Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has held a public hearing in Riyadh on 13 February 2016 in cooperation with the Saudi Justice Society (Qadha’), which also played host to the session. The public hearing focused on two new exposure drafts (Shari’ah Standards): “Competitions and Prizes” and “Liability of Investment Manager as Agent (Mudarib and Investment Agent and Partner).
Attendees included a number of prominent Shari’ah scholars and justices, Shari’ah Supervisory Board members of Islamic banks, in addition to a number of economists, bankers, practitioners, lawyers and academics. The session, which was exhaustive and spanned several hours, was chaired and moderated by Honorable Shaikh Dr. Abdulla al Mutlaq (advisor to the Saudi Royal Court, member of Council of Senior Scholars, and member of AAOIFI Shari’ah Board) and Honorable Shaikh Dr. Abdulla Bin Mansour al Ghufaili, who stated: “cooperation between the Saudi Justice Society and AAOIFI draws on the great importance of AAOIFI Standards which tackle and address practical complexities and convolutions and all relevant issues faced by Islamic financial institutions, facilitating the process of litigation and dispensing of justice in related matters. This would be possible by scholarly elaboration over pertaining cases and issues in order to come up with Shari’ah-based explications, and that is what AAOIFI is up to, and in relation to the society’s objectives.”
Shari’ah Standards has become the most prominent compilation of contemporary Fiqh reasoning in the area of Fiqh al-Mua’amalt (Jurisprudence of Financial Transactions) around the globe. The standards, a total of 54 so far, cover a large array of Islamic financial contracts and products, including those pertaining to banking, Islamic insurance, investment banking, capital markets, financing, and so on.
The success of these standards can be attributed to a set of factors, primarily the meticulous scholarly methodology (the due process) that AAOIFI follows in its efforts to develop and issue them. The standards development process is carried out through more than ten stages, including a very important stage: presentation of an exposure draft to one public hearing or more to discuss it with scholars and practitioners from the Islamic finance industry. This process aims to make sure the prospective standard is exhaustive and comprehensive and covers all practical aspects and unprecedented cases and occurrences faced by the industry. Thereafter, the remarks raised and collected at the public hearings will be discussed by the Shari’ah Board, and any necessary amendments- as deemed appropriate by the Board, will be made. The Riyadh public hearing was particularly extensive and in-depth.”
AAOIFI is currently set to issue a number of new Shari’ah standards and to review a number of existing ones. This is expected to have a substantial, positive impact on the support and development of the Islamic finance industry. It will also assist in the process of disambiguation of controversial fiqh-related issues.