This second of two articles on dispute resolution under Islamic law looks at arbitration – a system that has found wide acceptance in the Islamic world

Many Muslim countries continue to preserve part or all of Sharia from the time they belonged to the Ottoman Empire and practised the Majallat Al Ahkam Al Adliah of the Hanafi school of thought – a doctrine that contained the rules of Islamic law in civil and commercial matters.

Saudi Arabia and Yemen continue to follow Sharia fully. Syria, Libya, Sudan, and to a lesser extent Kuwait, rely on Islamic procedures in arbitration. Egypt, Bahrain, Oman, Tunisia and Jordan (and increasingly the UAE) have fully adopted the international UN Commission on International Trade Law model of arbitration.

Arbitration has been acceptable in Islam as a technique for settling disputes from its inception. Indeed, the prophet Mohammed himself acted as an arbitrator and the parties accepted his decisions as binding.

Generally, arbitration under Sharia is consensual, and there are no particular overriding Islamic rules that foreign workers should worry about. Here is how the system works:


Islam places no restriction on the subject matter that may be submitted to arbitration (unless it concerns the right of God). Commercial disputes relating to property, debts, sales, defects and delay – that is, all common disputes that arise in English arbitration – can be arbitrated under Sharia. The exceptions are crimes and sanctions that are not civil or commercial.

Arbitration agreements

All divisions of Islam agree that the arbitration agreement is the principal basis for confirming upon arbitrators their power to issue a binding decision. Those agreements do not need to be committed to in writing; an oral agreement to arbitrate accepted by both parties is equally binding. The important question is whether both parties have agreed freely and willingly to submit their dispute to arbitration. Clearly, written agreements usually leaves this beyond argument.

Historically, there has been a difference of approach between the Malki and Hanafi versions of Islam. The former required consent at the time of the agreement whereas the latter gave parties the right to withdraw consent to arbitration until just before the award is issued.

Mohammed himself acted as an arbitrator – the parties accepted his decisions as binding

The prevailing modern view is that parties are bound by the agreement to arbitrate until the end of the arbitral procedures. The source for this view is verse one of the Koran of Surah Al Maida, which says, “O ye who believe, respect your contractual undertakings” and verse 34 in Surah Al Isra, which says, “fulfil every engagement, for every engagement will be enquired into on the day of reckoning”. Hence, if the parties submit a dispute freely and willingly to arbitration, which is binding, they should not be able to renege from that “engagement”, either before or after the decision is made.

Appointment of arbitrators and their jurisdiction

According to Sharia, the parties should appoint the arbitrator. Such agreement may be in the parties’ construction agreement or made later, once a dispute has arisen under the agreement.

The number of arbitrators, or indeed the person or body that appoints the arbitrators, are subject to the agreement. Commonly, each party appoints their own arbitrator. A third one can also be appointed to reach a majority decision if the parties are agreed. Equally, the parties can agree that the decision must be unanimous.

There is no rule that an arbitrator is required to be a Muslim in civil and commercial disputes. It is generally recognised that the Islamic concept of “Darourah”, which means necessity, requires that the arbitrator be the person with the skills to resolve the dispute fairly.

The jurisdiction of the arbitrator under Sharia is also a matter for the agreement of the parties.

They can agree the subject and the matter to be disputed, where and when the hearing will take place and all the procedural rules that are followed. Moreover, the parties can, and often do, agree that the decision should be just and fair.

All arbitral awards under Sharia are binding. Most Arab countries that practice Sharia in arbitration are signatories to the New York Convention of 1958 on the recognition and enforcement of foreign arbitral awards.