Islamic finance dispute resolutions in the English courts: past experience and an outlook for the future

Abstract

Purpose This paper explores the experience of “Shari’a” as non-state law in the English courts through a historical analysis of past Islamic finance dispute resolutions (IFDRs). This paper aims to propose a conceivable scenario relating to the law applicable in international commercial contracts in the English courts with the emergence of the Hague Principles 2015. Design/methodology/approach This paper addresses several issues that have been raised in English case law: doubts about the legal nature of “Shari’a” as non-state law; the limits placed on freedom of choice of “Shari’a” law by the application of a single legal system; and the distinction between application of law and incorporation by reference of “Shari’a” in IFDRs. The paper then analyses the conformity of “Shari’a” with the provisions now used to resolve Islamic finance disputes (trade and investment) in the English courts, using an empirical analysis of The Accounting and Auditing Organization for Islamic Financial Institutions standards. Findings The paper provides that, in theory, “Shari’a” standards could play a significant role in IFDRs after Brexit, even though a gap persists in practice because the Hague Principles 2015 have not yet been adopted by the English legal system. Research limitations/implications The study focuses on the English courts and shows how the IFDRs could be resolved with the emergence of Hague Principles 2015 in the post-Brexit era. Originality/value To the best of the author’s knowledge, this paper appears to be the first paper to provide a conceivable scenario relating to the future of the IFDRs in the English courts.