ABSTRACT
The choice of law is an area that lawyers must understand in order to effectively meet their clients’ expectations in an Islamic finance agreement. Whether parties are domestic entities within a common law or civil law jurisdiction, or part of a large cross-border endeavour which has agreed to settle disputes in a jurisdiction whose system has no historical Shari’ah tradition, contracts must specify the applicable Shari’ah-based terms – being sure to state with specificity the standard which shall be applied. In the case where parties prefer a broad basis from which to make arguments that are specific to Islamic finance, it is necessary either to incorporate works from standard-making bodies, or to choose the law of a specific jurisdiction with a Shari’ah tradition, such as Malaysia or Saudi Arabia. Other works have explored the area of the choice of law in Islamic finance, mostly critiquing various decisions that have become prominent within the field. This chapter discusses those cases in order to point out possibilities and pitfalls, while drawing attention to the underlying issues that must be considered by counsel at the time of drafting the agreement.
