The third and final student paper I intend to share addresses the emergence of Islamic law in countries that are, or promise to be, important trade partners with western businesses.
Nicholas Khoury notes that, in the past ten years, Nigeria, Iran, Saudi Arabia and other countries have instituted Islamic law to some degree, with important ramifications for business negotiation and mediation. For one thing, resolution of disputes by a third party — judge or arbitrator — is frowned upon. But for another, agreements for which the consideration has no permanent value may be unenforceable. Thus a question arises whether, under Islamic law, stock or derivitive instruments can be exchanged, if their value may change over time and the bargain may or may not have proven equitable.
Mr. Khoury’s paper is another example of how, in our multicultural world, wise participants in the market, and effective facilitators of commercial conflict resolution, need to broaden our outlooks.
Commercial Mediation in Africa and Islamic Law
by Nicholas Khoury
I. Introduction
The African economy has been on the rise. In recent years, it has drawn increasing amounts of foreign investment.[1] Naturally then, commercial mediation in Africa has become an important topic. Also on the rise in many countries is the implementation of Islamic law. Until fairly recently, Islamic law was not commonly used even in Muslim countries. However, several important countries have now instituted Islamic law to some degree. Significant examples include Saudi Arabia, Pakistan, Iran, Sudan, and Nigeria.[2] This reemergence of Islamic law has profoundly affected many African countries. In Nigeria for example, 1999 saw the state of Zamfara successfully pressure the Nigerian government to institute Islamic law as the exclusive law of the state. The states of Kano, Katsina, Niger, Bauchi, Borno, Kaduna, Gombe, Sokoto, Jigawa, Yobe, and Kebbi followed suit.[3] Commercial mediation in many parts of Africa will still follow the contours of western-style mediation. A growing portion of Africa though, embraces commercial mediation in the Islamic legal tradition. If a mediator is to successfully embrace these new realities, they must understand Islamic law generally and the basic legal principles of Islamic mediation.
II. Islamic Law in General
Islamic law arose from the birth of Islam. The Prophet Mohammed began receiving revelations from the archangel Gabriel in 610 while living as a respected merchant in Mecca. Over the course of preaching these revelations, he came into conflict with the pagan members of his own tribe, the Quraysh. Facing serious persecution from tribal authorities, the Prophet and his followers, the first Muslims, fled to Medina in 622. There, they established the first Muslim community. Under an agreement known as the Charter of Medina, the Prophet was empowered to govern the city and act as a judge, arbitrator, and mediator for its citizens. His continued revelations and actions during this time formed the first Islamic legal rules and precedents.[4]
Just over a century after the Prophet’s death in 632, Islam had spread from the Arabian Peninsula as far as Spain in the West and the borders of China in the East. As it became necessary to create an extensive body of legal rules to govern this ever more complex Muslim society, legal scholars developed a distinctly Islamic law.[5] According to this Islamic legal doctrine, God is endowed with sole legislative powers and His will is law. God’s law is sharia and it is immutable and eternal. It contains singularly correct rules of God (akham sharia) for people to follow in every situation. However, while sharia is the embodiment of these perfect rules, it does not explicitly spell most of them out. Aside from a few which are well defined, they must be discovered by humans and translated into a body of substantive legal rules (fiqh). This is based on the Islamic proposition that God has bestowed upon humankind a power to formulate good opinion (zann) concerning God’s law through the exercise of their utmost energies. Furthermore, Islam emphasizes that a qualified opinion concerning sharia should constitute a binding legal rule (al-zanun wajibu ‘littaba fi’l-shar).
The process by which fiqh is extracted from sharia is known as the science of ijtihad. Islam recognizes that God’s law has been transmitted to humans through certain mediums, or sources. Ijtihad is accomplished by drawing opinions on sharia from these sources. When creating a substantive legal rule, a person must parse the sources of sharia for evidence of God’s law. Some evidence gives knowledge, or certainty (dalil ilmi). In this case, there is no need to go further as God’s rule on the matter is obvious. However, most evidence provides the basis of an opinion (dalil zanni). Through a strenuous analysis of the latter, by which a person exercises their utmost effort, it is possible to arrive at one possible opinion on God’s law and thus, a substantive legal rule. According to a well-known metaphor, the sources of sharia are roots of a tree, given by God. The branches of the tree and their fruit though, are fiqh in the form of legal rules which must be grown with human care. It is important that fiqh is not God’s Law as is sharia but merely a probable approximation of it. Therefore, fiqh as the product of ijtihad is best thought of in this way: “I believe that rule ‘x’ is in all probability a rule ordained by God.”[6]
Ijtihad has changed over time. There was early disagreement over the sources of sharia-derived law. In the seventh to tenth centuries, various schools of Islamic law emerged in the form of regional groupings. Those living in Iraq considered utilitarian reasoning by the individual (ra’y) to be the predominant source of fiqh. This group came to associate with the scholar Abu-Hanifa, who founded the Hanafi school of Islamic jurisprudence. Syrians and Hejazis deemphasized ra’y and believed that the words and actions of the Prophet and to a lesser extent, the first Muslims were the near-complete basis of fiqh. These people were led by the scholars Malik ibn-Anas and Ahmad ibn-Hanbal, who founded the Maliki and Hanbali schools of Islamic jurisprudence respectively.[7]
The scholar Muhammed ibn-Idris ash-Shafi‘i, who founded the Shafi‘i school of Islamic jurisprudence managed to achieve a synthesis of these divergent views. The Shafi‘i Synthesis as it is known, specifies the four sources of fiqh that can be used to perform ijtihad. The most important is the Quran, a collection of the Prophet’s revelations. Next in importance are the sunnah, or the words and actions of the Prophet (and to a lesser extent, the first Muslims) as reported by others. After these is the consensus of Islamic legal scholars on an issue (ijma). Least authoritative is analogical reasoning (qiyyas), to be used if other sources provide little or no evidence of God’s law. Essentially, Shafi‘i’s synthesis unified the process of ijtihad by making Islam’s divine texts, the Qur’an and sunnah most important while relegating individual reasoning to a diminished form bound by those texts. This imposed relative uniformity over substantive Islamic law from then on. In this idiom, The Hanafi, Maliki, Hanbali, and Shaf‘i schools went on to command significant followings and develop comprehensive bodies of fiqh.[8]
A good example of ijtihad under the Shafi‘i Synthesis is Islamic law’s general prohibition on alcohol. For the most part, drinking alcohol is a crime punishable by 80 lashes. This is drawn in principle from the Quran: “O ye who believe! Make not unlawful the good things which God hath made lawful for you, but commit no excess: For God loves not those given to excess. Eat of the things which God hath provided for you, lawful and good; but fear God, in Whom ye believe.”[9] The crime is developed in a sunnah attributing to the Prophet: “He who drinks wine, whip him.” Although this sunnah seems to ban only wine drinking, the Malikis, Hanbalis, and Shafi‘is state that consumption of all other intoxicating beverages is prohibited by analogy. The Hanafis however, hold that only consumption of intoxicating beverages made from grape is absolutely prohibited and that consumption of other intoxicating beverages is permissible up to the point at which they actually induce intoxication. They base this opinion both on the above-stated sunnah completely barring consumption of wine and also a lesser sunnah which states that ’Ali, the first governor of Yemen appointed by the Prophet once offered alcohol to his guests and proceeded to punish only those who became intoxicated saying, “the punishment is not for drinking, it is for being drunk.” On the other hand, the ban on wine has been unanimously extended to intoxicating drugs by analogy. The schools have based this on the perception that drugs have the same effect on people as alcohol and cause the same harm that the prohibition of alcohol was designed to prevent.[10]
While the schools of Islamic jurisprudence were greatly unified by the Shafi‘i Synthesis, the preceding illustration shows how each can hold substantially different opinions on certain points of law. Today, the schools have come to dominate different geographical regions. Those most prominent in Africa are the Malikis and the Shafi‘is. The Malikis compromise roughly 15 percent of all Muslims and are dominant in North and West Africa as well as the United Arab Emirates and parts of Saudi Arabia. The Shafi‘is on the other hand, compromise roughly 28 percent of all Muslims and while not dominant in any conventional geographic partition, they exist around the Muslim world, especially in many parts of East Africa.[11] Maliki legal doctrines are based largely on Malik ibn-Anas’ seminal work al-Muwatta, a compilation of the customs and practices of the early citizens of Medina. These are treated as reflections of the sunnah. While Malikis take a religious, paternalistic tone on social law, they take a rather irreligious, harsh tone on penal and business law. They are considered conservatives within Islam. Shafi‘is on the other hand, are the product of the compromise that was the Shafi‘i Synthesis. Therefore, Shafi‘is are moderates within Islam.[12]
III. Basic Principles of Islamic Mediation
Mediation has a prominent place in Islamic law.[13] Even before the birth of Islam in what is termed the “age of ignorance”, Middle Eastern and African cultures were geared towards mediation albeit to a lesser extent. The political system of that time was heavily dominated by tribalism. Affiliation with a tribe constituted in large part a person’s identity. Thus, while inter-tribal disputes were routinely settled by armed conflict, disagreements within a tribe were almost always mediated or arbitrated. This latter form of dispute resolution was generally effectuated by a recognized ad hoc mediator-arbitrator (hakam) who was chosen by the parties to a dispute. These tended to be kahin, or clergymen of established religions or cults.[14] The Prophet acted similarly during his time in Medina, often mediating and arbitrating disputes between members of the community. For example, a sunnah reports that the Prophet successfully mediated a dispute between a creditor and a debtor by suggesting that the creditor accept half the money owed to him if the debtor would immediately pay in full rather than in installments.[15] Moreover, the Quran contains several verses specifically advocating mediation.[16] As Islam spread, it had the prominent feature of deemphasizing tribal loyalties and promoting a universal identity among Muslims (dar al Islam). This facilitated mediation between all Muslims regardless of their tribal affiliations.[17]
Perhaps the biggest reason for the importance of mediation in Islamic law is Islam’s strong aversion to binding third-party dispute resolution that is, arbitration and litigation. There is a belief among Muslims that judges and arbitrators who make an incorrect decision as well as any person who benefits from that decision will receive severe punishment in the afterlife.[18] Two sunnah are particularly illustrative. They attribute to the Prophet: “Of Judges there are three: One in heaven and two in the fire,”[19] and also: “I am only a man and when you come before me it may happen that one of you might be more eloquent in his pleadings and that, as a result, I adjudicate in his favor according to his speech. If it so happens and I give an advantage to one of you by granting him a thing which belongs to one of his opponents, he had better not take it because I would be giving him a portion of hell.”[20] A well-known anecdote tells the story of one ‘Abd-Allah ibn-Faruk, who refused a judicial appointment in the city of Qairawan. He was persuaded to reconsider only when the city guards put him in chains and threatened to throw him from the mosque roof. Nevertheless, he was reduced to tears when approached by his first litigants and successfully persuaded them to reconcile rather than ask him to make a judgment in their case.[21]
In the spirit of avoiding binding third-party dispute resolution, Islamic contract law is designed to prevent commercial transactions in which disputes could arise. For one thing, Islamic law severely regulates the process of offer and acceptance. Every school recognizes that an offer and acceptance may be made verbally (bil kalam). A verbal offer or acceptance becomes effective as soon as it is spoken and heard by the intended party. Additionally, the schools unanimously recognize an offer and acceptance made by writing (bil kitabah). A written offer or acceptance can be made in many ways. It may be sent by mail or courier or in light of modern technology, by advanced conveyances such as electronic facsimile or e-mail. Essentially, an offer by writing may be made by any instrumentality capable of transferring a written document from one person to another. A written offer becomes effective the moment it is sent regardless of whether it is actually received by an offeree. An acceptance only becomes valid when it is received by an offeror. With the characteristic exception of the Malikis, the schools either severely regulate or prohibit offers and acceptances made in any other way. The Malikis approve of offers and acceptances made by signs and gestures. They reason that an offer and acceptance need only be communicated in some way and so signs and gestures are sufficient in that regard. The Malikis also recognize an offer and acceptance made by conduct (fil). The most common way in which to make such an offer is an offeror simply delivering property to an offeree with the expectation of receiving compensation. An offeree could accept simply by delivering such compensation to the offeror.[22]
Also, there are several mechanisms by which an offer and even a completed contract may be terminated. There are three general ways in which this may occur. First, according to the Hanafis, Hanbalis, and Shafi‘is, an offeror may revoke his offer at any time before an offeree accepts it. They reason that it is only equitable to allow an offeror the chance to include important provisions in his offer that he may have initially forgotten. The Malikis on the hand, state that an offer is irrevocable once it is made. They reason simply that an offeror should be careful to make his offer correctly the first time. In any event, revoking an offer before it is accepted is the simplest, most effective way of terminating an offer.[23]
Second, the “session” in which an offer is made may lapse before the offer is accepted. Like common law, Islamic law generally requires a contract to be the product of an offer, acceptance, and valid consideration. However, Islamic law also requires that an offer, acceptance and valid consideration be made in a single uninterrupted “session” (majlis). With the rise of modern technology and the realities of complex business transactions, the doctrine of majlis has been thrown into a state of confusion. Interruptions traditionally held to end a session include daily prayer and even falling asleep. Obviously, these “interruptions” contemplate a time when it was usually necessary for an offeror and offeree to complete contracts face to face in the market. Clearly, complex sessions and sessions conducted with the use of the modern postal system, electronic facsimile, and e-mail cannot be subject to such restrictions. Other, more adaptable interruptions include discussing other subjects, namely other contracts, and changing positions. Such “changing of positions” includes an offeror making a new offer, an offeree making a counter-offer, or other similar maneuvering.
Third, according to the Hanafis, Hanbalis, and Schafi‘is, either an offeror or an offeree may actually revoke a concluded offer and acceptance, or a completed contract, at any time before the end of a session (the doctrine of khiyar al-majlis). This is in accordance with a sunnah which attributes to the Prophet: “Each of the parties to a contract of sale has the option against the other party as long as they have not separated.” Once a contract has been completed, the schools, with the exception of the Malikis, are unclear as to when and how a session may end. The concept of session however, is interpreted very liberally for this purpose. The Malikis reject the idea that a completed contract may be revoked. They rely on the early Medinans having customarily rejected the practice. The Malikis then, hold that a session is completed the moment a valid offer and acceptance, or a completed contract, have been made.[24]
Islamic mediation itself commonly takes three forms. First, each conflicting party may select a “mediator” to effect an agreement in their stead. Essentially, this model allows for each side to employ a presumably more professional, clearheaded negotiator to reach an agreement. Although this kind of mediation is most common for marriage contracts, it is not unknown in commercial dispute resolution.[25] Second, conflicting parties may select a single mediator to engage in a more conventional mediation process by western standards. Traditionally, this kind of mediation was considered a judicial function and so Muslims tended to select judges as their mediators. However, the overriding reason for the predominance of judges in mediation was not their official position but rather their recognized ability to successfully resolve disputes.[26] Third, conflicting parties may seek an opinion on their issue from a respected legal expert (mufti). After hearing a controversy, this expert engages in a process (ifta) of in-depth legal research to find all the applicable substantive legal rules on the subject. The mufti is then expected to present a report detailing their research and its application to the conflict. Although a mufti’s opinion is not legally binding, it has substantial weight in Islamic legal proceedings.[27] Concerning the qualifications of an Islamic mediator, it is important that although very conservative Muslims may only accept a male Muslim mediator, the Quran says very little about a proper mediator’s qualifications, selection, or even the process by which he or she helps parties reach a solution. In practice then, anyone of any method may be an Islamic mediator provided they are respected as such and do not offend Islamic legal and moral principles.[28]
Those involved in Islamic dispute resolution must always bear certain issues in mind. Aspects of Islamic law can void mediated agreements or make them unappealing. To this end, an Islamic mediator should consider three major principles. First, Islamic law prohibits usury (riba), which generally occurs in any commercial transaction in which one or both parties receive interest. Closely linked to the concept of riba is the Islamic ban on gambling (gharar). This prohibition has been extended by analogy to ban contractual “uncertainty”. It has been used to expand the concept of riba so that it bans any commercial transaction in which a party’s consideration is uncertain as this could result in one party unexpectedly receiving something of greater value than what they gave in exchange.[29] The Malikis, Hanbalis, and Shafi‘is hold that any contract involving riba or gharar is completely unenforceable. The only slightly more lenient Hanafis apply their doctrine of “severance” to riba and gharar contracts by which they are still enforceable less their usurious provisions.[30] Moreover, the schools agree that riba and gharar are crimes punishable at a judge’s discretion and up to forty lashes, respectively.[31] Second, the subject matter of a contract and thus, a mediation, must be lawful (halal) and wholesome (tahir). Essentially, the subject matter of a contract may not conflict with Islamic law or norms.[32] Third, Islamic “law” is not always legally binding. In Islam, law exists in a dual system. Some laws set out obligations (wajb) and prohibitions (haram) while others recommend (mandub) and disapprove (makruh) behavior. While it would clearly be illegal to ignore laws which set out obligations and prohibitions, it is also unwise to ignore laws which recommend and disapprove behavior. There is a tendency within Islam to regard a wrongdoer’s punishment in the afterlife more seriously than any worldly legal sanction.[33]
IV. Conclusion
Islamic law is very different from western jurisprudence both conceptually and substantively and it is spreading quickly. It has had a significant impact on much of Africa. Given Africa’s growing economic importance, mediators would do well to familiarize themselves with Islamic law in general and mediation in particular. Although complex, Islamic mediation in Africa is manageable if one remembers certain points. Mediation is very important in Islamic law and preferred to litigation and arbitration. In its paternalism, Islamic law seeks to avoid the possibility of a conflict resulting from an undesirable contract. This is tempered however, by the free market approach to contract law adopted by the Malikis, who influence North and West Africa. Also, mediation may be conducted in any number of ways. In Islamic law, a mediator and their method are chosen based on respect and knowledge of the law. Finally, a mediator must always take relevant Islamic law into consideration, both that which is legally binding and that which is merely recommended.
[1] See Encyclopedia Britannica, Africa, http://www.britannica.com/EBchecked/topic/7924/Africa (last accessed November 20, 2009).
[2] See Encyclopedia Britannica, Sharia, http://www.britannica.com/EBchecked/topic/538793/Shariah (last accessed November 20, 2009).
[3] See Encyclopedia Britannica, Nigeria, http://www.britannica.com/EBchecked/topic/414840/Nigeria (last accessed November 20, 2009).
[4] See N.J. Coulson, A History of Islamic Law 10-11, 21-22 (Edinburgh University Press 2006).
[5] See Id. at 23-35.
[6] See Bernard Weiss, Interpretations in Islamic Law: The Theory of Ijtihad, American Journal of Comparative Law v. 26 199, 199-206 (1978).
[7] See Coulson, A History of Islamic Law at 30, 42-50.
[8] See Id. at 53-61, 71-73.
[9] Quran 5:90-91.
[10] See Matthew Lippman, Sean McConville & Mordechai Yerushalmi, Islamic Criminal Law and Procedure: an Introduction 47-48 (Praeger Publishers 1988).
[11] See Coulson, A History of Islamic Law at 101-102.
[12] See generally Id.
[13] See Ayla Karmali, The Influence of Sharia Norms of Dispute Settlement and International Law: The International Court of Justice, Room for Accomadation? v. 75 309 The International Journal of Arbitration, Mediation and Dispute Management 317-319 (August 2009).
[14] See Coulson, A History of Islamic Law at 10.
[15] See Karmali, The International Journal of Arbitration, Mediation and Dispute Management at 317.
[16] See e.g. Quran 4:35, 59, 65, 49: 9-10.
[17] See Coulson, A History of Islamic Law at 10-11
[18] See Karmali, The International Journal of Arbitration, Mediation and Dispute Management at 318.
[19] See Coulson, A History of Islamic Law at 123.
[20] See Karmali, The International Journal of Arbitration, Mediation and Dispute Management at 318.
[21] See Coulson, A History of Islamic Law at 123.
[22] See ‘Abdur Rahman I. Doi, Sharia: The Islamic Law 356-357 (Ta-ha Publishers Ltd. 1984).
[23] See Id. at 357.
[24] See Coulson, A History of Islamic Law at 42.
[25] See Karmali, The International Journal of Arbitration, Mediation and Dispute Management at 317.
[26] See Id. at 319-320.
[27] See Coulson, A History of Islamic Law at 142-143, 148.
[28] See Karmali, The International Journal of Arbitration, Mediation and Dispute Management at 323.
[29] See Coulson, A History of Islamic Law at 38-39.
[30] See Id. at 100.
[31] Lippman et al., Islamic Criminal Law and Procedure: an Introduction at 43.
[32] See Doi, Shariah: The Islamic Law at 358-359.
[33] See Karmali, The International Journal of Arbitration, Mediation and Dispute Management at 323-324.