The appellants sought to challenge the decision of the Medan Religious Court (lower court), which had declared the first appellant's auctioning of the respondents' property invalid, on the grounds that the lower court did not have the jurisdiction to make such judgment.
The court placed great emphasis on the actual transaction (akad) agreed to by the parties, stating that for a dispute between a creditor and debtor to be completely resolved, adherence to the relevant terms of the agreement was of paramount importance. Article 17(3) of the parties' Murabahah agreement provided that, in the event of a dispute, and if deliberative measures had failed, the parties would seek to resolve the dispute before the National Shari'a Arbitration Board (Basyarnas). Article 17(4) then compelled the parties to treat any decision from Basyarnas as first and final.
The court, pursuant to art 1338 of the Indonesian Civil Code (Kitab Undang Undang Hukum Perdata), found art 17 to be legally binding on the parties. Moreover, it cited a fatwa of the National Shari'a Council (Dewan Syari'ah Nasional), which cited verse 1 of Surat Al-Maidah from the Qur'an, which asks believers to abide by, and implement, the agreements they make. Accordingly, the court found that the lower court was precluded from serving as a forum to resolve the parties' dispute. Indeed, the court noted that it was common knowledge in the judiciary, especially in the religious judiciary, that when investigating shari'a economy-related disputes, deference to contractual terms relating to dispute resolution was unequivocal.