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United Kingdom
United Kingdom
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Fatwa meaning
Published by a LexisNexis Banking & Finance expert
What does Fatwa mean?
In legal practice, a fatwa is a written opinion by qualified Islamic scholars on whether a product or transaction complies with shari’ah principles. In UK and Irish Islamic finance and capital markets, it is typically issued by the Shari’ah Supervisory board of the Islamic financial institution or arranger and is often a condition precedent to financial close or first utilisation. It is also called a Shari’ah pronouncement or Shari’ah compliance certificate and is common for structures such as murabaha, ijara, tawarruq and sukuk.
A fatwa is not defined in UK or Irish legislation or case law; it is a descriptive term from Islamic jurisprudence. Under English, Scots, Northern Irish and Irish law, a fatwa is persuasive only and does not itself determine enforceability. Any binding effect arises only if the parties’ contracts incorporate it or make compliance a representation, warranty or undertaking.
In practice, parties may obtain multiple fatwas (for example, issuer and arranger) and align with recognised standards (such as AAOIFI). A fatwa usually summarises the structure, key documents and the scholars’ reasoning, and often includes reliance limits and update requirements if the structure changes. Usage and legal treatment are broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland.
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View the related Practice Notes about Fatwa
PRACTICE NOTES
UK Banking, Finance, Capital Markets, Derivatives and Insolvency Law Glossary including Islamic finance
Banking & Finance glossary A Auditing and Accounting Organisation for Islamic Financial Institutions (AAOIFI) The foremost Islamic, international, autonomous, independent, not-for-profit corporate body that develops and issues accounting, auditing, governance, ethics and Shari’ah benchmarks and standards for Islamic Financial Institutions (IFIs) and the wider Islamic finance sector. Founded in Bahrain in 1991, it is backed by a number of institutional members across more than 45 countries, including central banks and regulatory authorities, financial institutions, accounting and auditing practices, and legal firms. Its pronouncements are currently applied by leading Islamic financial institutions across the world and have advanced a progressive and gradual harmonisation of global Islamic finance practice. It also delivers professional qualification programmes—notably Certified Islamic Professional Accountant (CIPA), Certified Shari’ah Adviser and Auditor (CSAA), and the corporate compliance programme—in efforts to strengthen the industry’s human capital and governance frameworks. For further details, see Practice Note: Key participants in the Islamic finance industry—Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Acceleration Acceleration is the formal action...
22 May
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