– Basic foreign values (ordre public) protect against access to assets –
German courts also recognise Sharia law and, where applicable, apply it compulsorily if it does not contradict fundamental German legal concepts – especially the constitution. Conversely, German law is not applied abroad, even if it is fundamentally valid, if it contradicts the fundamental principles of the legal system there. German court decisions are not recognised abroad, for example, they are not enforced if they are not compatible with fundamental principles of foreign law. In international law this is called “ordre public” in the sense of “public order”.
Ordre public reservation to protect assets from creditors?
This also applies vice versa if a German court does not recognise the decision under a foreign legal system due to a violation of the German ordre public. For example, the Regional Court (Cologne Regional Court, judgment of 14.10.2011, file no. 82 O 15/08) refused to recognise a debtor’s discharge from legal debt on the grounds of a pseudo domicile for camouflage purposes abroad: “There is every indication that the defendant misused the opportunities offered by organised insolvency tourism to Great Britain in order to use the uncomplicated English insolvency proceedings to discharge itself from debt within one year and thereby evade justified creditors’ claims.
A further mass violation of, among other things, the ordre public can be found in the concealment of one’s residence in Germany, in connection with a camouflaged residence abroad, for example, in order to get health insurance there or allegedly to tax one’s world income there.
Legal structuring through change of nationality, religion, relocation, transfer of assets
So one could certainly come up with the idea of bringing one’s fortune to Egypt and becoming a Muslim, in order to exclude all non-Muslims from the inheritance, if a lawsuit has to be filed in Egypt, and also if an attempt is made to execute a German judgement in Egypt that does not comply with Sharia law, because it violates the public order according to Sharia.
Islamic law, the Sharia is a method and methodology of law creation through interpretation, and in the wake of diverse opinions. There the principle prevails that what is forbidden is what has not been expressly permitted – in our country the opposite is in accordance with the Basic Law.
Even if one refers to interstate agreements before an Egyptian court, the recognition of foreign decisions can fail due to the public order there, and this at the latest as soon as a Muslim is also affected.
Possibilities of structuring through choice of law – for example according to the Sharia
It is also possible to take advantage of the fact that the jurisdiction of the courts can vary considerably from one country to another, depending on domicile, nationality, location of any assets, and international or bilateral agreements.
Just as there are not extradition agreements with every country at all, and if there are, then not even for certain offences which are considered to be exempt from punishment at the place of residence, for example.
If, for example, there is no enforcement agreement, as is the case with Liechtenstein, a German judgment there has no effect or cannot be enforced.
In that case, a local lawsuit would have to be filed – this can be many times more expensive than at home.
And even if there is an enforcement agreement, this does not guarantee effortless success. If it is true that in Sicily the execution is carried out by the mayor, one can imagine why it takes years before the only message that the debtor has unfortunately not been found is that the debtor has been unable to be found.
Up to more than EUR 3 trillion demand for Sharia finance and insurance products
In recent years, a German federal state, as well as large financial institutions from England, France and Luxembourg, have launched their own Sharia-compliant products. Islamic scholars are needed for product design and assessment, so that, for example, the prohibition of interest, gambling and speculation is observed – including the avoidance of investments in companies that deal with the production of weapons, eroticism, tobacco, alcohol or pigs, or even pay interest on bonds. Since the subprime crisis it has been known that Sharia-compliant investments are on average more profitable than the average Western share. This is because they invest in real assets – speculative investments are out of the question, so they were hardly affected by the collapse of the Western financial casino in 2007/2008. Western banks and insurance companies are also not suitable as Sharia investments, neither the shares nor the usual products The prescribed calculation of the actuarials with interest and mortality tables in usual life and pension insurance and also in private health insurance as well as the obligation to invest the actuarial reserve mainly in interest securities also makes their products unsuitable for recognition under Sharia law. Practicable alternatives are support funds and other self-help institutions, e.g. in the form of foundations, as they have been successfully operated by pastors in some federal states for more than 70 years to ensure mutual coverage of medical costs.
European Central Bank (ECB) moves closer to Sharia
Borrowing money from the ECB will soon appear to be Sharia-compliant, as the interest rate was recently lowered to 0.05% – even if this has not yet been fully received by the credit end customers. For Islamic bonds (called sukuk) there is a prohibition of interest; just as in ancient times the demand for interest was considered a sin among Christians and Jews – instead a participation in profits is provided for. In some other countries there are legal maximum rates for interest, in others this is left to the jurisdiction. In most Muslim countries, Sharia law has a particularly strong influence on inheritance and marriage law, as well as the banking and insurance system. With regard to the well-known corporal punishment, the Muslim countries differ considerably in the application – and of course also in the pluralistic interpretation of the Sharia.
Sharia also to be applied and recognised by German courts
If our jurisdiction depends on the Sharia because of the foreign reference or the nationality of the persons concerned, the correct assessment can fail due to language barriers and the fact that this right is only partially passed on in writing. In principle, any foreign law can be agreed in contracts, especially if the persons concerned themselves have a foreign nationality. Then a German court must also apply this law – i.e. also Sharia law if necessary – as long as it does not contradict the ordre public. Thus, it happens that a German court does not pronounce a divorce if the wife has not previously been offended by a declaration of the husband before the Imam. However, the ordre public requires that the conditions for a divorce under German law are also met – or that the wife agreed to be violated.
Arbitration courts according to Sharia are possible
It is not only in the German courts that, given the prevailing conditions, judgments must be made in accordance with Sharia law. It is also possible to agree on one’s own arbitration courts according to Sharia law – their judgments are also to be recognised and enforced by German courts, provided they do not contradict the ordre public. If you call this “secret” or “parallel”. justice, fails to recognise that arbitration is widely used in our economy and that it is seen as an advantage that a final decision can be taken quickly without the general public being involved. Such an arbitral tribunal can also be staffed with more specialised arbitrators than a normal German court has. Arbitration tribunals and the applicable law can already be agreed in contracts, or voluntarily at a later date. Many clubs and especially professional associations make admission conditional on members recognising their own association and professional “jurisdiction” as binding in the event of violations of association and professional rules. Last but not least, this also relieves the burden on the usual courts.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.experten.de (published on 05.07.2019)
and
www.juraforum.de (published on 03.07.2019)
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About the author
Dr. Johannes FialaPhD, MBA, MM
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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