Chicago Journal of International Law


Two years ago, in the matter of Shamil Bank of Bahrain EC v Beximco Pharmaceuticals Ltd, the English Court of Appeal ("English Court") decided for the first time questions of the validity, interpretation, and breadth of a choice of law provision in a murabaha agreement. The judgment is of far-reaching significance in the fields of Islamic finance and Shari'ah-compliant investments. This is because the English Court evaluated the agreement solely under English law, even though the disputed choice of law provision stated that English law was only to be applied "[s]ubject to the principles of the Glorious Sharia'a." The English Court qualified this clause as a nonbinding statement of purpose. As Islamic investments and Islamic financial transactions become increasingly relevant in the US and continental European countries, the decision is likely to be considered by other courts in the future, and it is worth examining how German courts may react. To be sure, the decision was made under English law. The Beximco decision may nonetheless influence courts in other countries and not only those within the Anglo-American tradition. [CONT]