Lodhi 5 Properties Investments CC v FirstRand Bank Limited [2015] 3 All SA 32 (SCA) and the Enforcement of Islamic Banking Law in South Africa





Islamic law, mora interest, riba, Hiyal, Profit-and Loss Sharing


On 22 May 2015, the Supreme Court of Appeal (“SCA”) handed down a judgment in the matter of Lodhi 5 Properties Investments Cc v Firstrand Bank Limited [2015] 3 All SA 32 (SCA). This judgement considered whether the prohibition against the charging of interest on loan in terms of Islamic law (Shariah law) may be a defence for a claim for mora interest in term of a loan agreement. This note critically discusses the judgement in light of the approach adopted by the SCA with regard to addressing dispute arising from a contract that has Islamic law as a governing law. As this is the first case that came before the SCA in South Africa, this note critically analyses how this court discussed the applicable principles of Islamic law as applicable to the dispute between the parties. In particular, it questions the court’s assertion that a claim for mora interest has nothing to do with and is not affected by the Shariah law's prohibition against payment of interest on a loan debt. It also looks at the SCA’s approach (as a common law court) with regard to the enforcement of Islamic banking law principles. This judgement raises important issues regarding the enforceability of Islamic finance law and therefore merits discussion, in light of the continuing growth and expansion of Islamic banking and finance law in South Africa.


Google_Scholar_97.png   ScienceOpen_Log0335.png


Download data is not yet available.


Metrics Loading ...

Author Biography

Maphuti David Tuba, University of South Africa






Ab'Aziz Islamic Banking in Malaysia

Ab'Aziz MR Islamic Banking and Finance in Malaysia; System, Issues and

Challenges (USIM Negeri Sembilan 2013)

Abdul-Rahman Art of RF



Rahman Y

The Art of RF (Riba-Free) Islamic Banking and Finance:

Tools and Techniques for Community-Based Banking 2nd ed (Wiley

Hoboken 2014)

Ali Holy Qur'ᾱn: Translation

Ali MS The Holy Qur' ᾱn: Arabic Text and English Translation (Islamic

International Publications Islamabad 2004)

Alrifai Islamic Finance

Alrifai TIslamic Finance and the New Financial System: An Ethical

Approach to Preventing Future Financial Crises

(Wiley Singapore 2015)

Ayub Understanding Islamic Finance

Ayub M Understanding Islamic Finance (Wiley London 2007)

Chapra 1984 HI

Chapra MU "The Nature of Riba in Islam" 1984 HI 3-24

El-Gamal "Paradox"

El-Gamal MA "Interest and the Paradox of Contemporary Islamic Law and

Finance" in Al-Roubaie A and Alvi S (eds) Islamic Banking and Finance:

Critical Concepts in Economics -Vol II (Routledge London 2010) 281-308

Fakir and Tkiouat 2016 IJEFI

Fakir AEL and Tkiouat M "Single or Menu Contracting: An Application of the

Hersanyi Model to Mudaraba Financing" 2016 IJEFI221-230

Fisho-Oridedi 2009 CEPMLPAR

Fisho-Oridedi A "The Prohibition of Riba under the Islamic Law: What are

the Implications for the International Contracts" 2009 CEPMLPAR 1-20

Garner 2013 LJLC

Garner JM "A Critical Perspective on the Principles of Islamic Finance

Focusing on Sharia Compliance and Arbitrage" 2013 LJLC 69-90

Ginena and Hamid Foundations

Ginena K and Hamid A Foundations of Shari'ah Governance of Islamic

Banks (Wiley Chichester 2015)

Hanif 2011 IJBSS

Hanif M "Difference and Similarities in Islamic and Conventional Banking"

IJBSS 166-175

Hasan "Structured Products"

Hasan A "Islamic Structured Products: Issues and Challenges" in

Vernandos AM (ed) Current Issues in Islamic Banking and Finance:

Resilience and Stability in the Present System (World Scientific Singapore


Hassan, Kayed and Oseni Introduction

Hassan MK, Kayed RN and Oseni UA Introduction to Islamic Banking and

Finance: Principles and Practice (Pearson Harlow 2013)

Hatta and Samah 2015 GJAT

Hatta M and Samah S "Compensation and Penalty Imposed on Debt

Settlement of Islamic Products" 2015 GJAT 7-18

Horii 2002 ILS

Horii S "Reconsideration of the Legal Devices (Hiyal) in Islamic

Jurisprudence: The Hanafῑs and Their Exits (Makhᾱrij)" 2002 ILS312-357

Hussain Islamic Banking

Hussain MG Islamic Banking and Finance: Status and Issues (Deep and

Deep New Delhi 2011)

Iqbal "Financial Engineering"

Iqbal Z "Financial Engineering in Islamic Finance" in Al-Roubaie A and Alvi

S (eds) Islamic Banking and Finance: Critical Concepts in Economics -Vol

II (Routledge London 2010) 7-21

Irfan Heaven's Banker

Irfan H Heaven's Banker: Inside the Hidden World of Islamic Finance

(Constable London 2014)

Jalil 2010 IJBSS

Jalil MA "Financial Transactions in Islamic Banking are Viable Alternative to

the Conventional Banking Transactions" 2010 IJBSS 219-233

Kettell Islamic Finance

Kettell B Islamic Finance in a Nutshell: A Guide for Non-specialists (Wiley

Chichester 2010)

Khalil "Overview of Sharia"

Khalil E "An Overview of the Sharia'ahProhibition of Riba" in Thomas A (ed)

Interest in Islamic Economics: Understanding Riba (Routledge London


Kusheni and Hayat Contracts and Deals

Kusheni H and Hayat M Contracts and Deals in Islamic Finance: A User

Guide to Cash Flows, Balance Sheets, and Capital Structures (Wiley

Singapore 2015)

Mansoori 2011 JIBM

Mansoori MT "Use of Hiyalin Islamic Finance and its Sharῑ'ah Legitimacy"


Mirakor and Zaidi "Profit-and-Loss Sharing

"Mirakor A and Zaidi I "Profit-and-loss Sharing Contracts in Islamic Finance"

in Hassan MK and Lewis MK (eds) Handbook of Islamic Banking (Elgar

Cornwall 2007) 49-63

Morapi Islamic Banking in South Africa

Morapi L The Regulation of Islamic Banking and Financial Institutions in

South Africa (LLM-dissertation University of Johannesburg 2014)

Nuhtay and Salman 2013 IJBSS

Nuhtay SN and Salman SA "Shari'ah and Ethical Issues in the Practice of

Modified Wakalah Model in Family Takaful" 2013 IJBSS 128-132

Okon 2012 AJSMS

Okon EE "The Sources and Schools of Islamic Jurisprudence" 2012 AJSMS


Qaed 2014 JRHSS

Qaed IQM "The Concept of Wadiah and its Application in Islamic Banking"

JRHSS 70-74

Qasaymeh 2011 CILSA

Qasaymeh K "Islamic Banking in South Africa: Between the Accumulation

of Wealth and the Promotion of Social Prosperity" 2011 CILSA 275-292

Razak 2015 EJIF

Razak AHA "The Fundamentals of Islamic Banking and Finance: Apologue"

EJIF 1-11

Saeed Islamic Banking

Saeed A Islamic Bankingand Interest: A Study of the Prohibition of Riba

and its Contemporary Interpretation (Brill Leiden 1996)

Sauer "Metaphysics and Economy"

Sauer JB "Metaphysics and Economy -The Problem of Interest: A

Comparison of the Practice and Ethics of Interest in Islamic and Christian

Cultures" in Al-Roubaie A and Alvi S (eds) Islamic Banking and Finance:

Critical Concepts in Economics -Vol II (Routledge London 2010) 153-174

Sharawy 2001 GJICL

Sharawy HM "Understanding the Islamic Prohibition of Interest: A Guide to

Aid Economic Cooperation between the Islamic and Western Worlds" 2001

GJICL 153-179

Siddiqui "Islamic Banking"

Siddiqui S "Islamic Banking: Rationale, Prospects and Challenges" in Al-

Roubaie A and Alvi S (eds) Islamic Banking and Finance: Critical Concepts

in Economics-Vol IV

(Routledge London 2010) 73-89

Swartz 2012 AJBM

Swartz N "The Prevention of Over-indebtedness: The Problem of Interest

and the Islamic Response" 2012 AJBM 10099-10108

Thomas "What is Riba"

Thomas A "What is Riba" in Al-Roubaie A and Alvi S (eds) Islamic Banking

and Finance: Critical Concepts in Economics -Vol II (Routledge London


Visser Islamic Finance

Visser H Islamic Finance: Principles and Practice 2nd ed (Edward Elgar

Cheltenham 2013)

Wahyudi et al Risk Management

Wahyudi I et al Risk Management for Islamic Banks: Recent Developments

from Asia and the Middle East(Wiley Singapore 2015)

Zuhayli "Juridical Meaning of Riba"

Zuhayli S "The Juridical Meaning of Riba" in Thomas A (ed) Interest in

Islamic Economics: Understanding Riba (Routledge London 2006) 26-54

Case law


Bank Islam Malaysia Berhad v Lim Kok Hoe 2009 6 MLJ 839

South Africa

Albaraka Bank Ltd v Halaal Royal Snacks (Pty) Ltd (SGHC) unreported

case number 08400/2010

FirstRand Bank Ltd v Lodhi 5 Properties Investment CC 2013 3 SA 212


Lodhi 5 Properties Investments CC v First Rand Bank Limited 2015 3 All SA


United Kingdom

Beximco Pharmaceuticals Ltd v Shamil Bank of Bahrain EC 2004 APP LR


Islamic Investment Company of Gulf (Bahamas) Ltd v Symphony Gems NV

WL 346969 (QB Comm Ct 13 February 2002)

The Investment Dar Company KSCC v Blom Developments Bank SAL 2009

EWHC 3545 (Ch)


Close Corporations Act 69 of 1984

Companies Act 61 of 1973

Income Tax Act 58 of 1962

Prescribed Rates of Interest Act 55 of 1975

Tax Law Amendment Act 24 of 2011

Internet sources

Ali 1987 http://www.streathammosque.org/uploads/quran/english-quran-


Ali AY 1987 The Holy Qur'ᾱn: English Translation of the Meanings


ali.pdf accessed 17 May 2016

Baele, Farooq and Ongena 2012 https://core.ac.uk/


Baele L, Farooq M and Ongena S 2012 Of Religion and Redemption:

Evidence from Default on Islamic Loans https://core.ac.uk/download/pdf/

pdf accessed 17 May 2016

Rosly and Sanusi 1999 http://www.kantakji.com/media/8076/o113.pdf

Rosly SA and Sanusi MM 1999 The Application of Bay'AL-'Inah and Bay'

Al-Dayn in Malaysian Islamic Bonds: An Islamic Analysis

http://www.kantakji.com/media/8076/o113.pdf accessed 17 May 2016

Yaacob 2011 http://ifikr.isra.my/documents/10180/16168/19.pdf

Yaacob H 2011 A Critical Appraisal of International Islamic Finances Cases,

and the Way Forward http://ifikr.isra.my/documents/10180/16168/19.pdf

accessed 19 May 2016



How to Cite

Tuba, M. D. (2017). Lodhi 5 Properties Investments CC v FirstRand Bank Limited [2015] 3 All SA 32 (SCA) and the Enforcement of Islamic Banking Law in South Africa. Potchefstroom Electronic Law Journal, 20, 1–29. https://doi.org/10.17159/1727-3781/2017/v20i0a1308



Case Notes