Islamic finance and ensuring the agreement is upheld in the event of a dispute – what should investors or other parties to an agreement with an Islamic finance institution do to ensure that the agreement is upheld in the event of a dispute? They should:

1. ensure they obtain and fully review the constitutional documents of the institution with reference to national laws on ultra vires transactions, particularly those relating to Shari’a-compliant transactions;
2. obtain appropriate certificates and representations from the institution’s Shari’a Supervisory Board;
3. ensure the relevant agreement includes representation and warranties that the agreement does not conflict with the institution’s constitutional documents;
4. where possible, arrange for the transaction to be undertaken through a Special Purpose Vehicle established as a subsidiary of the institution, but in a jurisdiction where it is highly unlikely that such defences to non-performance in a contract would be upheld, e.g. Jersey.