Governance Gap in Smart Contracts Highlighted at UIN Bukittinggi's ICOISL 2026
BUKITTINGGI—The integration of artificial intelligence (AI) and smart contracts into Islamic finance has triggered fundamental governance challenges, as automated systems lack inherent Sharia authority and require strict oversight to prevent distortion when legal rulings are translated into computer code.
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| Associate Professor Wan Mohd Yusof bin Wan Chik from Universiti Sultan Zainal Abidin (UniSZA). |
Scholars at the conference underscored clear distinctions between traditional Islamic contracts (akad), programming code, and AI systems. A contract operates within the Sharia domain, forming a binding legal relationship grounded in intent (niyyah), mutual consent, specific conditions, and the higher objectives of Islamic law (maqasid al-shariah). Programming code functions on a technical level as a set of data-driven logic instructions for systems, while AI operates on an inferential layer to process data, identify patterns, and support decision-making.
"Machine capability does not equate to Sharia authority," delegates heard. While machines can process vast datasets rapidly and execute contracts automatically, they lack moral consciousness, intent, and a sense of justice. Absolute legal authority remains strictly with qualified Islamic scholars (faqih, mufti) who weigh public interest (maslahah) and bear moral accountability before God and society.
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| In-person attendees joined online participants for the conference. |
To ensure machine execution aligns with Sharia rulings, experts presented a nine-layer transformation framework spanning three key operational domains. The Normative Domain (Layers 1–3) establishes Sharia authority, formal rulings, and expert interpretation. The Operational Domain (Layers 4–5) shapes contract structures and operational workflows, while the Computational Domain (Layers 6–9) translates business logic into system rules, smart contract coding, and automated execution.
Beyond technical architecture, the paper highlighted human oversight as a non-negotiable boundary. The oversight model rests on four pillars: viewing machines purely as supportive tools, reserving final decision-making for human scholars, prohibiting AI from issuing religious edicts (fatwa) or replacing human reasoning (ijtihad), and enforcing continuous auditability to protect public rights.
Critical legal risks stem not from the technology itself, but from potential algorithmic bias affecting individual rights, social equity, and public welfare. Scholars concluded that human intellect guided by divine revelation must retain ultimate control, ensuring technology remains strictly under Sharia oversight rather than allowing efficiency to dictate religious jurisprudence.[IRWANDI]
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