The Application of SharīʿAh Finance Rules in International Commercial Arbitration

Due to its flexibility, speed and confidentiality, arbitration becomes the most attractive method for contracting parties to resolve their commercial disputes. This method of choice has developed gradually in the modern legal system of Islamic Countries (ICs) over the last three decades. Thus, many of individual countries have enacted their own arbitration regulations and ratified the relevant international arbitration conventions. They also established many qualified regional arbitration institutions. Subsequently, the referral to arbitration by professionals of these countries to settle their commercial disputes gains abundant popularity. This article provides a detailed view of Sharīʿah factor in international commercial arbitration.<br><br>Enforcement is certainly the goal for the arbitration process. Nevertheless, enforcement of foreign arbitral awards in the ICs could be challenged if these awards are contrary to Sharīʿah public policy. Therefore, by using this exception, the ICs can reject the enforcement of any foreign award that violates Sharīʿah public order.


Introduction
The high volume of international trade and the assortment of transactions have led to a noticeable increase in the number and complexity of trade-related disputes. This drove parties to search for efficient means to resolve disputes. Many were the means and mechanisms of dispute settlement among the most prominent at international level is arbitration. 1 The international tendency of adopting arbitration to resolve international trade disputes have had direct impact on the development of arbitration to become a recognized dispute settlement mechanism on the national and international levels. Like legislators of other countries of the world, legislators of the Islamic world have spared no effort to establish a similar trend. 2 To this effect, they acknowledged arbitration as a legal means of settling disputes and ratified the international conventions on the subject, such as the New York Arbitration Convention (NYCA) of 1958. Legislators of the Islamic world have also recognized foreign before an arbitration tribunal. Therefore, is applying the rules of Sharīʿah to international arbitration practical? Is it possible to envisage a suitable mechanism for incorporating Sharīʿah in international commercial arbitration? To address these questions subsequently, section two of this paper defines the general features of Sharīʿah, the third section examines the main development of modern legal systems in the ICs and the compatibility of modern arbitration practices with Sharīʿah rules. The fourth section traces the evolution of application of these rules in international commercial arbitration. The fifth section explores the ways that can be followed in order to promote the application of Sharīʿah by the international commercial arbitration tribunals, including the role of Islamic arbitration institutions in incorporating Sharīʿah in international arbitration, the legal possibility for the parties to choose Sharīʿah as the governing law of a contract, and the role that the Islamic public policy exception may play in recognition or rejecting the enforcement of foreign arbitration awards in ICs.

The notion of Sharīʿah
The origin of the term Islam in the Arabic language is the word Salaam which means peace. Al-Sharīʿah al-Islamiyah is the path to achieve the submission to God. 10 It is divine by source and eternal in letter and spirit. 11 As such, the essence of human belief is the absolute authority of God as the sole sovereign law-giver. Therefore, all legislations and activities of the followers of Islam should conform to this divine law discerned from the Qur'ān, Sunnah and (fiqh) interpretation/reasoning by Islamic jurists. 12 The Qur'ān is the holy book of Islam and the primary source of guidelines and principles of Sharīʿah, it is the word of God revealed through the Prophet Muhammad, while the Sunna is the sayings and traditions of the Prophet Muhammad. 13 As for faqih, they derived the technical legal rules from the Qur'ān and Sunnah. In this regard, the ' consensus' of the community of Muslim scholars is ijmā‛, while the analogical deductions and reasoning of the Muslim scholars with respect to the modern issues called qiyās. 14 The four (mazahib) major schools of Islamic jurisprudence and interpretation named according to the founder name of each of them are the Hanafi, the Maliki, the shafi'i, and finally the Hanbali. 15 The rules derived from the Qur'ān and Sunnah are sacred and eternal, whereas the opinions and decisions given by Muslim scholars are not sacred and are opened to many reinterpretations in the light of changes and developments of circumstances in social, educational, economic, and political life. 16 Based on the above, Sharīʿah differs from current western legal systems in its source, legitimacy and method of reform. In return, like these systems, Sharīʿah is a comprehensive approach to life and social norms and not only simple religious rules. 17 It contains specific provisions relevant to commercial transactions, such as the sanctity of contract (contracting parties should completely fulfill their contractual obligations), the principle of pacta sunt servanda, 18 acting in good faith, the prohibition of interest (ribā) usury, the prohibition of speculation (gharar) uncertainty and, accordingly, gambling contracts, the adoption of alternative methods of private commercial dispute resolution including conciliation, mediation and arbitration. Arbitration is a private dispute resolution system which is confidential and runs faster than courts proceedings. It provides parties more flexibility and control over procedures. 20 Like many Islamic financial institutions, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) defines arbitration in its Sharīʿah Standard No. 32-2/1, 21 as an '… agreement between two parties or more to designate an external party for resolving a dispute between them through issuance of a binding verdict'. 22 Regarding the arbitration clause, its validity under Sharīʿah rules was debated as the subject matter is a future dispute, while the subject of contracts in Sharīʿah must be existing. The four main Islamic schools, Hanbalis, Malikis, Shafi'is and Hanafis scholars, agreed that for the validity of arbitration agreement there must be an existing dispute, but this does not prevent parties to conclude conventional arbitration agreement by reference to the modern legal systems of the ICs. 23 Therefore, the validity of the arbitration clause and the subject contracts has been recognized by these systems, including KSA and UAE, in the absence of uncertainty. 24 The validity of this clause is explicitly recognized by the relevant positive laws, such as the NYAC of 1958 which states explicitly that: Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship…. 25 Therefore, Redfern and Hunter described the arbitration clause as a 'blanc cheque' that 'may be cashed for an unknown amount at an unknown future date'. 26 The contracting parties should also, under Sharīʿah rules, appoint in their arbitration agreement a competent arbitrator or more by name. The appointed arbitrator may use his sense of fairness without being forced to follow any evidentiary or procedural rules. 27 According to these rules, all private rights in commercial or proprietary matters can be arbitrated. 28 The enforcement of arbitral awards will be recognized by ICs as long the Islamic public policy is respected, the reasoning for these awards are given and the parties are well heard in front of each other. 29

Adoption of modern arbitration practices by Islamic countries
The UNCITRAL Model Law on International Commercial Arbitration of 2006 as amended is designed to assist countries in enacting and developing their national arbitration laws to incorporate the main features and needs of international commercial arbitration. It organizes all the steps of arbitral process from the arbitration agreement until the issuance of valid and enforced arbitral awards. 30 20 For the evolution and advantages of international commercial arbitration, see the research guided by Queen Marry-University of London, International By tracing this model law, many ICs have enacted national arbitration legislation that affirm the right of contracting parties to enter into valid and binding arbitration agreement, provide the mechanism of designation of arbitral tribunal, and determine the requested procedures for the enforcement of arbitral awards. In order to appreciate the deep impact of international arbitration practices on the reformation and modernization of the national arbitration legislations in ICs, there is a need to shed the light on their current arbitration legal systems, and verify the compatibility of modern international arbitral features with Sharīʿah rules.

Adoption of current arbitration practices by the modern legal systems of Islamic countries
During the last decades, arbitration in the ICs has been vastly growing. This growth is going in line with the force of globalization, the liberalization of economic resources and the growing of oil production in the Arab Gulf region. The economic development in these countries and the extensive investments in their infrastructure projects attracted national and international investors. The success of these countries in attracting foreign investment imposed on them to conform to international requirements including the method of alternative dispute resolutions. 31 Due to its flexibility, speed and confidentiality, arbitration became the most attractive method for resolutions of commercial disputes. 32 Accordingly, the ICs, such as Jordan, Iraq, and Egypt, have changed their arbitration regulations by adopting either the UNCITRAL Model Law or incorporating the law of one of the European countries, such as the French law or the law of England and Wales. 33 The vast development of arbitration in ICs reflected their response to the international commercial developments and showed their readiness to embrace arbitration as a means of various disputes resolution. It also proved that arbitration can be conformed to Islamic culture and traditions. 34 Brower and Sharpe 35 identify three phases in the development of arbitration in the modern ICs in the 20 th century. During the first phase, which began from the end of the World War II to the 1970s, the oil production in this region was controlled by concession agreements with western investors and arbitration was the primarily means for resolving disputes that arose between the Islamic country and investors in the oil industries. In that time, Islamic and local laws were negated by arbitrators and the western laws were applied. This position lead various states in the region to reject the reference to international arbitration in their commercial agreements as western and unfair.
During the second phase of modern international arbitration in the ICs which started from 1970s and lasted until 1980s, the world economy gained more confidence due to several factors including end of colonization, challenge to capitalism, increasing of oil production, development of industries, and, consequently, the stability of the western economies relied more on the effectiveness of arbitration in the settlement of oil concession disputes. 36 Nevertheless, the ICs challenged the whole international arbitration infrastructure as it was created and developed without their participation or, at least, giving any consideration to their values, culture and legal traditions. 37 As a result, several ICs revoked their oil concession agreements with western investors and rejected arbitration invoked by these investors. Moreover, they refused to ratify the main international arbitration conventions, including the NYAC of 1958. 38 During the third phase, ICs began to embrace the system of international arbitration. Therefore, several countries enacted local laws regarding arbitration, 39  centers. 40 They also joined international arbitration conventions such as the NYAC of 1958, and incorporated the international principles relating to the recognition and enforcement of foreign arbitral awards. As a result of this fundamental gradual development, the arbitration systems in the ICs currently compromise of two kinds of rules that find their origins in the Islamic and western laws. Mr. Kutty has categorized these countries into three categories: 41 countries that adopted western laws, such as Lebanon, Egypt, and countries that have drawn a substantial part of their legislations from the Sharīʿah, such as KSA, and, finally, countries which westernized some of their legislations but still influenced by Sharīʿah, such as Iraq and Jordan. 42 This categorization gives international business entities primarily an idea about the general principles of recognition and enforcement of foreign awards in each of those countries. As an illustration, the recognition and enforcement of foreign arbitral award in the UAE would be rejected by its local competent court once it finds that this award is contrary to the Sharīʿah principles. 43 The right to reject such award can be based on Articles 1 and 27 of the Civil Transactions Code which, respectively, state that:

Compatibility of modern arbitration practices with Sharīʿah rules
The UNCITRAL Arbitration Model Law of 2006 as amended and the NYAC on the recognition and enforcement of foreign arbitral awards of 1958 are the main international instrument that reflects the international practices of the key features of contemporary international commercial arbitration. 45 The essential features of these are: the capacity of parties to enter into a valid and binding agreement, 46 the parties' authority to select their arbitrators, 47 the separability of arbitration clauses, 48 the parties' autonomy to designate the procedural rules, 49 and the substantial applicable law on their arisen dispute, 50 the parties' authority to agree on the language 51 and place of arbitration, 52 the arbitrators' jurisdiction, 53 the conventional procedures for challenging the selected arbitrators, 54 the due arbitral procedures, 55 and the validity and enforcement of arbitral awards. 56 The common practices of international commercial arbitration adopted by UNCITRAL Arbitration Model Law and the related international arbitration conventions, such as the NYAC, have been incorporated in the legal systems of the ICs. 57 This incorporation has been also reflected by the establishment of arbitration centers in most of these Countries, such as KSA, UAE, Egypt, and Jordan where Sharīʿah is the principal source of their legislations and its imperative rules should be applied, either when the parties choose to apply one of the laws of these countries to their dispute, or when a party requests the enforcement of a foreign arbitration award on their territories. 58 However, there are some differences between arbitration under Sharīʿah and the modern international arbitration system regarding the arbitrability objective of disputes, especially in family issues. Therefore, while these issues are not mostly arbitrable in western countries, the Qur'ān has explicitly commended the reference to arbitration for resolving the family disputes. 59 Therefore, its verse 35:4 of Surah Al Nisa states that: 'If you fear dissention between a married couple, send an arbitrator from his family and an arbitrator from her people. If they both desire reconciliation, Allah will cause it between them'. By application of this divine instruction, and for illustration, the Uniform Law Commission (ULC) in the Islamic Republic of Pakistan adopted in July 2016 the Uniform Family Law Arbitration Act, whereby parties may agree to submit any existing or future family dispute to a binding arbitration, including claims for spousal support, division of property, custody and child support, claims of breach of a marital agreement. 60 The Sunnah has also stressed the necessity to settle disputes quickly and discreetly, as the only means for settling dispute at a time when courts did not exist was the tribunal of arbitration. The companions of the prophet Muhammad referred also to arbitration in many occasions. 61 Therefore, in an important case involved the Caliph Ali Ben Abi Taleb the fourth Caliph of Muslims and the Muslim Caliph Mua'wya Bin Abi Sofian, they agreed to appoint two arbitrators in written deed, in which they designated the names of arbitrators, and agreed upon the duration of arbitration, the applicable law and the place of issuing the award. 62 However, the limited usage of arbitration in Islamic history has been extended nowadays to include the arbitrability of all financial and economic issues, as Islam is a flexible evolutionary system that allows national legal systems of ICs to evolve and adapt to different and new circumstances. 63 Therefore, according to the consensus of Muslim scholars the excluded area from arbitration covers only the issues relating to Sharīʿah imperative orders, 64 such as the criminal punishment, the patrimonial rights, the guardianship on orphans. These matters must mandatorily be referred to national courts, whereas all other matters relating to financial and commercial disputes are arbitrable. 65 Regarding the arbitration clause, its validity under Sharīʿah was strongly debated as its subject matter is a future issue, while the subject of contracts in Sharīʿah must be existent and legitimate. 66 As mentioned above, the four main Islamic schools agreed that for the validity of arbitration agreement there must be an existing dispute, but, this does not prevent parties to conclude conventional arbitration agreement by reference to the modern legal systems of the ICs. 67  Practically, the arbitration clause participates positively in reducing the jurisdictional uncertainty, and in view of this functionality its future effect should not be used as a reason for its invalidity. Moreover, under Sharīʿah rules a contractual clause is invalid only if it contradicts the object of the contract. 72 Therefore, the reference in determining the validity of contractual clauses in Sharīʿah is the Hadith of Prophet Muhammad who said, 'Muslims must respect their contractual clauses, except a clause that legitimizes (haram) prohibited, or forbids (halal) permitted'. Based on this interpretation and at the practical level, the validity of arbitration clause should not be contested by Islamic jurisdiction as long as its concept does not legitimize prohibited things or forbids those which are permitted. 73 Under the principle of separability of an arbitration clause, its validity can be recognized independently of the underlying contract in which it is contained. According to the Islamic jurisprudence a void clause does not lead to the voidance of the underlying contract unless it is the principal motivation for concluding this contract. 74 The disputing parties have full liberty to appoint their arbitrators either directly or by reference to a third party. Sharīʿah does not put any restrictions regarding the number of the appointed arbitrators. The issue is entirely left to the disputing parties to appoint one or more arbitrators provided their number to be uneven. For illustration, Article 13 of the KSA arbitration law states that: 'The arbitration tribunal shall be composed of one arbitrator or more, provided the number of arbitrators is an odd number; otherwise, the arbitration shall be void'. Once started the arbitral procedures, the appointed arbitrator cannot be revoked in the absence of parties' mutual agreement. 75 However, any of them can submit a revocation request to the competent court to decide on the matter. 76 Regarding the qualification of the appointed arbitrators, 77 the Islamic jurisprudence requires for them the same qualification as for judges. 78 According to Articles 1792 -1794 of Majallat of 1877, 79 which is still in force in some ICs such as Jordan, a judge must be a mature, wise, free, sane, fair, jurist.
The question is raised in this regard about the validity of appointment of a non-Muslim or a woman as an arbitrator. Unlike Hanbali, Maliki and Shafi'i scholars, the Hanafi scholars authorize the appointment of non-Muslim arbitrators in disputes involving non-Muslims. Current Islamic jurisprudence allows Muslims to trade and do business in non-Muslim countries and to appoint a non-Muslim arbitrator to resolve the relevant dispute. 80 Also, Unlike Hanbali, Maliki and Shafi'i scholars the Hanafi scholars allow the appointment of a woman as an arbitrator in all kinds of disputes. According to Hanafis, an arbitrator can be a person who have the qualifications of a witness, and a woman who has the qualification to be a witness in debts and commercial transactions as stipulated in the Qur'ān. 81 Furthermore, the Qur'ān and Sunnah have not stipulated any explicit prohibition on a woman being a judge or an arbitrator, and the second Caliph of Muslims Omar bin 69 See for example, Article 7 (2) of the UNCITRAL arbitration Model Law which states that: 'The arbitration agreement shall be in writing', and Article 9.3 of the Saudi Arbitration Law which states that: 'An arbitration agreement shall be deemed written'. 70  Al Khattab appointed a woman as an inspector on Medina Bazaar, where she judged between merchants in commercial disputes. 82 Currently, the majority of ICs allow the appointment of women as judges and arbitrators. 83 Therefore, for example, the Emirati Federal Arbitration Law Nº 6 of 2018 states clearly in Article 10 (3) that 'The arbitrator need not be of a specific gender or nationality, unless otherwise agreed upon by the Parties or provided for by law'. In KSA, while the canceled Arbitration Law of 1983 was preventing the appointment of women arbitrators, the new arbitration Law of 2012 is silent on gender and religion of the appointed arbitrators. This silence should open the door before the appointment of women arbitrators.
Where the dispute involves a non-Muslim party, according to the Maliki, Shafi'i and Hanbali scholars, the disputing parties can choose the application of a non-Islamic legal system, provided that the chosen law does not violate the Islamic public policy. 84 However, with the ratification of NYAC of 1958 by the majority of ICs, these countries approved the principal of delocalization of arbitration agreement and consequently the right of contracting parties to choose freely the applicable law.
As far as the recognition and enforcement of arbitral award is concerned, according to the majority of Muslim scholars an arbitrator's award is binding and enforceable as a judge's verdict. 85 However, as for the lack of the arbitrator's enforcement authority, the enforcement request of an arbitral award should be addressed to the national court where the assets are located. This court has supervisory authority to check only the formal matters, including the existence of an arbitration agreement, the validity of constitution of arbitration committee, without exceeding that to the review of the merits of the dispute or the reasoning of arbitrators. 86 This enforcement may be rejected by the national court if the arbitral award comprises an apparent error or injustice or it is contrary to Islamic public policy. 87 Article V (2) of the NYAC states explicitly that: Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: b) The recognition or enforcement of the award would be contrary to the public policy of that country. 88 In fact, the ratification of the NYAC by most ICs have largely contributed in increasing the enforcement of foreign arbitral awards by their jurisdictions. It can also facilitate the enforcement of a Sharīʿah award rendered under Sharīʿah rules in a western country.
As recognized in modern international arbitration practices, the arbitral procedures in Sharīʿah allow the disputing parties to choose the arbitral seat and the applicable procedural law. This right is also given to the appointed arbitrator whenever he is entrusted that by the parties. The priority for Sharīʿah in this regard is to comply with the principle of due process that encompasses the respect of parties' right of defense, giving equal opportunities to each party to be heard and to present fairly their case. 89 In sum, the modern international arbitration practices could be consistent with the spirit of Sharīʿah rules, as long the concept of binding arbitration is recognized by its different resources of Qur'ān 90 , Sunnah and jurisprudence. Also, certain Sharīʿah-based legal system countries, including KSA, have issued their And if you fear dissension between the two, send an arbitrator from his people and an arbitrator from her people. If they both desire reconciliation, Allah will cause it between them. Indeed, Allah is ever Knowing and Acquainted [with all things], and V. 58 states that: Indeed, Allah commands you to render trusts to whom they are due and when you judge between people to judge with justice. Excellent is that which Allah instructs you. Indeed, Allah is ever Hearing and Seeing', as translated in <https:// quran.com>. arbitration legislations without doing substantial changes on the spirit of arbitration as known in the relevant international practices. 91

Evolution of application of Sharīʿah rules in international commercial arbitration
During the last century most of the cases in major international arbitrations replaced Sharīʿah as substantive law by western laws in terms of their practical application. As such, the western arbitrators seem to ignore the general rule of pacta sunt servanda.
The analysis of major cases provides us with a complete comprehension of their effects on the development of arbitration legislations in the ICs and justify the evolvement of their attitude towards commercial arbitration system from disfavoring it to embracing its practices. 92

Reluctance in the application of Sharīʿah rules
In the 1950s, several oil concessions arbitration cases have negatively affected the development of international arbitration systems the ICs.
In the petroleum case of International Marine Oil Company Limited v the Emirate of Qatar the arbitrator denied the application of Sharīʿah law on the concession agreement. The law of Qatar was evidently in that era a Sharīʿah law, but the arbitrator held that this law is insufficient to regulate a modern oil concession instrument as it does not contain any specific principles relating to this kind of agreements. 93 In another famous case of Aramco Arbitration, the Kingdom of Saudi Arabia v Arabian American Oil Company, the three appointed arbitrators held that the proper law governing the concession agreement was the Sharīʿah law, as applied in KSA, pursuant to the rule of pacta sunt servanda. 94 However, the arbitrators held that Sharīʿah law is insufficiently competent for regulating the modern regime of oil concession for the lack of specific regulation in this regard, 95 therefore, the arbitrators chose to fill the lacunae in the Saudi law by resorting to international customs and common practices in the international oil industry and general principles of jurisprudence. 96 Likewise, with the nationalization of three foreign oil companies by the Libyan government in the 1970s, these companies have initiated arbitration proceedings according to the arbitral clauses contained in the concession's agreements. However, the Libyan government refused to participate in the subsequent proceedings. 97 The Libyan local law and the relevant international law were the applicable laws according to the choice of law provisions included in these agreements. The arbitrators in the three relevant cases have denied the application of the Libyan local laws, which is considered a primitive law in a developing country and its application may affect negatively the required legal environment for the development of arbitration in international commercial relations. 98 The arbitrators based their decision in each case on deferent legal text and analysis. As a result, The Libyan government lost its three arbitral cases and ultimately reached to settlements with the different parties. 99 91 See in this regard, Alqudah, (n 24) 5. 92

'Sharīʿah risk'100 in Islamic finance contracts
Although some of the judicial decisions referred to in the cases below were rendered by national courts and not arbitration tribunals, they revealed the substantial manner of thinking of western judges, arbitrators and scholars about the difficulties that face the reference to Sharīʿah in Islamic finance contracts as a governing law. 101 The main issues that judges or arbitrators expressed in many occasions as risks in face of the applicability of Sharīʿah law in western jurisdiction systems are as follows: Sharīʿah is a non-state law, it is not codified in a body of law, the Islamic jurisdictions are not bound by jurisdictional precedence, the existence of multiple Islamic schools of thought led to different interpretations of commercial matters, lack of specific provisions and identified standards that detailed Islamic finance transactions, and lack of particular procedures to Islamic commercial dispute resolution. 102 For illustration, in the case of the holding pharmaceutical company of Bangladesh Beximco Ltd. v Shamil Bank of Bahrain, 103 the Islamic bank Shamil had entered with Beximco and other borrowers into two murābaḥah agreements. 104 According to the clause of governing law contained within each of these agreements: Subject to the principles of the Glorious Sharīʿah, this Agreement shall be governed by and construed in accordance with the laws of England. Beximco defaulted on its payment and after several violations of its contractual obligations, Shamil brought the case to the competent court, and in its defense, Beximco claimed that the murabahah agreements were void and unenforceable because the transaction was in actuality disguised interest-bearing loans proscribed under Sharīʿah law. 105 According to the English Court of Appeal, Sharīʿah Law could not govern an Islamic finance agreement in the UK. 106 The Court ruled that the reference by the parties in their Islamic finance agreements to both Sharīʿah and English laws would not lead to the application of a non-codified and a non-national system of law such as Sharīʿah. 107 The court held that the sentence 'subject to the principles of glorious Sharīʿah' in the governing law clause demonstrated merely Shamil's intention to conduct all its transactions according to Sharīʿah princi-ples…', and '…it was not meant to trump the application of English law as the governing law'. 108 Furthermore, the court added that Sharīʿah law is an unrecognizable form of law that contains general principles and the governing law clauses in the said agreements did not incorporate any specific or identifiable rules of Islamic law. 109 Therefore, the court concluded that the simple reference to Sharīʿah was 'intended simply to reflect the Islamic religious principles according to which the Bank holds itself out as doing business'. 110 The English Court of Appeal had justified the dismissal of Sharīʿah as a selected governing law by relying on Articles 1 (1), 3 (1) and 5, of the Convention of Rome of 1980 on the law applicable to contractual Obligations. 111 According to Articles 1 (1) and 3 (1), a contract shall be governed by the law of the country chosen by the contracting parties, and by virtue of Article 5 the choice of a non-state law as the governing law of the contract is implicitly excluded. Therefore, the strict application of these provisions has lead the court to the dismissal of the application of Sharīʿah. 112 Although the international commercial law model gives the parties the right to choose any non-state law as the governing law of their contract. 113 As a result of the preceding reasoning, the decision of the High Court was confirmed by the Supreme Court which clearly denied the application of Sharīʿah Law on Islamic finance transactions, even if so stated explicitly in the agreement as long as Sharīʿah is not a recognized form of law that encompasses specific identified principles able to govern an international commercial dispute in the UK. 114 In another case involved the Kuwaiti Investment Dar Co v the Lebanese Bloom Development Bank, 115 the two parties had entered into (wakālah) an agency investment agreement governed by the law of England. 116 According to this agreement, Bloom had to deposit a fixed amount of money with its (wākil) Dar agent to invest it in different projects. After Dar's default on payments under the signed agreement, Bloom brought the case to the High Court of England based on the default of payments of the agreed periodic profit in the contractual claim and the deposits held in the trust claim. 117 In its defense Dar raised that the wakālah agreement, which was approved by its Sharīʿah board, was not Sharīʿah compliant, being a loan investment agreement with interest. 118 The court ignored the binding and valid agreement and applied English law to the wakālah agreement, and ruled that Dar was liable to pay to Bloom only the deposit amount. By its decision, the court ignored the wakālah arrangements, under which Dar was obligated to pay to Bloom 5% return at the end of each wakālah period. 119 According to the Standard No. 5/2,2,2 of AAOIFI 120 Sharīʿah standard on guarantees:

… it is not permissible to combine agency and personal guarantees in one contract at the same time (i.e. the same party acting as agent on the one hand and acting as guarantor on the other hand), because such a combination conflicts with the nature of these contracts. In addition, a guarantee given by a party acting as an agent in respect of an investment, turns the transaction into an interest-based loan since the capital of the investment is guaranteed in addition to the proceeds of the investment (i.e. as though the investment agent had taken a loan and repaid it with an additional sum, which is tantamount to ribā). 121
As such, Dar was an agent and a guarantor of payment to Bloom the deposit amount and a 5% return. Therefore, it used this argument of non-compliance of the wakālah agreement with Sharīʿah rules to evade its agreed obligations towards Bloom. 122 119 Paldi, (n 118) 12. 120 The Accounting and Auditing Organization for Islamic and Financial Institutions (AAOIFI) is responsible for developing and issuing standards for international Islamic finance industry, <http://aaoifi.com/standard/Shariah-standards/?lang=en>. 121 Interest-based loan, which is prohibited in Sharīʿah according to Verse 275 Surah Al Baqara-Qur'ān, 'They said that sale is like ribā whereas Allah has allowed sale and has banned ribā'. 122 Paldi, (n 103) 14.
By its decision, the court ignored the above standards and, consequently, unfortunately misunderstood Sharīʿah law. It adjudicated the wakālah agreements according to English law, and judged that Bloom was only entitled to the deposit amount without the agreed 5% return on the ground that the transaction was null and void for non-compliance with Sharīʿah law. 123 While if the above Islamic standards were wellunderstood by the court, Dar was liable to pay to Bloom the deposit amount plus the agreed profit, rather than only the principal amount. 124 Similar reasoning was followed in the case Bank Islam Malaysia Berhard where the bank bought according to a Bai Bithaman Ajil (BBA) agreement a property to sell it to one of its customers at an agreed price including a profit margin, 125 which must be paid by the customer by periodic instalments. The primary perception of this transaction is that it is simply an interest disguised as a sale. Nevertheless, under Sharīʿah law nothing prevents the seller from increasing the sale price according to the period of time for which installments are extended. 126 Based on this general rule, the bank contended that it had a legal right to request the payment of the total agreed sale price regardless of the early termination of the agreement. It argued that the customer had to pay the total agreed sale price as this agreement is a real sale agreement and not an interest-based loan agreement. However, the court explained that: 'the BBA contract is secured by a charge and concession as rebate or ibrā' is given as a matter of practice to all premature terminations'. It added that: 'further, it is not a simple sale because even if the bank does not make payment of the full purchase price under BBA, the bank would still be entitled to claim the amount already paid'. It also stated that: 'whereas in a simple sale if the first leg of the transaction fails, the Bank's right to the amount paid will not ipso facto accrue since the sale was never completed'.
The court wondered:

why a bank should insist on payment of the full sale price and thereafter as a matter of practice grant a rebate to the customer simply to show that it is a sale transaction may have its purpose, but to place the customer in such a precarious position is quite something else, particularly when such grant is at the Bank's absolute discretion.
It stressed also the point that: In view of the above-mentioned cases, the main asserted conclusion was the dismissal by western courts of the application of Sharīʿah rules as being incompetent or insufficient, after which they applied 'general principles of law' in the western laws. 130 This position was largely criticized by the Islamic jurisprudence as the western courts, and by analogy the western arbitration tribunals, have not exerted enough efforts in determining the Sharīʿah mandatory rules, such as the prohibition of 'ribā' (interest), as intended by the contracting parties at the time of the conclusion of their contracts. As a result, throughout this period of time, many ICs have manifested its hostility and distrust of international arbitration and jurisdiction as favoring the western interests. 131 The arbitral cases in the next section were significant in embracing the institution and infrastructure of international arbitration by ICs.

Application of Sharīʿah rules
The international commercial law model recognized that the contracting parties can apply non-national system of law to their contract by mutual agreement to arbitrate their dispute governed by this system. This application might be applied directly through incorporation of this system such as the relevant Sharīʿah rules into the contract as particular provisions, or indirectly by applying a national law that itself applies these rules. 132 The Rome I Regulation on the Law Applicable to Contractual Obligations adopted by the EU in 2008, removed indirectly the limitation stipulated in the Convention of Rome of 1980 with respect to the exclusion of application of a non-state law. Therefore, it allowed in paragraph 13 of the preamble of this regulation to the contracting parties to choose a non-State law: 'this Regulation does not preclude parties from incorporating by reference into their contract a non-State body of law or an international convention'. 133 The implementation of such text may contribute in the development of application of Sharīʿah as a contractual governing law.
Furthermore, some of the international jurisdictional and arbitral precedents that took into account the application of Sharīʿah rules on Islamic finance contracts have played a vital role in the adoption and promotion of modern arbitration practices in ICs, for illustration: In Musawi v. R. E. International (UK) Ltd., case of 2007, 134 the England and Wales High Court of Justice was required to enforce an English arbitration award decided under Sharīʿah rules in a dispute related to a joint acquisition, development and ownership of an adjoining plot of land. The court decided that this award shall be enforced as long Sharīʿah is valid as a substantive governing law by virtue of the English Arbitration Act of 1996. 135 In Al Midani v. Al Midani case of 1999, in an arbitration agreement concluded by heirs of a wealthy Saudi regarding the division of their late father's estate by a named arbitrator, an appeal request was filed before the England CA which found that the applicable law was 'either Sharia law or such law as modified by Saudi law'. It mentioned that Sharīʿah is a direct source of law in ICs. Therefore, if the contracting parties wish to apply Sharīʿah, to their agreement, they have the option to apply a Sharīʿah-based national law, such as the Saudi system of law which is based on the Qur'an, Sunna and fiqh. 136 In  138 The enforcement of this award by Kuwait in the UK was not possible without ratification of the NYCA in 1978 to meet the reciprocity requirement retained by the UK at the date of its entry into the convention in 1975. The positive effect of this arbitration award proved to the countries adopting Sharīʿah law the benefits of joining the NYCA and the efficiency of international arbitration as effective mechanism for resolving Islamic finance disputes. 139 It would also facilitate the enforcement of foreign arbitration awards in the ICs, and the other way around the enforcement of a Sharīʿah award rendered under Sharīʿah rules in a western country.
In Aminoil v. Kuwait case of 1982, after nationalization of the Kuwaiti oil sector by the government in 1977 and subsequently the termination of the Aminoil oil concession agreement, the two parties referred to an ad hoc arbitration. The arbitration tribunal was sensitive to apply the Kuwaiti local law which is derived from Sharīʿah law. It applied this law to the substantive issue and gave the right to Kuwait to terminate Aminoil concession agreement against payment of fair compensation to Aminoil for its long-term benefits of this concession. 140 The direct outcome of this award increased the acceptance by ICs of international arbitration system as an effective mechanism for resolving international commercial disputes. 141 In Saudi Arabia/Netherlands v. ARAMCO arbitration case relating to the interpretation of a concession agreement made on 29 May 1933, between Pipeline Contractor (Saudi Arabia/Netherlands) and ARAMCO (Saudi Arabia/US), the Government of Saudi Arabia concluded an agreement with Saudi Arabian Maritime Tankers Ltd. (Mr. Onassis), under of which Articles IV and XV gave to Mr. Onassis a right of priority for the transport maritime of Saudi Arabian oil for thirty years. The focal issue in this dispute was the conflict between the right of priority given to Mr. Onassis and the concession agreement with Aramco, which gave it the exclusive right to transport the oil extracted from its concession area in Saudi Arabia. The ad hoc arbitrators referred to Sharīʿah rules to settle the submitted dispute by stating that:

It is difficult to admit that these Agreements should be characterized as laws under the legal system of Saudi Arabia. Reference may be made here to the Fundamental Instructions of the Kingdom of the Hijaz of 31 August 1926, corresponding to 21 Safar 1345 where it is provided in Article 5 that: All the Administration of the Kingdom of the Hijaz belongs to H.M. the King who is bound by the norms of the noble Sharīʿah.
Thus, the arbitrators were confronted with two concessions agreement concluded by the government of Saudi Arabia with Aramco for the first agreement in 1933, and the second one was granted to Mr. Onassis in 1954. Based on the ratification of these two agreements, an attempt was made to consider them as a law that governs the relationship between the government and the two companies. The government stressed the principle of sovereignty of the state party to the concessions in international public law and contended a restrictive interpretation of these agreement as one of its parties is a state. The arbitrators held that these arguments are not supported by Islamic law, which drew no distinction between private contracts, public contracts or treaties. These instruments have the same validity since principle of pacta sunt servanda is recognized by the Islamic law. Therefore, the arbitrators found that these agreements: Have a purely contractual nature, since this is in accordance with the legal nature of concessions in Saudi Arabian law where the King's intervention is needed merely to make the contract perfect. Furthermore, the Onassis agreement does not lay down norms of a general and impersonal application, but it establishes an individual situation to the advantage of Mr. Onassis and the companies he represents.
They also state that: 'In the Hanbali school of Islamic law, respect for previously acquired private rights, and especially for contractual rights, is a principle just and fundamental'. Therefore, a valid contract binds both Parties and should be performed; 'when one party has granted certain rights to the other contracting party, it can no longer dispose of the same rights, totally or partially, in favour of another party'. 142 The arbitrators considered that the proved exclusive right of Aramco to transport the extracted oil by sea is beyond all question, and they hold that that its concession right is legally protected by the principle of acquired rights, and found that Aramco was justified in resisting any violation of its exclusive rights as 'no one may derogate from his own grant'. This legal principle is commonly accepted in the Islamic law and in other legal systems. It applies to all kinds of legal relationships, whether in the public or the private law. 143 Concerning the arbitration precedents issued by the International Chamber of Commerce, it appears that Sharīʿah rules have been mostly applied as the contractual governing law.
Hence, in a dispute arose between an American construction company and an Algerian state company with respect to an infrastructure agreement to build a railway in Algeria, the American company submitted an arbitration request to the ICC to settle this dispute claiming that the Algerian company did not fulfil its contractual obligations. 144 Subsequently, an arbitration tribunal of three arbitrators was formed in the ICC. The tribunal chose to apply the Algerian law to both the arbitration procedures and substantive matter, since the execution of agreement and the seat of arbitration was in Algeria. 145 The arbitration tribunal ruled that the Algerian company is liable for non-performance of its contractual obligations and awarded to pay a fair compensation with interest. However, the Algerian company rejected the payment of interest since the applied Algerian law, which is derived from Sharīʿah, prohibits, as a fundamental rule, awarding interest. In its contention, the Algerian company referred to Article 1 (2) of the Algerian Civil Code, which states explicitly that: 'in the absence of any legal provision, the judge should apply Islamic Law first then he or she could apply customs'. The court did not take this rejection into consideration as the Articles 182 (2) and 186 of the same Code allow the payment of interest in case of compensatory damages. 146 In contrast, and in a different case of ICC involved Parker Drilling Co. v Sonatrach, the arbitration tribunal refused to award any kind of interest by application of Sharīʿah law, since the general reference to Sharīʿah law in the Article 1 of the Algerian civil code forbids awarding interest. 147 Likewise, in another case of ICC involved an oil company and a pipeline contractor, the arbitration tribunal refused to award interest to the claimant based on the Islamic general rule as they expressed: 'the Sharīʿah expressly forbids any charging of interest because it involves usury, not chargeable in Islamic Law'. 148 In settling another case, the arbitrators of ICC rendered their award based on their general understanding of the opinion given by experts in the applicable Saudi law, which was evidently Sharīʿah based law. 149 Therefore, they stated in their final award that: In order to respect the sensitivities of Sharīʿah law in this field, we do not consider that compensation should be awarded at a commercial rate of interest, but that it should rather be based on a rate which reflects the incidence of annual inflation over the period [at issue]. On this basis, we award to claimant, by way of additional compensation for financial damages, simple interest at the rate of 5% per annum over 5 years. 150

Strengthening the role of Sharīʿah in international commercial arbitration
There are many ways that can be followed in order to promote the application of Sharīʿah law by the international commercial arbitration tribunals, among of these ways could be the incorporation of Sharīʿah rules in the modern legal systems of ICs, promoting the role of Islamic arbitration institutions in the application of its rules and assuring the adapted solutions for the submitted disputes, respecting by the international arbitration tribunals for the party autonomy in the choice of Islamic law for settling their disputes, and retaining by the national courts of ICs the power of public policy to refuse the recognition and enforcement of the inconsistent international arbitral awards.

Codification of Sharīʿah rules
Sharīʿah rules are not codified in an authoritative body system like that of state-based law systems. The main reason for that is the diversity of Islamic schools that apply different approaches in their interpretation of Sharīʿah rules. The four classical Islamic schools are Hanafi, Maliki, shafi'i, and Hanbali, which together constitute the Islamic fiqh generally accepted by Sunni Muslims. Whereas the Ja'afari school is the generally accepted authority for Shia Muslims. 151 The difficulty of codification in this regard is that some ICs adopt different ranking of these schools' interpretations in varying extents, while other countries rely on some schools and exclude others. 152  The lack of uniformity could be illustrated within these schools by different examples, such as whether an arbitral award is enforceable. Therefore, unlike the consensus of Islamic jurisprudence, Hanafi school considers that the arbitration system is closer to the conciliation and an arbitral award is like parties' compromise where enforcement depends on the will of contracting parties. Similarly, there is no unanimous agreement regarding the arbitrability objective of different types of disputes, even in some type of financial transactions. 154 Historically, the legislative policy inherited by the legal systems of the ICs throughout various periods was complex and rich of features. 155 One of the foremost systems influenced these countries was the Ottoman legislative system since their nations were under the dominance of the Ottoman Empire for almost seven centuries. The Ottoman system included the general rules of Sharīʿah and the codified Ottoman law called Majallat which included the most important provisions for Islamic transactions. 156 With the introduction of the French Civil Code -established under Napoleonic rule in 1804 -into the legislative of the Arab countries, their legal systems were consisted of two types of rules of Islamic and French origin. The first codified civil rules in Arab countries was in Egypt which were drafted in the Egyptian Civil Code by Professor Abdul Razzaq al-Sanhouri, a leading legal Egyptian scholar. This code opened the door for the modern reform of the Arab countries legal systems. 157 However, the KSA was the only country that continued to apply Sharīʿah rules as a supreme law without the establishment of civil code, and, concurrently, their codified regulations relating to specific civil transactions such as employment, agency should not contradict Sharīʿah Law. 158 Despite the above legislative reform in the Arab countries, their legal systems are somewhat different from each other depending on the degree of influence of Sharīʿah in each country. The attempts to wholly codify Sharīʿah at Arab countries level into a modern law, which was started in 19 th century under the Ottoman Empire, is far from being completed or acknowledged by these countries due to the multiplicity of Islamic schools applied in their legal systems. 159 Nowadays, the ICs establish Sharīʿah supervisory boards to ensure the compliance of the activities of their Islamic financial institutions with Sharīʿah principles. This method of ICs is related somewhat to the diversity of opinions and multiplication of solutions provided by these boards according to the Islamic school adopted by the relevant country. On the other hand, the decisions of the Islamic supervisory boards are not binding to the courts in the jurisdictions of ICs, except for Malaysia where the courts are becoming bound by these decisions by virtue of the amendment of Central Bank Act of 2009. 160 To sum up, the success of codification of Sharīʿah rules would be of great practical value given the need of investors and business entities alike to have clear principles and fixed rules in their commercial transactions and arbitration in each country. 161

Strengthening the role of Islamic arbitration institutions
For as much as the core of the Islamic trade contracts based on Sharīʿah-compliance, many legal workshops and conferences were held over the past decades to stress the importance of standardizing and codifying the principles of Islamic finance transactions. 162 The establishment of a consolidated interpretation and codification of Islamic financial law can affect positively the reference to Sharīʿah by contracting parties as a clause of governing law. Many initiatives and international arbitration centers worked on the establishment and development of common standards and rules such as the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Islamic Financial Services Board (IFSB), the Islamic International Rating Agency (IIRA), the Kuala Lampur Regional Center of Arbitration (KLRCA), The International Islamic Center for Reconciliation and Arbitration (IICRA), and DWIFACJO Uniform Banking Law. 163 The AAOIFI is responsible for issuance and development of universally complied standards for the Islamic finance transactions. 164 Since its establishment, it has issued more than 100 standards concerning a global Islamic finance industry, accounting, auditing, ethics and good governance. The organization is supported by several Islamic financial institutions, law firms, accounting and auditing offices from over 45 ICs. 165 Currently, many leading Islamic financial institutions worldwide apply its standards which positively contributed in the harmonization of common practices in the area of international Islamic finance. 166 The IFSB is an international standard-setting organization instituted in 2002 and based in Kuala Lumpur, Malaysia. It promotes the stability of the Islamic financial industry by issuing prudent universal standards consisting with Sharīʿah principles with respect to the services offered by Islamic banks, insurance companies and capital markets. 167 Its research and regular activities aim to coordinate initiatives on Islamic finance industry. 168 The IIRA was founded in 2005 in the Kingdom of Bahrain as an infrastructure center for supporting Islamic trade transactions. It provides independent opinions across the world on the compliance of financial issues to Sharīʿah principles. This puts this center in league with the other supporting organizations such as AAOIFI and IFSB. IIRA stresses the point that fairness, good faith and transparency are substantial pillars of Islamic finance industry. Through its training and workshops, IIRA aims to promote a deep understanding of the concepts of Islamic transactions in existing and new markets. Several international jurisdictions and international institutions, such as the Central Bank of Bahrain, Central Bank of Jordan, the Banking Regulatory and Supervisory Agency in Turkey, Islamic Development Bank, formally recognized IIRA as an approved rating institution. 169 The Dubai World Islamic Finance Arbitration Centre (DWIFAC) and Jurisprudence Office (DWIFACJO) are a Dispute Resolution Mechanism for the Islamic finance Industry in UAE. 177 It provides global standard Islamic finance contracts with a built-in mechanism of dispute resolution, an arbitration center, a uniform Islamic banking law, and a central Supreme Sharīʿah Council. 178 Regarding DWIFAC arbitration procedures and decisions, they are conducted in the English language, the awarded decision is final and binding and shall be published, Sharīʿah shall prevail in case of conflict of laws as the verdict shall be conformed to Sharīʿah rules. 179 In 1985, the UAE issued a Federal Law No. 6 of 1985 regarding Islamic banks, 180 financial institutions, and investment companies. According to its Article 5 a Supreme Sharīʿah Council should be established, which is never occurred. The establishment of such council helps in overseeing the Islamic business entities. However, the implementation of Article 6 made these entities to establish their own Sharīʿah supervisory board which should apply Sharīʿah to the entity's commercial transactions.
To fill the shortfall, certain scholars 181 commended DWIFACJO to establish a Sharīʿah central advisory council and to issue a uniform Islamic banking law based upon the related laws issued by the local and federal authorities in the UAE and the international centers, such as the Islamic Banking Law of 1985, the Law Regulating Islamic Financial Business DIFC Law No. 13 of 2004, 182 and the AAOIFI standards. 183 This law can be used as a substantive law in DWIFAC, whereas the central council will positively contribute to the harmonization and standardization of principles of Islamic finance and trade transaction. 184 This council shall act as the supreme Sharīʿah authority for DWIFAC arbitration and DIFC.

Respect of parties' autonomy
The respect by the arbitration tribunals of the parties' autonomy to choose the governing law would certainly promote the application of Sharīʿah to Islamic finance contracts when they agreed upon as the law of contract.
Therefore, in international commercial arbitration, the contracting parties have a total autonomy to designate the applicable law on their contract. 185  The legal trend in ICs applies Sharīʿah as a substantive law rather than a procedural law for the reason that the Qur'an and Sunnah are silent on the procedures elements of arbitration process. The organization of these elements, including the procedural rules, the appointment of arbitration, the designation of the seat and language of arbitration were left to the free autonomy of the disputant parties. 189 In absence of this designation the applicable procedural law would be determined by the seat of arbitration. This legal principle is universally accepted, whether in Islamic or positive laws.

Retaining the power of Sharīʿah public policy
The ratification of the NYCA of 1958 by the majority of ICs over the past few decades has largely contributed to increasing the recognition and enforcement of foreign arbitral awards by the jurisdictions of these states. 190 However, the national jurisdiction in each of these states has the right to deny the recognition and enforcement of a foreign arbitral award if this is contrary to their domestic public policy. According to Article V (2) (b) of the NYCA: Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that […] the recognition or enforcement of the award would be contrary to the public policy of that country.
By using this exception, each country has its own discretion in rejecting the recognition and enforcement of foreign arbitral awards. 191 This power of discretion caused abundant confusion at the international trade level as the term 'public policy' was never defined by the NYCA. As a result, countries have adopted various interpretations of the 'public policy', certain referred to domestic public policy, whereas some of them chose the international notion, and others based their enforcement decisions on both domestic and international public policy. 192 The notion of Islamic public policy is based on the 'respect to the spirit of Sharīʿah and its sources' -Qur'an and sunnah, and on the eminent Sharīʿah principle that individuals must respect their clauses, unless they allow what is forbidden or prevent what is authorized. 193 As a code of life, Sharīʿah law plays a vital role in the finance transactions in the ICs, and the public policy in many of these countries is determined by reference to Sharīʿah principles. Therefore, the Islamic finance transactions are based on certain concepts related to (muḍārabah) the sharing of loss and profit, (mushārakah) joint venture, (murābaḥah) cost plus, (ijārah) financial leasing, the prohibition (gharar) speculation, the prohibition of (maysir) transactions based on chance the prohibition of trade that violate Sharīʿah principles, and the prohibition of (ribā) interest or usury. 194 The incorporation of these concepts into the national public orders of certain ICs may cause a problem of enforcement of opposite arbitral awards. 195 In UAE, for example, Article 2 of the UAE Civil Transactions Code of 1985 196 states that: 'The rules and principles of Islamic jurisprudence (fiqh) shall be relied upon in the understanding, construction and interpretation of these provisions'.
It further provides in Article 27 that: 'It shall not be permissible to apply the provisions of a law specified by the preceding articles if such provisions are contrary to Islamic Sharīʿah, public order, or morals in the State of the United Arab Emirates'.
Eventually, regarding the capacity of the appointed arbitrators, the majority of ICs, including Jordan, KSA and others, allow explicitly or implicitly the appointment of women and non-Muslims as arbitrators. 197 Therefore, for illustration, while the canceled Saudi Arbitration Law of 1983 was preventing the appointment of women and non-Muslim arbitrators, the new Law of 2012 is silent on gender and religion of the chosen arbitrators. This silence should open the door before the participation of women and non-Muslims as arbitrators without causing any problem of enforcement of arbitral awards under the NYAC, whether in KSA or in western countries.

Conclusion
In international commercial contracts, parties may choose local, foreign or conventional law. They may also choose to apply general principles and non-state law acknowledged by the international trade, such as lex mercatoria and Sharīʿah rules. Their choice should be respected by arbitration tribunals and courts unless it goes against the forum country's public policy. Some of cases assessed in this paper including Beximco, Bloom Bank, and Bank Islam Malaysia Berhard reveal the detrimental effects of using English or common law and litigation to adjudicate Islamic finance disputes. These cases demonstrated how the application of English law on Islamic finance disputes invalidated the selection of contracting parties of Sharīʿah under the pretext that its rules are sophisticated and not recognized by western jurisdictions as a valid national law for governing international trade transactions. By doing so, arbitrators and courts denied the worldwide leading legal principle of party autonomy.
With the evolvement of western arbitrators' attitude during the last two decades by starting to incorporate Sharīʿah in the international arbitration system, ICs began to embrace the infrastructure of international arbitration in their legal systems. Furthermore, the adoption by the EU of the Rome Regulation I of 2008 should also significantly enhance this evolvement and may contribute positively in promoting international commercial arbitration in the ICs. Consequently, this regulation gave in its preamble the contracting parties the possibility to choose a non-State law in international commercial contracts. This recent evolvement in addition to the traditional features of arbitration enabled it to become the preferred method for the resolution of Islamic finance disputes. These features are mainly its confidentiality, speed, cost, and flexibility in incorporating Sharīʿah rules into the governing clause law and in appointing proficient arbitrators in the field of Islamic finance transactions. This flexibility certainly promotes the fulfillment of the contracting parties' intent of Sharīʿah compliance.
However, the arbitration of Islamic finance transactions continues to face challenges in ICs in terms of: 1. Lack of a unified international regulatory or supervisory framework or an international Sharīʿah board that harmonizes the provisions of Islamic finance amongst ICs; 2. Diversity of interpretation provided by the local Islamic supervisory boards in Sharīʿah compliance issues; and, 3. Lack of enough proficient international experts and arbitrators in the domain of international Islamic finance.
Overcoming these obstacles can be possible through enhancement of the role of Islamic supervisory boards governance, publication of the 'fatawas' decisions of Islamic financial institutions to ensure and promote transparency and predictability, regulation of Islamic law certified and appropriately qualified experts as the secular legal systems are not equipped enough to interpret the principles of Sharīʿah, as well as the establishment of a regional central proficient and specialized arbitration institution in one of the ICs. This central institution should conduct intensive training sessions for Sharīʿah scholars in Islamic finance to provide the global business market with proficient specialized arbitrators. Furthermore, as we demonstrated through the cases assessed in this paper, the global market is in real need for establishing a Sharīʿah central advisory council and to issue a uniform Islamic banking law. These cases illustrated also the necessity for a standardized dispute resolution contract in the form of the DWIFACJO and DWIFAC dispute resolution mechanisms. Therefore, the incorporation of Sharīʿah into international commercial arbitration would facilitate the recognition and enforcement of foreign arbitral awards in the ICs. It is a determinant factor for the success