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Sharia
Practical Law Glossary Item 9-500-7092 (Approx. 3 pages)
Glossary
Sharia
Also known as Shariah or Shari'ah. Islamic principles and jurisprudence that govern the social, political and economic relationships and actions of Muslims and Islamic institutions. Sharia is derived from three primary sources, the:
- Quran, Qu'ran, or Koran: believed by Muslims to be the word of God.
- Sunnah: the practices and traditions of the Prophet Mohammed.
- Hadith: the accounts of the sayings of the Prophet Mohammed.
There are also two secondary sources for Sharia:
- Ijma'a: consensus of Muslim scholars.
- Qiyas: reasoning by legal analogy.
Although Sharia principles are taken into account in the drafting of Islamic finance documents (for example, structuring agreements to take into account the prohibition against riba, gharar and maisir), Sharia is not a codified body of laws but rather a set of moral and religious principles. As a result, Sharia-compliant agreements are not governed by Sharia law but by the laws of a specific jurisdiction such as the State of New York or England and Wales.
For more information on Islamic finance in the US, see Practice Note, Islamic Finance: US Law Overview.
For more information on Islamic finance in the UK, see Practice note, Islamic finance: UK law overview.