Saudi Gazette report

JEDDAH — The University of Jeddah sponsored a symposium to discuss pertinent issues at the heart of Islamic finance. The seminar, held last week at the College of Business, discussed the various aspects of Islamic finance and banking in the context of private international law.

The discussion was led by academics and experts in financial law including Dr. Akalemwa Ngenda, lecturer in the school of law at Brunel University in London. He highlighted elements within the various contractual documents that are signed regularly in cross-border investment transactions, and pointed out the key challenges presented by the conflict of laws. Dr Ngenda, who is also a solicitor in the United Kingdom, stated that there is huge potential for misinterpretation in cases involving Shariah-compliant products and services where dispute resolution is outsourced to the courts of foreign countries, which the contracting parties may genuinely consider to be neutral legal venues.

Dr. Bader Alyoubi, dean of the College of Business at the University of Jeddah, said: “This seminar aims to enrich the theoretical debate for students in the school of law, and to enable them to view the subject from different perspectives. Eventually, we should have a collection of literatures and scholarships that will assist in creating and developing Islamic financial laws for the benefit of our society.”

Islamic financial and banking institutions survived the recent financial crisis, which hit the global markets in 2008. It is now increasingly acknowledged that the basic foundation of the Islamic finance and banking system provides resilience and stability, which prevents this type of market turmoil and collapse that results from having an inherently unbalanced investment and credit risk structure. “The requirement for Shariah compliance is based on proscription of unethical conduct, shared risk and asset-backed funding,” Dr Ngenda said.

“Saudi Arabia, unlike Malaysia and the Untied Arab Emirates, has the best potential to take the lead as a global hub to foster the growth of Islamic finance in the years and decades to come. The Kingdom is in the unique position of having huge pools of liquidity coupled with a larger population, which should provide depth in financing markets.

“The Vision 2030 transformation agenda being pioneered by Crown Prince Muhamad Bin Salman, deputy prmeir and minister of defense, bodes well for economic growth, reform, and diversification against the backdrop of proposed liberalisation of stock and capital markets. Already there are promising signs with Saudi Aramco’s IPO floatation of 5% shares and the potential inclusion of MSCI Saudi Arabia Index in MSCI Emerging Markets Index in 2019. Also, in terms Islamic jurisprudence, it is not insignificant that this country is the cradle of Islam being the site of the two holy cities.” Dr. Ngenda observed.