Curriculum Guide · Courses

Professor John Vogel

LL.M Course 949 (cross-listed) | 2 credit hours

This course will explore contemporary Islamic finance from a transactional vantage and with particular emphasis on structuring financial transactions and products. Islamic finance will be examined both as an application of Islamic religious law and ethics (shari’ah) and as an effort to create and operate a shari’ah-compliant economic system without interest payments and receipts and based upon a compliant risk-reward paradigm that maintains expected returns for the transactional parties. We will examine some of the core principles of the shari’ah and the methodology by which shari’ah compliance is determined (Shari’ah Supervisory Boards and the issuance of rulings (fatawa)). As a base, we will examine certain principles and precepts of shari’ah and the classical contractual and legal forms that have been approved as being shari’ah-compliant. Our paradigm will be the study of recent Islamic finance transactions in different financial categories and markets. As examples, we will consider, among other structures: (a) lease (ijara) structures in real estate acquisition financings, construction and development financings and private equity transactions; (b) commissioned construction and manufacture concepts (istisna’a) in real estate construction and development transactions and project financings; (c) murabaha (sale at markup) arrangements pertaining to trade finance and working capital facilities; (d) partnership (musharaqah) arrangements in acquisition financings, construction and development financings and project financing as well as more conventional joint venture arrangements; (e) arboon (sale with downpayment) structures as they pertain to hedge fund activities, particularly short sales and options trading; (f) rahn (pledge and mortgage) and adl (trusted person) concepts as they apply to project financings and collateral security structures; (g) Islamic bond and securitization (sukuk) structures used in project finance, municipal finance, corporate finance and the capital markets; and (h) international investment fund structures used for Islamic finance, including associated tax considerations. In light of market realities, we will also consider conventional Western equivalents to certain shari’ah-compliant financial structures.