Rethinking dispute resolution mechanisms for Islamic finance: understanding litigation and arbitration in context

Abstract

While there seems to be a growing appetite for Islamic finance products at a global level, the parties using these products do not seem to pay enough attention to how best they can resolve any disputes arising from these agreements. It is a shortfall that undermines the Islamic compliance aspect of these transactions and jeopardises their unique Islamic characteristic. This article considers ways in which English litigation can be used as an optimal mechanism to resolve Islamic finance disputes. The article particularly analyses the incorporation of international Sharia Standards in Islamic finance agreements as a way to overcome the disadvantages of ligation highlighted by a large body of case law in this context. It then argues that, while arbitration might seem on the face of it a more appropriate mechanism, it is riddled with complexities and disadvantages.