Islamic Finance: Law and Practice

This is an ambitious book. Its subject matter is challenging for conventional lawyers because finance and banking law are typically the domain of hard-core commercial lawyers. This is not generally the case with the subject matter of this book as it applies to Islamic lawyers. In fact, it is not uncommon for those with Islamic studies degrees to naturally consider themselves experts in Islamic law; even more so for those with combined studies in law and Islamic studies. The complexity of financial law as such is not evident to students or scholars of Islamic law or Islamic studies, as opposed to general law. While the situation in the Islamic world is understandable and justified to some degree it is no longer viable. This is in contrast to the over-specialization in Western legal systems. Islamic finance requires a strong basis in finance and the legal dimension of Islamic finance further demands a solid understanding not only of law, but also of the complexities in the application of Islamic finance rules in contemporary legal systems, including those of Muslim-majority states. Islamic finance law is not a monolithic remnant of past times. It must compete with other forms of finance and the entire industry behind it must be able to market its products effectively and convincingly even to non-Muslims. More significantly, its legal dimension must be compatible with laws and legal systems in which it is meant to operate and keep abreast of the complexities of modern finance transactions. It is telling that a good number of Islamic finance transactions and dispute resolution is taking place in London with the use of governing law clauses that provide for both Islamic and English law. Hence, it is no longer possible to claim expertise in Islamic finance law on the basis of Sharia-based studies, or even general legal studies. It is within this shift from a purely theological reading of Islamic finance to a market-based application that this book is contemplated.