International Conference Under the Patronage of the Ministry of Economy and in the Presence of His Excellency Abdullah bin Touq Al Marri

Reviewing the UAE’s Legislative Expertise as a Model for Codifying Transactions in the Islamic Economy Globally
 In Cooperation with the United Nations Commission on International Trade Law (UNCITRAL) and the International Islamic Fiqh Academy (IIFA)

His Excellency Abdullah bin Touq Al Marri, UAE Minister of Economy, inaugurated an international conference in Dubai titled “Updates on Codification in Islamic Finance: The UAE’s Legislative Expertise as a Model.” The two-day event was organized by the International Islamic Centre for Reconciliation and Arbitration (IICRA) under the patronage of the Ministry of Economy, in cooperation with the United Nations Commission on International Trade Law (UNCITRAL) and the International Islamic Fiqh Academy (IIFA). The conference was sponsored by Abu Dhabi Islamic Bank (Gold Sponsor), Sharjah Islamic Bank (Silver Sponsor), and OGH Legal (Bronze Sponsor), in collaboration with the Institute of Training and Judicial Studies at the Ministry of Justice, the Sharjah Centre for Islamic Economics, the G.C.C. Commercial Arbitration Centre, and the University of London.

UAE Among Top Three Islamic Economies for the Third Consecutive Year, according to the Global Islamic Economy Indicator

In his opening remarks at the conference, H.E Abdullah bin Touq Al Marri expressed his sincere gratitude to IICRA for the invitation to participate in this significant event. He highlighted the conference as an essential platform for discussing legislative and technical advancements in the Islamic finance system, emphasizing its pivotal role in enhancing national economic competitiveness and contributing to the growth of regional and global economies.

His Excellency further emphasized that the conference would play a vital role in raising awareness about the regulatory and policy frameworks governing financial transactions and banking services. He noted the resilience and continuous growth of Islamic finance, driven by increasing global awareness of its value.

The UAE’s leadership in the Islamic economy was underscored as His Excellency highlighted the country's ranking among the top three Islamic economies in the Global Islamic Economy Indicator for the third consecutive year. Additionally, the UAE was ranked fourth globally among the largest Islamic financial markets in terms of assets, according to the Islamic Finance Development Index Report for 2023.

According to Central Bank of the UAE, the Islamic finance sector achieved significant growth, expanding by 11% in 2022 and contributing to total global Islamic financial assets reaching AED 16.5 trillion. Over the past five years, the sector has grown by 69%, and over the last decade, it has achieved an impressive 163% increase.

UAE Legislation Fosters the Growth of Islamic Banking Systems, Strengthens Banking Entities and Institutions, Stimulates Investment Flows, and Creates Greater Opportunities for Growth and Competition in Commercial Transactions

In his speech, His Excellency Abdullah bin Touq Al Marri commended the UAE’s flexible legislative environment, which continues to advance the Islamic banking sector. He highlighted the Ministry of Economy's collaboration with the UAE legislator in developing Federal Decree-Law No. 50 of 2022 on Commercial Transactions. This landmark legislation strengthens the framework for Islamic financial and banking transactions within the UAE economy, serving as a critical legal pillar for banking institutions. The law enhances the development of Islamic banking systems, supports banking entities and institutions, stimulates investment flows, and fosters growth and competition in commercial transactions. It requires banks to provide sufficient guarantees or insurance against loans, marking a pioneering step toward bolstering financial stability.

By regulating contractual relationships, the law ensures the stability of transactions, safeguards customer interests, and provides legislative oversight in place of exclusive reliance on fatwas and rulings issued by specialized bodies. The legislation also supports key commercial transactions—including deposits, investment accounts, and Takaful insurance—carried out through Islamic financial institutions in adherence to the Provisions of Islamic Shari’ah, ensuring their legal integrity and fairness. Additionally, the law introduces specific provisions for contracts and obligations with Islamic financial institutions, such as contractual promise, installment sales, Murabaha, reclamation financing, Salam, and leasing. His Excellency emphasized that the law represents a transformative milestone, establishing an advanced legislative framework for the Islamic financial system in the UAE economy. This framework enhances the competitiveness of Islamic economic institutions and the banking services they provide in the market.

Statistics Confirm that Islamic Banks Continue to Grow Faster than Conventional Banks

His Excellency added in his speech that the United Arab Emirates, thanks to the directives of its wise leadership, is a major center for Islamic finance globally. Islamic banking has become an integral part of the financial industry in the country, facilitated by a regulatory environment that balances legal requirements with the provisions of Islamic Shari’ah. In 2022, Islamic finance accounted for 23% of the total assets of the banking sector, equivalent to 845 billion dirhams. By the first half of 2024, this percentage had increased to 29%, marking a growth rate of 5.7%, which surpasses the growth rate of major conventional banks at 5.4%. Credit rating agencies expect Islamic banks to continue growing faster than conventional banks in the medium term.

The UAE Sukuk market has also seen significant expansion, with the federal government recently issuing Islamic treasury sukuks in dirhams, potentially encouraging other entities to follow suit. Additionally, sustainable financing has witnessed rapid growth in the UAE, with sukuk issuances that comply with environmental, social, and corporate governance (ESG) principles reaching 15% of the total global sukuk market. A study conducted by the Central Bank on the Islamic banking sector, which included both local and foreign Islamic banks as well as conventional banks offering Islamic banking services, found that 79% of such entities have adopted sustainability strategies. Of these, 74% reported that their strategies had been approved at the board of directors’ level. All Islamic banks confirmed they have sustainability strategies in place, while some conventional banks with Islamic windows are still in the process of developing or awaiting approval for their strategies.

The International Islamic Centre for Reconciliation and Arbitration: The Legal Arm of the Islamic Financial Industry

For his part, Professor Jassim Ali Salem Al Shamsi, Chairman of the IICRA’s Board of Trustees, expressed his gratitude to His Excellency the Minister of Economy for inaugurating this distinguished event, which underscores the UAE’s wise leadership in developing and advancing the Islamic economy. Professor Al Shamsi also extended his thanks to all entities involved in organizing the conference. He highlighted that this conference coincides with the 20^th anniversary of IICRA’s establishment. Over the years, IICRA has navigated numerous challenges, transforming them into successes and achievements, thanks to the unwavering support and assistance from its founders, members’ institutions, and the generous hosting of its main headquarters by the United Arab Emirates.

He further emphasized that IICRA has successfully fulfilled its objectives and mission through its services in resolving disputes in accordance with the noble principles of Islamic Shari’ah. IICRA has successfully addressed a wide range of disputes, covering various types and values. Professor Al Shamsi underscored the importance of IICRA’s role as an independent international organization, one of the key infrastructure institutions of the Islamic financial industry. It serves as the legal arm of the industry and is the only institution of its kind hosted in the United Arab Emirates, offering its services to the global Islamic financial sector.

UNCITRAL Supports Efforts to Codify Islamic Financial Transactions

For her part, Ms. Samira Musayeva, the representative of the United Nations Commission on International Trade Law (UNCITRAL), emphasized during her remarks at the opening session the conference's significance in advancing the Islamic economy. She highlighted UNCITRAL’s 60-year legacy of developing international legislation across various fields, including those relevant to Muslim societies. Ms. Samira Musayeva noted that UNCITRAL’s role extends beyond rulemaking to include technical assistance in interpreting and applying texts, as well as promoting awareness through training and capacity building. She expressed UNCITRAL’s readiness to support codification initiatives aimed at strengthening the economy in all its components and systems.

Resolutions of the International Islamic Fiqh Academy Provide a Rich Source of Material for Codifying Islamic Financial Transactions

The opening remarks concluded with a speech by H.E. Prof. Koutoub Moustapha Sano, Secretary General of the International Islamic Fiqh Academy (IIFA) who stated that the Academy is fully prepared to support plans and projects for codifying Islamic financial transactions. It includes among its ranks the most prominent contemporary scholars, jurists, and experts whose collective efforts study issues and incidents. The Academy has issued over 260 resolutions, with half specifically related to Islamic finance. These resolutions are considered valuable raw materials that can be utilized to draft legal materials, providing easy reference points for judges and lawyers practicing in the financial industry. His Excellency emphasized the importance of the desired law in transforming the rich and abundant jurisprudential materials into legal frameworks that address the issues we seek to resolve. Therefore, this codification that the UAE legislator has adopted, and we hope that other Islamic countries will follow suit. His Excellency highlighted the solid and established rule in Islamic jurisprudence: “The ruling of the ruler resolves the dispute.” While schools of jurisprudence may differ on certain rulings, national legislators can present a sound legal and legitimate solution to address such differences under national legislation.

IICRA Launches Unique Legal and Shari’ah Services and Initiatives Supporting the Islamic Economy

Following the opening remarks, and in line with its role as the legal arm of the Islamic financial industry, IICRA launched several vital initiatives and projects aimed at supporting the Islamic economy from both Shari’ah and legal perspectives. These initiatives and projects included the following:

Launching the 'JAIZ' for Legal and Shari’ah Review and Audit

IICRA’s General Secretary, Dr. Rami Sulaiman Abudagga, announced the launch of the "JAIZ" service for legal and Shari’ah review and audit. This new support service is an addition to IICRA’s existing offerings, focusing on providing legal and Shari’ah auditing of financial transaction documents. IICRA employs all its resources, including its list of registered arbitrators and experts, to deliver this service with the highest level of professionalism and distinction, ensuring that there is no conflict of interest.

Launching the Model Islamic Contract for the Construction Sector

Following that, IICRA announced the launch of the project for the model Islamic contract for the construction sector. The project was presented by Eng. Dr. Kamal Malas, chairman of the drafting committee appointed by IICRA. Scheduled for drafting in 2025 as part of IICRA’s plans to support the construction sector locally and internationally, IICRA identified gaps and challenges that can be addressed by drafting a model Islamic contract specifically tailored for the construction sector.

Cooperation and Partnership Agreements

The opening session of the conference also witnessed the signing of memoranda of understanding and partnership agreements between IICRA and numerous entities and bodies both inside and outside the country. Notable signings included agreements with the G.C.C Commercial Arbitration Center, Dar Al Shari’ah (Dubai), Minhaj Advisory, 𝗘𝗯𝗱𝗮𝗮 𝗜𝘀𝗹𝗮𝗺𝗶𝗰 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗖𝗼𝗻𝘀𝘂𝗹𝘁𝗮𝗻𝗰𝘆 𝗟𝘁𝗱 (𝗘𝗯𝗱𝗮𝗮 𝗜𝗙𝗖) (United Kingdom), and the University of London. IICRA emphasized its commitment to leveraging these partnerships and utilizing all available resources to fulfill its mission and goals in serving the Islamic economy both locally and internationally.

Important Topics and Productive Sessions

The first session of the conference, chaired by IICRA’s General Secretary, Dr. Rami Sulaiman Abudaqqa, addressed "The Most Prominent Updates on Codification of Islamic Financial Transactions in the United Arab Emirates." This session featured key speakers who played a pivotal role in the technical efforts central to the conference’s discussions. The dialogue session was attended by Counselor Hassan Al-Kilani, the Legal Advisor to the Ministry of Economy; Dr. Saad Al Bakkali, Director of the Higher Shari'ah Board at the Central Bank of the UAE; and H.E Dr. Maryam Al Suwaidi, Chief Executive Officer of the Securities and Commodities Authority (SCA).

The second session of the conference reviewed "The Reality and Challenges of Efforts to Codify Islamic Financial Transactions Regionally and Globally." It was chaired by H.E. Prof. Koutoub Moustapha Sano, Secretary General of the International Islamic Fiqh Academy (IIFA). Speakers from prominent entities participated in this session, including Dr. Yasser Hassan Al Hosani, Director of the Sharjah Center for Islamic Economics; Mr. Makhtar Abdullah, Chief Executive Officer of the Association of Shari’ah Advisors in Islamic Finance Malaysia (ASAS); and Dr. Abdul Hanan Al Issa, Legal Advisor and Independent Arbitrator in Islamic Economy.

The third session, "Methods and Requirements for Developing an International Model Law for Islamic Financial Transactions," was chaired by Ms. Samira Musayeva, representative of UNCITRAL. This session featured notable speakers such as Prof. Maged Shebaita, Professor of Transnational Law and Islamic Shari'ah, and Academic Fellow of the Oxford Centre for Islamic Studies; Mr. Suhail Zubairi, Former Senior Advisor, Islamic Economy, Department of Economy & Tourism, Government of Dubai, UAE; and Mr. Ammar Ahmed, Chief Executive Officer of Dar Al Sharia.

The fourth session of the conference addressed "Impacts of the International Model Law on Islamic Financial Transactions in Various Sectors." It was chaired by H.E. Counselor Dr. Mohammed Mahmoud Al Kamali, Director General of the Institute of Training and Judicial Studies. The session featured specialized speakers, including Counselor Mohamed Ghanem, Legal Advisor to the Central Bank of the UAE; Dr. Abdulbari Mashal, Member of the Fiqh Council of North America and Managing Partner of Raqaba, USA; and Dr. Omar Zuhair Hafiz, Chairman of the Board of Directors at the Islamic International Rating Agency, Bahrain.

Key Recommendations from the Conference

After reviewing the conference's working sessions, with the participation of more than 200 specialists and experts in Islamic economics, the conference concluded with a series of recommendations presented by the Secretary-General of the Center, Dr. Rami Sulaiman, at the end of the first day of the conference:

1. Launch of the "JAIZ" Service: IICRA introduced the "JAIZ" service, which focuses on providing Shari’ah and legal auditing of financing documents.
2. Establishment of an Islamic Contract for the Construction Sector: IICRA has initiated the drafting of a project to establish a model Islamic contract for the construction sector.
3. Codification of Islamic Financial Transactions: Initiating a project to codify the jurisprudence of Islamic financial transactions, in collaboration with several key entities, including IIFA, UNCITRAL, the Central Bank of the UAE, the Ministry of Economy, the Sharjah Institute for Islamic Economics, the University of London, and many other significant entities.
4. Avail IICRA’s Services: Encourage stakeholders to take advantage of IICRA’s services, particularly its institutional reconciliation and arbitration mechanisms for resolving contractual and agreement-related disputes.
5. Follow-Up on Conference Recommendations: Regularly monitor the implementation of the conference recommendations in collaboration with all concerned parties through communication and the organization of relevant academic events.
6. Fostering collaboration with IICRA: Advocating for collaboration with IICRA across all sectors contributing to the Islamic financial industry, with an emphasis on legal, Shari’ah, and technical aspects.

The importance of actively implementing these recommendations was emphasized through the formation of specialized working committees in cooperation with all local and international partners committed to supporting the Islamic economy. IICRA welcomes any efforts aimed at actualizing such recommendations and advancing the Islamic economy.

Workshops

On the second day of the conference, IICRA held specialized workshops focusing on Islamic economy and arbitration as mechanisms for resolving disputes. The workshops were attended by judges, legal experts, and Shari’ah specialists from several countries, including the United Arab Emirates, the Kingdom of Saudi Arabia, the Arab Republic of Egypt, the Republic of Sudan, the Hashemite Kingdom of Jordan, the Kingdom of Bahrain, Algeria, and the Sultanate of Oman.

Participants praised the training materials, trainers, and training plans provided by IICRA, highlighting the importance of such activities in enhancing their academic and practical expertise in the fields of Islamic finance and commercial and Islamic arbitration.