Construction of Dispute Resolution for Problematic Financing Agreements in Islamic Banks Through Collateral Auction Execution

Abstract

The rapid growth of Islamic banking in Indonesia has been accompanied by increasing cases of problematic financing (non-performing financing/NPF), necessitating effective dispute resolution mechanisms that comply with Islamic law principles while adhering to national banking regulations. This study aims to construct an optimal dispute resolution framework for problematic financing agreements in Islamic banks through collateral auction execution, analyzing the integration of Islamic law principles with Indonesian legal system. This research employs a normative legal research methodology with a conceptual approach, comparative analysis, and case study examination. Data collection involves library research, regulatory analysis, and interviews with Islamic banking practitioners and legal experts. The study analyzes current legal frameworks, Islamic jurisprudence (fiqh) principles, and practical implementation challenges. The research reveals significant gaps in the current dispute resolution mechanisms for Islamic banking financing disputes. The study proposes a comprehensive framework integrating maqashid al-shariah principles with procedural justice, establishing clear guidelines for collateral execution while maintaining compliance with both Islamic law and Indonesian banking regulations. An effective dispute resolution construction requires harmonization between Islamic law principles and national legal frameworks, with emphasis on alternative dispute resolution mechanisms that prioritize justice, transparency, and efficiency while protecting the interests of all stakeholders.