The Transformation of Islamic Law in Global Financial Markets
Abstract
The role of global capital in relation to human social systems has assumed enormous proportions in liberalised, deregulated markets. States attempt to nationalise it, financial centres spring up in its wake, and INGOs attempt to deal with its de-territorialising, supranational characteristics. A global adjudication system (arbitration) has been introduced to safeguard and buttress its flow. The power of Islamic capital has generated numerous sites of legal contestation and negotiation, ranging from gateway financial centres, international law firms and transnational financial institutions, all of which interact in the production of Islamic financial law (IFL). The process of producing IFL illustrates complex fields of action driven by power dynamics, neoliberal paradigms and the institutional momentum of the global economy. The municipal legal systems under study in this book (the United Kingdom, Bahrain, United Arab Emirates and the Dubai International Financial Centre) illustrate globalisation’s acceleration of legal, economic and social production.
... No contexto dos alimentos geneticamente modificados (GM), a visão islâmica é, geralmente, baseada na análise dos ingredientes específicos utilizados e se eles estão relacionados a produtos proibidos pela lei islâmica. Se os ingredientes modificados não estão ligados a substâncias proibidas, então, do ponto de vista islâmico, não há necessidade de debate adicional (Ercanbrack 2015). ...
... Portanto, atualmente, a posição islâmica sobre alimentos geneticamente modificados pode variar entre diferentes líderes religiosos e comunidades islâmicas, e pode haver diferentes interpretações e opiniões sobre a permissibilidade desses alimentos. É possível que, no futuro, a Academia Islâmica da Fiqh ou outras instituições islâmicas emitam diretrizes ou fatwas específicas sobre alimentos geneticamente modificados, fornecendo uma orientação mais clara para os muçulmanos (Ercanbrack 2015). ...
... É correto afirmar que a coordenação de esforços entre os países é importante para estabelecer uma participação ativa na definição e regulamentação dos produtos halal. Isso é fundamental para garantir a proteção dos direitos de consumo dos muçulmanos em relação aos produtos halal (Ercanbrack 2015). ...
A partir de uma análise bibliográfica e entrevistas realizadas no Irã, este artigo apresenta um debate sobre a visão do Islã para as relações econômicas internacionais, A partir de uma análise bibliográfica e de entrevistas realizadas no Irã, este artigo apresenta a perspectiva do Islã xiita sobre as relações econômicas internacionais, com um enfoque específico na realidade iraniana. O objetivo é debater o pensamento econômico no contexto do comércio internacional, destacando as questões éticas e morais que delimitam o comércio exterior no Islã e como essas questões podem ser consideradas tanto no âmbito da OMC quanto nas relações bilaterais entre países islâmicos e não islâmicos. Além disso, o artigo examina como esses países têm utilizado áreas de Zona Franca e o regionalismo para desenvolver o comércio internacional.precisamente sob um enfoque iraniano. A proposta é debater o pensamento econômico no contexto do comércio internacional, apresentando as questões éticas e morais que delimitam o comércio exterior do Islã e como estas podem ser consideradas tanto no âmbito da OMC, como nas relações bilaterais entre países islâmicos e não-islâmicos, e como esses países têm usado a área de Zona Franca, assim como o regionalismo, para desenvolver o comércio internacional.
... Inadvertently, the new Islamic financial products were often at a severe competitive disadvantage because they were subject to double taxation, or clients could not benefit from subsidies and tax rebates awarded to competing products and services in the conventional finance industry (El-Gamal 2006;Warde 2010;Pitluck 2013;Ercanbrack 2015). ...
... In contrast, all nations' conventional financial regulatory environments are more restrictive in retail finance than in wholesale finance, so as to protect non-professional clients from deceptive, fraudulent, or risky business practices (Ercanbrack 2015). Because these retail financial regulations were created in a conventional interest-based banking environment, many of the regulations unintentionally impede contemporary Islamic finance (El-Gamal 2006;Warde 2010;Pitluck 2013;Ercanbrack 2015). ...
... In contrast, all nations' conventional financial regulatory environments are more restrictive in retail finance than in wholesale finance, so as to protect non-professional clients from deceptive, fraudulent, or risky business practices (Ercanbrack 2015). Because these retail financial regulations were created in a conventional interest-based banking environment, many of the regulations unintentionally impede contemporary Islamic finance (El-Gamal 2006;Warde 2010;Pitluck 2013;Ercanbrack 2015). For example, northern jurisdictions typically require banks to offer insurance for bank deposits, so that retail clients' principal is never at risk; a concept typically perceived as riba in contemporary interpretations of Islamic finance (Plews 2005;El-Gamal 2006;Hamoudi 2014). ...
... The UK has been positioned as the leading Western country and Europe's premier centre for Islamic finance (Ercanbrack, 2015; 1 Islamic funds account for 4% and takaful for 2% of global Islamic financial assets (TheCityUK, 2019). These components are not discussed in this chapter due to their negligible presence. ...
... 2 According to the Rome Convention, a contract could only be governed by the law of a country (European Convention, 1980). Therefore, a contract seeking to incorporate a non-state law or body of principles such as shariah would not be recognised as the applicable law of a contract (Ercanbrack, 2015). TheCityUK, 2019). ...
... The UK's Islamic financial market contributes to and aims to increase investment in infrastructure development. 4 However, many have argued that the existing regulatory framework impedes the ability of Islamic financial markets to contribute distinctively towards the intended ethical and financial stability agenda (Aldohni, 2016;Archer & Karim, 2012;Ercanbrack, 2015;IMF, 2015IMF, , 2017Pitluck, 2012). The emerging significance of capital intermediated through Islamic banking and sukuk markets, in particular, makes it necessary to examine the adequacy of the regulatory framework for such alternative financial markets. ...
This chapter reveals critical issues and risks in relation to the regulatory strategies for Islamic financial market in the UK. It is argued that improper regulation would expose the Islamic financial market to (1) sharia compliance risk, (2) restrictive practice of Islamic finance ethics, (3) becoming a façade for conventional financial practices and (4) a lack of transparency that raises legal uncertainty and risk. Recognising the distinctive characteristics of Islamic finance, this chapter critically evaluates the existing regulatory strategies and offers suggestions for improvement. It proposes that regulators introduce standardised rules on sharia supervision, facilitate the growth of mudarabah capital as equity capital, and refine accounting and disclosure rules that properly account for murabahah transactions and complex Islamic securities, such as sukuk. This proposal is consistent with the goals of financial regulation to protect consumers and investors as well as to promote financial stability and market efficiency.
... Inadvertently, the new Islamic financial products were often at a severe competitive disadvantage because they were subject to double taxation, or clients could not benefit from subsidies and tax rebates awarded to competing products and services in the conventional finance industry (El-Gamal 2006;Warde 2010;Pitluck 2013;Ercanbrack 2015). ...
... In contrast, all nations' conventional financial regulatory environments are more restrictive in retail finance than in wholesale finance, so as to protect non-professional clients from deceptive, fraudulent, or risky business practices (Ercanbrack 2015). Because these retail financial regulations were created in a conventional interest-based banking environment, many of the regulations unintentionally impede contemporary Islamic finance (El-Gamal 2006;Warde 2010;Pitluck 2013;Ercanbrack 2015). ...
... In contrast, all nations' conventional financial regulatory environments are more restrictive in retail finance than in wholesale finance, so as to protect non-professional clients from deceptive, fraudulent, or risky business practices (Ercanbrack 2015). Because these retail financial regulations were created in a conventional interest-based banking environment, many of the regulations unintentionally impede contemporary Islamic finance (El-Gamal 2006;Warde 2010;Pitluck 2013;Ercanbrack 2015). For example, northern jurisdictions typically require banks to offer insurance for bank deposits, so that retail clients' principal is never at risk; a concept typically perceived as riba in contemporary interpretations of Islamic finance (Plews 2005;El-Gamal 2006;Hamoudi 2014). ...
Dating from the mid-1970s, Islamic banking and finance (IBF) is an ongoing experiment to critique the conventional interest-based financial system and to construct an alternative "Sharia-compliant" industry. This chapter develops an analytic typology to describe how states respond to this project based on (1) whether the state practices industrial policy to promote the IBF industry and/or (2) whether it promotes a legislative and regulative divarication of the dominant financial market to accommodate IBF. This response can and does differ between the IBF wholesale and retail markets, and such government accommodations are more important in retail than wholesale financial markets. This chapter develops this framework to investigate the social forces promoting and inhibiting Islamic finance in Muslim-minority countries in the global North. Specifically, it argues that Islamic finance has expanded in the United Kingdom after the state moved from a position of elementary accommodation to that of a secular incubator. In contrast, only wholesale Islamic finance has flourished in Luxembourg, in part because the state continues a strategy of elementary accommodation. More pointedly, in spite of a more favorable environment than either the United Kingdom or Luxembourg, in the United States IBF has failed to take root because of the government’s position of strategic negligence.
... It is essential to note that DIFC Court does not imply any commercial purposes, as DIFC is not particularly interested in destabilization of international business. Instead, DIFC Court is aimed at regulating the process, which is why acceptance of its jurisdiction does not mean "playing on the opponent's field" (Ercanbrack, 2015). As a result, preliminary DIFC arbitration is conducted for identification of a party to be penalized even though it represents DIFC. ...
... As a result, preliminary DIFC arbitration is conducted for identification of a party to be penalized even though it represents DIFC. In addition, DIFC is licensed with UAE regulation and control power (Ercanbrack, 2015). Overall, preliminary arbitration regulates international business even beyond the terms of DIFC jurisdiction, as it controls DIFC representatives under any circumstances of international business. ...
Purpose
The major role of DIFC Courts in the Arab community is to handle cases related to commerce and business. For a long time, the court had been acting only in their geographical area until a new law was enacted to extend their jurisdiction all over the world. Afterwards, a lot of criticism emerged as for why and how the court will benefit from such actions. The law has drawn a harsh response although most benefits have also been experienced since the court received quite a large number of new signings. Interaction at the world business forum has benefited the economy of Dubai thanks to the law. Therefore, the following paper discusses the benefits and disadvantages of the law on the expansion of the jurisdiction of the DIFC Court.
Design/methodology/approach
The following study focuses on a description of such benefits and drawbacks. The study does not evaluate a factual process of expansion but indicates the most distinct evidence of positive, as well as negative consequences of the expansion.
Findings
It is appropriate to make a general comment on the fact that the expansion of DIFC Court is not sufficiently effective at the current stage. Needless to say, it contains numerous positive aspects, but the gaps are evidently essential because they place the entire Court in a hard circumstance. The Court does not have a well-developed legal framework for its new area of jurisdiction as long as its limited volume of prior precedent is a distinct sign of the Court’s dependence on the UAE’s Law. In such way, DIFC Court will not be able to address issues within new fields of jurisdiction as it simply lacks an expertise and international law in its legal framework. Moreover, the jurisdiction over new areas of international business was not verified with a plain system of mediation, which is why a current expansion of DIFC Court has to be recognized as redundant. However, its advantages are tending to produce their effects provided that the Court manages to address its current problems.
Originality/value
The study has described the basic benefits and drawbacks of DIFC Court expansion. To speak about the main benefits, they can be depicted as appliance of the common law, unification of English language for proceedings, presence of a preliminary arbitration, and guarantees of award enforcement. In a similar way, the drawbacks of the expansion have been issued. The study has identified such drawbacks as lack of international and sophisticated expertise, untested legal framework, strong influence of forum non conveniens, and existence of a limited volume of prior precedent. The paper has not assessed a success of a factual expansion of DIFC Court jurisdiction, but it has managed to fulfil its primary purpose. Thus, the paper has identified a certain tendency concerning the expansion.
... To mention a few; Kenya amended Stamp Duty Act and the Public Finance Management Act in 2017 to give tax neutrality to the Islamic banking business (Mwaniki,2017). The United Kingdom has amended Land Duty Stamp Act to remove double taxation in Islamic banking (Ercanbrack, 2015). Nigeria in 2013 issued a guideline that exempted Islamic banking and its financial institutions from being taxed twice (Federal Inland Revenue Service, 2013). ...
The operation of Islamic banking in Zanzibar started in 2011 to boost economic activities and meet the demand of its people. However, the introduction of Islamic banking was not followed by any legal amendment to suit the operation of Islamic banking in the country as per Islamic principles. This paper, therefore, examines different laws which governed the Islamic banking in Zanzibar to find how far they support the operation of Islamic banking. The findings of this paper revealed that some of the laws in Zanzibar contain provisions that do not support Islamic banking transactions. The methodology adopted in this paper is based on the content analysis of legislations, leading textbooks, and journal articles. The study used a comparative method to address the study in question. The study recommends amendment of some laws such as the Contract Decree, 1917 and Transfer of Property Decree, 1917, Stamp Duty Act 2017, and Value Added Tax Act, 1998 for improving the legal regime governing Islamic banking transactions in Zanzibar.
... As an example, in Bahrain it is compulsory to use of AAOIFI financial accounting and Sharia standards which is a critical aspect of Bahraini financial service law. Because of that Bahrain is not only an important Islamic Finance hub, but also has an important role proliferation of Islamic financial standards and jurisdictions across the region (Sole, 2007;Ercanbrack, 2015). In 1997, the (Sidlo, 2017). ...
As an archipelago, the Kingdom of Bahrain is located on the southwestern coast of the Persian Gulf. In the early years of the independence, extracting petrolium was the leading sector in Bahrain economy. Despite the fact that Bahrain is the first country in the region which produced the oil and built a refinery, the country could never reached the production level of Kuwait or Saudi Arabia. To lose the competitiveness in oil production conveyed the country to diversify its economy. Today, not only aluminium production, but also retail sector and banking sector are the leading sectors of the country. In fact, the Kingdom of Bahrain is an important financial hub in the Gulf region. There is dual banking system in Bahrain. Currently there are a number of century old interest based commercial banks and some strong interest-free Islamic commercial banks operating in the banking sector. Recently, almost 20 percent annual growth of global Islamic finance showed a foot print in Bahrain. Owing to principles that govern Islamic financial activities, including equity, participation, and ownership brought Islamic banking and Islamic financial instruments more attractive in most of the muslim countries. Bahrain is not exceptional as one of the pioneer countries in perfoming Islamic banking applications both in its region and globally. As a small state with limited productive sectors, Bahrain has fostered the Islamic finance industry, not just locally, but globally.The progress of Islamic banking improvement can be analyzed under three basic parts: banking regulations, operations and improving alternative Islamic financial instruments. The single regulator, the Central Bank of Bahrain (CBB) has pioneered many different Islamic financial instruments and products such as sukuk (Islamic securities). Besides, takaful (Islamic insurance) is increasingly popular in Bahrain. The country tries to increase the interest to Takaful and Retakaful (Islamic reinsurance). And recently, the Bahrain Bourse has introduced a stock market index for Shari’a-compliant companies. These improvements also leaded the conventional insurance firms to serve more qualified products. All in all, today Bahrain is a home to the Gulf region’s greatest applications of Islamic finance institutions in every area of Islamic finance such as asset management, sukuk issuance, and Shari’a-compliant insurance and reinsurance. The purpose of this paper is to investigate the improvements of Islamic banking and Islamic finance in Bahrain. In this vein, regulations, not only the macroeconomic policy implications of the rapid expansion of Islamic finance but also some policy suggestions will be put forth to improve Islamic banking and Islamic finance both in Bahrain and globally.
... Just like international standards in global finance (Lall 2015), Shari'a rules are not broadly open to contestation by non-experts. Rules and standards are decided by select groups, including Shari'a scholars and policymakers (Ercanbrack 2015;Calder 2016). In many ways, the contemporary interpretations of these rules have gone through a profound transformation in the past century. ...
Until recently, most empirical support for theories on regulatory governance has been derived from democratizing and democratic settings. The assumption behind the selection of these cases relies on an understanding that non‐democratic systems will not nurture independent and autonomous regulatory practices. This paper closely examines this claim by problematizing variations in the regulation of the Islamic banking and finance industry based on recent findings from Malaysia and the United Arab Emirates. Combining historical data with field interviews, the findings reveal that historical legacies and regime institutions that frame political competition play a more nuanced role in the contemporary governance of market exchanges in non‐democratic settings. In particular, the type of political competition in authoritarian regimes influences the resulting configuration of regulatory institutions that govern Islamic banking and finance, which accommodate varying degrees of autonomy.
... Pur essendo difficile stimare le dimensioni operative della finanza islamica, che ad oggi coprirebbe comunque non più del 2-3 per cento delle transazioni mondiali, il mercato šarīʿah-compliant si è ormai diffuso a livello globale, dal Golfo (Arabia Saudita, Qatar, EAU), Iran e Sud-Est asiatico (rimanendo la Malaysia il mercato dei capitali più avanzato nella regione), all'Europa (TheBanker, 2013) e soprattutto nel Regno Unito (Cattelan, 2013a). Contemporaneamente, anche la letteratura scientifica in materia si è ampiamente estesa e comprende ormai una quantità innumerevole di pubblicazioni, sia di tipo introduttivo (Ayub, 2007), che di impostazione politico-economica (Warde, 2000;Tripp, 2006), economico-giuridica (Vogel -Hayes, 1998); oppure di impianto critico (El-Gamal, 2006); o più concentrata verso la modernizzazione del diritto islamico nel contesto finanziario attuale (Ercanbrack, 2015). ...
This article deals with the nature of Islamic economics as a scientific paradigm which claims to be alternative to conventional economic thinking.
To critically evaluate this claim, the work investigates the peculiar religious and moral principles that shape the idea of social justice in Islam. Subsequently, it outlines how Islamic economics derives from these principles a specific conceptualization of property rights and commercial relations that embraces parameters of (1) primacy of real economy; (2) transactional equilibrium; (3) and profit- and risk-sharing.
By endorsing the conceptual autonomy of Islamic economics from conventional capitalism, the article also refers to the current emergence of the Islamic financial market at a global stage, and the possible implications for a plural financial system in the future.
The article provides a historical and legal analysis of the development of Islamic trade law under the influence of secular European trade law. It was concluded that until the second half of the 20th century the influence of European trade law on Muslim legal orders was one-sided. Initially, the penetration of secular European trade law into Islamic commercial law was carried out through the law of medieval merchants (lex mercatoria). From the beginning of the 19th century the reception of secular European trade law was determined by the active colonial policy of European states (the model was the French system of trade law, reflected in the Napoleonic Commercial Code). Only at the end of the 20th century international commercial practice began to take into account Islamic contractual structures, as well as religious prohibitions and permissions of Sharia.
A historically informed understanding of ḥawāla and other varieties of informal value transfer systems (IVTS) requires consideration of the normative and cultural elements which structure and facilitate transactions in globalized financial markets. This paper argues that the Sharia-based normative and cultural framework of ḥawāla is created in the social relations of Muslim networks and that, in a criminal law context, this normativity can be used as a tool to discern between legitimate and illegitimate transactions. The new institutional economists’ (NIE) explanation of ḥawāla, which predominates in scholarly work, neglects this common frame of reference built on community, shared belief, and normative rules and expectations. The NIE views economic institutions through the lens of profitmaking and self-interest centred institutional development. Moreover, in a criminal law context, the profit-oriented perspective of law overlooks the normative characteristics that sometimes appear in the transactional characteristics of these transactions. When evidence of these characteristics is presented to the court, they offer a useful tool to differentiate legitimate from illegitimate transfers of value. Legitimate transfers will frequently be facilitated through dense networks in which the normativity and culture of ḥawāla frame the rules and expectations of parties to the transaction. Criminal transactions, on the other hand, typically involve fewer participants, sometimes from different ethnic and linguistic backgrounds, are profit-orientated, and involve means of enforcement such as the use of violence which traditional networks do not employ. The NIE perspective does not fully account for non-western legal orders or for commercial practices in which exchange remains culturally, historically, and socially embedded.
A brief critical examination of the contents and discontents of Islamic economics, and the secularization of Islamic law suggests that under the current conditions, Islamic economics can neither emerge on its own nor exist within the realm of conventional Economics. It cannot set its own agenda for the organization of an ideal Islamic economy because flawed paradigms are inconsistent with its metaphysical foundations, and are conducive to visions of “ethical capitalism” torn by the tensions of the open-ended processes of secularization and Islamization. The dualism of worldviews cannot be resolved into a harmonious unity as the differences in methodologies and metaphysical foundations are so stark that the dramatic change in Islamic fiqh from innovation to imitation is compromised and reconciliation is rather impossible. Thus, it is difficult to argue that Islamic jurisprudence and Islamic economics have evolved on the basis of the authenticity of Islamic teachings. For now, both Islamic jurisprudence and Islamic economics, which used to go hand in hand, seem to be leaning against the wind.
Closed legal systems are gone in modern world, “mixed” legal systems have become the norm. That has made so-called “transplants” easier but, contrary to a widely held view, legal institutions cannot be transplanted. English trust rules even less, for they are not a coherent set of rules. The British attempted to legislate on trusts for their colonies, for instance for Ceylon (the present-day Sri Lanka), and were thus obliged to be coherent. That made it necessary to introduce new legal concepts with unforeseeable consequences. A wave of legislation followed the adoption of the convention “On The Law Applicable To Trusts And On Their Recognition” by the 15th session of the Hague Conference on private international law (1985); it gave birth to the “international model” of trusts that quickly became the favourite setting of the rich and ultra-rich. Jersey in the Channel Islands was the leading jurisdiction, many others followed but it was not until the establishment of the International Finance Centres in the Gulf and later in Kazakhstan where “the laws of England and Wales” are taken as a source of law and local courts are staffed by former English judges or in any event by lawyers brought up in the common law that a proper transplant of the English trust took place. A totally different legal setting witnessed attempts to create imitations that had to run against well-established civil law conceptual attitudes that did not allow the existence of more than one patrimony per person or the segregation of assets within one person’s patrimony. In 2022 France decreed that each businessman is automatically the owner of two patrimonies; that open the way to a radical re-thinking of civil law notions. Québec and Louisiana are taken as examples of civil law legislation on trusts but Québec has followed its own idea that the assets that form the object of a fiducie belong to nobody, while Louisiana’s Trust Code is a deft admixture of civil law and common law elements based on the civilian notion of “fiduciary”. Luxembourg, France and other civil law countries are then examined: the focus then is on South Africa and Scotland, two countries which have a common past in a shared period of the European ius commune and a common present in being both orphaned from a cultural lineage that provided answers to current matters by drawing on Roman law. Now they both solve the problem of the patrimony by holding that a trustee has more than one patrimony, his own and then one for each trust of which he is the trustee.
Ekonomik alanda İslami devletlerin etkinliğinin artması ile birlikte bu ülkelerin dahil olduğu uyuşmazlıklarda İslam hukukunun uygulanması talebi artmıştır. Ancak modern hukuk sistemlerinde hukukun kaynağı din değil, yasalardır. Buna karşın özel hukukta yer alan irade serbestisi prensibinin bir sonucu olarak taraflar arasındaki uyuşmazlığa dini kuralların uygulanması mümkündür. Bunun için tarafların geçerli bir hukuk seçimi yapmaları gerekmektedir. Devlet mahkemeleri açısından hukuk seçiminden kastedilen bir devletin hukukunun se-çimidir. Bu bakımdan İslam hukukunun uygulanacak hukuk olarak seçilmesi mümkün değildir. Ancak İslam hukukunun anasyonel hukuk kuralları olarak değerlendirilmesi ve sözleşme hükümleri olarak kabul edilmesi imkân dahilindedir. Ancak hukuk seçimi klozunda sadece İslam hukukuna veya Şeriatın genel prensiplerine atıf yapılması yetersiz kalacaktır. Zira İslam hukuku ya da Şeriatın genel prensipleri kavramları bakımından dünya üzerinde yeknesak bir kurallar bütünü ve uygulamanın bulunduğu söylenemez. Bu bakımdan tarafların iradesi ortaya çıkarılamadığı için geçersiz bir hukuk seçimi olarak değerlendirmek mümkün-dür. İngiliz mahkemelerinde görülen Shamil Bank of Bahrain v. Beximco davasında da bu hususlar tartışılmış ve “Yüce Şeriat prensiplerine” yapılan atıf geçersiz kabul edilmiştir.
This socio-legal study investigates the phenomenon of Islamic divorce in the UK. The background to the research problem is situated in discussions on Muslim women's rights.
This chapter sets out an analytical framework that explains why regulators in peripheral developing countries respond in different ways to international banking standards. It identifies four factors that generate incentives for convergence on international standards: politicians seeking to integrate their countries into global finance and expand financial services sectors; domestic banks looking to enhance their reputation as they expand into international markets; regulators with strong connections to peer regulators and transnational policy networks; and sustained engagement with the IMF and World Bank. It also identifies four factors that generate incentives for divergence : politicians pursuing interventionist financial policies; politicians and business oligarchs using banks to direct credit to political allies; regulators who are sceptical about the applicability of Basel standards for their local context; and banks with business models focused on the domestic market for whom there are high costs and few benefits. The chapter identifies specific pathways to regulatory convergence and divergence, and salient features of each.
Why have Islamic insurance systems developed well in some countries, but not in
others? Malaysia is considered as Islamic insurance elite due to its relatively
large number of operators it houses as well as the sustained growth of Islamic
insurance sales within the country, while Indonesia and Pakistan are still in early
stages of development. Analyzing the political and social history of Islamization
of insurance systems in these three Muslim majority countries in Asia since 1980s,
this book demonstrates the development gap between these countries on
Islamic insurance results from; firstly, complex bargains made between various
groups within each country polity, and those bargains are structured by the
country’s fundamental political institutions. Secondly, the gap is also an
outcome of different societal transformations during the Islamization that
‘produce Islam(s)’ in these countries. The revival of Islamic principles in these
countries does not only create Sharia-compliant financial products but
produces Islamic norms, identities, ethics, and practices enacted in the way the
communities manage their risk.
The traditional literature on comparative law has never provided a comprehensive methodology for a comparative study of financial law. Although some research in this field has been made to quantify and qualify differences and similarities of national regulatory frameworks around the world, few studies have been devoted to exploring what lies behind the formal text of financial rules, i.e. the interplay of the “legal formants” that influence the construction of national and international financial laws and systems. The difficulty of building-up a scholarly methodology in this field is due to a variety of reasons, including the entangled nature of financial rules along with the mainstream opinion of economic sciences playing a major shaping role. But outlining a comprehensive methodology for comparative financial law studies appears today as compulsory. The multifaceted structure of financial markets across a multi-jurisdictional dimension requires deeper insights into how formal and informal rules set the landscape of the financial legal order. The comprehension of this dynamic interplay is in fact instrumental in examining how economic and legal doctrines, social sciences, political ideologies, and cultural frameworks originate and influence the evolution of international finance around the world. Drawing extensively from the scholarship of Mauro Bussani, this chapter seeks to fill this gap by proposing a theory of the origin of financial law. Starting from the analysis of risk and uncertainty as the main rationales of the financial legal framework, we discuss the legal layers underpinning its construction. Formal and informal institutions are equally shapers of financial orders while most of the financial rules originate and live ‘in the shadows’. Against this backdrop, we seek to shed some light upon the actual role played by technocrats and policymaking agencies in implementing these dynamic formants in modern societies. In doing so, we argue that financial law is just a by-product of “the very cultural framework in which it is embedded” while the evolution of global financial markets is deeply influenced by the geopolitical supremacy of the dominant cultures.
p>Islamic finance continues to grow over the world, the development of technology plays a crucial role to support Islamic finance. The great innovation of technology may come to dig up the potential of Islamic financing, yet digital system needs for sharia compliance, both are in similar needs for sharia overviews regardless different opinions of ijtihad in this modern time. Emphasizing case by case of Islamic finance has been done by the sharia scholars in producing the new product of Islamic banking and financing. The Islamic jurisprudence however should consider the substence and maqasid form of sharia. The objective of this paper is to enlight some vital parts of Islamic legal theory as part of Islamic law in implementing sharia compliance. Furthermore, provide the role of legal system which takes a crucial place in implementing the system, it should be harmonized in the existing condition of Islamic finance. This paper is qualitative methods with deep analysis on Islamic legal theory among muslim scholars.</p
We examine the processes by which regulations prevailing in countries at the core of the global economy spread to countries outside this small group. We show how specific cross-border relationships between banks, regulators, and investors generate regulatory interdependence that drives the diffusion of international standards from the standard-setting countries at the core of the financial system to the financial periphery. We argue that regulatory decisions in the financial periphery are shaped by the prior choices of regulators in other countries, mediated through four specific cross-border relationships associated with banking globalization. We draw on a new dataset of Basel II adoption in over ninety jurisdictions in the financial periphery. Using spatial lag models we show that regulators’ decisions over the adoption of international standards are shaped by the choices of regulators to whom they are connected through the cross-border operations of individual banks, international professional networks, and competition for capital. Our analysis underscores the value of parsing out the relevant actor-level linkages that connect countries: while international considerations shape regulatory decisions, what matters is not the extent to which countries are connected to the global economy but rather the nature of these connections.
In order to solve the complex and multidimensional problems of today's world, we need a radical imaginary, a new way to restructure and transform our society, its institutions, its organizations, and its inhabitants. One such radical imaginary can be provided by Islamic mysticism or Sufism in the form of ishq-i haqiqi or love of the divine. This new imaginary has a distinct epistemology, ontology, and cosmology which needs to be understood within the boundaries of its own discourse and praxis. It has the power to infuse the social world with universal meanings of love, brotherhood, and divinity. This can then help us to question, contest, and restructure our relationships with each other, this universe, and God, our creator. Finally, this new imaginary of ishq-i haqiqi can also be used to transform organizational realities especially with relevance to their purpose and mission and can reverse the existing moral degradation of the workplace. © Springer International Publishing AG, part of Springer Nature 2018.
Legal system and jurisdiction take an important role in developing system or product innovation. The principle of Islamic financial transaction is recently elaborated in different frames of finance. It describes the challenge of Islamic finance in several countries which is linked with the perspective of stakeholders, consumer, industry, and the existing regulation. Various problems and recent decision making concept should be solved properly. This article aims to re-emphasize the rationality of Islamic finance regulation adjusted with consumer’s need. In some points, this study is used as the analysis on Islamic finance regulation. This is a study case categorized in qualitative research. The in-depth analysis is done on the basis of legal appeal in the court of Indonesia and is referred to Indonesian law about Islamic finance.
Though it is advertised and promoted as the bulwark of an alternative economic system based on populist Muslim notions of social justice and fairness, Islamic finance as a practice has failed to meet these objectives. The causes of that failure and the question of whether alternative approaches are possible are the subject of this Article. The failure of Islamic finance to provide that which it promotes is the direct consequence of the application of an Islamic logic driven interpretive system through which rules are derived, which its adherents claim was formalized and systematized by the early jurist Muhammad Ibn Idris Al-Shafi'i. The system bears remarkable resemblance to the jurisprudential theories of Christopher Columbus Langdell in that particular cases (the reports of Muhammad, or hadith) are selected and then expanded into fundamental principles, or at least fundamental rules, through a doctrine known as qiyas, or analogical reasoning. The result is a financial system characterized by an incoherent web of rules, convenient and specific blindness respecting those rules in particular contexts, and deceptive and obfuscatory measures intended to lend the entire affair a patina of legitimacy as Islamic. Social justice and fairness are not significant components of the system. A principled alternative interpretive system, however, does seem possible so long as it remains within particular parameters, among them faithful adherence to Qur'anic verse, substantial respect for the hadith and sufficient systematization and methodological rigor to avoid what some Islamic jurists call subjectivity, or lack of interpretive control. Specifically, the Article engages and expands upon the ideas of Abdul Razzaq Sanhuri and Muhammad Baqir al-Sadr as potential avenues for reform that lie within these parameters. For the full text of the Article, please see 40 Cornell International Law Review 89 (2007).
This article refers to a number of situations in international arbitration that show a certain lack of understanding between legal systems. The issue of conflicts of culture in international arbitration and the possibilities to alleviate them are analysed through three topics: (i) the application of the Shari’a by Western judges (East-West conflict); (ii) the recognition of awards despite their annulment in the arbitration seat country (a specifically French aspect); (iii) divergences between the practice of the Common Law countries, the civil law countries and the Middle-East, related to evidence and procedure.
Trough this article, the author uses his academic experience and his practice as an arbitrator to identity a few means that could solve conflicts of culture in international arbitration such as the equality of applicable systems of law, rigorous conditions for recognition of annulment judgments, a pragmatic case-by-case adaptation of the rules of procedure and evidence, and, in all cases, the rationalisation of the use of ‘public order’ objections.
Disputes settled in Saudi Arabia, or which otherwise contain Saudi elements, are governed by the Kingdom’s lex arbitri, which requires that not only the arbitration clause and compromis be submitted to a designated competent authority for approval, but that the proceedings be supervised by said competent authority throughout their duration, save where conflict of laws rules permit the parties to refer to a foreign jurisdiction. There is no clear line of authority between contemporary Saudi arbitration law and Hanbali arbitral jurisprudence. Equally, the decisions of the arbitral governing authority (Diwan), although important, does not lend itself formally to stare decisis. Our analysis has demonstrated that this Hanbali corpus of law is in fact more flexible than Saudi law, particularly on the ground of interpretative techniques. This finding should dismiss the notion that Hanbalism is an archaic and backward-looking institution.
The Dubai International Financial Centre (DIFC) is an autonomous jurisdiction based in the Emirate of Dubai where the civil and commercial laws of the UAE do not apply. The DIFC’s legal system is based instead on common law and is supervised by the judges of the DIFC’s own independent courts. The DIFC’s legal landscape now includes the recently enacted DIFC Arbitration Law 2008, based on the UNCITRAL Model Law on International Commercial Arbitration, which opens up the DIFC as a possible seat of arbitration to all interested parties notwithstanding the absence of any links to the DIFC. Parties looking to seat their arbitrations in the Middle East now have the option of selecting the DIFC as a neutral, English-speaking, common law jurisdiction with a modern arbitration law, backed by an experienced judiciary, located in one of the leading commercial and financial centres in the Middle East. The aim of this article is threefold: (a) to present a short introduction to the DIFC’s unique legal system in order to establish the proper context for (b) a critical examination of the new Arbitration Law, and (c) to assess the likely impact of the new Law (and the recent establishment of the DIFC-LCIA Arbitration Centre) on arbitration in the Middle East and the wider region.
Hiyal (sg. hīla) are "legal devices" or tools used to achieve a certain objective, lawful or not, through lawful means. Although it is generally agreed that hiyal are not merely "evasions of the law," their exact nature and place within Islamic jurisprudence remains an open question. To date, there have been only a few studies devoted to the subject and these have focused almost exclusively upon the Hanafīs, who developed hiyal into a special branch of the law, called makhārij, i.e. "exits". I shall examine here the doctrine of the Hanafīs together with that of the Mālikī/Medinese jurists, who were early witnesses for and against hiyal as conceived by the Hanafīs. On the basis of their understanding of law in terms of utility, the Hanafīs employed makhārij to provide remedies for those who sought them. As a particular transmission of Hanafī doctrine, the genre of makhārij sought to confirm the standard doctrine by discovering "exits" suggested therein. The Hanafī concern for the subject was shared by the Mālikīs, albeit from a different point of view. The Mālikīs discussed hiyal as jurisprudential materials that convey the validity of their doctrine as prescribing appropriate solutions. Thus, I conclude that both the Hanafīs and Mālikīs regarded hiyal as solutions drawn from the materials of jurisprudence in accordance with the spirit of law as interpreted by the jurists of their respective schools.
The preceding Supreme Court decisions led to the following conclusions: firstly, although the Supreme Court in these decisions repeatedly insists that recourse to Islamic Shari'a is a matter of policy to be left entirely to the federal legislature, the Court repeatedly announced that all federal legislation should be derived from Islamic Shari'a. The Court thus adopted the Islamists position according to which any legislation violating the Shari'a dictates should be considered unconstitutional.66 Secondly, although, as mentioned, there was strong evidence of an apparent conflict between the Constitution and the laws dealt with by the Supreme Court in the aforementioned judgments, the Court was reluctant to declare the laws unconstitutional. This is accounted for by the Court's insistence on creating uniformity among these judgments. Greater conflict occurred between the Constitution and Articles 61 and 62 of Abu Dhabi Law than occurred between the Constitution and the Alcoholic Drinks Laws of Abu Dhabi and Sharjah. The fact that there was seen to be no conflict between the Constitution and Articles 61 and 62 naturally led the Supreme Court (for the purpose of creating uniformity among its judgments) to deny the existence of conflict between the Alcoholic Drinks Laws and the Constitution. Thirdly, the Supreme Court in interpreting and applying Article 7 of the Constitution in the judgments mentioned above, distinguished between civil and criminal matters. In answering the question of the legality of bank interest, the Court considered the application of the Shari'a as a matter of policy to be left to the legislature, and not for the judiciary to decide. Concerning the application of the Shari'a in criminal matters, the Court declared that the lower federal courts should apply the punishments prescribed by the Shari'a in Hudud offences. Indeed, practice in the UAE shows the application of Shari'a in the sphere of criminal matters only; it does not apply to commercial matters, especially in the case of applying interest in commercial law as proven by the Supreme Court in the Junatta Bank case. The roots of such a distinction can be found in the answer to the question, why was the application of Shari'a rules regarding Hudud offences made obligatory by the Supreme Court, while the application of the Shari'a rules affecting bank interest was not? The probable answer is that the Supreme Court has shied away from applying the Shari'a where it would threaten orderly economic development and the modernisation of its institutions.67 The application of Hudud punishments, by comparison, threatens no such disruption.
The process of modernising the Emirates' legal systems which started in the early 1960s essentially involved replacing the traditional system of law and justice (which was effectively governed by the Shari'a), with laws and institutions of Western inspiration. In addition, alongside the traditional Shari'a courts (which applied Shari'a law and were presided over by Shari'a-trained judges), the
With the generalization of production for exchange in modern times and the corresponding expansion of monetary and commercial transactions, the issue of contractual freedom has become a major concern for Muslim jurists and legislators, instigating a reconsideration of the classical doctrines of Islamic law on the subject. Due partly to its religious character and partly to the historical circumstances presiding over its formation in the first three centuries of the Hijra, Islamic law does not permit freedom of contract. Broadly speaking, three kinds of considerations intervene to restrict freedom of contract in classical fiqh: (a) those arising from the prohibition of usury (ribā); (b) those delimiting the licit object of legal obligation (maall alaqd); and (c) those concerning the stipulations attached to the contract (shurū). In the present article, I investigate the third category of restrictions and touch on usury and the licit object of obligation insofar as the latter affect shurū (sing., shar), namely the conditions attached to a contract.
How much regulation do the consumers of non-bank retail investment services want? The arrival of the Personal Investment Authority raises questions about the necessity, costs, structure and accouni-ability of regulation, as well as its potential moral hazards.
On a global scale, the estimated flow of migrant workers' remittances through formal channels now comfortably exceeds $100bn per annum, while the unrecorded flow through informal channels amounts to at least as much again. During the last few years the Informal Value Transmission Systems (IVTS) networks through which the latter are transferred have attracted a great deal of attention, both because of a gradual realisation of their scale, and because of fears that they could provide a vehicle for drug smugglers and terrorists to shift funds without fear of detection by the authorities. Recently reinforced anti-money laundering (AML/CFT) regulations aimed at curbing such illegitimate transfers are having an expensive impact on all sections of the financial services industry, no less in the formal than the informal sector. As yet, however, remarkably little attention has been paid to the basis on which the so-called‘underground’networks in the informal sector actually operate, the basis on which they organise and guarantee the security of their financial operations, let alone the extent to which they may have developed their own internal mechanisms for keeping drug smugglers and terrorist financiers at bay. In the same vein there is little awareness of the extent to which these‘informal’networks now use sophisticated communications technology, including Swift and telegraphic transfer (TT), to implement their transactions, and the extent to which the financial liquidity generated by remittances now plays a key role in supporting commercial counter-trade. Based on first-hand observations of the activities of Anglo-Pakistani hawala networks, this paper presents an empirically informed account of the operation of IVTS as highly efficient financial systems, and on this basis explores whether recently reinforced AML/CFT initiatives are fit for their purpose.
This paper examines the unfinished agenda of the governance structure for financial regulation and supervision in Europe. In this unfinished agenda, there are two opposite forces at play: one that fosters greater centralisation and another one that promotes decentralisation with co-operation. I try to cast some light on this debate, by arguing that a single market with a single currency does need some common rules, but does not require a single supervisor. I also argue that the possible centralisation of one function (lender of last resort) does not imply nor require the centralisation of other supervisory functions.
On the Development of Custom as a Source of Law in Islamic Law: Al-rujū'u ilā al-'urfi ahadu al-qawā'idi al-khamsi allatī yatabannā 'alayhā al-fiqhu
- Libson G.