Non-compliance with Shariah principles does not invalidate a contract under Islamic finance unless it violates applicable finance laws, as per Section 281 of the Islamic Financial Services Act 2013.

JUDGMENT

Yusrin Faidz Yusoff JC:

Introduction

[1] This case arises from a financing arrangement in which the plaintiff, an Islamic financial institution, extended facilities to the defendant. The plaintiff asserts that the defendant has defaulted on its repayment obligations. The plaintiff therefore seeks summary judgment, contending that this is a straightforward matter devoid of any triable issues. Conversely, the defendant argues that there are substantive issues that necessitate further examination at trial. This judgment seeks to address whether the issues raised by the defendant constitute genuine triable matters, or whether the plaintiff is entitled to summary judgment as claimed.

Background facts

[2] The defendant was a customer of the plaintiff bank, having applied for financing in connection with the provision of transportation and engineering services to the oil and gas industry. Based on an offer letter dated 21 July 2016 ("Offer Letter"), the plaintiff granted the defendant with a Commodity Murabahah Term Financing-i ("CMTF-i Facility") for the sum of USD2,600,000.00, and a Commodity Murabahah Revolving Credit-i ("CMRC-i Facility") for the sum of USD750,000.00 (collectively referred to as the "Banking Facility").

[3] Pursuant to the said Offer Letter, the following agreements were entered into between the plaintiff and the defendant:

(a) A Commodity Murabahah Agreement (for the CMTF-i Facility) executed on 29 November 2016, with a principal limit of USD 2,600,000.00, to partially finance the acquisition of a Vessel categorized as Other Cargo/Supply Ship/Offshore Tug, identified as "WBI Trinity" (the "said Vessel"), bearing Registration No 40266-09-B and IMO No 9545766, and registered under the Panama Maritime Authority, flying the Panama flag; and

(b) A Commodity Murabahah Agreement (for the CMRC-i Facility) executed on 29 November 2016, amounting to USD 750,000.00, designated for working capital requirements and/or drydocking of the said Vessel. (See Exhibit LCH-1, of encl 14).

(referred together as "the Facility Agreements")

[4] The commitment of the parties to the Banking Facility was further evidenced by the concomitant execution of the following documents:

(a) Specific Debenture dated 29 November 2016 between the plaintiff and the defendant;

(b) Deed of Assignment of Contract Proceeds dated 29 November 2016 between the plaintiff and the defendant;

(c) Third Party Deed of Assignment of Contract Proceeds dated 29 November 2016 between the plaintiff and Workboat International DMCCO (Dubai Company No.: 80004);

(d) Deed of Assignment and Charge over Designated Collection Account dated 29 November 2014 between the plaintiff and the defendant;

(e) Corporate Guarantee dated 29 November 2019 between the plaintiff and Alam Maritim Resources Berhad (Company No.: 700849-K);

(f) Deed of Covenants Accompanying First Mortgage (WBI Trinity) from the defendant to the plaintiff;

(g) Letter of Confirmation and Undertaking dated 29 November 2016 from the defendant to the plaintiff;

(h) Irrevocable Letter of Undertaking dated 29 November 2016 from the Corporate Guarantor to the plaintiff; and

(i) Letter of Undertaking (Negative Pledge) dated 29 November 2016 from the defendant to the plaintiff.

(See Exhibit LCH-2, of encl 14)

[5] The plaintiff has accordingly disbursed the said Banking Facility to the defendant, and the defendant has utilized the same.

[6] On 17 May 2018, through the approval of Corporate Debt Restructuring Committee ("CDRC") of Bank Negara Malaysia, the plaintiff agreed to rearrange and/or restructure the amounts and payment schedule through a Supplemental Letter of Offer dated 17 May 2018 ("Supplemental Letter of Offer"). (Exhibit LCH-3 at pdf pp 475-480, Enclosure 14).

[7] Through the Supplemental Letter of Offer, in addition to the restructuring and reorganization of the said Banking Facility it was also stated that the CMRC-i Facility was canceled and no longer available.

[8] Following the Supplemental Letter of Offer, the plaintif