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This article provides an overview of the judgments of the Judicial Committee of the Privy Council, the highest court of appeal in the British Empire regarding Islamic Endowments (awqāf). The cases originated from all over the Muslim-populated areas of the British Empire. The first judgment was delivered in 1840 and the last in 1968. An analysis of the judgments shows that the Judicial Committee of the Privy Council made significant developments in Islamic law of Endowments (awqāf), though its decision to declare family endowments invalid was controversial.

For the full text of the judgments mentioned on page 2, please click here. 

This fatwa states that a mosque may be used as, for example, an educational facility, meeting room, or child recreation centre, provided that such activities:

1. do not contravene shari'a;
2. always respect the mosque; and
3. do not disturb those praying or performing other rituals (ibadah).

Similarly, hiring out parts of a mosque for wedding receptions, for example, is permitted provided the mosque is treated with respect in the process. These conditions apply to land and objects donated pursuant to a waqf as well.

The appellate court upheld the Superior Court of Orange County’s refusal to divide marital property in the context of a divorce according to Islamic law. The plaintiff introduced a marriage certificate as a “premarital contract,” which, among other things, lays out a set amount to be paid to the wife in the event of a divorce. The lower court refused to consider the certificate a “contract,” as it was not clear that both parties were expressly agreeing to the same terms, consistent with their understanding of Islamic law and custom.

In a divorce proceeding involving a prenuptial agreement (Islamic marriage contract) between a Muslim husband and wife, the California Court of Appeals considered the validity of a provision requiring the husband to pay 3,000 Jordanian dinars as well as 2,000 dinars of either cash or household furniture as a “deferred dowry” (known as mahr or ṣadāq) due to the wife upon death or divorce. The husband claimed that the deferred dowry is not due where, as here, the wife initiates the divorce proceeding. The court concluded that, regardless of the individual claims, requiring payment of one party to the other upon divorce was an example of prohibited “divorce profiteering” and that, “if the court had accepted the position of wife’s expert, the contract would not have been enforceable under the public policy of the state.” Accordingly, the Court upheld the lower court's decision not to enforce that provision of the agreement.

New York University, School of Law

This course will provide an overview of the theoretical doctrines that give rise to Islamic finance and an introduction to its contemporary practice in various market contexts. We will begin with the religious impulse that gives rise to Islamic finance, including, different Islamic critiques of conventional finance and why Islamic finance is claimed to be a superior model. We will then turn to classical Islamic commercial law, and study the two principle classical doctrines of Islamic commercial law that seem to mandate the creation of alternative financing models, ribā (often translated, incorrectly, to “usury”) and gharar (often translated, incorrectly, as “speculation”). We will also cover the basic building blocks of Islamic commercial law, studying rules governing sales, leases, loans, pledges and other fundamental commercial law relationships as well as Islamic rules governing business organizations such as general and limited partnerships.

After completing an overview of historical doctrines, we will turn to how these doctrines were modernized to produce a “modern” Islamic commercial law, something that enabled the rise of contemporary Islamic finance. We will consider a broad range of Islamic financial contracts across various markets, including, consumer banking and finance, Islamic deposit taking banks, Islamic corporate finance (e.g., sukuk, sometimes called “Islamic bonds”) and Islamic derivatives. We will then consider the legal structure undergirding Islamic finance and use it as an example of the advantages/disadvantages of public ordering versus private ordering. The course will conclude with different critiques of Islamic finance.

Plaintiff Kevin Murray, an American taxpayer, sued Treasury Secretary Timothy Geithner and the Board of Directors of the Federal Reserve, arguing that the Emergency Economic Stabilization Act (EESA), which established the Troubled Asset Relief Program (TARP), violated the Establishment Clause of the First Amendment by allowing funds to be used to support companies that invest in sharīʿa-compliant financial instruments. Applying the Lemon Test to assess whether there was excessive entanglement between religion and state related to Islamic financial instruments, the Court concluded that there was not; specifically, it determined that the Islamic financial instruments comprised only a small percentage of the complete business portfolio, that the purpose of the EESA was not religious, and that the primary effect of utilizing the Islamic financial instruments did not support or hinder any religion. Accordingly, the Court granted summary judgment in favor of the defendants.

At issue is this case is an Islamic financial instrument called a mudaraba agreement, by which a bank enters into a profit-sharing arrangement with a borrower. The Agreement at issue includes a clause stating that any disagreements are to be settled through arbitration in the Bahamas. The Court refused to uphold the Agreement because Vinewood Capital was not a signatory to the agreement, and thus denied the motion to compel arbitration of Vinewood’s claims. In May of 2011, the Court dismissed the appeal and closed the case.

Plaintiff Kevin Murray, an American taxpayer, sued Treasury Secretary Geithner and the Board of Governors of the Federal Reserve, challenging use of the Troubled Asset Relief Program (TARP) funds created by the Emergency Economic Stabilization Act (EESA) to bailout AIG, a “market leader in Sharia-compliant financing.” The Court denied summary judgment in favor of the defendant, finding that the bailout of AIG by the government may raise First Amendment Establishment Clause issues. This decision was overturned in a 2011 appeal, in which this same Court granted summary judgment in favor of the defendant, holding that the plaintiff had not made out a sufficient case that would allow a jury to conclude, under the Lemon Test (which assesses whether there is excessive entanglement of the Government with religion) that the Treasury Secretary violated the Establishment Clause by allowing AIG investment in sharīʿa-compliant financial instruments.

The Court considered questions of venue for a case related to Islamic financial instruments. The defendant, Dar al-Maal al-Islami Trust, petitioned the Court to compel the plaintiff, Vinewood Capital, to follow the arbitration clause of a profit-sharing (mudaraba) agreement. The Court determined that there was no single agreement listing both parties as signatories, and it thus refused to uphold the arbitration clause.

The defendant, Dar al-Maal al-Islami Trust, sought to enforce the terms of an arbitration clause, which required arbitration in the Bahamas upon disputes surrounding an Islamic financial profit-sharing arrangement known as a mudaraba agreement. The Court found that the clause was not enforceable, as Vinewood Capital was not a signatory party to the agreement. This decision was affirmed in 2008 by the U.S. Court of Appeals for the Fifth Circuit.

Holding: When multiple family members die in the same event, such as a natural disaster, the named beneficiary of an insurance policy is prima facie presumed the recipient of the payout unless another claimant can show that the beneficiary died in the event before the policy holder. Here, both the policy holder and his wife, who was his beneficiary, died in a flood, and without evidence showing that his wife predeceased him, the policy holder’s sister could not claim the insurance payout.

Procedural Posture: An insurance company filed interpleader in the Circuit Court of Baltimore City against the claimants of a life insurance payout. The Court found that the payout should go to the administrator of the deceased’s children. The deceased’s sister and the administrator of the deceased’s wife’s estate each appealed. Islamic law is not directly relevant, except that the court compares the American system to “the Mahometan law of India,” which it understands to presume in inheritance cases that relatives who died in the same event, such as a natural disaster, died at the same moment.

Judgment: Affirmed in part and reversed in part in an opinion authored by Justice McSherry.

Facts: Walter Hoopes, his wife Maria Hoopes, and their two children died in a flood in May 1889. Walter Hoopes had life insurance and named his wife as his beneficiary. According to the insurance regulations, should his wife pre-decease him, the payout was to go to his children; if they did not survive him, the payout was to go to his mother, then to his father, and finally to his siblings. After their deaths, Walter Hoopes’ sister, the administrator of Maria Hoopes, and the administrator of the children claimed rights to the insurance payout. The Court of Appeals of Maryland noted first that other legal systems, including Roman law, the Napoleonic Code, “the Mahometan law of India,” and ancient Danish law employed various presumptions based on age, gender, and time to help courts determine the survivorship order when multiple family members died at the same time or in the same event. However, it concluded that the American common law system has no such presumptions, and survivorship “must be proved by the party asserting it.” In this case, there was no evidence or way to know who predeceased whom in the flood. Because the wife, as the named beneficiary, had prima facie title to the insurance payout, her estate’s title could only be extinguished by a satisfactory showing by Walter Hoopes’ sister that the wife died before Walter. There is nothing in the record to indicate this was the case, so, the Court concluded, the payout belongs to the wife’s estate.

This is a memorandum (circulaire) issued by the shari'a board of the Central Bank of Morocco (Bank al-Maghrib) in January 2017. The document contains fatwas pertaining to Islamic financial instruments such as murābaḥa and regulations concerning its practice and penalties. 

These materials document, state by state, what each of the sharīʿa states is doing in respect of the collection and distribution of zakāt and the management of pious endowments (waqf, pl. awqāf). The materials include early proposals by Sharia Implementation Committees or Councils of Ulama for official zakāt organizations, including the doctrinal background; all statutory materials related to Zakat and Endowment Boards, Commissions, Committees, and Funds; organizational and regulatory materials issued by such bodies; a number of official reports on their activities, including types and amounts of zakāt collected and distributed and endowments established; and other information collected in the course of fieldwork.

These materials are a part of The Nigeria Papers – a SHARIAsource Special Collection, compiled and edited by Independent Scholar Philip Ostien and others. 

This fatwā concerns whether a Muslim can transfer movable and immovable property to one or some of his heirs through a will. The answer provided by the muftī is that the permission and acquiescence of all other heirs is required.

Al-Mughnī is a commentary on al-Khiraqī's (d.945) Mukhtaṣar, a treatise on Ḥanbalī law. The excerpt in question deals with the question of sharecropping, where ibn Qudāma explain's his madhhab's position and defends it against potential detractors. 

Majmū’ al-fatāwā is a collection of the various fatwās the Ḥanbalī scholar Ibn Taymiyya gave during his lifetime. The two fatwās in this document answer questions regarding the legality of sharecropping. Ibn Taymiyyah provides an extended explanation of his legal school's position, citing both textual and analogical sources.

Islamic finance creates financial products specifically aimed at Muslims that are sharīʿa compliant. Many scholars have condemned Islamic finance for condemning ribā (interest) on the one hand, particularly where usurious, but then many others have created workarounds that allow modern big-finance firms to avoid it in name only on the other hand. Those who argue against the workaround argue that nominal interest-avoidance goes against the spirit of the guidelines set forth in Islamic law (sharīʿa). Weighing in on the controversy, University of Toronto Law Professor Mohammad Fadel considers whether ribā might serve a function that goes beyond simple definitions of it as either interest or usury. Historically, the prohibition on interest was a means of regulating medieval financial industries, in ways that have little application to the modern financial instruments. The medieval prohibitions and the modern controversies about Islamic finance then, he argues, are misaligned and need rethinking. This post provides a "plain English" review of the article: Mohammad H. Fadel, Ribâ, Efficiency and Prudential Regulation: Preliminary Thoughts, 25 Wisconsin Journal of International Law 655 (2008).

The Scholars at Department of Dārul-Iftā' (Wifaqul Ulama) in the United Kingdom issued this fatwā in response to a question about the permissibility of using Bitcoin, a prevalent form of cryptocurrency. The council determines its use to be ḥarām, or impermissible according to their understanding of Islamic law. They determine this on the basis that Bitcoin does not meet a number of necessary characteristics associated with valid currency: namely, it is highly volatile in nature; it carries excessive risks associated with its volatility; and it lacks of validation in the its algorithmically and thus inherently decentralized system of production and economic exchange.

Twenty-one scholars on the Syrian Islamic Council issued a fatwā on cryptocurrency that declared dealing with cryptocurrency to be religiously forbidden (ḥarām) because of the many risks associated with it, which they identify as ignorance about it, uncertainty [as to its fluctuating value], and its resemblance to gambling. They came to their decision after outlining their understanding of cryptocurrencies as goods that are intangible given that they are produced programmatically and exist on the internet. For them, this nature of digital currency bolsters the risk of loss in the event of a technical malfunction or computer hacking. Secondly, they understand cryptocurrencies to be decentralized, which creates ambiguity around its origin, authority structure, and reference points necessary for evaluating those currencies in trading and for setting pricing. That ambiguity in turn prevents any authority from controlling the flowing liquidity in the markets. Furthermore, they conclude that governments currently lack legal considerations that might aid in the oversight and control of cryptocurrency circulation. Because of these risks, they determine that trading cryptocurrency is forbidden unless so long as there are no changes in its structure or governance that can help eliminate the large degree of risk that comes with their usage currently, through proper oversight and issuance from central banks or trusted institutions.

In this paper, Muftī Faraz Adam considers whether Bitcoin can be considered currency in Islamic law by interpreting relevant classical legal texts with the aim of identifying the principles defining money in Islamic law. He identifies three necessary elements for currency to be money: that it constitute māl (wealth), taqawwum (legal value) and thamaniyya (monetary usage in exchange markets). He determines that Bitcoin constitutes wealth (māl) and has legal value (taqawwum), However, he determines that it cannot be considered to possess valid or stable monetary usage (thamaniyya) due to its volatility and associated risks. Muftī Adam further determines that this form of cryptocurrency does not pass the principle of preservation of wealth (hifẓ al-māl) that form part of the fundamental objectives of Islamic law (maqāṣid al-sharīʿa) and its associated values of justice or equity (‘adl).