Question 1 20 Marks Outline and discuss in general terms, the main current issues which arise concerning the choice of (non-state) Islamic law to govern international finance contracts and the likely...

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Question 1

20 Marks

Outline and discuss in general terms, the main current issues which arise concerning the choice of (non-state) Islamic law to govern international finance contracts and the likely feasibility of ‘combined law’ contracts e.g. of Sharia law and Australian law having regard to the UK case
Shamil Bank of Bahrain EC vs Beximco Pharmaceuticals Ltd & Ors
[2004] EWCA Civ 19 (http://www.bailii.org/ew/cases/EWCA/Civ/2004/19.html).

Question 1

20 Marks

Visit the website of the Republic of the Philippines Court of Appeals, Manila, Third Division, download the 13 March 2012 (item 543) judgment in
Takenaka Corporation & Asahikosan Corporation vs. Philippine International Air Terminals Company Inc., (http://ca.judiciary.gov.ph/cardis/CV96502.pdf and together with any other material you may care to consult, answer the following questions.

  1. Provide a short account of the key, material facts which gave rise to this case together with the main parties and the progression of the dispute through the arbitration/court hierarchy in England and the Philippines. (5 marks)

  2. Outline the grounds which defendant-appellant PIATCO relied upon in asserting that the December 2005 foreign judgment (including orders for payment) of the English High Court of Justice wasn’t valid and shouldn’t be recognised and enforced.
    (5 marks)

  3. How did Associate Justice Rebecca De Guia-Salvador (Justice DGS) deal with PIATCO’s various arguments against enforcement of the London orders, and what was her final decision and order?
    (10 marks)


Question 3

20 Marks

A leading Queensland manufacturer of sugar cane harvesting and processing equipment, CuttySark Ltd (CSL), wishes to expand into the large, somewhat under-mechanised Philippine sugar cane industry. It plans to sell its product range direct to about 20 medium sized Philippine equipment importers and 10 provincial sugar cane mills, taking advantage of a well-funded Philippine Government initiated five year sugar industry modernisation program. The program (i) exempts sugar industry related plant and equipment imports from all taxes and charges and (ii) grants importers and cane mills zero interest five year development loans in order to finance that modernisation program which relies heavily upon imports. CuttySark seeks your advice as an international business adviser, on the following critical legal aspects of its proposed standardised contracts for the sale and purchase of its 30 item product range varying in value from US$10,000 to $1 million (all amounts in US dollars hereafter).

  1. The choice of law – Australian, Philippine or some third country.
    (5 marks)

  2. Inclusion of a compulsory arbitration clause.
    (5 marks)

  3. The comparative merits of arbitration in Australia, the Philippines or elsewhere and choice of the arbitrator or arbitral body.
    (5 marks)

  4. The comparative ease of enforcing Australian and Philippine “foreign court” judgments or arbitrations award respectively in the other country. And briefly appraise the likely viability of CuttySark’s proposed Philippine expansion if the Philippine Government insisted that as a condition of loan support, all plant and equipment import contracts be made subject to Philippine law and arbitration.
    (5 marks)

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Answered Same DayDec 20, 2021

Answer To: Question 1 20 Marks Outline and discuss in general terms, the main current issues which arise...

Robert answered on Dec 20 2021
122 Votes
RUNNING HEAD: INTERNATIONAL FINANCE LAWS
International Finance Laws 2
Running Head: INTERNATIONAL FINANCE LAWS
International Finance Laws
Name
Institution
Question 1: Issues arising from the choice of (non-state) Islamic law to govern the international finance agreement and the feasibility of ‘combined law” contracts
The past few years have seen an irrefutable increase in the utility of international finance and trade instruments to be administered through Islamic doctrines. Consequently, there have emerged heated discussions over the understanding and use of the financial instruments. There is likelihood of conflicting law issues when there is an increased demand for Shariah-acquiescent instruments within a common law or any other non-Shariah legal framework. Major concerns arise where a choice of Shariah law is integrated into agreement terms (Colon, 2011, p.413). The terms used in the contract to explain different types of Islamic-compliant businesses may lead to ambiguity.
The language used in contract transactions shapes the parties’ performance and expectations. In addition, the judges interpreting the financial transactions governed by Shariah law may have to rise above constitutionally inflicted boundaries on the capability to deduce laws developed from religious foundations. Therefore, Shariah law has continued to be interpreted differently in different cultures lacking a proper mode of standardization. There has also been reluctance to accept the choice of Shariah law despite its potential benefit to investors and increased number of Muslims in common and civil law countries (Tabari, 2010). In most countries, there are no adequate legal and political frameworks to accommodate this choice. As a result, the question of the applicability of party autonomy in international finance transactions has also emerged.
The Rome convention requires that a contract be governed by one legal system, which is the national system. This justified the ruling of the judges in the case of Shamil Bank of Bahrain EC vs. Beximco Pharmaceuticals Ltd & Ors [2004] EWCA Civ 19. That contract should have been governed by the English law as the national law because a contract cannot be governed by two different legal systems and that Shariah was in that case a set-off religious principles (British and Irish Legal Information System, 2004). There is an indisposition on the part of the courts and legal systems to adopt a choice law that is different from the national legal system.
The Feasibility of ‘Combined Law” Contracts
Rome convention regulations also embrace the “doctrine of incorporation” and thus, Shariah principles could be adopted on contractual terms (Tabari, 2010). The outcome and the rule of the Shamil case is discouraging for parties that may want to incorporate laws. Combined law will involve Shariah principles and the national legal system. The acknowledgement of these two sets of law in an agreement ensures that the courts and parties recognize the provisions to and to what extend each principle is applicable.
Combined law will be feasible if the Islamic finance is liberal and some aspects are permissible. At times, the Shariah principle seems to be a direct opposite of civil or common law and therefore the incorporation will require permissiveness and clearly laid provisions depending on the nature of the national legal system (Colon, 2011, p. 433). In international finance, there has emerged the term “Shariah risk”. This is the probability that one party will not honour their obligations and declare the Islamic law invalid. Combined law is necessary with increased assets and instruments transacting through the Shariah, however, there must be institutional, cultural and legal systems that are well placed to ensure this incorporation.
Question 2: Takenaka Corporation & Asahikosan Corporation vs. Philippine International Air Terminals Company Inc
Material Facts of the Case
The Government of the Republic of Philippines (GRP) granted Philippine International Air Terminals...
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