Arbitration and Mediation as Instruments for Resolving Business Disputes in Commercial Contracts: An Islamic Law Perspective

Abstract

Business disputes frequently arise from the implementation of commercial contracts, particularly regarding contractual obligations, interpretation, and breaches of agreement. Litigation is often considered ineffective due to lengthy procedures, high costs, and its adversarial nature. Consequently, arbitration and mediation have become preferred alternative dispute resolution mechanisms. This article examines the role and challenges of arbitration and mediation in resolving business disputes within commercial contracts from the perspective of Islamic law. Using a normative juridical approach, the study analyzes relevant legal doctrines, regulations, and Islamic legal principles. The findings indicate that arbitration and mediation are consistent with the Islamic concepts of tahkim (arbitration) and sulh (amicable settlement), which emphasize justice, consensus, and the preservation of business relationships. Despite several implementation challenges, both mechanisms offer effective, efficient, and Sharia-compliant solutions for contemporary commercial dispute resolution.