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Battle of Siffin and arbitration

In the first week of June 657, the armies of Mu'awiya and Ali met at Siffin near Raqqa and engaged in days of skirmishes interrupted by a month-long truce on 19 June. During the truce, Mu'awiya dispatched an embassy led by Habib ibn Maslama, who presented Ali with an ultimatum to hand over Uthman's alleged killers, abdicate and allow a shura (consultative council) to decide the caliphate. Ali rebuffed Mu'awiya's envoys and on 18 July declared that the Syrians remained obstinate in their refusal to recognize his sovereignty. On the following day, a week of duels between Ali's and Mu'awiya's top commanders ensued. The main battle between the two armies commenced on 26 July. As Ali's troops advanced toward Mu'awiya's tent, the governor of Syria ordered his elite troops forward and they bested the Iraqis before the tide turned against the Syrians the next day with the deaths of two of Mu'awiya's leading commanders, Ubayd Allah, a son of Caliph Umar, and Dhu'l-Kala Samayfa, the so-called 'king of Himyar'.

Mu'awiya rejected suggestions from his advisers to engage Ali in a duel and definitively end hostilities. The battle climaxed on the so-called 'Night of Clamor' on 28 July, which saw Ali's forces take the advantage in a melée as the death toll mounted on both sides. According to the account of the scholar al-Zuhri (d. 742), this prompted Amr ibn al-As to counsel Mu'awiya the following morning to have a number of his men tie leaves of the Qur'an on their lances in an appeal to the Iraqis to settle the conflict through consultation. According to the scholar al-Sha'bi (d. 723), al-Ash'ath ibn Qays, who was in Ali's army, expressed his fears of Byzantine and Persian attacks were the Muslims to exhaust themselves in the civil war. Upon receiving intelligence of this, Mu'awiya ordered the raising of the Qur'an leaves. Though this act represented a surrender of sorts as Mu'awiya abandoned, at least temporarily, his previous insistence on settling the dispute with Ali militarily and pursuing Uthman's killers into Iraq, it had the effect of sowing discord and uncertainty in Ali's ranks.

The caliph adhered to the will of the majority in his army and accepted the proposal to arbitrate. Moreover, Ali agreed to Amr's, or Mu'awiya's, demand to omit his formal title, amir al-mu'minin (commander of the faithful, the traditional title of a caliph), from the initial arbitration document. According to the historian Hugh N. Kennedy, the agreement forced Ali "to deal with Mu'awiya on equal terms and abandon his unchallenged right to lead the community". Madelung asserts it "handed Mu'awiya a moral victory" before inducing a "disastrous split in the ranks of Ali's men". Indeed, upon Ali's return to his capital Kufa in September 658, a large segment of his troops who had opposed the arbitration defected, inaugurating the Kharijite movement.

The initial agreement postponed the arbitration to a later date. Information in the early Muslim sources about the time, place and outcome of the arbitration is contradictory, but there were likely two meetings between Mu'awiya's and Ali's respective representatives, Amr and Abu Musa al-Ash'ari, the first in Dumat al-Jandal and the last in Adhruh. Ali abandoned the arbitration after the first meeting in which Abu Musa—who, unlike Amr, was not particularly attached to his principal's cause— accepted the Syrian side's claim that Uthman was wrongfully killed, a verdict that Ali opposed. The final meeting in Adhruh, which had been convened at Mu'awiya's request, collapsed, but by then Mu'awiya had emerged as a major contender for the caliphate.