Why Islamic Finance Disputes are Best Resolved via International Arbitration

There’s no doubt international arbitration is an effective mechanism for dispute resolution. It’s

even one of the favored for international and local Islamic finance disputes. International

arbitration is a very credible option to replace traditional legal proceedings. It is a private and

neutral form that is constantly gaining popularity as it applies to various industries and sectors

across the globe.

According to research, market practice, and statistics, the popularity of International arbitration

in resolving Islamic finance disputes has risen in recent years. It’s also grown in the international

finance and banking sector for a lot of great reasons. One of them is because of the use of

knowledgeable experts in the field of finance and banking for arbitration and resolving conflicts.

In this article, we’ll provide you with more reasons as to why Islamic finance conflicts are

best resolved via international arbitration. Read on.

International Arbitration offers neutral decisions

Islamic finance contracts usually involve parties that are from different countries across the

Middle East and other parts of the planet. This characteristic of commercial agreements makes

international arbitration the preferred method for dispute resolution compared to submitting a

financial dispute to another national court that belongs to one party to a contract. The parties that

are involved in an agreement can either select an arbitrator from a different country or send a

request to an international institution for arbitration in order to secure an appointment. This way,

there is neutrality for the choice of venue, procedures, legislation, and tribunal that all involved

parties can enjoy.

A national court has the tendency to be biased or even lack the competence, experience, and

resources in giving satisfactory resolution to many Islamic finance disputes while international

arbitration provides a more competent result for decision making and the decision maker has

principles that are not attached to any party or national authority.

Although arbitration offers a process that’s more neutral for the choice of arbitrators and law,

making international arbitration a lot more benefits of involved parties that are from different

jurisdictions, there’s a concern still regarding the neutrality of international arbitration. This is

why it is best to consult first with a court expert UAE.

International Arbitration offers an enforceable decision

An arbitral tribunal’s final award is a decision that’s binding instead of being a recommendation

for the parties that are involved. It is an enforceable decision both internationally and locally.

The award that is from arbitral tribunals is different from a local court of law’s judgment.

International treaties that are concerning arbitral awards’ enforcement are more acceptable both

locally and internationally in comparison to the enforcement of a judgment. But, there’s a

widespread idea in developing countries that commercial arbitration that’s conducted by an

international arbitral tribunal is biased with the interests of Western countries. This assumption

can cause other countries in being hostile to international Islamic finance disputes being resolved

by international arbitration. This can also pose obstacles with regards to the enforcement of

international agreements and awards for arbitration in some countries.

In addition, it can be very hard to make an arbitration contract that is effective, most especially

for contracts with several parties. It is, therefore, required to consider arbitration provisions

carefully including the drafted contract as incomplete or defective clauses for arbitration can lead

to several judicial proceedings that occur in several different local or national courts.

International Arbitration has a flexible Arbitration Process

There’s no standard of rules that’s mandatory to be followed with international arbitration.

International commercial arbitration for Islamic finance disputes provides parties with freedom

in agreeing the time tables and procedural rules, as well as the selection of a decision-maker that

is technically an expert and most suitable in the circumstances of the unique Islamic finance

dispute.

Still, there are no detailed rules or procedures, which means this can result in misconduct that is

in favor of a party. It can also result in more or greater finance disputes as the parties don’t know

which procedure to apply.

International Arbitration is Confidential

International arbitration for Islamic finance disputes is preferred by most businesses and

corporations as it is a private process. The press and the public aren’t entitled to presenting a case

or dispute, unlike legal proceedings that are held in local courts. Confidentiality of international

arbitration can be taken as the most important advantage of this dispute resolution method.

Although international arbitration isn’t fool-proof in resolving disputes of entities that are from

different countries, it is an effective way and actually the better method of resolving Islamic

finance disputes. If you want to know more about international arbitration, Call us here at

Farahat & Co. Our court experts UAE can also advise you on your specific circumstances.

Simply book a quick consultation today!

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