Islamic arbitration is a method of alternative dispute resolution that is based on the principles of Islamic law, also known as sharia. It is a popular method of dispute resolution in countries with a predominantly Muslim population and can be used for a variety of legal disputes, including commercial transactions.
One of the main advantages of Islamic arbitration is that it is often quicker and less costly than traditional litigation. This is because Islamic arbitration proceedings are usually conducted in a more informal setting and do not require the same level of documentation or legal representation as a court case.
Another benefit of Islamic arbitration is that it allows parties to resolve disputes in a way that is consistent with their cultural and religious beliefs. This can be particularly important in commercial transactions, where parties may prefer to resolve disputes in a way that is consistent with their values and traditions.
Islamic arbitration is also viewed as being more flexible and adaptable than other forms of arbitration. This is because it allows for the use of a range of dispute resolution techniques, including mediation, conciliation, and negotiation. This can be particularly useful in commercial transactions, where parties may need to find creative solutions to complex disputes.
However, there are also some potential drawbacks to using Islamic arbitration for commercial transactions. One concern is that Islamic arbitration may not be recognized or enforced in countries where it is not commonly used. This can create uncertainty for parties involved in cross-border commercial transactions, as it may be difficult to enforce any arbitration agreements or awards in other jurisdictions.
Another potential issue is that Islamic arbitration may not always be aligned with the legal systems of non-Muslim countries. This can be particularly problematic if the parties to a commercial transaction are based in different countries with different legal systems. In such cases, it may be difficult to reconcile any arbitration agreements or awards with local laws.
Despite these potential drawbacks, Islamic arbitration can still be a suitable option for commercial transactions in many cases. It can be particularly useful for parties who want to resolve disputes in a way that is consistent with their cultural and religious beliefs, and who are willing to accept the potential risks and limitations of this form of alternative dispute resolution.
Written by:
Shafiq Taibjee
Lawyer | Arbitrator | Mediator | Islamic Arbitrator & Expert Honorary Fellow – IICRA, UAE