang Hukum Perdata), which states that all contractual agreements are to be treated as statutes for the parties that make them, applied. In shari'a law, the court stated, this concept in muamalah (commercial and civil law) is known as asas al-sufiah, al-muamalah al-ibahah. Accordingly, the court found that it was precluded from adjudicating the dispute.