Risk-sharing investment is currently the buzz word in Islamic finance.
However, there is an incongruence in applying multilayered and opaque
Tijarah contracts for investment purposes. This has contributed to the
divergence between Shariah and Common Law and caused tremendous problems
and systemic legal risks to Islamic finance.
The authors of Shariah Investment Agreement introduce a legal tool in
the form of a Shariah Investment Agreement carefully drafted to ensure
that it is Shariah-compliant and can be applied in Common Law
jurisdictions as well, so as to allow for the execution of risk-sharing
investment in Islamic finance. It details the building blocks and key
considerations that must be noted when drafting such agreements so the
investor and investee will know what to expect when entering into such a
contract.
Proper implementation of the Shariah Investment Agreement will pave a
clear route to a harmonious convergence between Shariah and Common Law
and lead to Islamic finance developing further to become a stronger,
unstoppable force in the finance industry.