Evangelicals say no to Islamic finance… in Korea

The Korean Law Blog reports that a group of evangelical Protestants in South Korea have apparently killed a bill which would recognize tax deductions and other legal benefits for Islamic financial structures.

This sort of silliness isn’t unique to Korea, of course. Followers of the English-language media have undoubtedly seen tons of uproar over the Sharia courts in Britain which can make legally binding judgments under English law. The catch is, of course, that the jurisdiction of these courts is consensual, just like commercial arbitrators or The People’s Court — you are only bound by Sharia rulings if you voluntarily agree to go to Sharia court. So for the non-Muslims in Britain, you’d think it would be a non-issue.

The Korean backlash is just as ridiculous, if not moreso. Not only would the proposed law not hurt anyone, but failing to pass it seems to effectively hurt Korean companies, especially financial institutions, by depriving them of potential business in Islamic countries and from Islamic investors.

(Note that The Korean Law Blog is not the same as the late, great Korea Law Blog run by Marmot contributor Brendon Carr. But for all you comparative law geeks in the audience, it’s a reasonably informative substitute.)

7 thoughts on “Evangelicals say no to Islamic finance… in Korea”

  1. Well maybe those Islamic countries should admit Christians in their countries before they ask for tax deductions in ours.

  2. Awesome, Korea finally loses some competitive edge to Japan on something, after years of Japan Inc. complaining how the Koreans are outdoing them.

    To clarify, “a bill which would recognize tax deductions and other legal benefits for Islamic financial structures” is probably the same thing that exists in the UK, France, Singapore, and most recently, Japan — not “beneifts” or favoring of Islamic finance, but as the structuring of Islamic finance different, the tax systems in many countries have been alligned so that there is no tax incentive one way or the other to use conventional or Islamic finance.

    Islamic finance is going to be critically important in the coming years as all the oil money goes to the Middle East and lots of it will be sent overseas in the form of Islamic finance.

  3. The problem with Sharia courts is that they make legally binding judgements which are not under English law. They make judgments under Sharia law, a completely separate system, and English police and courts are then obligated to recognize and enforce those judgements.

    Parties to the judgement may be voluntary parties, like the parties to the judgement of commercial arbitration or The People’s Court, but the similarity ends there. Any case of commercial or private arbitration I have heard of has been conducted more or less in accordance with the laws of the locale it was held in. You don’t arbitrate a case in the US using Chinese law and precedent, in other words. And while The People’s Court may have been a TV show, Judge Wapner was an actual retired US judge whose decisions were at the very least in the spirit of US laws (if perhaps not following the letter).

    The issue is not that Sharia law in England will be involuntarily enforced on non-Muslims, it is that British police and courts are forced to recognize and enforce non-English Law decisions on British residents and/or citizens. Whether the parties to those decisions submit to the Sharia courts voluntarily is irrelevant – although given what has been demonstrated time and time again in Muslim societies where Sharia law is The Law, exactly how “voluntary” all the parties’ participation is may be suspect. There can be but one Law of the Land, for everyone. What has happened in England would have been called extraterritoriality in the old days. That is why it is unacceptable – if people want to live under Sharia law and have that law enforced by the police and courts then I suppose they are entitled to that desire. But they can move to a Muslim nation, then, where they will find a society that shares their values.

    Now, having said that, if Muslims in Britain or anywhere else wanted to have their own private arbitration methods, and voluntarily submitted to the decision of those arbitration committees, in so far as the decisions do not violate local laws they should be allowed. However the decisions should not be backed up with the force of the local police and courts if they were not arrived at in clear accordance with the laws of the country or municipality the decision was handed down in.

  4. The English have a lot more to be worried about than the Koreans. Islamic finance is not subject to Sharia courts — it’s generally subject to English law, and English courts or international arbitration process the disputes. There are boards of Sharia scholars who review the structure and grant approval and that’s the extent of Sharia review.

  5. LB, there’s never been any suggestion that shariah law would supercede existing statutes. British law does allow for many forms of alternative dispute resolution. If two sides are willing to submit themselves to binding arbitration then a civil dispute can be handled outside the ordinary court system.

    It strikes me that the issue in problem cases in nothing to do with Britain “allowing” sharia courts to dispense rough justice and all to do with the lack of willingness of individuals to use the legal routes available to them to make complaints about violence or coercion. That’s a problem which you’ll find in a number of closed communities from Orthodox Jews to Roma Gypsies and even some of the rougher working class estates.

  6. Any case of commercial or private arbitration I have heard of has been conducted more or less in accordance with the laws of the locale it was held in. You don’t arbitrate a case in the US using Chinese law and precedent, in other words.

    That isn’t necessarily true. In contracts, the parties can generally choose any governing law and dispute resolution venue they want (subject to consumer protections and certain other limitations). Two people could theoretically enter a contract “governed by Chinese law” and agree to dispute resolution in New York courts. Practically, this would be pretty stupid because nobody expects a New York court to apply Chinese law in a consistent or predictable manner. But it can make sense in arbitration situations where you know the arbitrator will be most familiar with the law in question.

  7. “Awesome, Korea finally loses some competitive edge to Japan on something, after years of Japan Inc. complaining how the Koreans are outdoing them.”

    Why do you find this development “awesome?” That’s an odd word to use here. Was your life somehow better when Korea was poor and down in the dumps and completely dwarfed by Japan in every way?

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