Islamic Hire Purchase or AITAB (Al-Ijarah Thumma al-Bay’) is unfortunately lacking in Shariah regulatory framework. Thus, any dispute arising from the transaction will be referred to the conventional regulations, and such inclination can be due to :
(a) Absence of Islamic hire-purchase regulation, thus practitioners in AITAB transaction have no other legal recourse except the conventional hire-purchase law; Hire-Purchase Act 1967 (HPA).
(b) The basic operation of AITAB in effect is similar to conventional hire-purchase, i.e., determination of fixed rate, standard documentation, and formation of agreement ; the only difference is in the issue of interest (riba) and issuance of acceptance (‘aqd) letter.
(c) Conventional hire-purchase business has been in the market for quite a long period of time and has established its rules and policy, thus its operation appears to be much easier in practice.
(d) Jurisdiction of civil courts also covers Islamic banking transactions. Since there is no legal authority for AITAB transaction, any case connected to it will be referred to HPA.
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