Law of Islamic Finance
- Course Code:
- Unit value:
- Year of study:
- Year 3 of 3 or Year 4 of 4
- Taught in:
- Full Year
Objectives and learning outcomes of the course
On successful completion of the course, a student should be able to demonstrate a
sound knowledge of general issues such as the reasons for the development of Islamic finance (including its history and the elements of Islamic Economics, Islamic ideas of social justice and money theory), the nature and scope of Islamic Finance, the relationship between it and conventional finance, together with the foundations of, and main principles and practices, underlying the law of Islamic Finance (eg the commercial aspects of the classical shari’a, the prohibition of riba and gharar and other fundamentals of the Islamic law of contracts).
A student should also be able to demonstrate:
- sound understanding of a selection of specific topics and financial instruments, including the main contract forms, institutional infrastructure, international institutions and regulatory bodies.
- Finally, a student should be able to demonstrate that he or she is familiar with current debates, such as those concerning the methods of adapting the classical shari’a/fiqh to the modern financial and economic environment, the islamicity of present practice, variation and standardisation, the relationship to state law (including regulation), and current trends.
Scope and syllabus
Particular subjects studied may, and probably will, vary from year to year depending on the present importance of specific topics and on the emergence of innovations and new debates. The text below is therefore representative only.
History and fundamental elements of Islamic law and its commercial aspects; comparison with Jewish and pre-Reformation Christian attitudes; the abandonment of the commercial aspects of Islamic law and the introduction of Western law; ideas concerning the adaptation of Islamic law to the modern world; Islamic economics, Islamic ideas of social justice and money theory; and the history of Islamic Finance. The nature and scope of Islamic Finance, the relationship between it and conventional finance and its strengths and weaknesses.
Foundations of the Law of Islamic Finance
Principles of the Islamic law of contracts; the prohibition of riba, gharar and forbidden things; the Islamic concept of property and ownership.
Specific Topics and Instruments
Main contract forms such as mudaraba and musharaka; trade financing and murabaha contracts; ijara; salam; istisna’; Islamic insurance and takaful; sukuk; security, guarantees and transfers of rights, bai’ al-dain; currency trading and derivatives; institutional infrastructure, international institutions and regulatory bodies; governance, including Islamic asset and fund management, the authority problem and shari’a supervisory boards; regulation.
More General Issues
Methods of adapting the classical shari’a/fiqh to the modern financial and economic environment; the debate on the islamicity of present practice; variation and standardisation, including AOIIFI standards; the relationship to state law, including regulation, and current trends.
Fit with Programmes
Generally, Law of Islamic Finance fits into School of Law offerings in Islamic and commercial/financial law. In terms of the LLB, it provides an attractive and commercially competitive option to students in their 3rd year of study. The course complements 2nd year options including Islamic Law, Law and Society in Africa and Law and Society in South Asia, and will offer students the opportunity of further developing their knowledge in related areas of law including Islamic commercial law, the laws of Islamic contract and Islamic financial law. Islamic Finance has grown enormously in significance in recent years, and there is a growing demand among present and prospective students, as well as among employers in the legal and financial sectors.
Method of assessment
Assessment weighting: 100% examination.