Sharia [i.e. Islamic law] is not a book of statutes or judicial

precedent imposed by a government, and it’s not a set of

regulations adjudicated in court. Rather, it is a body of

[Qurʾān]-based guidance that points Muslims toward living

an Islamic life. It doesn’t come from the state, and it doesn’t

even come in one book or a single collection of rules. Sharia

is divine and philosophical.

“”-Asifa Quraishi-Landes, Senior Scholar at SHARIAsource, “Five Myths

about Sharia,” Washington Post, June 24, 2016.

We use real cases to show how U.S. Courts consider Islamic law. Like

any other legal framework, Islamic law defines and dignifies the private rites and

contracts that people of faith and ordinary citizens otherwise hold dear, including

matters of marriage and commerce. What do American judges do

when adjudicating a case in which at least one seeks to navigate these private

practices and their protections through Islamic law, in jurisdictions of U.S. law?

FACTS #1:

Plaintiff Characters:Vinewood Capital

Other Plaintiff Characters:

Wendel Pardue

Laird Fairchild

James Conrad

Defendant Characters:Dar al-Maal al-Islami Trust

Ziad Rwashdeh

Khalid Abdulla-Janahi

Others:

August Investment

Alpha Investment

The “Trio”

Contracts in Question:

“The Settlement Agreement and Release” (“The Settlement Agreement”)

“Special Purpose Mudaraba Agreement”

“Overland Defendants”

*“A mudaraba agreement is an Islamic financing instrument extending credit for an annual fee rather than compounding interest. Under Islamic law,

loaning money for ribā (interest) is prohibited.”

FACTS #2:

May 2, 2006: “Vinewood filed this suit against Defendants alleging claims for

breach of contract, promissory estoppel, fraud and misrepresentation. The

main text of Vinewood’s first amended complaint is devoid of any factual

allegations. It simply alleges the elements for each cause of action, and

makes conclusory allegations….”

FACTS #3:

April 2004: Pardue and Fairchild file an action in Texas state court (“the Texas litigation”) against their

former employer, Overland Realty Capital, including…Rawashdeh” for wrongful termination. “Overland

defendants file counterclaims.”

June 2004: Conrad, a former Overland employee…meets with defendants to negotiate and settle the Texas

litigation. “The ‘Trio’ create[s] a new real-estate investment company called Vinewood” as part of the

negotiations. Vinewood would “source real estate investments for the DMI Trust entities” and “be the

exclusive company...for real-estate ventures in the United States.”

October 7, 2004: The Settlement Agreement is signed by the Trio and DMI. Both parties agree to resolve all

disputes as part of the Texas litigation, and agree that “dispute resolution...shall be governed by the State of

New York...settled by arbitration to be held in the Commonwealth of the Bahamas.”

“Nowhere in the agreement does it mention the creation of Vinewood...”

FACTS #4:

October 14, 2004: “Vinewood and August Investment create the “Special Purpose Mudaraba

Agreement.” Under this document, August Investment agrees to loan Vinewood up to 2.5 million dollars.

Dispute Resolution: Just like the Settlement Agreement, any disputes under the mudaraba agreement will

be settled according to the laws of New York and resolved through arbitration in the Bahamas.

“Nowhere in the mudaraba agreement does it refer to the Settlement Agreement nor does it state that

Vinewood would be the exclusive company used by the DMI Trust entities....”

August Investment subsequently transferred its interest in the mudaraba agreement, with Vinewood’s

consent, to Alpha Investment.

*“A mudaraba agreement is an Islamic financing instrument extending credit for an annual fee rather than compounding interest. Under Islamic law,

loaning money for ribā (interest) is prohibited.”

FACTS #5:

May 2, 2006: “Vinewood filed this suit against Defendants…”

Vinewood’s Fairchild claimed in the suit that the defendants, Rawashdeh and Abdulla-Janahi had

agreed to place Vinewood in charge of providing and managing certain real-estate ventures managed

by DMI Trust. Vinewood “began expending time” and other resources to come up with an investment

summary and business plan, recruit employees, and prepare budgets.

Vinewood’s Conrad claimed in the suit that Abdullah-Janahi of DMI Trust introduced “individuals

from Bahrain and Kuwait who were doing business with DMI Trust,” implying that DMI Trust still

intended to do business with Vinewood. Vinewood “did a substantial amount of work” as a result,

“only to have Defendants never follow through with their promises to invest.”

Has the mudaraba agreement been violated? Is Vinewood’s suit

subject to the arbitration agreement?

FACTS #6:

Plaintiff Characters:

Vinewood Capital

Wendel Pardue

Laird Fairchild

James Conrad

Defendant Characters:Dar al-Maal al-Islami Trust

Ziad Rwashdeh

Khalid Abdulla-Janahi

August Investment

Alpha Investment

Overview:

Vinewood’s Arguments:

1) no valid arbitration agreement

2)

Settlement and Mudaraba

Agreements

Vinewood Defendants.”

3) oral agreement

separate apart those

agreements

DMI Trust, et al.’s Arguments:

1) Vinewood signed the mudaraba

agreement mandatory

arbitration clause

2) Vinewood’s principles signed

the Settlement Agreement

3) valid and

enforceable agreement

Vinewood

Vinewood’s do not fall agreements.

Moreover

Vinewood’s claims do not

indicate violation either agreement.

Vinewood

Alpha Investment mudaraba

Vinewood

unrelated to the mudaraba

mudaraba agreement same standard other

agreements Settlement Agreement

interpreted

New York law arbitrated Bahamas

Defendants’ claims mudaraba

agreement Court same standards Texas

law as other claims

Located at Harvard Law School, SHARIAsource is a team of

advisors, scholars, and editors dedicated to providing content and context

on Islamic law in a collective mission to organize the world’s information on Islamic

law in a way that is accessible and useful.