Purbalingga Religious Court Decision No. 1721 of 2013: Multi-service Ijarah Financing Agreement

The plaintiff submitted that, pursuant to a multi-service ijarah financing agreement (dated 13 September 2011), the first defendant, in agreement with the second defendant as his wife, received IDR 250 million from the plaintiff, and agreed to pay an ujrah (fee) of IDR 180 million. The term of the agreement was from 13 September 2011-13 September 2016, and the monies were to be used to cover print media costs to advertise the defendants' business. After the defendants defaulted on repayments, the plaintiff sent to the defendants several reminder notices and a subpoena. Despite being granted these opportunities by the plaintiff to make the necessary payments, the defendants failed to act, even by the time the plaintiff had filed its claim. Accordingly, the plaintiff filed a shari'a economy-related dispute claim, in accordance with art 49 of Law No. 3 of 2006 on the Religious Judiciary, in conjunction with art 55(1) of Law No. 21 of 2008 on Shari'a Banking.

In his written response to the plaintiff's claim, the first defendant explained his own financial hardships, and asserted that the ways in which the plaintiff had sought payment from someone in his predicament were inferior to those of a conventional bank. For example, the first defendant told the court that the plaintiff, which he had authorised to sell four shophouses he owned to pay any debts emerging from this agreement, offered the same price he had received for six other shophouses he had sold five years ago. The first defendant also alleged that the plaintiff had only ever sought its profit from the agreement, an agreement he had never properly understood, rather than inquiring into the defendants' hardships. Moreover, over two years, the first defendant had paid approximately IDR 60 million in interest (bunga), and had been ordered to pay another IDR 257 million, as well as the principal debt, meaning he had had to pay IDR 115 million over two years. The first defendant was astounded when he compared this with what a conventional bank would have charged (0.9-1 percent interest per month). The first defendant also told the court of his excellent credit history with other banks. The first defendant requested that the court dismiss the plaintiff's claim and, in order to repay the debt and to continue to pay the plaintiff in accordance with the agreement, provide him an opportunity to sell his shophouses for a reasonable price, as well as an opportunity for his business to grow.

The court, citing the Qur'an and arts 21(b), 44 and 46 of the Compilation of Shari'a Economy Laws (Kompilasi Hukum Ekonomi Syari'ah), opted to enforce the agreement against the defendants, ordering them to pay IDR 252,393,450.

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