Malaysia and the Centralized Model of Islamic Finance Regulation

UAE and Malaysia editor Paul Lee's commentary examines Malaysia as an example of a centralized model of regulating Sharīʿah compliance in Islamic finance. "When parties seek to engage in Islamic finance in a jurisdiction, that jurisdiction must make a determination as to whether, and how, to regulate Islamic finance. Beyond those issues arising in conventional finance, Islamic … Continue reading Malaysia and the Centralized Model of Islamic Finance Regulation

The Need for an Islamic Bankruptcy Code

Student editor Esther Agbaje (HLS ’17) suggests that sukuk (commonly called Islamic bonds) are insufficient to handle bankruptcy in financial systems operating with respect to Islamic law, or sharīʿa compliance. Banks and other financial institutions or municipalities that issue sukuk intend for these instrument to organize debt and therefore to be insulated from default. This idea seeks to implement the Islamic law financial principle of profit/loss sharing, designed to … Continue reading The Need for an Islamic Bankruptcy Code

STANDARDS:: Auditing and Accounting Organisation for Islamic Financial Institutions’ (AAOIFI) Sharīʿa Standards for Financial Institutions (2010)

In 2007, the Auditing and Accounting Organisation for Islamic Financial Institutions (AAOIFI) considered about 85% of sukuk (commonly called Islamic bonds) to be non-sharīʿa-compliant. In 2010 they released these comprehensive guidelines on Islamic finance, including a section on sukuk (pg. 303), which outlines factors to consider when creating Islamic bonds. One such factor is industry, … Continue reading STANDARDS:: Auditing and Accounting Organisation for Islamic Financial Institutions’ (AAOIFI) Sharīʿa Standards for Financial Institutions (2010)

Debt and Bankruptcy in Classical Islamic Law

Student editor Esther Agbaje (Harvard Law School) explores classical Islamic law's basic conceptions of debt and bankruptcy. While the main Islamic texts, the Qur’ān and Sunna (records of the Prophet Muhammad's teachings), provide principles for fiscal  matters, these principles are not enough to establish systems as complex as those in modern finance with a guarantee of soundness in … Continue reading Debt and Bankruptcy in Classical Islamic Law

The Comparative Costs and Benefits of Models of Islamic Finance Regulation

Islamic finance is under increased scrutiny. Just last week, the Accounting and Auditing Organization for Islamic Finance Institutions (AAOIFI) announced plans to more aggressively develop centralized standards to regulate the boards responsible for assessing sharīʿa-compliance among banks and financial institutions doing business in GCC countries. UAE editor Paul Lee provides some context. From a series … Continue reading The Comparative Costs and Benefits of Models of Islamic Finance Regulation

New Trends in Regulating Risk in Islamic Finance

UAE editor Paul Lee details how Western courts have married Western and Islamic finance without compromising the principle of fair competition. The regulation of Islamic finance has generally been an area to which Western jurisdictions have devoted limited attention, and courts and regulators have been forced to step in ad hoc to fill necessary gaps. This post … Continue reading New Trends in Regulating Risk in Islamic Finance

Legal Entrepreneurs in the Halal Industry: The Case of Sharīʿa in China

China editor Matthew S. Erie writes about how the Chinese government's attempts to legally respond to its Muslim Hui population's calls for greater regulation of halal food counters the original secular intentions of a socialist legal system. The law of the People’s Republic of China (PRC) allows for no legal basis for religious law, such as sharia. This bar, however, … Continue reading Legal Entrepreneurs in the Halal Industry: The Case of Sharīʿa in China