Towards Our Own Lex Mercatoria: A Need for Legal Consensus in Islamic Finance

Abstract

Lacking in terms of personal lex mercatoria governing the cross-border transactions in Islamic finance may lead to uncertainty in trade financing. Global Islamic finance is faced with many unresolved issues that demand urgent attention from all parties involved. One of the pressing issues is the lack of standardisation to face globalisation within the industry. An attempt is made herein to propose a few options in having legal consensus towards the creation of lex mercatoria in Islamic finance. This paper proposes that, as the global market continues to increase and as interest in Islamic finance grows around the world, there is a compelling need to make future developments of the industry smoother by having its own treaties, conventions and model laws which form the basic financial instruments in order to avoid possible conflict and gain public confidence.