This publication is part of the journal (2011-2)
Purpose – This paper aims to highlight resolution of Islamic finance dispute by common law-oriented
courts in Nigeria with respect to Sharīʿah non-compliance and legal risks thereof, as well as the lesson to learn
from Malaysia in that regard. This is with view to ensuring Sharīʿah compliance and legal safety of Islamic
finance practice as prerequisites for sustainability of the Nigerian Islamic finance industry.
Design/methodology/approach – A qualitative method was used; interviews were conducted with
different categories of experts and primary data collected in relation to Sharīʿah non-compliance and legal
risks in adjudicating Islamic finance dispute by civil courts and the role of expert advice as basis for court
referral to Financial Regulation Advisory Council of Experts. A doctrinal approach was adopted to analyse
relevant legislative provisions and content analysis of secondary data relevant to applicable provisions in
matters of finance before civil courts.
Findings – The paper discovers an indispensable role of conventional financial regulations in sustaining
Islamic finance industry. Appropriate laws for Islamic finance under the conventional framework foster legal
safety and Sharīʿah compliance of Islamic finance activities in related cases handled by courts. Nigeria civil
courts can aid sustainability of Islamic finance when so equipped and enabled by laws that address apparent
Sharīʿah non-compliance and legal risks in judicial dispute resolution. Inadequate legal provisions for dispute
resolution breeds Sharīʿah non-compliance and legal risks in Islamic finance, undermine its prospects and
stand inimical to its sustainability.
Research limitations/implications – This research is limited by its focus on Sharīʿah non-compliance
and legal risks alone, which emanate mainly from judicial resolution of Islamic finance dispute by Nigerian
Practical implications – This research seeks to motivate a determined and deliberate regulatory action
and change in approach towards addressing apparent risks associated with Islamic finance while resolving
disputes therein by civil courts. It has implications on common law jurisdictions generally that adopt similar
approach as Nigeria’s while introducing Islamic finance into their conventional finance framework.
Originality/value – Dispute resolution and other regulatory functions of civil courts are important to
Islamic finance though apparently overlooked while introducing Islamic finance in Nigeria as in other
emerging jurisdictions. This research ascertains the role of the civil courts as indispensable for Islamic
Financial Institution (IFIs) operations and demonstrates that such courts are needed for the development and
sustainability of Islamic finance industry. The research demonstrates the end-to-end requirement of Sharīʿah
compliance of Islamic financial transactions as absolute and needs be ensured and guarded at dispute
resolution level by properly equipped courts.
Keywords Nigeria, Dispute resolution, Sharīʿah compliance, Sharīʿah governance, FRACE,
Sharīʿah advisory council, Islamic finance disputes, Sharīʿah issues, SAC
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