Islamic commercial arbitration and private international law: mapping controversies and exploring pathways towards greater coordination

Abstract

This article maps the main fault lines between the concerns for Shari’ah compliance, which are central to Islamic commercial arbitration and the categories of private international law. While issues such as applicable law, public order and the enforcement of foreign arbitral awards are routinely addressed in private international law, questions remain as to the extent to which the latter is able to accommodate additional concerns, which would be relevant for Shari’ah compatibility of an Islamic commercial arbitral award. This study is based on the qualitative methodology that is standard in legal analysis. This methodology consists, first, of desk-based research to compare the formulations found in a variety of textual sources: national and international legal sources, doctrinal opinions and the rulings of different courts. Second, the implications of different formulations are drawn out by considering actual and possible ‘limit cases’ in which the different wordings would translate into incompatible solutions. Third, proposals are made to help address the ensuing incompatibilities. Establishing a common operational ground between international private law and Shari’ah compliance in commercial arbitration would enable the two systems to function in a more coordinated fashion, reducing the legal uncertainties that are otherwise present when they are treated as parallel, mutually incommunicable systems. Through a focus on the specific misalignment between Islamic commercial arbitration and private international law, our article makes targeted suggestions that would materially address some of the concerns posed by the increasing internationalisation of Islamic finance—and by its attendant need for cross-border dispute resolution respectful of the ethical goals of Shari’ah compliance.