Date of Defense
8-11-2024 10:00 AM
Location
Moot Court Room, Ground Floor, College of Law Building H2
Document Type
Dissertation Defense
Degree Name
Doctor of Philosophy in Private Law
College
College of Law
Department
Private Law
First Advisor
Prof. Emad Dahiyat
Keywords
Shari’ah Supervision Committee, Higher Shari’ah Authority, Independence, Law No. (14) of 2018, Shari’ah Governance Standard.
Abstract
This study deals with the legal organization of internal Shari’ah Supervision Committees ISSC in light of the modern federal legislation of the UAE and the standards of Shari’ah governance, after a legislative vacuum that lasted for nearly 9 years since the establishment of Dubai Islamic Bank in 1975 as the first Islamic bank according to the modern concept of banks in the UAE and the world as a whole, until the issuance of Law No. (6) of 1985 regarding Islamic banks, financial institutions and investment companies as the first legislation regulating Islamic banking in the UAE, and the study aims to demonstrate the adequacy of this organization to achieve the desired objective and procedural independence compared to the previous situation before the issuance of Decree-Law No. (14) of 2018 regarding the Central Bank and the organization of financial institutions and activities, the establishment of the Higher Shari’ah Authority HSA, and the issuance of a package of governance standards regulating Islamic banking in the UAE, by answering the main problem of this study, which revolves around the extent of the success of the legislator in the UAE in the legal organization of ISSC and its impact on the independence of these committees and enhancing the efficiency of banking work and the confidence of those dealing with Islamic financial institutions. Several questions branched out from this main problem, perhaps the most prominent of which is the basis for the 1 1 12 29 30 33 38 4 work of ISSC in Islamic financial institutions, whether it is the law or the contract, and whether the federal legislator succeeded in adopting a new organizational name for ISSC. The study concluded with several results, the most important of which is the UAE legislator’s creation of a new organizational name for the ISSC and the consequent conferring of the internal characteristic on the control system that the committee is responsible for, not the committee itself. This lies in the federal legislator’s adoption of the hierarchical system in Sharia supervision, in addition to the legislator’s desire to distinguish between the Internal ISSC associated with the financial institution, which represents the internal control system, and the HSA in the Central Bank of the UAE, which represents the central external control system, and not to confuse them. Accordingly, the UAE legislator’s adoption in Federal Decree-Law No. (14) of 2018 of the new organizational name and the consequent conferring of the internal characteristic on the nature of the supervision carried out by the ISSC is justified. The appointment of members of the ISSC through the nomination of the institution’s board of directors of the members and their appointment by the general assembly makes the members’ independence relative, and does not extend from requiring the approval of the Higher Shari’ah Authority, as it is accepted that financial institutions are primarily profit-oriented institutions, so it is not possible to rule out the existence of a conflict of interest between the institution’s board of directors and one of the committee members, as the board of directors may seek The institution selects members who are known for not being strict when issuing fatwas, which may lead to the exclusion of highly qualified members and depriving banking of their efforts, and focusing on specific members in most financial institutions. The study also concluded with several recommendations, perhaps the most prominent of which is opening the door to appeal against the decisions of the HSA issued in disputes over the legitimacy of a matter, which may arise between the members of the committee 5 themselves, or between the committee and the Bord of Directors of the financial institution, so as not to miss the opportunity for the disputing parties to reconsider the matter again by the HSA, especially since the work of the HSA is a human and discretionary work that is subject to error, and may have serious consequences on financial institutions in avoiding profits, and explicitly stating the prohibition of the General Assembly authorizing the Board of Directors of the financial institution to appoint a member of the ISSC in the Shari’ah governance standard, whether in the new appointment of the member or the renewal of the appointment or in the event of a vacancy in the position of a committee member that does not result in affecting the legal quorum, similar to the prohibition of the General Assembly in public joint-stock companies authorizing the Board of Directors to appoint the auditor in accordance with Article (245) of Decree-Law No. (32) of 2021 regarding commercial companies, due to the unification of the reason represented in providing sufficient guarantees for the independence of the auditor and the member of the ISSC due to the nature of the work they do, as the ISSC is similar to The auditor in the attestation function by submitting the annual Shari’ah report to the General Assembly, as the authority to appoint members of the ISSC is one of the most important components of the independence of these committees from the Islamic financial institutions associated with them. If the jurisdiction to appoint members of the ISSC is established for the Board of Directors of the financial institution, it is absolutely impossible to talk about the independence of the members of these committees from the financial institution that has the authority to appoint them, and this does not extend to requiring the approval of the HSA of the Central Bank of the UAE.
Included in
THE LEGAL REGULATION OF THE INTERNAL OVERSIGHT COMMITTEES IN ISLAMIC FINANCIAL INSTITUTIONS
Moot Court Room, Ground Floor, College of Law Building H2
This study deals with the legal organization of internal Shari’ah Supervision Committees ISSC in light of the modern federal legislation of the UAE and the standards of Shari’ah governance, after a legislative vacuum that lasted for nearly 9 years since the establishment of Dubai Islamic Bank in 1975 as the first Islamic bank according to the modern concept of banks in the UAE and the world as a whole, until the issuance of Law No. (6) of 1985 regarding Islamic banks, financial institutions and investment companies as the first legislation regulating Islamic banking in the UAE, and the study aims to demonstrate the adequacy of this organization to achieve the desired objective and procedural independence compared to the previous situation before the issuance of Decree-Law No. (14) of 2018 regarding the Central Bank and the organization of financial institutions and activities, the establishment of the Higher Shari’ah Authority HSA, and the issuance of a package of governance standards regulating Islamic banking in the UAE, by answering the main problem of this study, which revolves around the extent of the success of the legislator in the UAE in the legal organization of ISSC and its impact on the independence of these committees and enhancing the efficiency of banking work and the confidence of those dealing with Islamic financial institutions. Several questions branched out from this main problem, perhaps the most prominent of which is the basis for the 1 1 12 29 30 33 38 4 work of ISSC in Islamic financial institutions, whether it is the law or the contract, and whether the federal legislator succeeded in adopting a new organizational name for ISSC. The study concluded with several results, the most important of which is the UAE legislator’s creation of a new organizational name for the ISSC and the consequent conferring of the internal characteristic on the control system that the committee is responsible for, not the committee itself. This lies in the federal legislator’s adoption of the hierarchical system in Sharia supervision, in addition to the legislator’s desire to distinguish between the Internal ISSC associated with the financial institution, which represents the internal control system, and the HSA in the Central Bank of the UAE, which represents the central external control system, and not to confuse them. Accordingly, the UAE legislator’s adoption in Federal Decree-Law No. (14) of 2018 of the new organizational name and the consequent conferring of the internal characteristic on the nature of the supervision carried out by the ISSC is justified. The appointment of members of the ISSC through the nomination of the institution’s board of directors of the members and their appointment by the general assembly makes the members’ independence relative, and does not extend from requiring the approval of the Higher Shari’ah Authority, as it is accepted that financial institutions are primarily profit-oriented institutions, so it is not possible to rule out the existence of a conflict of interest between the institution’s board of directors and one of the committee members, as the board of directors may seek The institution selects members who are known for not being strict when issuing fatwas, which may lead to the exclusion of highly qualified members and depriving banking of their efforts, and focusing on specific members in most financial institutions. The study also concluded with several recommendations, perhaps the most prominent of which is opening the door to appeal against the decisions of the HSA issued in disputes over the legitimacy of a matter, which may arise between the members of the committee 5 themselves, or between the committee and the Bord of Directors of the financial institution, so as not to miss the opportunity for the disputing parties to reconsider the matter again by the HSA, especially since the work of the HSA is a human and discretionary work that is subject to error, and may have serious consequences on financial institutions in avoiding profits, and explicitly stating the prohibition of the General Assembly authorizing the Board of Directors of the financial institution to appoint a member of the ISSC in the Shari’ah governance standard, whether in the new appointment of the member or the renewal of the appointment or in the event of a vacancy in the position of a committee member that does not result in affecting the legal quorum, similar to the prohibition of the General Assembly in public joint-stock companies authorizing the Board of Directors to appoint the auditor in accordance with Article (245) of Decree-Law No. (32) of 2021 regarding commercial companies, due to the unification of the reason represented in providing sufficient guarantees for the independence of the auditor and the member of the ISSC due to the nature of the work they do, as the ISSC is similar to The auditor in the attestation function by submitting the annual Shari’ah report to the General Assembly, as the authority to appoint members of the ISSC is one of the most important components of the independence of these committees from the Islamic financial institutions associated with them. If the jurisdiction to appoint members of the ISSC is established for the Board of Directors of the financial institution, it is absolutely impossible to talk about the independence of the members of these committees from the financial institution that has the authority to appoint them, and this does not extend to requiring the approval of the HSA of the Central Bank of the UAE.