De-identification of Islamic finance contracts by the common law courts

This chapter seeks to analyse how the courts of two major common law countries, the UK and Malaysia, have dealt with Shari’ah non-compliance in Islamic finance contracts. There seems to be two notable trends. The approach adopted by the courts in the UK has been labelled as ‘non-interventionist’ as they have declined to adjudicate Shari’ah issues in Islamic finance contracts. As a result, these contracts have become similar to their conventional counterparts. The Malaysian courts’ approach, on the other hand, is said to be ‘interventionist’ as Shari’ah aspects of Islamic finance contracts have been adjudicated. The manner in which Shari’ah issues have been dealt with, however, has not been consistent. This has led to occasional conflicts between the courts and Shari’ah scholars as to who should have the authority over the interpretation of Shari’ah. The chapter examines the implications of both approaches and offers viable solutions.