Court Ruling Challenges Foreign Currency Trading

Concerns are rising over an Abu Dhabi Federal Supreme Court ruling that foreign exchange dealings that are 'purely speculative' constitute gambling and are illegal under Islamic law.

The court issued its ruling towards the end of 1996, but the decision has only begun to generate debate within banking and government circles following the recent publication of an English translation of the ruling.

Implications for business

The ruling is unlikely to have a significant impact on the operating environment for foreign businesses in the Emirates. The government is fully committed to developing the country as the commercial and banking hub of the Gulf and will work to prevent strict interpretations of Islamic law undermining this project. Countries with far stricter interpretations of Islamic law have operated effective currency markets. Moreover, the ruling was made by the Abu Dhabi court and has no impact on banks in Dubai, where the courts have supported the legality of currency