Islamic finance and commercial law are characterised by the application of moral and religious precepts to the way players conduct their transactions and business. The module will analyse the constraints that made the application of conventional banking and financial transactions not applicable in Islamic countries. Great attention will be given to both the transactional and the supervisory aspects of Islamic finance.
The course will consider how Islamic law has shaped the global Islamic finance industry. Secondary works will be supplemented by legal opinions (fatwās) as well as legal documentation produced for contemporary Islamic finance transactions.
In the first part of the module the main features of Islamic contract law in commercial activities and how this is shaped by the evolution of legal doctrine will be investigated. Particular attention will be given to the role played by Ribā (Unlawful Gain). It will then analise specific sale contracts such as Ijāra (Lease), Istisnāʽ (Commission to Manufacture) and Murābaha (Cost-Plus Sale).
In the second part of the course, students will be exposed to the main characteristics of the global Islamic finance industry, and its relationship with traditional activities in capital and financial markets. A thorough analysis of the main features of Islamic Financial institutions will be conducted. Also the peculiar role played by a secular regulator/supervisor in over-sighting standards and activities which are religious in nature will be analysed.
It will then move towards specific transactions and products such as Equity Investment and Partnerships: Mudāraba (Silent Partnership) and Musharaka (Partnership); derivatives; and debt transactions.
Students will also familiarise with the peculiarity of insurance (Takāful) and dispute resolution mechanisms under Islamic law.
* Cannot be taken without first completing QLLM164 Elements of Islamic Law
2.15 hour written examination paper