The Long Shadow of England’s Privy Council Cast on the Islamic Law of Trusts in British India Student editor Esther Agbaje (Harvard Law School) explores classical Islamic law’s basic conceptions of debt and bankruptcy. While the main Islamic texts, the Qur’ān and Sunna (records of the Prophet Muhammad’s teachings), provide principles for fiscal matters, these principles are not enough to establish systems as complex as those in modern finance with a guarantee of soundness in terms of Islamic law. As financial systems increase in complexity and number of actors, for better or worse, so too does the necessity of a clear set of sharīʿa-compliant standards. Agbaje suggests starting with classical Islamic law, which explicitly summarizes the principles of finance into “four distinct areas: prohibition on earning interest (riba), the prohibition on speculation (maysir), the prohibition on illegal activities (haram), and the obligation of banks to give back to the community (zakat).” These principles naturally make for a financial model “based on partnership” that emphasizes both debt repayment and tolerance. “This tension between the obligation of a debtor to repay and the obligation of a creditor to forgive (or at least allow more time for repayment)” manifests as equal treatment for personal and commercial bankruptcy. How bankruptcy is practically dealt with, however, differs among schools of jurisprudence, as they diverge on how a creditor may humanely demand repayment. Read more. Image credit: Western Civilization II Guides
CASE: Abul Fata Mahomed Ishak v Russomoy Dhur Chowdury (1894) This case exemplifies the complex influence of the British Privy Council on Islamic law (called “Muhammadan law”) in India during colonial rule. While the British rulers instituted their legal system in India, family and inheritance law often remained under the purview of the exponents of Islamic law. This case demonstrates the political and legal complexities of such a system. The court here held that a family endowment could not be formed under Islamic law. The principles underlying this decision, however, bore an uncanny similarity to English inheritance laws. Read more. Image credit: The British Library
CASE: Indonesian Supreme Court Jurisprudence 111K/AG: Familial Beneficiaries (1998) One of the Supreme Court of Indonesia’s judgments on inheritance, the judgment in this case is that the law does not recognize a simultaneous ownership and inheritance dispute when the petitioners or potential beneficiaries (ahli waris in Bahasa, ahl al-wārith in Arabic). Although Indonesia is not an Islamic constitutional country, its legislation is increasingly guided by Islamic law principles. Read more. Image Credit Wikipedia
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