RMR lwn. MNMN [2022] SLRHU 4

Syariah High Court of Selangor (Shah Alam)

Marriage Debt

1.    This case involved a former husband and wife who were married on 5 November 2010 and divorced in the Syariah Subordinate Court of Sepang without the Court’s permission on 28 May 2019.   The marriage of the parties was blessed with two (2) children.

2.    During the divorce proceeding, there was no recorded order regarding claims for marriage debt. However, on 8 August 2019, the Plaintiff applied to Syariah High Court of Selangor to claim marriage debt through Suit No. 10100-0490757-2019 as follows:

               (i)       The Honourable Court declared Bitcoin of USD 206.9967889, which is equivalent to RM10,095,109.20, as marital debt between the Plaintiff and the Defendant in accordance with Section 61 of the Islamic Religious Administration (State of Selangor) Enactment 2003 [“Enactment No. 1 Of 2003”];

            (ii)       The court further ordered that such Bitcoin to be returned to the Plaintiff’s account;

             (iii)       Costs are to be borne by the parties; and

             (iv)       Any other orders or relief deemed fair and appropriate by the Court.

3.    The Defendant, in the Statement of Defence, dated 26 December 2019, disagreed with the said claim and made defences against each claim and allegation made by the Plaintiff in her Statement of Claim, as well as counterclaims to the Court to dismiss all Plaintiff’s claims with costs.

1.    Whether the claim on Bitcoin is valid, according to Hukum Syarak, can be commercialised, and subsequently claimed by the Plaintiff?

1.    Whether the claim on Bitcoin is valid, according to Hukum Syarak, can be commercialised, and subsequently claimed by the Plaintiff?

(a)      Both Parties, in their written submissions, have referred to the same authority, namely by referencing Bayan Linnas Series No. 153: The Ruling on the Use of Bitcoin Currency, to argue whether such bitcoin is Syariah-compliant or otherwise.

(b)      Both Parties in their written submissions, have concurred on the definition of Bitcoin as follows:

               (i)       Bitcoin, established by Satoshi Nakamoto in 2009, stands as a digital currency.

              (ii)       Bitcoin stands as the inaugural asset in the realm of cryptocurrency or digital currency, derived through a prolonged mining process requiring the resolution of intricate mathematical problems and the utilisation of computer equipment.

          (iii)       The blockchain network is a public ledger that records all Bitcoin transactions, accessible to every user engaged in Bitcoin transactions and mining activities.

(c)      The Court held that based on the definition put forth by the parties, it can be inferred that Bitcoin qualifies as a digital currency, or more specifically, a cryptocurrency.

(d)      The Court further, referred to the decision of the Selangor State Fatwa Committee Meeting held on 17 August 2021, which deliberated on the Syariah Analysis of Cryptocurrency: A Syariah Analysis as follows:

“It was necessary to conduct transactions using digital currencies as either a medium of payment, remittance, or asset storage provided they met the specified parameters –

(a) Transactions involving digital currencies must be conducted through licensed digital currency exchange platforms approved and regulated by the relevant authorities only.

 (b) Users should possess sufficient knowledge regarding-

 (i)            The types, key features, and associated risks of digital currencies;

 (ii)        Adequate technical knowledge on how to acquire digital currencies and where they should be stored to ensure their security;

 (iii)        The regulations set by licensed and regulated digital currency exchange platforms approved by the authorities;

(iv)         The laws and regulations pertaining to digital currencies.

(c)  Like any other currency, digital currencies should not be used as payment for goods, services, and activities that are non-compliant with Hukum Syarak, such as drug purchases, prostitution, gambling, funding of violent activities, and money laundering”.

(e)      The Court held that based on the decision of the Selangor State Fatwa Committee Meeting, transactions and dealings involving Bitcoin are permissible, provided that the parties conducting the transactions ensure compliance with the outlined parameters.

(f)        The Court referred to the statement issued by Bank Negara Malaysia (“BNM”) on 3 January 2014, which elucidated as follows:

“The Bitcoin is not registered as a legal tender in Malaysia.  The Central Bank does not regulate the operations of Bitcoin.  The public is therefore advised to be cautious of the risks associated with the usage of such digital currency.”

(g)      Based on the reference above, the Court held that BNM announced to the public that digital currencies are still not recognised as legal tender in Malaysia, and digital currency businesses are not protected by the standards or regulatory practices applicable to financial institutions regulated by BNM.

(h)      The Court also referred to the website of BNM in which the Court also found that as of 6 January 2021, a total of 56 cryptocurrency firms have been registered with BNM.  However, BNM maintains its stance that digital currencies are not recognised as legal tender, as evidenced by the following statements:

“BNM does not validate any information declared by reporting institutions, nor endorse the pricing methodology used by digital currency exchangers.

“Consumers are advised to exercise the necessary caution and understand risks associated with digital currencies.”

“There will not be any elements of consumer protection or avenues for redress made available in the event of complaints or losses and damages incurred by any parties dealing in digital currencies.”

(i)        The Court believes that to ensure any transactions can be conducted using Bitcoin, the Plaintiff should prove to the Court that the Bitcoin account claimed by the Plaintiff complies with the parameters set by the Selangor State Fatwa Committee.

(j)        The Court further held that the Plaintiff did not clarify in any of her pleadings or at any stage in the proceeding regarding the compliance of the Bitcoin account claimed by the Plaintiff with the parameters outlined by the Selangor State Fatwa Committee.

(k)       The Court decided that there is no licensed digital currency exchange platform approved and regulated by the authorities, and there is no regulatory body recognised by the Malaysian government overseeing and ensuring the financial integrity of digital currencies, akin to the role undertaken by BNM in ensuring monetary stability and conducive financial stability in Malaysia.  Despite BNM issuing the Policy on Prevention of Money Laundering and Terrorism Financing for Digital Currencies (Sector 6), BNM consistently maintains that digital currencies remain unrecognised as legal tender in Malaysia, and parties involved are accountable for the risks and losses associated with digital currency transactions.

1.    The Plaintiff’s claim, the Defendant’s counterclaim, and suit  were dismissed by the Court.

2.    The Defendant’s costs were ordered to be borne by the Plaintiff by the Court.

Key Take Away

1.      This case revolves around disagreements over marital debt in Syariah Court.  Despite the Plaintiff’s efforts to include Bitcoin as part of her marital assets, the Court’s decision shows the difficulty of settling such disputes without clear rules.