Finality of Arbitral Awards under Islamic Law - Dissertation Example

Download file to see previous pages Arbitration then was widely practiced, but it was based on a completely different set of legal precepts that differs from that relied upon by Western arbitration processes.
In contemporary international business, Arab countries governed by Sharia law have come to play an important role and interact more frequently in business dealings with the developed countries of the West as well as the rest of the world. Since banking institutions are the principal conduit of payments and remittances in international transactions, a good number of disputes involve financial contracts. Jarrar called the finality of arbitration arbitrary, and the principle that the results of arbitration are binding and final is a myth.

This is not to say, however, that the teachings of Sharia are directly contradictory to the recognition and enforcement of arbitral awards. It is actually in the greater interest of Islamic countries which issue Sukuk bonds to streamline arbitration proceedings to reduce the perceived risks investors assume when investing in these Sharia-based financial instruments. Arbitration is invaluable for the average investor to pursue claims in any dispute, including Islamic finance, because arbitration is usually less costly and therefore favorable to individual investors. Added to these is the absence of uniformity among remedies and the complexities of navigating conflicts of law issues makes litigation an unfavorable means of obtaining relief. Therefore, it is to the advantage of Islamic financial institutions, in particular, and Islamic business in general to enhance systematic procedures that affirm and enforce arbitral awards, both domestic and international.

1.2 Conventions influencing the enforcement of arbitral awards in Islamic member states
As of January 1, 2009, 143 out of a total of 192 member states have adopted the New York Convention of 1958, among whom are all the major players in the Sukuk bonds market, namely Malaysia (1985), Bahrain (1988), Qatar (2003) and the UAE (2006). This is because Sukuk issuances have come to be accepted globally, and its compliance with arbitration is most useful in the resolution of international disputes arising out of the terms of the Sukuk contracts. ...Download file to see next pages Read More