Recognition and Enforcement of Islamic Finance in the Middle East

By Waugh, Jody; Al Awamleh, Ahmad | Business Law International, January 2014 | Go to article overview

Recognition and Enforcement of Islamic Finance in the Middle East


Waugh, Jody, Al Awamleh, Ahmad, Business Law International


Introduction

All Arab states - from Morocco in the west through to Oman in the east - are civil law countries and, with the exception of Lebanon, prescribe Islam as the religion of the state in their constitution. With the exception of Jordan, all to a greater or lesser degree prescribe Sharia as 'a' or 'the' source of legislation.

Arab states follow a civil law system because of the former French occupation of Egypt and the significant contribution made by Dr Abd ElRazzak El-Sanhuri, who drafted the Egyptian Civil Code in 1948 and came into force in 1949 with key assistance from French legal jurists.

The Egyptian Civil Code was not only the first codified law in the Arab part of the world, but it also provides for the principles of Sharia to be a legitimate source of law. It is worth mentioning that the Egyptian Civil Code examines only commercial and civil relationships (purely general principles of contract law), and does not address any provisions related to family law (ie, marriage and inheritance). Further, the Egyptian Civil Code does not provide for specific provisions that regulate Islamic finance products; rather it provides for provisions that regulate contract law in general terms.

Nevertheless, Middle Eastern jurisdictions measured the Egyptian Civil Code as an ideal model on which to base their own legal systems at that time. By the passage of time, all other Arab states have codified their own civil codes, which largely derive their origins from the Egyptian Civil Code.

It is important to bear in mind that as a result of the Ottoman occupation of Arab states and the application of Majalat Al-Ahkam Al-Adlia (A1 Majala), the Civil Code of the Ottoman Empire, Arab states, after their independence, continued to apply A1 Majala, until they enacted their own civil codes - which are, as earlier highlighted, based on the Egyptian Civil Code. Since A1 Majala is based on Sharia principles, the civil codes of all Arab states are based on Sharia principles. The influence of Sharia principles on the legal system of Arab states appears, mainly, in the civil codes, as the civil code of most Arab states explains that if there is no specific agreement between the contracting parties, the court has to comply with a specific order of legal sources being: (1) codified legislation; (2) commercial custom; and (3) if the judge is not able to find an answer in these sources, the judge should consider the principles of Sharia. Consequently, courts in the Arab states cannot rule against the principles of Sharia since Sharia principles are a source of legislation.

Each Arab state now has its own written constitution and an enormous number of codes regulating all areas of legal practice (eg, civil code, commercial code, companies code, tax code, etc), and therefore courts and judges are restricted to enacted legislation only. In other words, there is diminutive scope for judge-made law in civil, criminal and commercial courts.

Generally, Arab states fall into three categories when it comes to embracing Sharia principles:

1. states that transformed their internal financial system to an Islamic form such as Sudan and Saudi Arabia;

2. states that adopt Islamic banking as a national policy while sustaining duel banking systems, such as Kuwait, Bahrain and the UAE;

3. states that neither support nor oppose Islamic banking within their jurisdiction, such as Egypt and Jordan.

Nevertheless, although the laws of most Arab states, as highlighted above, are based on the principles of Sharia generally, the current legislation in place does not encompass specific codified legal provisions regulating Islamic finance products. Hence, Islamic finance practice, in most of the Arab states, is developed on general principles of contract law.

This article looks at the recognition and enforceability of Islamic finance products (with a focus on Ijara and Murabaha) in the Arab states, in particular in the UAE. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Recognition and Enforcement of Islamic Finance in the Middle East
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.