Governing Jurisdiction – The litmus test of “real” Islamic Finance

While reviewing several cases of defaults, disputes, and disruptions in Islamic Finance deals that have made the press, I noticed that almost every case that has been litigated on has been in a western common law court (UK-USA).

Thinking out loud, I wonder if this is the litmus test for “real” Islamic Finance? Not that bringing the case to court is the litmus test, nor that the ruling issued is either. My point here is that designating the governing jurisdiction as a common law court gives away something somewhat subtle, however inferred, concerning the intentions, and more importantly, the expectations of the contracting parties.

Presuming here that that external factors such as a judge’s ability to determine a contract to be Islamically acceptable is not a factor due to proficient negotiation and contract formation by the parties, let’s ask the question:

How many cases have been approved as “Shariah Compliant” yet when taken to court have been ruled to be not-so-Islamic?