192 Regulatory Issues
indebtedness owed to the Islamic financial institution.^1 The Federal
Constitution of the UAE provides that Islam is to be the main source of
jurisprudence.^2 However, in these proceedings, the court considered that the
proper interpretation of the contract was that it was in fact a conventional
loan secured by a mortgage over land.
If a Shari’a Supervisory Board wanted the Shari’a to regulate any dispute
then, in the context of English law, it might be better to have disputes
arbitrated and with the Shari’a being the determining law. There has been
a recent decision which has upheld an arbitration provision which directed
the arbitral panel to decide disputes in accordance with the Shari’a.^3 While
this might prove to be attractive to Shari’a Supervisory Boards, the other
parties to a transaction may be concerned about the possible uncertainty as
to the interpretation of the Shari’a, and how an arbitral panel would deal
with this uncertainty.
As can be seen, therefore, the issue of thefatwadoes need to be carefully
considered in the context of the contractual governing law provisions and
the jurisdiction or arbitration provisions. While a secular court might rule
in a manner that construed the Islamic finance transaction as being a
conventional financing document, this would not, however, affectthevalidity
of thefatwapronounced by the Shari’a Supervisory Board.(^1) Federal Supreme Court judgement issued on 18 November 2001 under appeal No. 411.
(^2) Article 7 of the UAE Constitution of 1971, as amended.
(^3) Sayyed Mohammed Musawi v. R.E. International (UK) Ltd, Sayyed Mohammed Ali Shahrestani, Sayyed
Reza Shahrestani and Sayyed Saleh Shahrestani([2007] EWHC 2981(Ch)).