Islamic finance is growing fast all over. The spread of Islamic banking is reaching high percentage, as revealed in studies.
This march is due to the nature of Islamic banking, far from greediness, speculation, uncertainty, ambiguity and others. To support this march, there is a need for new products to satisfy consumers at different places with different requirements.
A positive stand is required from Sharia scholars and jurists to look into new applications for the benefit of all. From legal perspective, we believe that a fast and equitable channel is required to settle disputes that could arise. Herein, due to the nature of Islamic finance, it would be most prudent and appropriate to seek arbitration as the most suitable appropriate vehicle for settlement of all disputes.
Arbitration has been instructed in Surratt An-Nisaa, wherein it has been stated, to appoint arbitrators for reconciliation. What more is needed than such instruction to seek arbitration in case of disputes, and this should apply to all disputes including trade and banking disputes.
The importance of seeking arbitration, with reference to Islamic banking disputes in particular, stems from the fact that Islamic banking products are of special technical nature that requires special technical understanding.
As a fact, this technical understanding will be available in arbitration tribunal composed of Sharia scholars, jurists and elites.
Here, in the arbitration tribunal, the advantage of Sharia knowledge is mostly available to a high degree of certainty. Choosing an arbitration tribunal composed of Islamic jurists and scholars is the suitable mechanism and appropriate means for settlement of disputes that could arise in relation to Islamic banking disputes. By this alternative, we will not face a situation that is similar to what had happened for example, in the case of Shamil Bank of Bahrain vs. Beximo Pharmaceuticals.
In this case, among others, the courts mentioned that the ‘Glorious Sharia Rules’ are not framed or drafted in a certain specific law.
They represent general principles with different schools of thought expressing many ideas. Whereas, on the other hand, reference to English Law or other codified laws like the French Law or German Law, etc is clear and acceptable. To escape such instances, we believe that arbitration is a necessity, if not a must, for steady progress of Islamic finance.