Islamic banking and finance (IBF) has emerged as a dynamic sector with a global presence characterized by the operation of Islamic financial institutions (IsFIs) in diverse legal and cultural contexts (Biancone et al., 2020). This adaptability demonstrates how Islamic finance aligns with varied regulatory frameworks and cultural environments (Aqib Ali, 2023). The IBF is rooted in the principles of the Islamic moral economy, emphasizing risk- and profit-sharing rather than interest-based transactions (Khavarinezhad et al., 2021) (Meskovic et al., 2021). The sector promotes financial inclusion, provides access to capital for small- and medium-sized enterprises (SMEs), and supports socially responsible investments (Brescia et al., 2021). These attributes underscore the social impact of the IBF, as it strives to contribute to sustainable economic development.However, as the IBF expanded, legal disputes surfaced, especially when Islamic principles intersected with secular legal systems. Notable cases such as Islamic Investment Company of the Gulf (Bahamas) Ltd. vs. Symphony Gems N.V. and Others (2001), Beximco Pharmaceuticals Ltd. vs. Shamil Bank of Bahrain (2004), The Investment Dar Company KSCC vs. Blom Developments Bank Sal (2009), Project Blue Limited vs. The Commissioners for Her Majesty’s Revenue and Customs (2018), and Dana Gas PJSC vs. Dana Gas Sukuk LTD and Others (2017) highlight the complexities in recognizing Shariah principles within English courts. These cases illustrate the challenges of enforcing Islamic finance contracts under secular jurisdictions where inconsistencies arise in the application of Shariah. Additionally, issues related to Shariah compliance supervision were noted. When Shariah compliance oversight is delegated solely to Shariah boards or auditors within Islamic banks, compliance gaps may influence investor confidence and consumer trust, particularly in cross-border transactions (Berrahlia, 2024).

Accounting in Islamic finance is critical in ensuring that IsFIs operate in accordance with Shariah principles. This specialized form of accounting requires distinct standards and procedures tailored to Islamic finance transactions. Various organizations, including the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), have worked to establish and harmonize accounting standards for IsFIs (Hassan & Aliyu, 2018). These standards provide guidelines for financial reporting, auditing, and disclosure, enhancing transparency and consistency across the industry. The adoption of these standards strengthens the credibility and operational integrity of IsFIs ((Tasnia et al., 2023); (El-Halaby et al., 2020); (Hassan & Rabbani, 2023)).

Legal disputes in the IBF often arise from contract misinterpretation, breach of terms, fraud, or noncompliance with Shariah principles (Puneri, 2021). Addressing these disputes requires robust governance and effective resolution. The intersection of accounting practices and dispute-resolution mechanisms in the IBF is critical but underexplored. Accounting practices influence how financial performance and compliance are reported, directly affecting disputeresolution processes. The absence of harmonized standards may lead to inconsistencies in financial reporting, complicating the resolution of disputes. Cross-border arbitration and international litigation further exacerbate these challenges, given the variations in the jurisdictional recognition of Shariah.

This study elucidates how accounting practices influence the resolution of disputes in Islamic finance. Understanding the role of accounting in dispute resolution is essential to enhance the efficacy of these mechanisms and ensure the stability and integrity of IsFIs. Addressing these challenges will contribute to a more resilient and transparent Islamic finance industry, ultimately fostering greater trust and confidence among stakeholders.

Sharia Compliance for Islamic Banking and Finance

The global expansion of IBF is evidenced by the spread of Islamic banking institutions and the entry of conventional banks into the Islamic financial sector (Slimene et al., 2014). Growth is fueled by the financial needs of the expanding Muslim population and their commitment to Islamic principles (Hassan, 2022). The key drivers of the global Islamic economy include the significant size of the Muslim demographic, adherence to Islamic teachings, and technological advancements (Zucchelli, 2022) (Alshater et al., 2022) (Muryanto, 2022). Islamic banks, similar to social banks, emphasize ethical finance and play a vital socioeconomic role (Aboul-Dahab, 2023).

A core principle of Islamic finance is the prohibition of gharar (excessive uncertainty) to ensure contractual clarity and fairness. Gharar occurs when a seller's ability to deliver a sold item is uncertain, which can render contracts void. Islamic financial contracts such as istisnaa, salam, and ijarah are subject to specific guidelines to mitigate risk, even when items are not present at the time of the contract. Islamic jurisprudence (fiqh) permits exceptions when the public interest (maslaha) is served (Jobst & Solé, 2012). This principle extends to Islamic accounting practices, which emphasize transparency, fairness, and stakeholder trust.

IsFIs follow Sharia-compliant standards that promote fairness and justice. The accurate recording of financial transactions is critical, especially in cases involving future uncertainties. Sharia audits are crucial in transactions such as home financing, ensuring that gharar is avoided, protecting banks from reputational risks (Oseni et al., 2019). Transparent accounting enhances trust among stakeholders, including investors and clients, and strengthens the credibility and stability of the IBF sector ((Oseni et al., 2019);(El-Gamal, 2001).

Historically, Islamic jurisprudence has established specific regulations to address gharar in commercial transactions. For example, the Quran prohibits games of chance, and the Prophet Muhammad forbade practices such as selling unborn animals without their mothers or selling milk in the udders. These measures ensured fairness and transparency, reflecting the ethical foundation of Islamic economic principles (Hasanuzzaman & Review, 1991)(El-Gamal, 2001). While traditional commercial transactions require visible and deliverable goods, modern financial products, such as derivatives, necessitate more complex rules. Islamic finance addresses these complexities using Islamic legal principles and modern adaptations of classical contracts.

Dispute resolution in IBF faces unique challenges. Arbitration is the preferred mechanism for resolving IBF-related conflicts. Ensuring that financial intermediation supports the real economy, as opposed to exploitative practices, aligns with Islamic finance's socioeconomic justice principles (Ghaffour, 2017). Legal certainty in IBF is strengthened by the role of international councils, such as the Institute for Islamic Research at Al-Azhar University in Cairo, the Islamic Jurisprudence Institute of the Islamic League in Mecca, and the Fiqh Academy of the Organization of Islamic Cooperation (OIC) in Jeddah. In particular, the Fiqh Academy plays a vital role in issuing Sharia rulings on financial matters (Jackson-Moore, 2009). If a Sharia-compliance argument is raised, the contract may be rendered invalid, even if previously approved by a Sharia supervisory board, as Sharia compliance is paramount (Blanke, 2019-04-04).

Legal certainty in IBF is critical for the stability of its financial products. Differences in the interpretation and application of Sharia principles within national legal frameworks pose significant challenges. For example, disputes over jurisdiction have arisen in Western courts, with cases such as Beximco Pharmaceuticals Ltd. & Others v. Shamil Bank of Bahrain EC (2004) and the Islamic Investment Company of the Gulf (Bahamas) Ltd. v. Symphony Gems NV & Others (2002) illustrating these challenges. In such cases, English courts have applied conventional legal principles, often overlooking the unique aspects of Sharia compliance (Hasan & Asutay, 2011)(Jackson-Moore, 2009). This highlights the need for more effective dispute resolution mechanisms that consider the principles of Sharia.

Despite the slower growth in Western countries than in Islamic nations, IsFIs have been present in the West for over 40 years. Their development is linked to globalization and the growth of the Muslim diaspora. However, there is a gap between traditional Islamic contracts and modern financial transactions because the IBF faces pressure to align with complex global financial systems (Hamour et al., 2019). The use of Arabic and English terms allows for contract localization. Nevertheless, differences in legal concepts and customer perceptions present challenges because branding and messaging can influence financial decisions and lead to choices based on incomplete information.

Existing Accounting Principles in Islamic Banking and Finance

The criterion for evaluating investments in any commercial activity is the value of accounting profits. Accounting profits contribute to reviewing contract structures and predicting future financial flows. The most important role of accounting profits is to help stakeholders, especially investors, make future decisions (Susilowati et al., 2023). Accounting profits comprise two components: 1) cash flow during a specific duration and 2) earnings accruals over a period. However, the latter are considered more important than cash earnings because managers usually manipulate the company’s profits and use accruals to produce profits that differ from the real profits for achieving the expectations of financial analysts and meet market expectations. As in any other industry, bank managers adjust profits for the same purpose (Asl & Doudkanlou, 2022). (Hassan & Rabbani, 2023) studied the impact of AAOIFI governance disclosure on the performance of IsFIs. A thorough analysis of the literature related to AAOIFI accounting standards was conducted to examine the diverse roles of the AAOIFI in setting accounting, auditing, governance, and ethics standards in global IsFIs. Their findings underscore the pivotal role of AAOIFI in shaping accounting standards for IsFIs, significantly contributing to the positive trajectory of the Islamic finance industry. The AAOIFI’s proactive involvement in issuing and developing accounting and auditing standards has emerged as a key driver behind the enhanced financial performance of IsFIs. Furthermore, this study identified notable research gaps, highlighting the need for future scholarly inquiries into these specific domains (Hassan & Rabbani, 2023).

In Islamic finance, governance adheres to fundamental principles, such as accountability, responsibility, trustworthiness, independence, competence, and confidentiality, as dictated by Sharia law. These principles are pivotal in shaping corporate governance within the Islamic banking system and are fundamental to the operations of all Islamic financial centers. Consequently, Islamic banking is constrained to transactions deemed acceptable under Islamic law, engaging solely in ethical investments and moral purchasing practices. (Mergaliyev et al., 2019) (Lanzara, 2021). Conversely, conventional literature has not delved deeply into the intersection of religion with economics and accounting despite the clear relevance of exploring these connections. Historically, religion has played a significant role in shaping and upholding ethical standards such as truthfulness, fairness, and justice. When these principles become prevalent in society, the community enjoys a heightened level of trust in business transactions and financial matters (Lewis, 2001).

Literature on Dispute Resolution in Islamic Banking and Finance

Disputes in business transactions are an inevitable aspect of commerce, as contracting parties may fail to fulfill their obligations or disagree on the execution of the agreement. Conflicts can arise from differing interpretations of contract terms or dissatisfaction with the manner in which an agreement is executed. Such disputes necessitate the establishment of dispute resolution procedures, which are now a common feature of contractual arrangements (Ghaffour, 2017).

Disputes in the IBF are particularly complex, as they may also involve regulatory conflicts or issues related to constitutional or governing laws, especially in cross-border transactions. These disagreements may stem from the interpretation or implementation of Sharia-compliant financial contracts, investment agreements, or other financial arrangements. However, the legal framework for dispute resolution in IBF law remains insufficient and lacks harmonization across jurisdictions (Al Rahahleh et al., 2019). The primary challenge lies in the inconsistent application and interpretation of Islamic law, which can create uncertainty in legal outcomes(Oseni & Ahmad, 2015).

Malaysia is a notable exception because it has established a comprehensive legal framework to support the IBF industry. Malaysia has introduced several reforms to enhance legal certainty in Sharia-compliant finances. Key institutions, such as the Sharia Advisory Councils of the Securities Commission and the Central Bank of Malaysia (Bank Negara Malaysia, BNM), are vital in ensuring the consistency and clarity of Sharia-compliant legal interpretations (Ghaffour, 2017). The Central Bank of Malaysia Act of 2009 marked the formal establishment of a dual financial system, enabling the Islamic financial sector to evolve alongside its conventional counterparts. Furthermore, the Islamic Financial Services Act of 2013 revised previous legislation on Islamic banking and takaful (Islamic insurance), enhancing the legal standards governing the IBF in Malaysia.

Today, Malaysia’s legal framework for Islamic finance is recognized globally as a model for regulatory excellence and Sharia legal certainty. The country’s dual financial system has allowed it to position itself as a leading hub for Islamic finance, providing a clear, consistent, and supportive regulatory environment for IBF operations (Ghaffour, 2017).

Gaps and challenges in current research

The Islamic finance industry faces challenges in regulatory compliance, legal documentation, and consumer protection. The key issues include misleading information, unfair contractual terms, and transparency gaps. Bank Negara Malaysia (BNM) introduced initiatives to promote governance, fairness, and transparency in the IBF industry (Oseni et al., 2019).

A major concern in Islamic finance is profit measurement and form-substance alignment in contracts. The concept of a "substance gap" highlights discrepancies between a contract's form and its intended substance throughout product development, implementation, and outcomes (Hamour et al., 2019). Islamic banks employ profit-and risk-sharing models that expose them to higher portfolio risk, often leading to stricter credit rationing (Masood & Bellalah, 2013).

Dispute resolution in Islamic banking requires clarity on the jurisdiction and qualifications of judges, especially in cross-border transactions (Rasyid, 2013), which arise from claims of non-compliance with Sharia rule (Hasan & Asutay, 2011). The globalization of Islamic finance highlights the need for the harmonization of Sharia interpretations across jurisdictions. Regulatory ambiguity can deter investor confidence, emphasizing the need for transparent Sharia rulings and effective legal frameworks (Ghaffour, 2017)(Bälz, 2008).

While previous studies have examined corporate governance, sukuk structures, and ethical issues in Islamic finance, there is a dearth of literature on the intersection of accounting and dispute resolution in IsFIs. This highlights an opportunity for further research on accounting frameworks and legal certainty in IBF (Hassanein & Mostafa, 2022).

This research employed a qualitative review and quantitative analysis, integrating qualitative systematic literature reviews, case studies, analysis of regulatory frameworks, and quantitative bibliometric analysis. This study draws on an extensive review of primary and secondary legal sources, including Islamic law, international conventions, national regulations, court judgments, legal opinions, and industry standards. Primary sources, such as Sharia principles, regulatory guidelines, financial statements, and official reports from regulatory bodies, are supplemented by court judgments and precedents relevant to the IBF sector.

Secondary sources, including academic research papers, industry reports, scholarly books, and expert critiques, were utilized. Data collection included a systematic search of the Scopus database using the keywords “Islamic banking and finance” AND “legal,” which was refined to include “accounting” AND “dispute resolution,” yielding 91 relevant publications from 2018 to 2023. These were imported into SciVal for analysis, enabling a thematic review of key trends and patterns within the selected literature.

SciVal's Scholarly Output metric was used to assess research productivity. This metric quantifies the number of Scopus-indexed publications attributed to a specific research entity and offers valuable insights for evaluating academic productivity. It is especially useful for comparing the research outputs of entities with similar focus areas and career stages and tracking the scholarly contributions of early-career researchers or new strategic initiatives.

This study acknowledges the potential variation in the interpretations of Sharia principles among scholars and institutions, which may lead to diverse perspectives on the legal aspects of the IBF. To address this issue, we provide a balanced analysis that considers these interpretations. Although Scopus is a widely used database, its limitations regarding language, publication dates, access restrictions, and potential biases may affect the representativeness of the results.

The Basel Committee on Banking Supervision (BIS) is critical in setting global banking standards and promoting the stability and soundness of the international banking system (Charter, 2018-06-05). The BIS supports responsible innovation and competitive financial services ((B.I.S., 2021); (Paltrinieri et al., 2021)) and has established key regulatory frameworks, including Basel I, II, and III, to guide banking supervisors in enhancing the corporate governance of financial institutions ((B.I.S., 2021); (Charter, 2018-06-05)). Similarly, in Islamic finance, the AAOIFI, Islamic Financial Services Board (IFSB), BNM, and other standard-setting bodies have established governance standards rooted in Sharia principles to ensure the effective regulation of the Islamic finance industry (AAOIFI, n.d.).

The Basel Committee on Banking Supervision (BIS) is critical in setting global banking standards and promoting the stability and soundness of the international banking system (Charter, 2018-06-05). The BIS supports responsible innovation and competitive Islamic banking and financial law have witnessed high-profile cases highlighting the complexities of applying conventional legal frameworks to Islamic financial contracts. These cases underscore the need for a robust legal framework to support the industry's growth. In modern contracts, parties must specify the governing law to avoid potential disputes (Hasan & Asutay, 2011). The principles of Islamic finance aim to promote justice and fairness by addressing potential risks and ignorance that could lead to conflicts. The emergence of fintech and digital currencies has intensified the significance of gharar (excessive risk), compelling IBF regulatory bodies to strengthen Sharia compliance with financial contracts and services. This measure safeguards the sector's reliability and prevents reputational damage from fraud or noncompliance (Suryanto & Ridwansyah, 2016).

The human resource landscape in IsFIs is marked by two distinct groups: Sharia specialists with limited financial expertise and finance professionals with limited knowledge of Sharia principles (Akbar et al., 2023). This dichotomy presents operational challenges and opportunities for growth. Collaborative efforts among regulators, policymakers, and industry practitioners are essential for addressing these challenges and ensuring the future sustainability of IBF.

Disputes in Islamic finance often arise from debt-based financing methods, such as murabaha, BBA, and bay al-Inah. Sukuk-related issues, as exemplified by the East Cameron Partners case, highlight the growing complexity of IBF contracts. As sukuk issuance expands to include cross-border transactions, disputes are expected to become more intricate because of jurisdictional differences and criticisms of existing structures (Hasan & Asutay, 2011). Effective dispute resolution mechanisms tailored to specific conflicts are critical in maintaining the integrity and stability of the IBF sector (Dahlan, 2018). Table 1 summarizes these findings.

An extensive review of the existing literature on accounting and dispute resolution in Islamic finance reveals the absence of a direct connection between accounting practices and dispute-resolution mechanisms. While accounting plays a fundamental role in shaping financial narratives and providing essential data for legal proceedings, existing research has not explicitly established a clear link between accounting methodologies and dispute outcomes. Figure 1 illustrates this issue.

Given the critical role of accounting in ensuring financial transparency and accountability, understanding its intersection with dispute resolution mechanisms could enhance the integrity of financial transactions in the Islamic finance sector. Accurate financial information is crucial in legal proceedings because it can influence dispute outcomes and inform legal strategies. If accounting practices are shown to impact dispute resolution, legal professionals could tailor their arguments and evidence presentation accordingly, leading to more equitable and informed decisions (Oseni et al., 2016).

The keyphrase relevance, as shown in Table 2, indicates a strong intersection between accounting practices, Islamic finance principles, legal frameworks, and governance structures within IBF, all of which are crucial to the resolution of disputes.

These keywords represent the crucial aspects of the IBF sector. Disputes in this context encompass financial, ethical, legal, and governance issues. Therefore, expertise in accounting, adherence to Islamic principles, knowledge of Sharia law, understanding banking operations, and an awareness of corporate governance structures are crucial for preventing or effectively resolving potential disputes within the IBF (Table 2).

The relevance of key accounting phrases in scholarly output from 2018–2023 reveals interesting trends. While the topic of auditing peaked in relevance in 2019, indicating a significant focus within academic research, the key phrases “accounting standards,” “disclosure,” and “accounting system” have garnered increased attention in the period 2022–2023. This shift suggests a growing interest in specific aspects of accounting practices, indicating a potential evolution in research priorities in the field of accounting for Islamic finance.

Robust scholarly output from countries such as Malaysia, Indonesia, the United Kingdom, Pakistan, and the United States underscores the significant role of research in shaping the Islamic finance landscape, particularly in accounting and dispute resolution. These nations, recognized as leaders in Islamic finance scholarship, have consistently contributed to academic discourse, illuminating the intricate relationship between accounting practices and effective dispute resolution mechanisms (Figure 2).

This pattern of prolific research strongly suggests that advancements in accounting methodologies have directly influenced the development of dispute resolution mechanisms in Islamic finance. Continuous scholarly endeavors in these countries serve as catalysts, fostering innovations and best practices that enhance the legal certainty of the IBF sector. By bridging the gap between theoretical research and practical applications, these active countries set precedents for other jurisdictions, emphasizing the mutual relationship between accounting accuracy, robust dispute resolution frameworks, and the overall stability and growth of the IBF sector. As research continues to flourish in these regions, the global Islamic finance community can anticipate a future characterized by heightened legal certainty, transparency, and trust, which are essential elements for the sustainable evolution of the industry.

The leading journal in the field of accounting for Islamic finance is the Journal of Islamic Accounting and Business Research, which has 12 articles, followed by three publications on accounting, Islamic Accounting and Finance: A Handbook published in 2023. The Academy of Accounting and Financial Studies Journal, Critical Perspectives on Accounting, and Library Philosophy and Practice shared the third position (Figure 3). The findings concerning the most active journals in the field of Islamic finance and accounting are illustrated by (Alshater et al., 2021) and (Brescia et al., 2021). They found that the Journal of Islamic Accounting and Business Reasearch serves as a vibrant platform for advancing accounting and business expertise rooted in Islamic principles. Its aim is to positively impact societies globally and foster their well-being.

Collaboration denotes the degree to which an entity’s publications engage in collaborative efforts at the international, national, or institutional levels, as well as instances of single authorship. To provide a nuanced evaluation, collaboration was field-weighted, employing a calculation methodology similar to that of the Field-Weighted Citation Impact. However, instead of relying on citations, this metric employs document-level international–national collaboration ratios to establish field-weighted thresholds. Notably, field weighting for collaboration is applicable exclusively at the international and national levels. This analysis illuminates the collaborative patterns of the entities, shedding light on the global, national, and local partnerships in which they engage, offering an understanding of their networks and outreach.

SciVal employs view count as a metric to gauge the overall usage impact of an entity’s publications. This metric encapsulates the interest and engagement of the entire research community, comprising undergraduate and graduate students, as well as professionals in the corporate sector, who, although not frequently engaged in publishing and citing, significantly contribute to the research landscape. View Counts serve as a valuable indicator, especially for research intended to be read widely rather than extensively cited, highlighting the broader impact of research beyond traditional citation metrics (Figure 4).

The findings, illustrated in Figures 1–4 underscore the robustness of accounting research in Malaysia, Indonesia, and the UK. These countries play a pivotal role in shaping the global landscape of accounting awareness, with notable contributions to scholarly activities and understanding. There is an evident correlation between intensive research output and the evolution of dispute case law in IBF is evident. Proactive research in these countries supported the development of legal frameworks governing IBF practices. This observation aligns with (Hassan, 2022), who emphasize that accounting plays a critical role in Indonesia’s Islamic banking sector, establishing it as fundamental to understanding the field’s landscape.

Accounting practices significantly influence dispute resolution in European financial institutions. The European EU’s consumer protection framework mandates compliance with national regulations, promotes fair practice, and prevents disputes (Viitanen & Wilhelmsson, 2014). Stringent technical standards protect depositors, investors, and consumers and ensure the integrity of financial transactions. For IsFIs operating in the EU, additional compliance with consumer protection regulations can introduce complexities that require adjustments to disclosure obligations and consumer protection measures. Noncompliance may result in legal disputes, penalties, and reputational damage.

Efficient dispute resolution is essential for IBF’s growth and sustainability of IBFs. Disputes may arise from contractual issues, Sharia compliance, regulatory conflicts, or jurisdictional legal inconsistencies, particularly in cross-border transactions. Accounting serves as a vital evidentiary tool in these processes, supporting fair outcomes and fostering trust among the stakeholders.

Moreover, the principle of advertising recognizability is crucial to marketing law. Consumers must distinguish commercial content from noncommercial information to reduce the risk of hidden advertising, which may influence decision-making. Hidden advertising poses risks to consumer rights and trust, especially for IsFI customers, highlighting the need for transparency in marketing communication (Viitanen & Wilhelmsson, 2014).

Development of Islamic finance cases in the United Kingdom

The United Kingdom has the most advanced Islamic financial sector in Europe (di (Mauro et al., 2013)), supported by six Islamic banks offering diverse financial products (Jirvaj, 2022-01-20) and a growing sukuk market since 2017 (Siddiqui & Rizvi, 2022). This development is further driven by the UK’s Muslim population, which constitutes approximately 3% of the total population (Bellalah & Masood, 2013). Remarkably, the UK ranks fifth in the Global Islamic Fintech (GIFT) index, and is the only non-OIC country among the top ten. The factors contributing to this growth include an active Islamic FinTech community, a growing number of Islamic FinTech firms, an expanding FinTech sector, a skilled talent pool, and supportive regulatory frameworks (Muryanto, 2022). Consequently, the rise in IBF cases highlights the opportunities and challenges IsFIs face in the UK legal environment, reflecting the sector’s dynamic nature and regulatory complexities.

Development of Islamic banking and finance cases in Malaysia

Malaysia has established a robust legal framework for Islamic finance to ensure effective and consistent implementation of Sharia principles within Malaysian law. However, evolving challenges necessitate ongoing efforts to maintain certainty, requiring excellence at the institutional and judicial levels. The Sharia Advisory Councils (SACs) of BNM and the Securities Commission support courts by providing certainty. These SACs do not replace judicial authority but complement it, ensuring consistency and regularity in the interpretation of Sharia rules relevant to Islamic finance (Ercanbrack, 2019).

The SACs play a pivotal role in issuing definitive Sharia rulings and guiding their application to case-specific nuances. A systematic framework has been established to facilitate legal professionals, including judges and arbitrators, in seeking SAC guidance on matters requiring interpretation of Islamic law. Issues beyond the SAC’s purview remain within the formal court jurisdiction. The SAC composition, often including former judges, enhances its operational effectiveness. Documenting and publicly sharing the reasoning behind the SAC decisions further strengthens procedural legitimacy. Financial regulators also play a crucial role in forming a comprehensive regulatory ecosystem for Islamic finance (Ghaffour, 2017).

Sources of conflict in Islamic finance often stem from ignorance or the risks inherent in contractual agreements. Disputes may arise from concealed defects, damage, or faulty commodities in contracts that lack specific injunctions. Justice is administered through compensation mechanisms aligned with jurisprudential principles (El-Gamal, 2001). (Salami et al., 2022) highlight the importance of researchers incorporating IFRS regulations relevant to specific jurisdictions. This practice is essential for accounting and legal research because the outcomes derived from accounting ratios often inform legal decisions. Legal professionals, who are typically less proficient in econometric modeling, rely on economic outcomes to frame their analyses and inform dispute-resolution strategies (Kamla & Haque, 2019).

The growing global Islamic finance sector calls for a more skilled workforce from Sharia, particularly legal professionals and supervisory board scholars. These experts provide critical guidance on compliance with Sharia and other legal regulations during financial product structuring (Nomran & Haron, 2019). Expertise in accounting and Sharia principles enables legal professionals to present stronger arguments during proceedings. Certification initiatives and specialized seminars are essential for developing this dual expertise, fostering practical Sharia knowledge and essential legal proficiency (Ghaffour, 2017).

Accounting standards for IsFIs are vital because of the complexity of Islamic financial transactions. Conventional frameworks such as IFRS and GAAP often fail to address the unique nature of these transactions (Islamic Accounting, n.d.). Regulators, such as BNM, have established bespoke standards for Islamic finance to aid product structuring and legal documentation development. Individual excellence among Islamic finance professionals and legal experts is crucial to achieving legal certainty (Ghaffour, 2017).

Corporate Social Responsibility (CSR) disclosure in Islamic banks further underscores the role of accounting. (Rehman et al., 2020) noted that while Islamic banks in Pakistan demonstrate significant CSR practices, their reporting is often imbalanced, prioritizing financial obligations over other dimensions. This scattered reporting affects customer perceptions of banks’ ethical and moral responsibilities. (Rehman et al., 2020) proposed a unified index merging the AAOIFI and GRI standards to standardize CSR disclosure, enhance transparency, and align with Sharia compliance.

This study analyses the role of accounting in dispute resolution in the IBF industry, emphasizing its pivotal role in facilitating fair and Sharia-compliant outcomes. Accounting, with its focus on meticulous recordkeeping, financial reporting, and auditing, provides critical data essential for resolving disputes. Financial documents such as balance sheets and profit-sharing reports serve as key evidence in cases involving profit-sharing ratios, contract validity, and claims of financial misconduct.

Islamic accounting professionals play a fundamental role in contract disputes by interpreting financial terms and ensuring compliance with the Sharia principles. The absence of harmonized accounting standards for Islamic financial reporting has created challenges for IFIs in adopting conventional frameworks such as the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). These standards, designed for conventional financial systems, are often inadequate to address the complexities of Islamic finance transactions. Therefore, sector-specific accounting standards are essential for supporting effective dispute resolution and strengthening financial integrity.

The SACs play a pivotal role in issuing definitive Sharia rulings and guiding their application Future comparative studies of dispute resolution mechanisms across various IBF attempts could yield insights into best practices. To some degree, bridging accounting practices with dispute resolution is beneficial for policymakers, legal practitioners, and financial regulators in fostering a resilient Islamic finance ecosystem that ensures accountability, transparency, and legal certainty.