A new Islamic legal theory? Islamic commercial jurisprudence within contemporary Islamic financial institutions

What is it about?

This paper explores the emergence of a new Islamic legal theory as practiced by contemporary Islamic financial institutions. Focusing on AAOIFI Sharīʿah Standard No. (29), which outlines the stipulations and ethics of issuing fatwas within institutional settings, the study adopts a qualitative approach using a holistic case study design. The analysis identifies a three-phase framework shaping this new legal theory: reliance on the core sources of Islamic law in chronological order, reinterpretation of classical tertiary sources without chronological priority, and the application of modern legal tools rooted in Islamic jurisprudence. The research is limited to the perspectives found within the official AAOIFI standard but offers what may be one of the earliest efforts to formally define this evolving legal approach within the context of Islamic finance.

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