Contacts Introduction This recent decision in the English courts concerning a Wakala transaction has caused some disquiet among participants in the Islamic finance market. Our view is that, while the case raises several interesting issues, it does not fundamentally undermine Wakala transactions or the Islamic finance market generally. The case is only procedural and makes no final determination of the issues. At the heart of the case was an argument concerning whether the Wakeel lacked capacity to enter into the transaction on the basis that its objects clause prohibited non-Shariah activities and that the Wakala transaction was in truth a disguised interest bearing deposit.
Comm giving summary judgment to S, which was a bank. S then claimed against B as principal debtors in respect of monies advanced to them by S under various Islamic financing agreements and as guarantors of some of those agreements.
To this S further claimed amounts outstanding under the agreements when B failed to make payments. B's defence was, inter alia, that on the proper construction of the governing law clause, the agreements were only enforceable in so far as they were recognised by Shari'a law and English law, and that the agreements were in fact contrary to Shari'a law.
The judge held that English law was the governing law because there could not be two separate systems of law governing the contracts. In this case, the appeal from the Bank of Bahrain was dismissed.
In giving the judgment for the case, the following includes most of the insights that informed the decision and perception of the court. The judge who was overseeing the proceedings of the case, Held, while dismissing the appeal, said that: There could not be two governing laws in respect of the agreements.
The Rome Conventionscheduled to the Contracts Applicable Law Actonly contemplated and sanctioned the choice of the law of a country.
The reference to Shari'a law was repugnant to the choice of English law and could not sensibly be given effect to.
The judge was right that the words were to be read as a reference to the fact that S held itself out as conducting its affairs according to the Shari'a principles.
Even though the arbitrators in this case were bound to rely on public policy for their decisions; they were bound to the public policy defence, but in this case the defence was completely ineffective.
The money that was actually owed was still due to the Bank of Bahrain.
The court found that the public policy was not a defence against the primary facts of the case; that the company owed the money to the Bank of Bahrain and were charged to pay that money back. Inasmuch as the court was not obligated to take into consideration Bahrain public policy if the parties had not asked it to do so, it would have been appropriate for the court to consider it just so as when giving its decision, it would be far reaching with the understanding that it had considered all the scenarios extensively.
UNCITRAL was involved basically because the rights of the local court would most likely override the international public policy and it allowed the Government of Qatar jurisdiction.
This rule was set up to protect the local courts, especially in the Middle Eastern States. It can be observed that Middle East countries such as Qatar which have expressly accepted to be governed by international arbitration regulations could easily benefit from the latitude that such provisions offer.
It should be noted that this case obtains because Qatar is not under strict Islamic rule because it is rather a monarch, with an almost secular government.
Decisions made in the courts in Qatar can therefore enjoy international recognition, just as much as Qatar would also easily recognize decisions made in other jurisdictions where her citizens are involved. Qatari public policy can be seen to be less rigid in recognizing arbitration processes and decisions made elsewhere so long as the international rules to which she subscribes.
The Tribunal felt that the common ground of these decisions lay in the approach and findings of the arbitrators.
In each case, the Tribunal looked first at the contract to determine the parties' intent on the jurisdictional issue, and then supported a decision based on general contract language by finding that customary international law provides for an arbitral tribunal to determine its own jurisdiction.
The case Dubai and Qatar with British Arbitrators Lord Asquith and Sir Alfred Bucknill, showed that the British arbitrators were actually insensitive to the cases in these GCC States and the consequences were extremely damaging as far as public opinion and the opinions of the Gulf courts.
He would not accept the precedents of the side of the Abu Dhabi State, coming from Islamic Law instead of international law. Women were given place in the court system and could even bring suits, divorce and have modern legal rights in ancient Egypt. These cases could be used in a Bahrain court of law and are still used as precedence.
In international law, there could be some negative arguments, as with Lord Asquith, which should use arbitrators more sensitive to the Islamic traditions and beliefs.Shamil Bank of Bahrain EC v.
Beximco Pharmaceuticals Limited.3 This article uses the Shamil Bank case to explore the issue of how compliance with Islamic principles might best be achieved in a financing agreement governed by English law. In particular, it discusses at some. We would like to show you a description here but the site won’t allow us.
Shamil Bank of Bahrain EC v. Beximco Pharmaceuticals Ltd.
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(ʺthe Bankʺ) against the first and second defendants as principal debtors in respect of monies advanced to them by the Bank under. Shamil Bank of Bahrain v Beximco Pharmaceuticals Ltd  1 Lloyd’s Rep 1 28 January Shamil Bank of Bahrain EC v Beximco Pharmaceuticals Ltd (No.1),  EWCA Civ Microsoft Word - SHamil V leslutinsduphoenix.com Author: user Created Date.
Beximco Pharmaceuticals Ltd and others v Shamil Bank of Bahrain EC  EWCA Civ 19 (28 January ).