National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
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dedicated regulation (other than the regulation governing conventional banks) was issued to
govern Islamic banks.
CMA was established by Royal Decree 80/98 issued on 9 November 1998 and commenced its
duties on 9 January 1999. CMA has both regulatory and legislative roles (CMA 2016a). In its
latter role, CMA prepared a draft law for takaful and its application mechanism in the country
which was approved on 6th March 2016 (CMA 2016b). The draft of Takaful Law “complies with
Takaful Standards issued by Accounting & Auditing Organization for Islamic Financial
Institutions (AAOIFI)” and is in line with Bahrain and Qatar practices (TR et al 2015: 114). The
Islamic Capital Market was added in the Capital Market Law by its amendment in Royal Decree
59/2014 issued on 10th November 2014. The amended Capital Market Law authorizes CMA to
issue sukuk regulations. Currently, CMA has submitted sukuk regulations for review and
approval.
Tax regimes and impact on Islamic Finance
Article 125 the Banking Law 2012 exempts Islamic banks from the imposition of fees levied on
the transactions conducted on lands and movable property. Specifically the article exempts
Islamic bank charges imposed by transactions involving ownership and leasing of movables
and real estate overriding a number of other laws such as land and tax laws related to land
transactions (McMillen 2013). This is in consideration of the unique structure of Islamic
transactions and to ensure a level playing field. Furthermore, amendments are now in process
on Income Tax Law 2008 to consider the unique features of sukuk.
Dispute Settlement/Conflict Resolution Framework and Institutions
The Commercial Court in Oman has jurisdiction over commercial disputes that include banking
and finance. Other than settling disputes using Shariah, the courts apply Omani laws
established by Royal Decrees (OSEC 2011). Disputes related to Islamic finance are dealt and
adjudicated under the existing laws of the country and are not treated as other cases.
Specifically, the courts apply the principles of Sharia on contractual sharia related to disputes
in addition to the general rules of contract provided that these rules do not conflict with Sharia
principles. Article 4 of the Banking Law provides for arbitration as dispute resolution in the
commercial courts if agreed to by the parties concerned (BLO).
Bankruptcy and Resolution of Banks
Bankruptcy is dealt with and provided for in Commercial Law 55/90 in which the rights of the
creditors and a detailed bankruptcy framework are covered. In addition, Article 85 of the
Banking Law 114/2000 deals with bankruptcies of banking institutions. The Islamic banks are
covered under these regimes with due consideration to the nature of the banking relationship
with the Islamic banks’ customers that include depositors, investors or customers who are
financed Islamic banks. Dissolution and liquidation of Islamic banks are covered in Section 8 of
the Islamic Banking Regulatory Framework. Sukuk regulation under the final stages of
approval also considers the bankruptcy of the issuer (CMA).