Salam and happy new year,
Dear my weblog readers,
I am delighted to share with you my recent article entitled ‘An Analysis of the Courts’ Decisions on Islamic Finance Disputes’ published in the ISRA International Journal of Islamic Finance, 3 (2): 41-71. This article critically reviews and analyses the courts’decisions on Islamic finance disputes in four different jurisdictions, namely Malaysia, the United Kingdom, India and the United States.This paper highlights the distinctive approaches of courts in making decisions pertaining to Islamic finance issues. These jurisdictions were selected on the basis of the interesting case studies they provide, where Malaysia represents a country where the Muslims are a majority and the others where the Muslims are a minority.
For further reading, click An Analysis of the Courts’ Decisions on Islamic Finance Disputes
Considering the continuous legal uncertainties, the polemics of governing laws, the distinct interpretational approach and the different positions on the status of Islamic law as a recognised law of the land as argued and debated in the courts, it is important to have a proper, sound and clear legal environment to support the implementation of Islamic finance. In order to mitigate any sort of legal risk as well as Shariah non-compliance risks which are most likely to be disputed in courts, the ideal legal framework for Islamic finance must be characterised at least by four important features.
Firstly, in order to foster confidence in investors and consumers, there must be an enabling environment that accommodates and facilitates its implementation. Secondly, the enabling legal environment must be supported by a clear and efficient system that guarantees the enforceability of Islamic financial contracts. Thirdly, Islamic finance needs a credible and reliable legal avenue for settlement of legal disputes arising from Islamic finance transactions. At this point, alternative dispute resolution seems to be the best alternative to court proceedings which can streamline the resolution of disputes and avoid the need for court proceedings.
Finally, a sound legal framework is dependent on the instrumental function of its legal fraternity. Lawyers, judges, legal advisors, Shariaah scholars and other professionals in Islamic finance should acquire sufficient knowledge on the traditional Islamic legal concepts and be able to apply them in the context of modern finance and the law of international finance. All of these features are the prerequisites of a sound legal framework for the Islamic finance industry.