ABSTRACT
The chapter begins by examining the prohibition of the award of interest under Shari'a. In particular, it discusses how classical Shari'a forbids the payment of interest, even if the claimant is being awarded compensation or damages. The domestic law of most Muslim countries make provision for the payment of simple interest by judges or arbitrators, but generally prohibit the award of compound interest. A minority of Islamic scholars such as Tantawi and Wasil have issued fatwas, to the effect that simple interest is not riba, but merely a form of profit sharing of investments. It is unclear whether compound interest is treated as riba. The chapter examines the approach taken by the domestic legislation of most Muslim countries, in relation to what constitutes as riba. The arbitral tribunal in the ICC Case 7373 also noted that 'anything in the nature of usury or unjust taking of interest, as well as compound interest are barred by this doctrine under Shari'a law.
