Jurisdiction(s):
United Kingdom

Key definition

Shari’ah definition

What does Shari’ah mean? Used in UK and Irish practice to describe Islamic religious principles referenced in contracts (especially Islamic finance) or personal matters, rather than a source of state law. Shari’ah (also Sharia; literally, “the clear path to water”) is not defined in UK or Irish legislation or case law and is treated by the courts as religious doctrine. Across England & Wales, Scotland, Northern Ireland and Ireland, conflict of laws rules do not permit Shari’ah, by itself, to be the governing law of a contract (see Beximco v Shamil Bank [2004] EWCA Civ 19). Parties may, however, incorporate Shari’ah‑compliance undertakings or...

Shari’ah Principles Governing Islamic Finance: Money’s Non‑Intrinsic Value, Risk‑Sharing, Asset‑Based Structures, and Prohibitions on Riba, Gharar, Maisir, Unjust Enrichment and Haram Industries

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Practice notes

Shari’ah compliant, or Islamic, finance is a method of funding grounded in the principles and prohibitions of Shari’ah (Islamic law). These rules stem from a range of sources, with further detail provided in Practice Note: Sources of Shari'ah. That Practice Note sets out the fundamental principles and prohibitions that underpin the structuring of Islamic finance transactions, and explains how arrangements are shaped to reflect them. In practice, the question of whether a given Islamic finance transaction satisfies these standards—and so can be treated as Shari’ah compliant—rests with the Shari’ah board of the institution offering or Arranging the finance and, less commonly, with the Shari’ah board of a corporate making use of the facility. As a general rule, the default assumption is that a transaction presented as Shari’ah compliant or Islamic will be acceptable unless it breaches core principles or passes important thresholds. For additional information, see Practice Note: Key participants in the Islamic finance industry.

Money—no intrinsic value

Under Shari’ah, money is regarded purely as a yardstick of value and a medium of exchange; it holds no inherent worth in itself...

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Web page updated on 21/05/2026

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