Essay: Dispute Arbitration in Islamic Finance

One of the problems facing dispute arbitration in Islamic finance, lie in the diversity of practice and thoughts of the Shari’a law across the Islamic countries . There are different shari’a schools such as Hanafi, Hanbali and Shaf’ie within Sunni and other within Shia which have slight differences in their teachings .

For instance, Hanafi teaching or school is common in Syria, Iraq and Turkey whereas Maliki is common in Saudi Arabia and North Africa. These differences influence the concept of finance dispute resolution. For instance, arbitration in Malaysia using the Shari’a law is more liberal compared to the arbitration using Shari’a law in the Gulf region where they take Shari’a in a very pure way .

The difference between the English law and the Shari’a law in terms of arbitration process, rules and provisions, bring about several challenges especially when a case involves Islamic and non–Islamic countries . Incase of a dispute, the most suitable law to be used in the arbitration process is always subject to the benefits that any party in the arbitration process is bound to receive. This has made some companies to prefer arbitrations from certain regions or countries as in the case of  AHAB v. Mashreqbank reviewed above.