Arbitration — practice questions

Correct answer: B. Clauses 5/1 and 5/2: Arbitration is binding on the parties where it is stipulated in the contract or where they agree on it and pledge to observe its verdict. It is not binding on an arbitrator who is not entitled to remuneration, who may withdraw after accepting the task. If the arbitrator is paid, arbitration becomes binding on him, and if he withdraws after acceptance he bears any actual harm resulting from his act (see Shari’ah Standard No. (34) on Hiring of Persons).

Correct answer: D. Clauses 7/1 to 7/3: Arbitration is permissible in whatever a party is entitled to relinquish his right in. It is impermissible in matters constituting a right of Allah, such as Hudud, and in cases entailing proving or disproving a verdict concerning a third party. A verdict issued on an issue that may not be resolved through arbitration is null and void. Disputes over Mudarabah profit, Salam deliveries or rent are private financial rights that may be arbitrated.

Correct answer: A. Clauses 8/1 and 8/2: An arbitrator must have full eligibility for the task and should in principle be a Muslim; however, a non-Muslim arbitrator may be appointed when acute need so requires, in order to arrive at a Shari’ah-accepted verdict, subject to Clause 11/1, which requires a valid arbitration decision to conform to the rules of Shari’ah. Clause 8/3 adds that one or more arbitrators may be appointed, preferably an odd number, or with a chairman holding a casting vote.