Islamic Finance and the Modern World: The Legal Principles Governing Islamic Finance in International Trade
The Company Lawyer, Vol. 31, No. 8, pp. 249-254, 2010
6 Pages Posted: 7 Apr 2011 Last revised: 25 Nov 2013
Date Written: 2010
Islamic law or Sharia purports to govern all aspects of the private and public life of the believers. Its all-embracing character is the constant narrative of Islam as a religion and a civilization. While Sharia does not address finance in its modern meaning, it does incorporate general principles governing the economic behaviour of the Islamic society and specific instruments regulating classic commercial transactions. Thus Islamic banks are unable to use conventional methods of financing and seek to provide Sharia-compliant alternatives to the services rendered by Western banks. They use a different paradigm of financing, namely asset based financing, and employ the well-defined structure of nominated contracts in Islamic law. This article looks in some detail at the structure of Islamic finance instruments and the practical and theoretical implications of the growth of this method of financing for the Western lawyers. More specifically the article seeks to present a concise analysis of the place of Islamic finance in English law.
Keywords: Islamic Finance, International Trade, International Sale, Banking and Finance
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