Law and Islamic finance

Defining Terms

The starting assumption of UK Islamic Finance Law is that law is an essential tool for the understanding and analysis of Islamic finance and banking. Whilst this may seem to state the obvious in fact the preponderance of the literature dealing with the contemporary industry either does not or does not adequately set out the principals and constitutive legal rules and sources from Islamic commercial law.

An economic approach, subsuming accounting or marketing and branding considerations prevails. Where legal sources and their modern applications are considered the treatment is often unnecessarily opaque (referring to academic and scholarly debates of little relevance to contemporary doctrine.) Leaving the arcane and superfluous aside UK Islamic Finance law seeks to reveal the underlying and recognisable legal structures and concepts essential to Islamic law in its contemporary financial and wider commercial applications. Doing so it accepts and furthers the proposition that: ‘One of the most prominent features regarding the development of the Islamic economy in its “modern era” (which begins approximately 1390 AH, or 1971 CE) is the interactive influence of law, particularly in its jurisprudential sense. And law, in both its jurisprudential application, is stimulating and shaping the growth of Islamic finance.’[1]

A further question frequently raised about Islamic law is the respective import or weight of the spirit or the letter of the law.


[1]  Yusuf Talal DeLorenzo and Michael J.T. McMillen, ‘Law and Islamic Finance: An Interactive Analysis,’ in Simon Archer and Rifaat Ahmed Abdel Karim, eds, Islamic Finance: the New Regulatory Challenge (2nd edition, Wiley 2013) 163-223 at 163