- Remedies for lenders’ breaches — Islamic financial services
This chapter assesses dispute resolution in Islamic finance. Simply referred to as ‘IDR’ (Islamic Dispute Resolution), this Shari’a-based form of Alternative Dispute Resolution (ADR) not only provides desperately needed subject matter expertise in Islamic finance dispute resolution but at the same time accommodates Islamic legal values and traditions in resolving the disputes that inevitably arise in the context of Islamic finance. As with construction arbitration, or labour arbitration, or any other subject-specific ADR process, IDR for Islamic finance is simply another mode of private commercial adjudication. Moreover, from the viewpoint of the State, it is much less threatening than a parallel system of Shari’a courts, which may reach decisions over which the State has no ultimate say. In fact, contrasted with such a parallel system, absent an amicable settlement—in which case the State would have no stake or direct interest anyway—the ultimate adjudication by an IDR intermediary would be subject to review and affirmation by the courts as an arbitral award. Rather than popular or state resistance to the idea of IDR, currently the greatest obstacle to increased and more widespread implementation of IDR for Islamic finance disputes is insufficient expertise and extremely limited facilitative legal and institutional frameworks.
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