Islamic Finance & Influence of Religion on Law
Mrs. (Justice) Sujata Manohar (retd.).
Former Judge, Supreme Court of India.
Movement of people across the globe in the first decade of this century coupled with globalization of trade and finance has generated a renewed interest in spiritual or moral values that influence diverse groups of people living together. Globalization has also brought with it conflicts between differing sets of such values, and raised anew the question, “How far should religion or religious norms influence the law?” It is clear that this increased interest in the fundamentals of religion & spiritual traditions has generated a tendency to incorporate religious concepts in a new field-laws governing Finance and Banking or laws regulating business activities. At the same time, the recent financial crisis has exposed corporate malpractices, and the urgent need for value driven business practices being incorporated in laws that govern business organizations and their interaction with the public. There is an obvious need for ethical business practices which can be ensured by appropriate laws. Can this need for value driven business activities be filled by incorporating religious concepts pertaining to business in national laws?
Corporate social responsibility is now a much enunciated concept. In this context, if resort to religion for shaping business practices adds any generally accepted social & economic values to business laws and practices, or prevents anti-social business behavior, its association with law is welcome. Grameen Bank is an example of evolving new value- based business systems relevant to our current needs. But often religions shaped in the past centuries take care of the then prevailing malpractices. They may, but perhaps do not always, bring with them archaic notions or practices long discarded or not capable of easy adaptation to modern times or they do not address or cure present day ills. And this has generated problems & conflicts within those legal systems that seek to combine religion and law for the current century.
Religion has been the underpinning behind law from ancient times. To the question “Why should I obey the Law?” the most irrefutable traditional answer has been, ‘Because it is so ordained by God, or because the law is laid down in my religion.” However law has travelled far beyond religion. Countries that are secular or multi- religious may, and do justify laws as reasonable or just or as protective of fundamental rights or freedoms of their people, or as creating the appropriate framework for the nation’s manifold activities; prescribing conduct which is prohibited or which is a crime, laying down punishments etc. This is a simplistic description of the role of law in a modern society. But the current civilizational values depend on the Rule of Law- of laws that are just and fair. Legal philosophers – John Austin & other legal positivists call the law a command of the sovereign power to obey behavioral codes with a penalty for transgressing them. The sanction behind the law is the command of the sovereign. In a democracy the sanction may be the collective wisdom or the will of the people. The behavioral code prescribed by law may be secular or religious, depending on those who exercise sovereign power. A state with a single official religion may prescribe a behavioral code based on that religion. Thomas Aquinas in the Middle Ages, and others have described law somewhat differently as derived from universal principles of morality rooted in religion. The problem is, there are several religions with differing codes of morality and socio-economic behaviour. It is necessary that the civil society debates and decides on the values it would like to adopt to create a fair and just socio-economic and political order.
This Conference is looking at International Law as promoting peace and justice. I put justice first. Without justice there can be no peace. I like to think of human rights as embodied in the Universal Declaration of Human Rights and further developed in international treaties such as the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights as a universal code of morality or principles that a State must adhere to in framing and enforcing laws. These human rights that must be enjoyed by people in a just society are being incorporated in more and more national constitutions in the form of a Bill of Rights. For a secular nation – one where no religion is an official or a preferred religion; or a multi – religious community, it is difficult to incorporate religious edicts of one particular religion in the law and it is undesirable to do so.
Incorporating or enforcing Islamic business or finance rules may be possible in Islamic countries. Such countries will however, have to consider whether isolating themselves in this fashion from the legal mainstream may do more harm than good. But incorporating Islamic concepts in the business laws or practices of non-Islamic or multi–religious countries creates disharmony where there was none, and complicates business dealings both locally and internationally. Globalization of trade and commerce has happened because international institutions – WTO, IMF, World Bank, etc. apply uniform codes and business law principles. Economic progress should be in the direction of unification of business and finance laws; and their simplification to facilitate global trading & finance, not making such laws more and more complicated or diverse. The improvement in the standard of living of the poor of this world depends on the economic progress that globalization can generate.
If it is possible to isolate an Islamic financial community that uses Islamic financial principles for its internal dealings, it may use Islamic doctrines for its internal transactions. The early 1970s saw the emergence of such institutions. The first International Conference on Islamic Economics in Mecca in 1976 and in London
In this context one may look at various fields where the existence of a religious law or even a religious practice has generated conflicts. The Committee on Feminism & International Law is currently examining women’s migration and has also looked at migrations in the context of cultural practices among the migrants such as a dress code for women prescribed by their “religion” which requires them to cover their face. When such women migrate to a different value- based country, a diversity in dress code of this particular type, which many look upon as symbolic of women’s unequal status, does not help. To what extent should the cultural identity of a migrant be protected and to what extent should migrants “assimilate” or accept behavioral norms or values of their adopted nation? This is currently the subject of an important on- going debate in Europe and elsewhere.
In this context I would also like to deal generally with problems of incorporating religion- based laws in the laws of a nation. I would like to briefly refer to the Indian experience in dealing with “religious” laws. India India for Muslims, Parsee Law for Parsees, Christian law as applied in India
As a result there is a tremendous sense of injustice, especially among women, who are the worst affected by religious dicta. As a lawyer 50 years ago in the early years of the Constitution I was asked questions to which I had no answers. A woman wanted a divorce on account of her husband’s cruel behaviour towards her. She had to be told that she could not do so unless she also proved adultery. (She was a Christian.) She said, ‘ My neighbor could get a divorce on account of her husband’s cruelty. Why can’t I?’ The law has now changed. A Hindu couple wanted to adopt twin girls. They could adopt only one because Hindu Law did not permit adoption of more than one child of the same sex. The law is now amended. Another woman asked, ‘How can my husband divorce me by pronouncing Talak thrice without giving any reason and without even going to Court? Others have to approach a Court of Law and give reasons for a divorce.’ Different rights for different sets of people in similar situations create a sense of injustice. It is also not easy to apply secular law to override deficiencies or injustices caused by religious laws. We had a poignant case of a Muslim woman Shah Banu who was denied maintenance beyond the Iddat period of three months on divorce. The Supreme Court of India resorted to a secular law to give her maintenance. The agitated Muslims pressurized the government to enact a law for denying such a right to a Muslim woman who was divorced.* These are illustrations of how applying such different norms to people in the same situation in the same country creates a sense of inequality and lack of fair play. Can minorities be allowed their institutions or their practices at the cost of their human rights?
At the highest, religion- based law may be workable in a closed community. Even so one needs to look ahead rather than behind if one hopes to make a contribution to progress or to do justice. World should not step backwards and make Commercial Law or Criminal Law unequal or divisive in its application to international commerce, finance or transnational crimes. Law can be enriched through incorporating within it values which are now internationally accepted. And this is slowly happening in laws relating to contracts, corporations, banking, finance etc. It is happening with private international law – especially divorce, custody of children or transnational adoptions, surrogacy, etc. Interesting transnational dialogue has taken place relating to the nature of punishment, death penalty, punishment in the form of compensatory work or community service by convicts, rights of victims, jurisdiction of national courts dealing with inter-state criminal activities, crimes by the mentally challenged, crimes by children and so on.
I hope that our generation will break fresh ground in the field of law as a result of its global perspective on legal challenges that the new century poses. In the words of Dr. Radhakrishnan, a distinguished philosopher and former Vice President of India
* Muslim Women(Protection of Rights on Divorce)Act 1986. The Supreme Court has since interpreted the relevant provision in this Act as giving a lump sum maintenance for life to the divorced woman.
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