Arbitration on the Increase in Islamic Finance
August 8, 2011
Islamic banks and individuals engaged in financial transactions have moved towards adopting alternative dispute resolution schemes which involve arbitration. In a recent case between two Muslim businessmen, a dispute arose about the arbitration procedure involving the requirement to have an Islamic arbitrator.
Some institutions like the Kuala Lumpur Regional Centre for Arbitration (KLRCA) avoid this procedural problem by requiring prospective arbitrators to be either an Islamic scholar with experience in arbitration or an Islamic Banking Law practitioner for all cases involving Islamic financial institutions.
The director of the KLRCA said, “The arbitrator need not be a Muslim and what we look for in an arbitrator is their qualification and their award writing skills.” The KLRCA, the first institution in the region to provide arbitration services based on specialized Islamic Banking and Financial Services Arbitration Rules, may be on the cutting edge in resolving procedural issues like these.