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Abstract

This Article focuses on the case of Islamic Investment Company of the Gulf (Bahamas) Ltd. v. Symphony Gems N.V. & Others (“Symphony Gems”). Symphony Gems is the first instance where a Western court of law ruled on an Islamic financial transaction. Symphony Gems illuminates the challenges and tensions within the industrial complex of Islamic finance as it seeks to exist and thrive in a commercial reality where the regulatory framework and its associated assumptions (both theoretical as well as those of commercial practice) differ markedly from those of Islamic law and the contemporary Islamic financial industry. The resulting transactions often deviate from the classical modes or forms upon which they are supposed to be based. From a conventional finance perspective, Islamic transactions can be criticized as being anomalous, inefficiently structured and obliquely documented. Symphony Gems arose out of the applicability of an Islamic financial contract known as a murabahah. This Article will explain both the conceptual basis and the contemporary usage of the murabahah contract and, more generally, the challenges of integrating Islamic financial concepts into the Anglo-American legal system that predominates the modern global economy. Murabahah contracts, simply stated, involve the sale of an item, through a middleman, in which the ultimate buyer is aware of the middleman's costs in obtaining the item. As discussed later in this Article, murabahah contracts in contemporary practice closely approximate conventional financing mechanisms, particularly the economics underlying a similarly-profiled conventional commercial financing. This is why murabahah contracts are so popular. Therefore, it is not surprising that the first instance in which a Western court of law has examined and opined upon an Islamic financial contract involves a murabahah sale.

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