Europe's Approach to Islamic Banking: A Way Forward - Wbiaus.org

Trakiccourt called two expert witnesses in order to learn more relevant information aboutthe murabahah agreement. Nevertheless, the expert opinion given by the expertwitness has not been taken into consideration by the learned judge. Tomlinson Jstated:”The fact is that, as Dr Samaan states and as I have no reason to think is inany way inaccurate, this contract does not have the essential characteristics of aMorabaha contract. Furthermore, it is a contract governed by English law. I mustsimply construe it according to its terms as an English law contract”.The judgment was duly commented upon and criticized by a few Muslim scholars.For example, Norhashimah (2007, p. 104) questioned why the court called the expertwitnesses to give their opinion if their evidence “has no bearing whatsoever”?According to Engku Rabiah (2008), this case is an example where despite the factthat the transaction was not Shari’ah compliant, the English court said that it is validaccording to English law. This defeats the basic aim of the Shari’ah. Furthermore,she explains that this irregularity was made worse by the parties’ choice of law andchoice of court. In fact, the parties agreed that a non-Islamic court shall adjudicatethe matters in case of dispute in a non-Islamic jurisdiction.This case is an example which shows that having the contracts concluded betweenthe parties in accordance with Islamic law is not just enough. The subsequentenforcement or adjudication in case of dispute between the parties to the contract isessential. This is the additional challenge in countries where the Islamic law is notapplicable and where the courts are non-Islamic courts. Therefore, there is a need todeploy an effective mechanism which would enable the courts to follow thecontractual terms and Islamic nature of the contract where it is the case. The laws inthe non-Islamic countries which wish to introduce and practice Islamic banking andfinance could be duly amended to a certain extent so that the courts can recognizethe basic principles of Islamic law in relation to the contract. The above decision bythe English court defeats the object and purpose of having Islamic banking andfinance.2. Shamil Bank of Bahrain EC v Beximco Pharmaceuticals Ltd & Ors. [2004] 4All ER 1072This is another case where the parties entered into murabahah agreement. Whenone of the parties defaulted the issues raised before the English Court of Appeal wasin relation to the governing law clause. However, the unique feature of this case isthat the parties to the murabahah agreements agreed in their governing clause thatthe contracts shall be governed by the English law subject to its consistency with theShari’ah. The governing clause of the murabahah agreements provided the followingclause: “Subject to the principles of the Glorious Shari’ah, the agreements should begoverned and construed in accordance with English law”. The contention put forwardby the Beximco was that the murabahah agreements were not in compliance withShari’ah principles and as such they should be declared invalid and unenforceable.The Court of Appeal judge Potter LJ rejected that contention and held that thecontracts are governed by the English law and not Shari’ah. Furthermore heexplained that the contracts cannot be governed by two set of laws or legal systemsat the same time. Nevertheless, the learned judge acknowledged the fact that theparties do have freedom to incorporate the provisions of the foreign law into theircontracts through the ‘doctrine of incorporation’ and those foreign provisions would27