Flexibility and Shari'ah Compliance of Islamic Financial Contracts: An Evaluative Framework

Moqbel, T; Ahmed, H

Abstract

Although the key distinguishing feature of Islamic finance is compliance with Sharīʿah, there is criticism from various quarters on the Sharīʿah compliance of its products. However, there is no objective way to assess the Sharīʿah compliance of Islamic financial contracts. This article develops a structured framework for analysing Sharīʿah compliance of Islamic financial contracts by deconstructing them and developing principles of evaluation based on concepts from Islamic legal theory. Other than providing a framework to assess Sharīʿah compliance of Islamic financial contracts, this article also alludes to an important issue regarding the contracts’ flexibility. Using concepts from Islamic legal theory, the article classifies different contractual stipulations according to their legal weight, and identifies how legal perspectives on the requirements of compliance can determine the flexibility of contracts. An evaluative framework is used to assess the Sharīʿah compliance of an actual muḍārabah (silent partnership) contract and finds it to be defective.

Citation

Moqbel, T., & Ahmed, H. (2020). Flexibility and Shari'ah Compliance of Islamic Financial Contracts: An Evaluative Framework. Arab Law Quarterly, 35(1-2), 92-115. https://doi.org/10.1163/15730255-bja10052

• Journal Article Type: Article
• Acceptance Date: May 12, 2020
• Online Publication Date: Jul 22, 2020
• Publication Date: Jan 1, 2020
• Deposit Date: May 29, 2020
• Publicly Available Date: Aug 27, 2020
• Journal: Arab Law Quarterly
• Print ISSN: 0268-0556
• Electronic ISSN: 1573-0255
• Publisher: Brill Academic Publishers
• Peer Reviewed: Peer Reviewed
• Volume: 35
• Issue: 1-2
• Pages: 92-115
• DOI: https://doi.org/10.1163/15730255-bja10052
• Public URL: https://durham-repository.worktribe.com/output/1269674