Litigation in Religious Courts as a Pressure Mechanism for Resolving Non-Performing Financing in Islamic Banking

Abstract

This study aims to examine the use of lawsuits as an instrument to encourage the fulfillment of obligations by customers in default. The research employs an empirical juridical method using statutory and case approaches. The findings reveal that filing lawsuits demonstrates a high degree of effectiveness in enhancing customer compliance with financing obligations. Furthermore, lawsuits are not merely initiated to obtain judicial decisions but also function as instruments of negotiation and legal pressure that facilitate the settlement of obligations before the court renders a judgment. This study concludes that the use of litigation as an instrument to induce debt settlement constitutes an emerging reality in the practice of resolving non-performing Islamic financing. Nevertheless, such practices must be constrained by the principles of good faith and the prohibition of abuse of judicial process. Accordingly, the study recommends strengthening the regulatory framework and guidelines governing Islamic financing dispute resolution, optimizing non-litigation mechanisms, and implementing stricter judicial oversight to ensure that the use of litigation remains consistent with the principles of justice, legal certainty, and Sharia values.