Islamic Law in Domestic Arbitration

Development summary

In the summer of 2025, an Austrian case concerning an arbitration agreement based on principles of Islamic law and a domestic award ordering damages of more than EUR 1,000,000 triggered significant public controversy. The appellate court held that resolving a commercial dispute under Islamic law did not violate the fundamental notions of the Austrian legal system. The case led to calls to ban the application of Islamic law in Austria, while the Austrian government established a working group to examine possible legal reform. The note also considers potential conflicts with EU and international law.