The rise and rise of Islamic finance law

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What is Islamic finance?


Law students are largely encouraged to become corporate and commercial solicitors when leaving university and during the Legal Practice Course. Consequently, many of these trainees end up being pigeonholed into very robotic and potentially tedious careers.

In comes Islamic finance to provide an alternative, where solicitors are given the opportunity to exercise their creativity when dealing with the development of Sharia-compliant structures in the realm of Islamic finance.

So what exactly is Islamic finance?

“You can’t be a credible financial centre without having a credible Islamic finance programme,” says Qudeer Latif, head of Clifford Chance’s global Islamic practice.

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Islamic finance refers to the means by which corporations in the Muslim world, including banks and other lending institutions, raise capital in accordance with Sharia, or Islamic, law.

Contrary to popular opinion, Sharia law — which derives from the Qur’an and the religious teachings of Islam — is not taking over Britain. It is seen as a rule of law that contributes to the way Muslims live, even as far as how they should use their finances.

Most importantly, the principles of Islamic finance encourage fairness. Islamic finance seeks to eradicate ideas of the lender having a position of power over the poorer, weaker individual, by prohibiting interest or fees for loans of money. Investment in businesses that provide goods or services considered contrary to Islamic principles (e.g. pork or alcohol) is also prohibited.

You may think that Islamic finance probably contradicts much of modern day capitalism.

However, it has been argued by many historians that the foundations of capitalism were taken from early Islamic finance principles. These economic concepts and techniques were applied in early Islamic banking, including limited partnerships, forms of capital, and capital accumulation. Many of these early capitalist concepts were adopted and further advanced in medieval Europe from the 13th century onwards.

I find it remarkable that the theories of core Islamic finance principles were derived from a book over 1400 years ago, impacted a feudal Europe, and are still of value today.

The development of Islamic finance continued sparingly until the Middle East oil revolution — really kicking off its return around the world. Today, the magic circle titans are all offering Islamic finance services to wealthy Muslim investors, particularly in the Middle East.

The presence of the likes of Allen & Overy, Hogan Lovells and Norton Rose Fulbright show how far Islamic finance has come. The unwavering investment that has occurred over the Middle East, with offices springing up in Saudi Arabia, Oman, Qatar, United Arab Emirates and Kuwait is a testament to firms taking the Islamic practice seriously.

Though don’t rule out investors in London too. In 2013 David Cameron unveiled plans for £200m Islamic bond (known as Sukuk) in an attempt to help Britain secure investment from wealthy Muslims. The issuance of the Sukuk means Muslims will be able to invest without breaking Islamic laws forbidding interest-bearing bonds. Likewise, Britain became the first western country to allow such a bond.

Prime Minister David Cameron said:

I want London to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world.

A bold ambition.

To highlight the increasing popularity of Islamic finance, it is expected that the combined total of Islamic banking assets from the core market nations will exceed $10 billion by 2019. Likewise, the global Islamic economy is predicted to be $6.7 trillion by the same year, according to a Dubai report.

The Gulf has demonstrated that it has become a central player and one of the leading financial districts in the world. In a short space of time the United Arab Emirates, Qatar and Saudi Arabia have attracted incredible investment for cutting-edge projects. The opportunities available in the Middle East are unique in their nature.

The distinctiveness of Islamic finance is underlined by the recent financial recession. While many firms and companies struggled — and even went under — due to investments in the aforementioned ‘prohibited’ assets, Islamic finance remained strong. Consequently, Islamic finance institutions were seen as legitimate safe havens and investors have since decided to remain with them.

Where does that leave trainees?

Under UK law, firms are restricted from innovating too far from black-letter law. However Islamic finance is a whole new ball game. It allows lawyers, with the consultation of leading Islamic clerics who interpret Islamic business principles, to create remarkable business structures for clients. Since Islamic finance is relatively new with regards to development, fresh kinds of structures are always welcomed. Likewise, since many Islamic clerics differ on what is permissible and what is not, this allows for a number of unique business arrangements to be constructed.

This aids trainees who are focused on the entrepreneurial and innovative side. It allows them to develop leadership skills by undertaking research and ascertaining what works for clients.

Firms like Pinsent Masons, Clifford Chance, Dentons, Stephenson Harwood and many more are offering training contracts in the Middle East, and this demonstrates the need for a new type of trainee. The lawyer in question would be both UK and Middle East qualified, living in a sunny, tax-free country, and with possibly less demand than the conventional route. Although the Arabic language is in some cases preferred, this is not always the case.

Being a lawyer doesn’t mean you have to follow the conventional route. Be willing to try new things and you never know where you may end up.

Omar Sharief is a current LPC student at BPP Law School.

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Um, this piece seems to be almost entirely free of content, and is certainly free of citation.

So what exactly is Islamic finance?

There’s no answer to this fundamental question in this article.


What I got from the article – “Sharia Law is not going to be imposed on Britain, stop being an Islamaphobe”


Sharia law is already being imposed on Britons.


Lol. Do you even know Shariah law?


There are British citizens who are muslims who are subject to sharia law, in the UK. Some of these British citizens are coerced into this position by their families and communities. Therefore it is entirely correct to say that “Sharia law is already being imposed on Britons”.

Avid Listener

Hear, hear!


“Under UK law, firms are restricted from innovating too far from black-letter law”

This is so wrong. A good lawyer is one who can innovate, and find a new way to do something beyond the back letter law. Has the author heard of commercial awareness?


You are a simpleton.


I thought the Islamic Finance module taught at certain institutions was for those who could get neither pupillage or a training contract, and were fobbed off to think that this would somehow bolster their CV for those applications?


Like on many other occasions, you thought wrong.


The Islamic finance LLM at certain London based law schools is…..bollocks. It isn’t worth the paper it is written on, and most islamic finance lawyers in the city do not have that useless badge.


Poor article full of sweeping generalisations


Why was there no mention of the Jizya tax, a tax on non-muslims to “humiliate them” (as stated in the Koran)?


I thought that was a tax on tissues!

Carl Bailey

Wow. That shows you know nothing about Jizya. It’s a tax for protection under Islamic Law. It must be done willingly by the non muslim party. There are exemptions to it also. Do your research before spouting your vile hateful nonsense.


“Protection”. Yeah, right.

Ever heard of “Protection Rackets”?

I.e. Pay up or we’ll blow up your Church/Synagogue/Temple…

Humphrey Bogart

Omar Sharif, is that you?

Humphrey Bogart

Loooool, $6.7 trillion by 2019? According to a ‘Dubai report’?

You’re taking the piss Omar, especially considering how depressed oil prices are at the moment. By 2019, half of your so-called Islamic ‘economies’ will be either bankrupt or in midst of some conflict, fighting over who’s got a bigger dick in their toxic religion. Serves them right, really.


I haven’t been on here in ages. The comment section used to be funny, but now it’s just filled with know-it-alls and complainers.

Blunt Realist

Before people run off to interviewing describing Islamic Finance as the next big thing, it may be worth noting that a substantial number of UK and US firms have attempted to launch practices in this field over the years, and by and large they have found there is insufficient demand/ profit for it to be worth their time. Naturally there are exceptions to this, but it’s not going to be world changing. Most of the firms still plugging away at it have small practices and try to use it as a method of getting other work from Middle Eastern clients or raise their profile in the market. It’s a small fry world.

As for the article generally, it displays a total misunderstanding of a) what clients want and b) what trainees actually do.

“It allows lawyers, with the consultation of leading Islamic clerics who interpret Islamic business principles, to create remarkable business structures for clients”- I’ve yet to find a client who would rather I consult a religious minister over a tax expert on what structures we should use for their matter. That includes muslim clients. It’s a shame you didn’t give any examples of these “remarkable business structures”. It’s perhaps telling that despite these “remarkable business structures” that apparently exist there hasn’t been a mass move towards using Islamic Finance.

“Under UK law, firms are restricted from innovating too far from black-letter law. “- UK law? You’re doing the LPC and making that kind of error? That aside, I don’t agree with your conclusion at all. English & Welsh law is respected world over for its use in commercial agreements partly due to its stability and perceived reliability/safety. I know little of the Scottish or NI systems, but judging by the prevalence of Scottish partnerships in the corporate world I’m guessing that “black letter law” isn’t causing too many problems.

“This aids trainees who are focused on the entrepreneurial and innovative side. It allows them to develop leadership skills by undertaking research and ascertaining what works for clients.” You think trainees are out designing new structures for their clients and figuring out what works for them? Really? In the real world trainees are never going to have sufficient experience to make those kind of calls, to understand everything sufficiently or ever be allowed to touch something carrying such business risk. That is not intending any disrespect to trainees, it is simply the case that there is vast amounts of learning to do in those first years. A 6 month seat will not do anything more than give you a taster of a practice area even if you are the most competent trainee ever.

I won’t even go into the fact that the vast majority of the work most firms undertake in the Middle East has no real link to Islamic Finance at all.

Tudor Street Insider

Feel the burn, Omar.

Brilliant reply, thank you.

Former Gulf lawyer

Excellent response to a useless, void-of-any-knowledge article on an area of law which is actually a big joke. For the last 10 years, Islamic Finance has been trying to emulate financial products (culminating even in “Islamic derivatives”) from the interest-based financial economy (which no doubt has massive inherent problems), rubber-stamping them as halal (permissable) by obtaining a religious opinion of some dubious but highly paid “sheikh” specializing in this field (visit the conferences on islamic Finance and you’ll see the same names again and again, Sheikh Nizam, Mohammad Daud Bakar etc – people I have met and who are exceptionally nice) and pushing that fraudulent shit to people and institutions who are lured into putting their money into financial “products” which the sheikh says won’t deprive them from their 70 virgins in paradise. Some of the same people then go home to beat up and rape their domestic helper, as may be customary particularly in the Arabian Gulf shitholes and backwater jurisdictions acclaimed to be the new centers of the world.

And uh yes. Personal note. I also had a lawyer colleague who in the office refused to work on conventional loan agreements for reasons of his Muslim faith. Naturally he had no issues sodomising a different blonde girl every other weekend while we worked in Dubai. And just to be clear, I banged more chicks than he did, so no envy on that front.

Omar, for pussy you don’t need Islamic finance. All the best.


Why are the comments so critical! Its a journal, think piece not an essay or dissertation! Where do you want the footnotes to be placed! Stop being so disrespectful when the author is just writing an article to inform people about an area of law.

Did some of you even read the full article or just jump to the comments to be so critical… chill out


Because there is no information in the article.

Sly Stallone

Hi Omar, your entry still sucks.


The numpty who wrote this dismal article should stick to the law school library, rather than spouting off on subjects that he knows sweet fa about…

Silly boy…

Jon Jon

Islamic attempts to provide alternatives to interest (Riba) based financial products with the aim of minimising exploitation and preventing excessive uncertainty (Gharar).

However, Islamic finance is usually more expensive than conventional finance (thereby undermine the whole idea of a ‘fair price’), and in substance still uses interest, albeit under a different name.

Largely a gimmick and hardly Islamic..

Laird Lyle of the Isles.

I concurs with Blunt Realist at 4:16pm

I am actually qualified in Islamic Commercial Law, yet in 25 years of dealing with Muslim clients, have never come across it once. It’s an academic subject for PR stunts, but it does take a few years to learn, if you’ve nae better to do.


Does Islamic finance include a limb-removal clause where one party has been held to have acted fraudulently?


LPC student writes article about subject he knows nothing about, awesome.


So many negative comments here. I don’t know if this is the most factually accurate or insightful article as I had not even heard of Islamic Finance until now but I found it actually to be very interesting. This is Legal Cheek, not a Law Soc Journal, and I think this was a great introduction to the idea of Islamic Finance being a new potential opportunity to Law Firms.

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