There’s a growing market for lawyers with expertise in Islamic banking and finance, but just what place can Shariah law have in Australia?

To some Westerners, the term Shariah law conjures up some negative connotations. Some might point to the punishment of amputation that common thieves could receive in some jurisdictions, the punishment of stoning to death for married individuals who commit adultery, and floggings for unmarried men and women who engage in sexual behaviour.

However, the reality is that for many Muslims living in common-law based societies, simple everyday matters like financial transactions can be extremely difficult to navigate in a way that respects the laws of their religion.

Internationally, The Banker magazine recently found that there would be a need for 50,000 Shariah law experts to advise on Islamic banking and finance matters within the next 10 years.

Meanwhile, according to Latrobe University, there are more than 260 Islamic financial institutions operating across the globe managing assets worth more than $500 billion - that's a massive jump from the $8.5 billion the community held less than 30 years ago in 1985. And according to Celent, a research division of Oliver Wyman, Islamic banking is growing across the world at an annual rate of 10 to 15 per cent.

Shariah law in Australia

In recent months, the idea of Shariah law in Australia has gained considerable credence. Just last week, a Melbourne-based lawyer told Lawyers Weekly about his proposal for a Shariah law-based mediation centre in Victoria.

Hyder Gulam, a senior associate at Logie-Smith Lanyon Lawyers who proposed the idea, said it emerged from a paper he co-wrote with barrister Simon Lee for Muslim publication, Crescent Times.

But exploring the notion of a Shariah-based mediation centre in Australia was a hypothetical some media outlets immediately picked up on, suggesting Gulam was slating something that appeared quite unsavoury to the wider Australian population - a Shariah court in Australia.

“There were Imams from Brisbane and Sydney mosques, as well as people coming from overseas – Saudi Arabia, Pakistan, Indonesia – they all want to know what’s going on in Australia on Islamic banking and finance”

However, Gulam instead came to the conclusion that a Shariah court would only be possible in the sense of a dispute resolution service, using concepts of mediation and conciliation.

He says his paper was designed to be an open discussion on how a Shariah-based mediation service could work locally, adding that he hoped the paper would provide the groundwork to approach government for funding in order to scope out the idea further.

"We basically asked, if you were going to have a Shariah court here, hypothetically speaking, firstly, would it be possible, and if it were possible, how would it be set up?," he says.

"We got to the point where we said, 'It's probably not feasible to have a Shariah court.' There are too many obstacles - especially the lack of understanding of what Shariah law actually is."

Gulam instead came to the conclusion that a system of mediation and conciliation based on Shariah principles might be possible.

He says that while many people immediately assume that such an idea would only deal with family law, as a corporate lawyer, he believes its main objective would be to serve the corporate dispute needs of the Muslim community.

"So how do you deal with partners or directors of Muslim-based companies that are in dispute," he says.

Gulam explains that the current means for disputing parties to solve issues via Shariah principles is to go to Imams in the community. "These guys have been very good but they don't have proper mediation training and secondly, they don't have a good understanding of Australian law," he says.

While Imams could still be involved in a Shariah-law based mediation service, Gulam believes they should also receive legal and mediation training in order to better settle disputes.

The role of law firms

Meanwhile, some law firms are also realising the need to house experts in Islamic banking and finance laws. Macpherson+Kelley (M+K) recently announced that they have established one of the country's first Islamic finance funds by working with the Muslim Community Cooperative of Australia (MCCA).

Gerard Kennedy, a principal at M+K, says the move was made in a bid to address some of the difficulties the Muslim community faced in ensuring its financial needs in a Western society were compliant with Shariah law. With few options for the growing Islamic community in Australia to access financial arrangements that comply with Shariah-based principles and that also meet the legislative needs of the Australian financial system, Kennedy set about finding a solution that could help.

"The demand was big; [the Muslim community] needed to be able to access money in Australia through the Western banking system which, of course, involves interest," he says. "It took a lot of thinking by me to create an idea which would be palatable to the Islamic community as far as using Western money is concerned - and having it accepted under Shariah law."

A place for education

Identifying the increasing need for Shariah law experts in Australia and across the globe, some local universities have responded with education programs. At Latrobe University, Dr Ishaq Bhatti has this year established a Masters of Islamic Banking and Finance. He says the idea emerged from a symposium on Islamic banking and finance that the university held earlier this year, which resulted in delegate numbers that far exceeded expectations.

"We had law firms, government organisations, academics, postgraduate students and universities queuing up," he says.

"There were Imams from Brisbane and Sydney mosques, as well as people coming from overseas - Saudi Arabia, Pakistan, Indonesia - they all want to know what's going on in Australia on Islamic banking and finance."

Bhatti believes that opportunistic lawyers will attempt to gain the knowledge they need in order to fill the emerging gap in experienced professionals in Islamic banking. "At the moment, banks are hiring people from non-Islamic banking backgrounds, and they cannot produce a financial product which is ethically [sound to Muslims]," he says.

"These finance experts are trained in conventional finance areas and don't care about the risk between the buyer and the lender, the need for sharing."

Bhatii adds that by training lawyers and finance experts locally, Australia can seize on the opportunity of Islamic countries looking to Australia given the country's performance during the global financial crisis. "There are a lot of foreign delegates coming here, that's why Australia is such a great place to offer a course like this," he says.

A controversial idea

There's no doubt that the suggestion that Shariah law has a place in Australia causes controversy. However, usually the strong emotions arise as a result of coverage from media outlets that sensationalise the issue, and forums and message boards that are simply ignorant to the suggestions being made.

The reality is that already, there are certain elements of Jewish and Christian laws that already have a place in Australia. Gulam says given the Jewish and Christian examples, why can't something exist for Muslims also?

"There is no reason why the Muslim community can't have something like this as well, but [referring to his mediation service proposal] we need to obviously do an appropriate study and get some government support behind this as well," he says.

Gulam adds that the government could draw a number of wins by getting involved. "One is that it shows the community that the government is working with them, and that's a big ticket because it shows that there is some sort of legitimacy, it's not just the 'long-bearded bloke, Imams,' running this thing, but that it has some credence and credibility with the government."