By Liam Patrick Nicol, Joel Väisänen, Marc Orti Carceller
Perhaps shaping the earliest tenet of international law, the pacta sunt servanda principle is the basis of contract law within Islamic business and finance regulations. In this sense agreements must be kept, conferring legal certainty to the contract parties. Therefore, this rule permits the enforceability of legal arrangements, becoming legally binding for the contractors.
The Quran, which is Islam’s first fundamental source of law, includes numerous references to what is known nowadays as the pacta sunt servanda principle. This supports the claim that the notion is not foreign to Islamic law and is compatible with its norms, particularly regarding internal and international ties between Muslims and non-Muslims.
In such a way, Muslim scholars and intellectuals recognize this precept as an essential
religious obligation 1. In accordance with the above, this conceptualization helps to clarify the importance of the responsibility of faithful and straightforward compliance in terms of pacts, contracts and commitments, governing Muslim life.
As a divine law, the Sharia, does not have to be continually updated, thus, in the context of international trade and business, Islamic law has the ability to adapt to new developments. Under the established rules of the principle of permissibility in Islamic jurisprudence, transactions or contracts are not prohibited without a clear and express provision. Thus, it can be generalized that Islamic law accommodates all types of contracts and transactions that do not lead to usury or in other ways violate the Sharia.
According to Islamic law, a contract is binding and enforceable, when there is an offer
(‘ijab); acceptance (qabul); consideration; capacity (ahliyyah); subject matter (mahal al-‘aqd) and absence of duress (ikrah).2 The purpose of the contract must also be acceptable in the context of Islamic religious beliefs. It is forbidden, or haram, for example, to trade in some things, thus, contracts for alcoholic beverages, pork or pornography are invalid and have no legal effect.
Therefore, it is evident from the above discussion that the pacta sunt servanda doctrine is intrinsically divine in the Islamic legal sphere. That is to say, it is a prescribed command of Allah and a holy procedure of the Prophet. Whereby, Allah has instructed Muslims to fulfil their words and as a result of that preserve their faith and dispense justice. If not, punishment will occur in this world and the next. Alternatively put, believers must honour their promises or face consequential action.
So, what is the objective of this principle? It acts as a means to achieve Allah’s contentment by fulfilling pledges made with him and agreements made with others. This principle is much wider than the Western idea of common good. As such, Islam wishes to attain peace and security as a result of following Allah’s commandments. Accordingly, Allah’s joy is the goal, adherence to the doctrine of pacta sunt servanda is a vehicle to acquire that goal and, peace and security is a compensation for the endeavour to achieve the goal.
1 Dawood, H.A., 2012. In Diplomatic Banquet of Treaty: Islamic Sharī ‘ah and International Laws Share the Attires
of Pacta Sunt Servanda. American Journal of Islam and Society, 29(1), pp.30-59
2 Jalil, Dr & Rahman, Muhammad, 2010. Islamic Law of Contract is Getting Momentum. International Journal of
Business and Social Science. 1. 175-192