THE PROHIBITION OF RIBA UNDER

ISLAMIC LAW: WHAT ARE THE

IMPLICATIONS FOR INTERNATIONAL
CONTRACTS?

Alache Fisho-Oridedi*

ABSTRACT: The doctrine of prohibition of interest payments – riba under Islamic law has had
significant effect on international transactions with Islamic law flavour. The applicability of this
prohibition to international contracts has been the source of much debate within the international
commercial community and across the various schools of Islamic law. The need for the structuring of
business transactions to adhere to the dictates of Islamic law while ensuring that the transaction
remains profitable and beneficial to the parties has led to the evolution of various transactional models
that are applied in the Islamic states. This study focuses on the concept of prohibition of riba in a bid to
understand its applicability in modern international business transactions. In conducting this research
I have adopted an analytical and historical approach and conclude that the concept of prohibition of
riba remains a current doctrine widely applied throughout the Muslim community albeit not uniformly.
Thus a good understanding of this concept is required by persons involved in transactions involving
Islamic law and the transaction must be structured to conform to the dictates of Islamic law in order to
make them legally enforceable.

_____________________
*The author is a Senior Legal Officer in the Commercial Law Department of the Nigerian National
Petroleum Corporation. A Barrister and Solicitor of the Supreme Court of Nigeria, she has a strong bias
for commercial contracting and legal project support in the Oil and Gas Industry. She is currently a
postgraduate student of CEPMLP University of Dundee, Scotland, where she is pursuing an LLM
Degree in Petroleum Law and Policy. E-Mail: alache.fisho-oridedi@nnpcgroup.com
 TABLE OF CONTENT

Page

1. INTRODUCTION……………………………………………………………….3

2. OVERVIEW OF ISLAMIC LEGAL SYSTEM...................................................5

2.1. Sources of Islamic Law.............................................................................6

2.1.1 Primary Sources............................................................................6

2.1.2 Secondary Sources........................................................................7

2.1.3 Other Sources................................................................................8

2.2 Schools of Islamic Jurisprudence and their views on Riba..................... 8

3 THE PROHIBITION OF RIBA IN CONTRACTS UNDER ISLAMIC LAW....9

3.1 Overview of Islamic Law of Contract.........................................................10

3.2 Prohibition of Riba under Islamic Law.......................................................11

3.2.1 Contracts for Sale of Goods........................................................11

3.2.2 Loan Agreements........................................................................12

3.2.3 Riba Transactions in Islamic Law Jurisdictions.........................12

3.2.4 Transactions with Non-Muslims................................................13

4. EFFECT OF PROHIBITION OF RIBA ON INTERNATIONAL

TRANSACTIONS...............................................................................................13

4.1 Modern trends in International Transactions under Islamic Law............13

4.2 Emergence of Islamic Banking................................................................14

4.3 Islamic Project Finance............................................................................15

4.3.1 Mudaraba......................................................................................16

4.3.2 Muradabah....................................................................................16

4.3.3 Musharaka....................................................................................17

5. CONCLUSION...................................................................................................17

BIBLIOGRAPHY

2
1. INTRODUCTION

International business transactions by their very definition are transactions that

transcend national, regional and international borders. The complexities of the

contractual relations flowing from these transactions often give rise to peculiar

transactional practices and norms in the various jurisdictions in which the different

rights and obligations of a contractual relationship exist. These norms and practices

range from those attributable to the juristic doctrines of the different schools of

comparative law to those attributable to the application of a juristic system based on

religion as is found in Islamic states.

Historically, trade in the largely Muslim Persian Gulf flourished primarily amongst

adherents of the faith who by virtue of a common belief system, generally enjoyed

consensus on the peculiar commercial terms of the transaction as dictated by the

prevailing Islamic law. However the discovery of natural resources in the region led

to an explosion of international trade and commerce with the attendant dilution of the

application of Islamic law principles of business. Western investors who invested in

the region were often in a superior commercial position having the investment funds

as well as the technical know-how for the transactions. Thus these investors dictated

the terms of the transaction and determined the governing law of such contracts which

rarely would be Islamic law.

Following an era of economic nationalism in the early 1960s, many of the states in the

Persian Gulf in a bid to assert control over their natural resources and harness the

benefits there from, embarked on wide-spread nationalisation/expropriation of foreign

interests and there was a shift in the transactional dynamics as the states gained the

3
advantage position. Coinciding with this era was a resurgence of Islamic thinking and

a global rebirth of the Islamic system.1 Many Islamic states began to insist on the

application of the Sharia’a in their regions and sought the conformity of all commercial

transactions both domestic and international with the dictates of Islamic law.

One of the fundamental principles of Islamic commerce is the prohibition of riba

which is translated as interest, undue profits or excessive gain from a transaction. The

application of this principle has far-reaching effects on the transactional dynamics of

international contracts concluded under Islamic law. While its effect is sometimes felt

in contracts for the sale of goods particularly where there is delay in the payment for

goods, the most obvious impact is on the financing of transactions. In conventional

western style banking, a transaction is financed by a bank on the understanding that

the capital lent to the customer would be repaid plus interest at a rate agreed

beforehand as an additional compensation taking into account the time value of

money and the value of the service of lending. This type of transaction is prohibited as

riba under Islamic law and consequently transactions so financed may be declared

void or voidable in Islamic law jurisdictions.

While usury is regarded negatively in most parts of the world, what is typically

frowned upon is excessive interest charges and not the payment of interest as a whole.

Under Islamic law however, the payment and receipt of interest –riba- is strictly

prohibited as the application of interest is regarded as an act of exploitation and

injustice and therefore inconsistent with Islamic concepts of fairness and justice.

Although the prohibition of riba is universally applicable within Muslim

1
Sharawy, H., Understanding the Islamic Prohibition of Interest: A Guide to Aid Economic
Cooperation between The Islamic and Western Worlds, 29 Ga. J. Int’l & Comp. L. 153 2000-2001

4
communities, the scope of its application within financial transactions is not as easily

defined. The question become not really the prohibition of riba, but what qualifies as

riba and how does its prohibition affect international trade in Islamic states?

The paper commences with an overview of the Islamic legal system and examines the

issue of riba and its effect on international contracts.

The paper adopts a historical and analytic approach in addressing the issues raised and

concludes that the prohibition of riba has far reaching effect on contractual

relationships entered into in Islamic law states and it must be carefully considered by

investors seeking to do business in Islamic states and the transactions structured to

accommodate the dictates of the sharia’a and ensure compliance therewith.

2. OVERVIEW OF THE ISLAMIC LEGAL SYSTEM

Islamic law also known as Sharia’a is regarded by its adherents as a divinely ordained

system of law which has roots in the pre-Islamic customary laws and norms of the

Arabs of the Persian Gulf states.2 Islamic law is derived primarily from the Quran

which is the holy book of Islam and the sayings and practices of Prophet Mohammed.

2.1 Sources of Islamic law

Most Muslim scholars agree on the general classification of the sources of Islamic law

into primary sources which consist of the revealed sources and secondary sources

which are the unrevealed sources. It is worthy to note that the sources of Islamic law

2
See further Khadduri, M., Nature and Sources of Islamic Law, 22 Geo. Wash. L. Rev. 3 1953-1954

5
are hierarchical in nature with the Quran resting unchallenged at the pinnacle.3 The

main sources of Islamic law and a selection of the other secondary sources are

described below.

2.1.1 Primary Sources

The Quran

The Quran is the first and most important of the sources of Islamic law. It is

considered to be the direct words of God revealed to and transmitted by the Prophet

Mohammad. Indeed as stated by Khan in his article:

“To Muslims, the Quran being the very word of God, it is the absolute authority from

which springs the very conception of legality and every legal obligation.”

As the highest source of Islamic law, all other sources must conform to the Qur'an.

Indeed the other sources only become tenable in situations where the Quran does not

address an issue directly.

Sunnah:

These are also referred to as hadiths and are the traditions or known practices of the

Prophet Muhammad. This source includes many things that he said, did, or agreed to.

It also includes rulings or judgements passed by Prophet Mohammed on various

matters which were reduced into writing for future reference. Many issues concerning

personal conduct, community and family relations, political matters, etc. were

3
Also See Khan, K., Juristic Classification of Islamic Law, 6 Hous. J. Int’l L. 23 1983-1984

6
addressed during the time of the Prophet, decided by him, and recorded. The Sunnah

can thus clarify details of what is stated generally in the Qur'an.

2.1.2 Secondary Sources

Qiya

In cases when something needs a legal ruling, but has not been clearly addressed in

the Quran or Sunnah, judges may use analogy, deduction and legal precedent to

decide new case law. Quite obviously, the application of reasoning and deduction in a

case often leads to the adoption of accepted principles established in earlier cases.

This source has been compared with the Common law doctrine of judicial

precedence.4

Ijma

This is a consensus agreement on an issue by eminent Muslim jurists/theologians in

situations when a specific authority on the issue is absent in the Qur'an or Sunnah.

Ijma is developed from diverse opinions of jurists based on the Quran and/or Sunnahs

which over time consolidate into a consensus on the issue under consideration.

Ibrahim in his paper states that once a consensus has been established it becomes a

binding authority and cannot be repealed by another consensus.5 Consensus in this

instance therefore has the effect of creating substantial law.6

4
Ibid
5
Ibrahim, A., The Rise of Customary Businesses in International Financial Markets: An Introduction
to Islamic Finance and The Challenges of International Integration, 23 Am. U. Int’l L. Rev. 661 2007
– 2008, p. 679
6
Hassan, F., The Sources of Islamic Law, 76 Am. Soc’y Int’l L. Proc. 65 1982, p. 67

7
2.1.3 Other Sources:

There are other sources of Islamic law whose classification lack universal acceptance

amongst the various schools of Islamic jurisprudence. They are often based on the

discretion of the judge and application of principles of equity, justice, fair-play and

morality and so are open to interpretation. Since these are subjective terms, it goes

without saying that the application will differ based on the personal bias of each

individual judge. Perhaps this is the reason for the non-acceptance of some of these

sources by some schools of jurisprudence. Examples are isthisan - based on the

personal choice of a judge to achieve justice [equity]; istislah - the desire to reach a

good or beneficial result and avoid a harsh judgement and istidlal and istishab which

are pronouncements on public policy based on judicial discretion.7

2.2 Schools of Islamic Jurisprudence

As the practice of Islamic thought progressed through time, it highlighted the

differences in interpretation of the dictates of the Quran and this led to the

establishment of various schools of Islamic jurisprudence. At some point there were

over 50 of such schools, but currently the two main sects of Muslim jurisprudence are

the Sunni and the Shiite sects which are each subdivided into four schools of Islamic

thought. 8 The four Sunni schools are the Hanafi, Shafi’i, Maliki and Hanbali while

the four Shiite schools are the Ibadi, Zaydi, Ithna and Imami. These schools were

named after eminent Muslim scholars who evolved peculiar theories of legal

assumptions and methodologies which were further developed by their students.

7
Ibid, at p. 68
8
Childress, C., Saudi-Arabian Contract Law: A Comparative Perspective, 2 St. Thom. L. F. 69 1990, p
74.

8
The Majority of the Muslims around the world are Sunnis [prevalent in Saudi Arabia,

U.A.E., North Africa, Turkey and Central Asia) while about 10-15% are Shiites [Iran,

Iraq, Central and South Asia).9 While the two sects share many common beliefs such

as the supremacy of the Quran and adherence to the five pillars of Islam, there are

fundamental difference in their interpretation of some verses of the Quran,

acceptability of some of the Sunnahs and the application of the doctrine of riba.

3. COMMERCIAL TRANSACTIONS UNDER ISLAMIC LAW AND THE

PROHIBITION OF RIBA

It is specifically stated in an early revelation in the Quran that “God hath permitted

trade and forbidden usury.”10 This restriction is anchored on the principle that the

earning of an unjustifiable profit at the expense of another is an exploitative act.

Furthermore, the concept of wealth accumulation in Islam reveals that it is haram

[forbidden] in Islam to accumulate wealth that is not a product of work. Thus wealth

that is generated from the payment of interest qualifies as haram and is expressly

prohibited in the Quran.11

An understanding of this concept clarifies why although Islamic law is primarily

targeted at such areas as family, inheritance and criminal law,12 the applicability of

Islamic law to commercial transactions is becoming more prevalent as the financial

community in Islamic law states strive to bring these transactions in to conformity

with the dictates of Islamic law.

9
See Blanchard, C., Islam: Sunnis and Shiites, Congressional Research Service, Jan. 2009, available at
http://www.fas.org/irp/crs/RS21745.pdf [last visited 13th July 2009).
10
the Quran, 274
11
Quran 4:161.
12
Childress, C., supra note 8.

9
3.1 Overview of Islamic Law of Contract

Two fundamental principles of Islamic law of contract are the concepts of riba and

ghahar. While riba is the prohibition of the payment of usury or interest on a

transaction, ghahar refers to the prohibition of gambling, speculation and

unreasonable uncertainty in a commercial transaction.

The word riba is derived from the Arabic verb raba which means to increase, grow or

rise above.13 Although riba generally refers to usury, some Muslim scholars have

given it a much wider scope to cover any increase in wealth and/or income that results

from the lending of money or the exchange of fungible goods.14

The literal translation of ghahar is fraud but the conceptual translation usually refers

to risk, uncertainty or hazard.15 The prohibition of ghahar stems from the Quranic

prohibition of games of chance and therefore under Islamic law, transactions having

an element of speculation are frowned upon. In practice, contractual relations that fail

to clearly define the existence and availability of the object and the consideration of

the contract will be categorized as speculative transactions and therefore will be

prohibited.16

3.2 Prohibition of Riba under Islamic Law

This is one of the most significant principles in Islamic finance and thus is key to the

successful implementation of any commercial transaction. This principle of

13
Shihata, I., Some Observations on the Question of Riba and the Challenges Facing ‘Islamic
Banking’, 5 Y.B. Int’l Fin. & Econ. L. 23 2000-2001, p.25
14
Ibid
15
Kamali, M., Islamic Commercial Law; An Anlysis of Futures and Options, (Islamic Texts Society;
Cambridge, England, 2000), pp 84 – 97.
16
Hassan, K. & Lewis, M., Handbook of Islamic Banking, (Cheltenham, UK: Edward Edgar
Publishing Limited, 2007).

10
 prohibition of riba has universal application across the different schools of Islamic

jurisprudence and has remained relevant in current day. However, the interpretation of

the concept of riba is controversial.

3.2.1 Contracts for Sale of goods (riba al-buyu)

Under Islamic law, a sale is described as “the exchange of a thing of value by another

thing of value with mutual consent.”17 Certain conditions precedent are inherent in a

contract for the sale of goods: the goods must be in existence at the time of sale; the

seller must have ownership of the goods as well as physical possession, the sale must

be instant and not deferred to a future day, delivery and price must be certain and the

sale must be unconditional.

The terms and conditions of the sale must be compliant with the above and a seller

must state clearly the cost of production of the goods and the profit margin he is

adding on to the cost in order to ensure that the contract does not contravene the

prohibition of riba interpreted in this case as excessive profits. The consequence of

entering into a contract tainted by Riba is that such a contract will not be enforced by a

court. An application of equitable remedies by the court may result in the parties being

restored to their original positions.18

3.2.2 Loan Agreements (riba al-nasi’a)

Islamic law prohibits the payment of interest on loans obtained by a borrower from a

lender on the grounds that such interest payments are forbidden as riba in the Quran.

17
Usmani, M., An Introduction to Islamic Finance, [The Hague: Kluwer Law International, 2002), p.
38.
18
Sloane, P., The Status of Islamic Law in the Modern Commercial World, 22 Int’l L. 743 1988

11
The argument put forward by jurists is that the pre-determined interest charged by a

lender represents a gain that is risk-free and not attributable to any work or risk on the

part of the lender. A loan of currency is recognised under Islamic law and referred to

as qard and interest payments on such a loan may be permissible if it is proven that

such interest payments were made willingly by the borrower and were not a condition

of the qard. 19

It is my opinion that perhaps a distinction of the concept of a loan should be made as

it appears that the original concept for the prohibition of riba was based on the

protection of a poor borrower from unreasonable and usurious repayment terms. In

modern transactions however, loans are used as working capital and money to make

more money. It appears therefore that it does no moral injustice for a lender to be able

to receive uplift or a return on his money in view of the concept of time value of

money and for the service rendered in loaning the money.

3.2.3 Riba Transactions in Islamic Jurisdictions

Some Islamic countries have accepted the inclusion of some interest payments in

commercial transactions in their jurisdiction while others strictly prohibit same. In the

United Arab Emirate (UAE), the application of interest in some commercial

transactions is legal. In Iran however, such transaction will be illegal and void on the

basis of the prohibition of riba.20It is interesting to note that this illegality does not

extend to banking operations outside Iran as it appears that Iranian banks do receive

19
Saleh, N., Unlawful Gain and Legitimate Profit in Islamic Law, (Cambridge: Cambridge University
Press, 1986), p. 44
20
Ansari-pour, M., Interest in International Transactions Under Shiite Jurisprudence, 9 Arab L. Q.
1994, p. 158.

12
and pay interest on foreign transactions.21 Banks also pay interest inside Iran. The

only effect of the prohibition is changing the name of interest to profit.

3.2.1 Transactions with non-Muslims

Does the prohibition of riba apply to transactions between Muslims and non-

Muslims? The general rule under Islamic law is that where the transaction is

conducted within an Islamic state, riba will be prohibited. However as to the question

where the transaction is conducted outwith the Muslim state, the Hanbali school is of

the opinion that riba within this transaction will not be prohibited. The other schools

hold different view on this.22One of the views is based on the principle that property

of non-Muslims is not protected under Islamic law and therefore it would not amount

to an injustice or haram to apply interest in transactions involving non-Muslim

parties.

4 EFFECT OF PROHIBITION OF RIBA ON INTERNATIONAL

TRANSACTIONS

4.1 Modern trends in International Transactions under Islamic Law

The prohibition of interest payment has been settled firmly in Islamic law as the

various schools agree on the fundamental principle that the payment of interest is

prohibited in the Quran. However in these jurisdiction, different models of contractual

arrangements have evolved over the years that while remaining in conformity with the

dictates of Islamic law, ensure that an investor in a transaction earns some return on

his capital invested in that transaction. This has resulted in the emergence of Islamic

banking as a niche service provider and Islamic project finance, a method of financing

21
Ibid, p.159
22
Saleh, N., Unlawful Gain and Legitimate Profit in Islamic Law, (New York: Cambridge University
Press, 1986)

13
a project that applies the returns from the project to the repayment of loans structured

for the carrying out of the project. In this section, we will examine some of the more

popular models of commercial transactions obtainable across the Muslim society.

4.2 Emergence of Islamic Banking

The concept of Islamic banking which was birthed in the last 30 years has evolved to

become a viable segment of the international banking market. Islamic banking is

concerned with the development and promotion banking products tailor-made for the

Islamic society which conform to Islamic principles, law and traditions while

providing similar incentives to products utilised in conventional interest-based

banking.

Since wealth accumulated without work is classified as haram, one may simplistically

conclude that the implementation of an interest-free banking system would be

impossible because of the calculation of interest payment on loans obtainable from a

bank. However, Islamic law fundamentally recognises the principle of shared risk as

work entitling a financial institution to an addition on the principal sum that was

advanced. 23In essence,

“an Islamic bank should share in the risk with the entrepreneur...Islamic

banking implies zero rate of interest but not zero rate of return...”24

The first truly Islamic bank was established in Mit Ghamr, Egypt in 1963. Currently

there are about 200 Islamic banks operating in over 70 countries which include

23
See Sharawy, H., Understanding the Islamic Prohibition of Interest, 2 Ga. J. Int’l & Comp. L. 153
2000 – 2001, p. 166
24
Siddiqui, S.H., Islamic Banking: Genesis & Rationale, Evaluation & Review, Prospects and
Challenges (Karachi, Pakistan : Royal Book Co., 1994), p. 49.

14
Muslim and non-Muslim countries with a portfolio of over USD200billion.25 In

Pakistan, Sudan and Iran for example, there has been a national transition of the

banking system from a western-styled to an Islamicised system of banking. In August

1983, a new banking law was enacted in Iran that enforced the complete abolition of

interest by March 1985 In Iran it was only in the shape of changing names. In Sudan,

by a directive of the Central Bank issued in December 1984, all commercial banks

were required to stop dealing with interest and to negotiate the conversion of existing

interest-bearing deposits into investment deposits in accordance with Islamic law.

Foreign transactions were to continue on the basis of interest until an alternative way

became available.26

4.3 Islamic Project Finance

A major development pursuant to the emergence of an Islamic banking system is the

evolution of Islamic project finance. The term project finance refers to a model of

financing in which debt and equity plus a level of credit enhancement are combined

for the development of a capital intensive project and the repayment of the loan is

made primarily from the project revenue. 27 In conventional western style banking, the

terms of the loan agreement will inevitably include payment of interest on the capital

sum at a fixed and agreed rate.

Since Islamic law prohibits the payment of interest, Islamic banks have developed

different financial products that achieve the aims of project finance without

25
Islamic Institute of Islamic Banking and Insurance, The Islamic Banking System, Status of Islamic
Banking Today (2003), www.islamic-banking.com (last visited 28th July, 2009).
26
Rachagan, A., Islamic Banking in Malaysia, JIBRL 88
27
Hoffman, S., The Law and Business of International Project Finance, (2nd Edition), (New York,
U.S.A.: Transnational Publishers Incorporated, 2001), p. 6

15
contravening the dictates of Islamic law. Some of the more popular of these products

are examined below.

4.3.1 Mudaraba

This is a form of trust financing where the bank acting as investor, provides all or

most of the funds required for the facilitation of a project and the entrepreneur

provides as his share of the risk allocation the expertise and technical know-how for

the facilitation of the project. Profits derived from the revenues of the investment are

split between the bank as investor and the entrepreneur in a predetermined ratio which

may involve decreasing participation by the bank as the capital sum is recovered.

Where there is no profit, the bank loses its capital investment and the entrepreneur

loses the right to share in the profits.28

This model was used in Saudi Arabia by the Islamic Development Bank for the

financing of a US$1.5 billon infrastructure fund.29

4.3.2 Murabadah

This is often referred to as cost-plus financing. In this model, the lending bank

purchases the product which the borrower requires and resells such products to the

interested party at cost plus a mark-up. The bank must clearly state in the loan

documents what its cost was and the mark-up applied on the price in other to ensure

that the transaction is in conformity with the dictates of the law. This form of

financing is usually employed for short-term facilities with tenors of between one to

28
Seniawski, B., Riba Today: Social Equity, the Economy and doing Business Under Islamic Law, 39
Colum. J. Transnat’l L. 701 2000-2001, p.722.
29
Ibid

16
five years and was used in Algeria for the financing of gas turbine engines for a power

plant project.30

4.3.3 Musharaka

Islamic financial institutions refer to this model of financing as “participation

finance”. In project finance, this translates to an arrangement that is quite similar to

the traditional joint venture structure where partners to a project have joint

investment, decision making and profit sharing rights. The lender bank therefore

becomes a partner to the transaction and is therefore entitled to a share of the profits

received by the project. The Saudi British Bank in 1997 structured a US$72 million

musharaka facility for a group in Saudi Arabia and the funds were used for the

financing of the purchase of cars by individual customers of the group.31

5 Conclusion

As the world experiences globalisation and international trade continues to grow, it is

inevitable that challenges arising from the application of the prohibition of riba will

arise particularly when one of the parties is a subject of Islamic law jurisdiction.

When one considers that the Persian Gulf holds about 75% of the entire crude oil

reserves in the world, it is clear that international trade will continue to grow in the

region in the future. This means therefore that an understanding of the transactional

dynamics of commercial transactions under Islamic law is an essential tool for

business in the region.

30
See Bilal, G., Islamic Finance: Alternatives to the Western Model, 23 Fletcher F. World Aff. 145,
158 (1999).
31
Supra note 25, p.724

17
The prohibition of riba under Islamic law is probably the most important principle of

commercial transaction under Islamic law. The management of the application of this

principle in international transactions is very important and has led the financial

community in Islamic law states to develop products that though in practical terms

operate and have the same effect as interest charges in conventional style banking, are

structured in such a way that they do not run afoul of the dictates of Islamic law.

Investors in Islamic states must of necessity have a grasp of the concept and

transactions must be structured to conform to the dictates of Islamic law as applicable in the

different jurisdictions as regards the prohibition of riba. Also in the personal opinion of the

writer, perhaps Islamic law jurists should open the arena of discourse on the need for a

distinction between interest payments on personal loans and interest charges on loans

advanced for commercial purposes.

18
 BIBLIOGRAPHY

BOOKS

Hallaq, W., The Origins and Evolution of Islamic Law, (Cambridge: Cambridge

University Press, 2005)

Hassan, K. & Lewis, M., Handbook of Islamic Banking, (Cheltenham, UK: Edward

Edgar Publishing Limited, 2007)

Iqbal, M. & Llewellyn, D., New Perspectives on Profit Sharing and Risk,

(Cheltenham, UK: Edward Edgar Publishing Limited, 2002)

Saleh, N., Unlawful Gain and Legitimate Profit in Islamic Law, (Cambridge:

Cambridge University Press, 1986)

Usmani, M., An Introduction to Islamic Finance, (The Hague: Kluwer Law

International, 2002)

Siddiqui, S.H., Islamic Banking: Genesis & Rationale, Evaluation & Review,

Prospects and Challenges (Karachi, Pakistan : Royal Book Co., 1994), p. 49.

ARTICLES

Ansari-pour, M., Interest in International Transactions under Shiite Jurisprudence, 9

Arab L. Q. 1994

Bilal, G., Islamic Finance: Alternatives to the Western Model, 23 Fletcher F. World
Aff. 145, 158 (1999)

19
Childress, C., Saudi-Arabian Contract Law: A Comparative Perspective, 2 St. Thom.
L. F. 69 1990

Hassan, F., The Sources of Islamic Law, 76 Am. Soc’y Int’l L. Proc. 65 1982

Ibrahim, A., The Rise of Customary Businesses in International Financial Markets:

An Introduction to Islamic Finance and The Challenges of International Integration,
23 Am. U. Int’l L. Rev. 661 2007 – 2008

Khadduri, M., Nature and Sources of Islamic Law, 22 Geo. Wash. L. Rev. 3 1953-
1954

Khan, K., Juristic Classification of Islamic Law, 6 Hous. J. Int’l L. 23 1983-1984

Rachagan, A., Islamic Banking in Malaysia, JIBRL 88

Seniawski, B., Riba Today: Social Equity, the Economy and doing Business under
Islamic Law, 39 Colum. J. Transnat’l L. 701 2000-2001

Sharawy, H., Understanding the Islamic Prohibition of Interest: A Guide to Aid

Economic Cooperation between the Islamic and Western Worlds, 29 Ga. J. Int’l &
Comp. L. 153 2000-2001

Shihata, I., Some Observations on the Question of Riba and the Challenges Facing
‘Islamic Banking’, 5 Y.B. Int’l Fin. & Econ. L. 23 2000-2001, p.25

Sloane, P., The Status of Islamic Law in the Modern Commercial World, 22 Int’l L.
743 1988

INTERNET SOURCES

Blanchard, C., Islam: Sunnis and Shiites, Congressional Research Service, Jan. 2009,
available at http://www.fas.org/irp/crs/RS21745.pdf [last visited 13th July 2009)

Islamic Institute of Islamic Banking and Insurance, The Islamic Banking System,
Status of Islamic Banking Today (2003), www.islamic-banking.com (last visited 28th
July, 2009)

20