The Effectiveness of Sharia Dispute Resolution Mechanisms in Strengthening Consumer Protection

Abstract

This study examines the effectiveness of sharia dispute resolution mechanisms in strengthening consumer protection in Indonesia. This issue is crucial as the rapid growth of the Islamic economy has increased the complexity of disputes between financial institutions and customers, while existing mechanisms have not fully reflected substantive justice. Although the Religious Court and the National Sharia Arbitration Board (BASYARNAS) have a strong legal foundation, their practical effectiveness remains limited due to institutional and social challenges. This research employs a qualitative descriptive-analytical approach, using in-depth interviews with 18 informants consisting of judges, arbitrators, OJK officials, representatives of Islamic financial institutions, and consumers. Data were analyzed using the interactive model of Miles and Huberman, including stages of data reduction, presentation, and conclusion drawing, with validation through source and method triangulation. The findings reveal that the effectiveness of sharia dispute resolution is still low at the implementation level. The main influencing factors include low public legal literacy, weak inter-institutional coordination, limited human resources in sharia law, and suboptimal application of maqashid al-shariah principles. A hybrid model combining litigation and sharia-based mediation is identified as a potential alternative to strengthen consumer protection and increase public trust in sharia legal institutions. This study concludes that the effectiveness of sharia dispute resolution must prioritize substantive justice and social welfare rather than mere procedural compliance, to enhance trust and fairness within Indonesia’s Islamic legal system.