The law of Islamic finance in the United Kingdom : legal pluralism and financial competition

The extant literature concerning the Law of Islamic Finance (LIF) is dominated by illustrations of Islamic financial contracts and critiques of the way in which the sharia has been circumvented. Much less emphasis has been placed on understanding the regulatory and financial environment in which the...

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Main Author: Ercanbrack, Jonathan G.
Published: SOAS, University of London 2011
Subjects:
Online Access:https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.576544
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spelling ndltd-bl.uk-oai-ethos.bl.uk-5765442018-11-20T03:16:54ZThe law of Islamic finance in the United Kingdom : legal pluralism and financial competitionErcanbrack, Jonathan G.2011The extant literature concerning the Law of Islamic Finance (LIF) is dominated by illustrations of Islamic financial contracts and critiques of the way in which the sharia has been circumvented. Much less emphasis has been placed on understanding the regulatory and financial environment in which the LIF is formed and practiced. This thesis considers the challenges in formulating and implementing a modern, transnational LIF in the conventional financial and legal environment and offers solutions to these problems. It demonstrates the way in which the classical sharia is transformed by these challenges into a LIF, a hybrid law resulting from pluralistic legal interaction and financial competition. In assessing the manner and impact of implementing the LIF in the United Kingdom, the thesis considers the interaction of the sharia with English law, UK financial services law and international regulatory standards. Comparative law methodology, with a particular emphasis upon legal pluralism and legal transplants, are employed. The sharia, a relatively stateless law, is the inspiration behind Islamic financial contracts. Dominated by transnational corporate interests, Islamic financial ijtihad represents the strategy to adapt conventional financial contracts to sharia criteria. The results are hybrid structures that conform to Islamic legal theory but which generate municipal legal challenges in practice, as well as sharia-compliance risks. Such structures have been integrated in English law with the creation of tax exemptions and novel regulatory classifications that treat these structures as loan arrangements and debt-based instruments. Furthermore, Islamic financial transactions are subject to UK financial services regulation, which itself incorporates European Union financial directives and Basel Capital Adequacy Standards. Finally, Islamic financial contracts, which are often governed by English law, face challenges in English courts concerning parties' choice of the sharia as the proper law of their contract. Arbitration, on the other hand, offers parties the autonomy to choose the sharia as the substantive law of their contract and to have it enforced under English law. The wide range of challenges in articulating and implementing a LIF demonstrate the hybrid nature of the law, resulting from pluralistic legal interaction in modern financial markets. This pivotal insight may encourage scholars and practitioners to revise their conception of the LIF and, by extension, their view of the industry and its financial practices. In sum, the LIF is a modern, transnational law that derives its inspiration from the classical Islamic tradition of commerce but which has been innovated in ways that distinguish it as an emergent law in its own right.340.5SOAS, University of Londonhttps://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.576544http://eprints.soas.ac.uk/13598/Electronic Thesis or Dissertation
collection NDLTD
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topic 340.5
spellingShingle 340.5
Ercanbrack, Jonathan G.
The law of Islamic finance in the United Kingdom : legal pluralism and financial competition
description The extant literature concerning the Law of Islamic Finance (LIF) is dominated by illustrations of Islamic financial contracts and critiques of the way in which the sharia has been circumvented. Much less emphasis has been placed on understanding the regulatory and financial environment in which the LIF is formed and practiced. This thesis considers the challenges in formulating and implementing a modern, transnational LIF in the conventional financial and legal environment and offers solutions to these problems. It demonstrates the way in which the classical sharia is transformed by these challenges into a LIF, a hybrid law resulting from pluralistic legal interaction and financial competition. In assessing the manner and impact of implementing the LIF in the United Kingdom, the thesis considers the interaction of the sharia with English law, UK financial services law and international regulatory standards. Comparative law methodology, with a particular emphasis upon legal pluralism and legal transplants, are employed. The sharia, a relatively stateless law, is the inspiration behind Islamic financial contracts. Dominated by transnational corporate interests, Islamic financial ijtihad represents the strategy to adapt conventional financial contracts to sharia criteria. The results are hybrid structures that conform to Islamic legal theory but which generate municipal legal challenges in practice, as well as sharia-compliance risks. Such structures have been integrated in English law with the creation of tax exemptions and novel regulatory classifications that treat these structures as loan arrangements and debt-based instruments. Furthermore, Islamic financial transactions are subject to UK financial services regulation, which itself incorporates European Union financial directives and Basel Capital Adequacy Standards. Finally, Islamic financial contracts, which are often governed by English law, face challenges in English courts concerning parties' choice of the sharia as the proper law of their contract. Arbitration, on the other hand, offers parties the autonomy to choose the sharia as the substantive law of their contract and to have it enforced under English law. The wide range of challenges in articulating and implementing a LIF demonstrate the hybrid nature of the law, resulting from pluralistic legal interaction in modern financial markets. This pivotal insight may encourage scholars and practitioners to revise their conception of the LIF and, by extension, their view of the industry and its financial practices. In sum, the LIF is a modern, transnational law that derives its inspiration from the classical Islamic tradition of commerce but which has been innovated in ways that distinguish it as an emergent law in its own right.
author Ercanbrack, Jonathan G.
author_facet Ercanbrack, Jonathan G.
author_sort Ercanbrack, Jonathan G.
title The law of Islamic finance in the United Kingdom : legal pluralism and financial competition
title_short The law of Islamic finance in the United Kingdom : legal pluralism and financial competition
title_full The law of Islamic finance in the United Kingdom : legal pluralism and financial competition
title_fullStr The law of Islamic finance in the United Kingdom : legal pluralism and financial competition
title_full_unstemmed The law of Islamic finance in the United Kingdom : legal pluralism and financial competition
title_sort law of islamic finance in the united kingdom : legal pluralism and financial competition
publisher SOAS, University of London
publishDate 2011
url https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.576544
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