Islamic finance operates in accordance with the principles of Islamic law (or Shariah). The basic principle of Islamic finance is underlined by the prohibition of investment in interest-based ventures and businesses that provide goods and services considered contrary to its principles like tobacco, alcohol, gambling, vulgar entertainment and conventional finance.

Another fundamental principle of Islamic finance is highlighted in the sharing of profit and loss between parties in a business transaction. Common terms used in Islamic finance include profit sharing (Mudharabah), joint venture (Musharakah), leasing (Ijarah), safekeeping (Wadiah) and cost plus (Murabahah). Currently estimated to be worth around US$1 trillion globally with 300-plus Shariah compliant financial institutions operating in more than 75 countries today; this industry is growing at a remarkable pace of approximately 15%-20% on a yearly basis, thus representing a vast practice which has developed its presence on a global scale. Despite a widespread misconception, Islamic finance does not require specific laws and is not limited to the Muslim community. Except for several predictable prohibitions mentioned earlier, Islamic finance solutions are applicable everywhere and by anyone.

It is of standard practice that Islamic banks and banking institutions that offer Islamic banking products and services are required to establish a Shariah Supervisory Board to advise them and to ensure that the operations and activities of the bank comply with Shariah principles. An essential ingredient is a regulatory framework that can accommodate Islamic finance principles and a regulator that is prepared to work with Islamic institutions to overcome technical hurdles. There must also be a tax regime that enables Islamic financing structures and products to be treated in an equivalent manner to their conventional counterparts. 

The appeal for Islamic finance has become infectious to an extent where the largest Muslim populations in the world, most notably India has developed a profound interest for Shariah compliant products to cater for its community and business sector. In view of capitalizing on the opportunities that Islamic finance has to offer, the Indian government and corporates have taken the initiative to closely examine which Shariah compliant companies and sectors are able to further contribute to the development of Shariah market capitalization in India. This is solely due to the fact that India believes that by complying with the economic laws of Shariah, she can become an attractive destination for Islamic investments. The Islamic finance sector in the United Kingdom has also seen enormous growth both domestically and internationally. London is one of the top five financial centres in the world for Islamic finance.

Islamic finance has always been known and seen as a form of socially responsible investing whereby Shariah law requires that investments made have to be based on tangible assets and that lenders and borrowers in a business transaction share profits and losses. It is unfortunate however, that the rapid growth of Islamic finance has converted itself as a breeding ground for socially irresponsible investors who are ignorant about the social impact of investment. It is not unusual to come across conventional profit-driven investments these days that are dressed up to look like Islamic finance. The presence of Shariah-dress investments only serves as an invitation to unethical profit chasers who seek to threaten the health and reputation of the Islamic financial market. As such, it is vested within the powers of national financial watchdogs to ensure that Shariah-dressed investments are not part of an Islamic financial market that only decreases its immunity to the global financial crisis.

The issuance of sukuks, which conform to Islam’s prohibition of receiving or paying interest, has come under intense scrutiny in recent times over fears of a debt default in Dubai. Commonly referred to as Islamic bonds, companies that issue sukuks make payments to investors using profits from the underlying business instead of paying interest. The Dubai crisis has sparked speculation that Islamic finance is no different from conventional finance that led to the financial turmoil a couple of years ago.

However, many fail to understand that the main cause of the Dubai crisis is purely one of a credit issue where Dubai World and its subsidiary Nakheel have over borrowed and over expanded within the real estate and tourism sectors to an extent where near-term repayment obligations cannot be met. In short, the Dubai crisis demonstrates the fragility of the financial and economic system in Dubai, which is one based on excessive borrowing to finance excessively luxurious projects without giving much consideration to the economic feasibility of such projects. Notwithstanding, the assistance by Abu Dhabi in the form of USD10 billion has allayed all the fears.

Despite reservations held by several parties that Islamic finance is just as susceptible to the global economic turmoil, many still maintain that there is vast potential and opportunities for financial institutions to tap in the field of Islamic banking and finance. With the adoption of stringent Shariah principles, Islamic finance offers a huge alternative economic opportunity to the conventional methods that investors have become accustomed to. Many countries globally from Europe, Middle East, Asia, Australia and even the United States have realized the importance of Islamic finance. Malaysia, being one of the pioneers of Islamic finance and location of the highest number of sukuks issued globally remains at the forefront which provides guidance to others in terms of regulatory and legal aspects.

A new comparative study of 17 jurisdictions in insolvency and bankruptcy related matters has been launched by Otto Lobo, partner at Motta Fernandes, Rocha Advogados (MFRA), a full service law firm in Rio de Janeiro and São Paulo, Brazil.

“World Insolvency Systems : A Comparative Study” is a single works of 440 pages published by Carswell and can be ordered from www.carswell.com or the Amazon website.

Each individual jurisdiction is authored by an authority in that jurisdiction and covers the following countries: Australia, Belgium, Brazil, British Virgin Islands, Canada, Cyprus, France, Germany, Gibraltar, India, Italy, Mexico, New Zealand, Russia, Spain, Switzerland and The United States of America.

Mr Lobo´s main areas of expertise are corporate law and M & A; oil & gas; project finance; commercial and general litigation; and bankruptcy and reorganization (including advice to debtors, creditors and trustees). He has acted as counsel in Brazil´s first major recuperation procedure under the new Brazilian Bankruptcy Code enacted in 2005.  He is the advisor to the Government of El Salvador on Bankruptcy matters and has worked on the draft of the new El Salvadorian Bankruptcy Law.

Motta Fernandes, Rocha Advogados (MFRA) is the LAWorld member for Rio de Janeiro and São Paulo.

Nexsen Pruet plays key role in deal to bring Boeing to South Carolina, USA

The LAWorld member for the Carolinas USA, Nexsen Pruet, worked with Boeing Company officials to negotiate an incentives package approved by the South Carolina legislature.  Under the deal, Boeing will invest $750 million and create several thousand jobs in the State over the next seven years. 

“The Nexsen Pruet team provided invaluable advice and assistance to The Boeing Company as we worked our way through the legislative and executive processes in the State of South Carolina,” said J. Michael Luttig, Executive Vice President and General Counsel of The Boeing Company.

The new Boeing facility will help produce the 787 Dreamliner.

“This is the most important economic development project in our state’s history,” said Leighton Lord who is Nexsen Pruet’s board chairman. “It was a privilege to represent The Boeing Company in this matter.”

“We’ve all seen the tremendous economic impact the BMW facility has had on the Upstate, and indeed, the rest of the state since it opened in the early 1990s,” said Billy Wilkins, who is a former Chief Judge of the U.S. Court of Appeals for the Fourth Circuit.  “I fully expect Boeing will have the same – if not a greater – positive economic impact on South Carolina.”

Today’s historic announcement could not have taken place without the complete commitment of the South Carolina General Assembly and Executive Branch.

Nexsen Pruet, LLC is one of the largest law firms in the Carolinas. For more than 20 years, Nexsen Pruet’s economic development attorneys have helped hundreds of national and international companies locate and expand in the Carolinas.

At the annual conference of the International Bar Association in held in Madrid in October 2009, Laura K. Christa co-chaired a working session on “Coordinating the Chaos – a global update on mass claims: can litigation, arbitration and government remedies work together?”

She also spoke on the panel describing class action procedures in the US, highlighting class actions member firm Christa & Jackson has defended in California on behalf of a number of US corporations.

This was followed by European and South American speakers, including a representative of the EU, who described efforts being made in jurisdictions to capture some of the “group” action methods used in the US, to their own jurisdictions, in order to aid in promoting judicial efficiencies and fairness in the adjudication of smaller claims on a group wide basis.

For more information on mass claims please email Laura K Christa ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) or This e-mail address is being protected from spambots. You need JavaScript enabled to view it