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Ercanbrack, Jonathan (2021) 'Islamic Trade Law and the Smart Contract Revolution.' In: Neo, Dora and Hare, Christopher, (eds.), Trade Finance: Technology, Innovation and Documentary Credits. Oxford: Oxford University Press, pp. 308-334.

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Abstract

The history of Islam is inextricably connected to a celebrated history of trade and commerce which distinguishes it amongst monotheistic faiths. The modern incarnation of Islamic trade finance, however, bears only rudimentary similarity to the trade practices of old. Modern Islamic trade finance is devised to replicate conventional trade practices so that the barter-like immediacy of the Islamic contract of sale has been replaced with promissory attributes (wa’d). Yet Islamic law (sharia) has shown itself to be fully capable of adapting to modern trade practices so long as its major principles remain intact. The introduction of blockchain and smart contracts for Islamic trade finance does not change this basic calculus and yet these technologies promise to revolutionise Islamic trade practices in a way that compels the industry to operate in closer keeping with its commercial principles. Paradoxically, these technologies require substantive changes in the way in which Islamic trade finance is practiced, helping the industry to overcome its attachment to legal artifice (hiyal). Using comparative law methodology, this chapter briefly examines a short history of trade and commerce in the Islamic tradition, followed by the development of modern Islamic finance. It addresses the principles of Islamic commercial law as the basis for understanding the murabaha contract for trade finance, followed by an analysis of the legal and sharia-related issues that English courts have dealt with in the practice of Islamic trade finance. Finally, the chapter considers the transformative capacity of blockchain and smart contracts for Islamic trade finance, highlighting prominent legal and sharia-related issues that compel the industry to transform its trade practices markedly.

Item Type: Book Chapters
SOAS Departments & Centres: Departments and Subunits > School of Law
Subjects: K Law
ISBN: 9780198854470
Copyright Statement: This is the version of the chapter accepted for publication in Neo, Dora and Hare, Christopher, (eds.), Trade Finance: Technology, Innovation and Documentary Credits. Oxford: Oxford University Press, pp. 308-334. Re-use is subject to the publisher’s terms and conditions
Date Deposited: 28 Aug 2020 09:16
URI: https://eprints.soas.ac.uk/id/eprint/33394

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