October 3, 2017
Two Men Enter: Arbitration, Reconciliation, and What Can Be Kept Out of Court

Investment & Startups


5 min read

In this article we explore two forms of dispute resolution, arbitration and reconciliation, under Islamic law. This is a follow up to two previous articles where we discussed defamation as a case brought to court, as well as how Islamic courts operate. There will be two more followups to this article, inshallah that you can read about at the end.

In this article:
– Where arbitration sits in Islamic legal hierarchy
– Defining Arbitration
– The differences between arbitration and adjudication
– What subject matter is valid for arbitration
– How do you “do” arbitration?
– Two People Enter: Reconciliation as Dispute resolution
– Why this is important?

Where Arbitration Sits in the Islamic Legal Hierarchy

In the previous article we set out that the ultimate authority for resolving disputes rests with the courts. This is due to the function that courts fulfill and the authority by which they derive their power. Courts, and by that in Medieval Islamic law we mean Judges, derive their authority from appointment by the sovereign ruler. This fact is so well documented throughout Islamic legal texts that it is almost an exercise in futility to reference. That groups of citizens cannot band together and appoint their own judges seems to be a no-brainer. Had that been permitted, it would be ultimately result in chaos. Who from amongst would not want his own personal judge that can decide issues the way he desires? For the sake of social harmony and to emphasize the importance of social cohesion and unified political will, appointing a ruling government is a prerequisite to appointing judges. This will be apparent from the various references I mention in the coming paragraphs.

Judges derive their authority from the state and as such have the power to compel action from those called to court, regardless of their agreement to or not. Arbitration on the other hand derives its authority from two sources. Before a ruling is issued by an arbiter, it derives its authority from the private agreement of two sane adults to enter into an arbitration agreement. After a ruling is issued, the authority to enforce that ruling lies with the courts. We’ll talk about this more under arbitration procedure.

Defining Arbitration

Perhaps one of the more comprehensive definitions of arbitration occurs in the Mejelle, a 19th century Ottoman civil code that codified Hanafi law: “Arbitration is the taking of an arbiter by the litigants after their agreement for him to decide a dispute between them and answer their complaint.” [1/365] Almost all other definitions of Arbitration fall under this one, with some of them mentioning that the Arbitrator must hold the qualifications of a judge in order to preside over an arbitration hearing.

The Differences Between Arbitration and Adjudication

There are several differences between adjudication and arbitration:

  • Judges are state appointed, Arbitrators are appointed by a private contract.
  • Adjudication does not rely on the agreements of the litigants while Arbitration does, until a decision is issued.
  • Courts may cover almost any subject matter presented to it, arbiters may only cover subject matter that relates to private agreements between adults. This will be covered in detail later.
  • Arbitration is a private contract, Adjudication is a public service.
  • A judicial decision is irrevocable, while an Arbitrator’s decision is subject to review and revocation if reviewed by a judge and found to be invalid or illegal. [Ibn al-Simnani, #120]

There are several others, but I’ll suffice with this for now for sake of brevity.

What Subject Matter is Valid for Arbitration

Arbitration is a subsidiary of Adjudication, “as it is an appointment made by individuals, branching off of Adjudication, related to financial dealings, not Hudud punishments, Li’an, and Qisas.” [Ibn Farhoun 1/17]

Its important to note here that not all Jurist accepted the validity of Arbitration. In fact, Ibn Hazm of the Zahiri school, implies arbitration in the presence of a court in invalid, as it encroaches on the right of the judge to resolve disputes. [9/435] This is also one opinion in the Shafi’ school [al-Hawi 15/325] This is a minority opinion.

The majority allow arbitration but restrict it to certain subject matter. They usually do this by enumerating what cannot be arbitrated on. For example, the Malikis enumerate seven subjects that may be not be arbitrated: Hudud, Li’an, killing, allegiances, lineage, divorce, and manumission. Dardir comments saying: “Arbitration is not allowed in any one of these seven subjects, as they relate to 3rd party rights other than the two litigants; either a right of God’s or a right of man’s. [The rights of Man are things such] as in Li’an, allegiance, and lineage. As for Hudud, killing, manumission, and divorce, then these are God’s rights. As for Hudud, these deterrents are God’s right. AS for Divorced women, then it is impermissible for her to remain in her husband’s care; and it is impermissible to return a slave to slavery as this is God’s right.” [Al-Sharh al-Kabir, 4/136]

In the Shafi’ school, when explaining Nawawi’s legal text al-Minhaj “If two litigants arbitrate to a man about other than hudud punishments this is permissible…”  al-Shirbeeni says: “Note: ‘litigants’ here is in reference to a dispute, but is unintended, as arbitration applies to marriage. Had he [i.e. al-Nawawi] said ‘two parties’ instead it would have been better. Him saying ‘in other than Hudud punishments’ is a necessary addition to the Muharrar [another Shafi’ legal compendium] as Arbitration is not valid in [Hudud]. Had he said ‘In other than a punishment for God’s sake’ so as to include discretionary punishments it would have been better, as they are like Hudud punishment in this regards.” [Mughni al-Muhtaj 6/267]

While the Hanabilah, in one opinion in the school, did allow crime and punishment to be arbitrated on it is important to note that like the other canonical schools they stipulated that the Arbitrator carry the exact same qualifications as a judge and that the punishment decided on be forwarded to the state to implement. In fact, Ibn Rajab mentioned this qualifier expressly as the opinion of Ibn Aqeel and Ibn Taymiyah. Ibn Rajab explains “His decision is applied after review and concurrence by a judge… and it is appropriate that they [the Arbitrator and the counter-party] testify in court that he [the sentenced party] agreed to this arrangement before the decision was rendered so that he may not deny this later on. If however he rescinds his agreement to the arbitration before this case is presented to the judge, this is permitted.” [al-Mubdi 8/160] Al-Buhuti reiterates these conditions as well in Sharh al-Muntaha.

This opinion in the Hanbali school, namely the applicability of Arbitration to Hudud Punishments, comes with a few caveats. First, it should only be decided by one qualified to be a judge. Second, it is subject to judicial review before application, as personal application of a Hadd punishment is a form of sedition. Third, the parties have the right to rescind their agreement to the arbitration at any time after the arbitration ruling is issued and before the Judge issues his.

This minority opinion, if taken on face value and applied, would lead to sedition and chaos, and sedition is punishable in its own right. [Sharh al-Muntaha 3/337]  It would seem that while jurists of the Hanbali school were trying to reconcile various evidences and broad statements made by their Imam, by doing so they created a legal knot that becomes difficult to untie. In fact, navigating these details seems almost impossible without creating mass inefficiencies and social harm.

This outsourcing of judicial responsibility was unique to the Ḥanbalī school, but is only one opinion within the school. The second opinion agrees with the Majority in part but is more restrictive. According to this second opinion, Arbitration can only be applied to financial disputes. Ibn Rajab comments on this saying, “…this is another narration that is related in al-Furu’ and other works. It is an easier opinion, and therefore should be summarily applied.” This is no doubt the correct opinion on this matter in the Hanbali school and agrees with another opinion in the Shafi’ school. [Ibn al-Simnani, #122 ]

Similar opinions to all the above are found among Hanafis [al-Marghinani 3/108, al-Babarti 7/318, and others].

If we were to summarize the opinions above to present a holistic principle that can be relied on for deciding what can and cannot be arbitrated on we could say: “Arbitration is permissible in all private agreements between consenting adults, to the exclusion of all 3rd party rights whether private or public.” This would effectively make arbitration applicable to subjects like business transactions and marriage, but not to things like divorce, child custody, criminal law (whether hudud or discretionary), and issues of public welfare.

Ibn Farhoun summarizes this logic by saying “Such issues are excluded from this topic as they necessitate the affirmation or negation of a ruling from other than the two parties, third parties who did not agree to the decision of this arbitrator.”  [1/62]

How do you “do” Arbitration?

Arbitration procedure is no different than the judicial procedure we mentioned in the last article, with a few procedural additions. The disputing parties must first agree to qualified arbitrator(s) who will preside over their dispute. Like all contracts, it is preferable to be drafted in written form and signed. This allows each party to compel the other to perform, i.e. to do what the arbitration decision spells out, by a judge’s decision in the instance when personal morality and ethics is not strong enough within a person to act as a natural deterrent from repugnant behavior, in this case breach of contract.

Reconciliation: Two Enter, Two Leave

Reconciliation is another form of dispute resolution subordinate in status to both arbitration and adjudication. The Prophet expressly permitted reconciliation when he said “Reconciliation is permitted between Muslims, expect for that which permits the forbidden or forbids the permissible.” [Tirmidhi, #1352]

Reconciliation is defined as “a contract that removes disputes by mutual consideration.” [Mejelle #1531] All other legal schools mention a similar definition. What this means is that reconciliation, while it may be supervised by a 3rd party, it does not derive its authority from that 3rd party. Likewise, the decision rendered is not made by the 3rd party. Instead, two people agree to resolve their disputes, documenting that agreement. If and when that agreement is violated, they have the right to pursue other methods of dispute resolution, namely arbitration and adjudication.

One indication of this subordinate status is that Reconciliation is mentioned almost universally under transactions (Buyu’) as it is a private agreement between two people. They may decide to reconcile their dispute after concurring with the issue at hand, called al-Sulh ma’ al-Iqrar or Amicable Reconciliation, and thus amicably end their dispute. They may on the other hand not want to cede to the opposite party that they are correct or have a right over the things they dispute, but agree to end the dispute nonetheless and not revisit the issue. This is known as al-Sulh ma’ al-Inkar or Disputed reconciliation.

This private agreement however is not unrestricted. Jurists gave examples as to what sorts of actions are invalid forms of reconciliation. For example, if a person were to agree to be another’s slave this would be invalid. Likewise, if a man and woman were to have a dispute and she agreed to having been his wife in exchange for a financial award, this too would be invalid. [al-Salman P158-159] Ashhab of the Maliki school gives us a convenient maxim by which we can determine what sorts of subject are valid for reconciliation. He says: “The definition of what reconciliation is not permitted in is: anything in which it is unpermitted to pardon someone of doing such as theft or adultery. Those things in which one may pardon a person are allowed to be reconciled.” [Ibn Farhoun 2/49] Ibn al-Simnani mentions similar when he says: “It is impermissible to reconcile over Hudud punishments as these God’s rights.” [#5172]

Additionally, things that are 3rd party rights, whether public or private, are not valid for reconciliation. “The fundamental principle here being that transacting on a 3rd party right is not permitted; if a man were to take a fornicator, thief, or drunkard and attempt to deliver him to court, and instead this person reconciled with him [the man] to pay him in order to leave him alone the reconciliation would be false.” [alBabarti 8/418]

Note that the stipulations that we discussed in detail under arbitration are almost the same as reconciliation. Things which are personal disputes between consenting adults can be reconciled. Crimes and 3rd party rights may not. More references on this certainly are available, however the point here is to illustrate to you what the boundaries of acceptable reconciliation are.

Why is All This Important?

Understand that reconciliation is subordinate to arbitration, and that both are subordinate to court decisions, helps us understand what sort of issue we are allowed to resolve on our own or with the help of an independent 3rd party. It also illustrates for us the sort of issues that are grave enough to necessitate we take them to court, instead of subjecting ourselves and others to unnecessary prolonged disputes that only muddy the already murky waters of unethical acts or criminal behavior.

While other than the courts may be cheaper and faster, it’s important to remember that under Islamic law some disputes cannot be arbitrated or reconciled. They must be taken to court. Take for example if a person is alleging that another party abused them, this is a criminal offense and it cannot go to arbitration or reconciliation. Some Muslims will then say well what am I supposed to do in this situation? I don’t want to go to the courts because I’m afraid, they will not understand the case or that there will be some type of blowback on the community because of this or that I’ll be doing something wrong ethically or morally as a Muslim.

The answer is you are NOT in between a rock and a hard place. It is permissible for you and maybe a moral obligation on you to go to the courts when there is a fear of greater harm from not doing so. There are several precedents under Islamic law to support this position regardless of who the courts are being run by

I will cover these situations in a follow-up article in this series, but first there’s another topic that needs discussing: The differences between crime, sin, unethical behavior, lack of integrity, and things running contrary to custom.

I hope to have these done within the next two weeks.


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