Dispute Resolution of Sharia Cooperative Business Financing through Local Institutions of the Sasak Tribe Community

The growth and development of sharia cooperatives in West Nusa Tenggara, particularly on Lombok Island, have shown steady progress in recent years. This condition has had a positive impact, notably by expanding access to microfinance for local communities. However, business dynamics do not always unfold as expected. While some cooperative members are able to fulfill their obligations on time, others may delay or even fail to meet their responsibilities, potentially leading to disputes. When such disputes arise, they must not be ignored efforts to resolve them are essential. In the literature, two models of dispute resolution are commonly recognized: litigation and non-litigation. This study focuses on two main issues: first, the urgency of resolving sharia cooperative business financing disputes through local institutions of the Sasak tribe; and second, the prospects of utilizing these local institutions for such dispute resolution. This research employs a normative-empirical method with a socio-legal approach. The findings indicate that the involvement of Sasak tribal institutions in dispute resolution is highly urgent. This is reinforced by the convergence between the principles of sharia cooperatives and those upheld by local dispute resolution mechanisms. Furthermore, the prospects for resolving sharia cooperative financing disputes through local institutions are promising, supported by a legal framework that recognizes and legitimizes the role of these institutions at the local government level. To effectively implement dispute resolution through local institutions, there is a need to strengthen the human resources involved—particularly those with knowledge of sharia economics and cooperative management—among both cooperative administrators and traditional leaders. This research is expected to contribute as a reference for business practitioners in addressing disputes between cooperatives and their members.