Form Over Substance – Will the Secular Courts Force the Issue?
Taking the general agreement, that the fundamental principles underpinning Islamic finance offer the potential for a different and perhaps sounder way for undertaking financial transactions, into consideration, and afterwards analyzing common Islamic finance products in detail, it can be concluded that Islamic finance will not always be less risky when compared with conventional finance products.
Mudaraba and musharaka are the best form of Islamic finance. Taken in their purest form, they represent a different approach to conventional financing, its return solely depending on the profitability of that investment.
Many transaction structures and agreements were approved with the idea that they will start up the industry, although they would need improvements.
But sometimes these imporvements never took place or the focus was on the form of the documents rather than analysing the real intent underpinning the Islamic finance transaction and the intention of the parties.
All this could mean that the secular courts need to revisit these issues with more urgency.