Anthony Gold hosts roundtable consultation on the Islamic principle of zakat on PI settlements; 28th November 2017

We were very pleased to be invited to host a roundtable discussion organised by Simply Ethical, a provider of Ethical and Sharia compliant investment solutions on the launch of their consultation concerning the payment of religious tax on awards received following a personal injury claim.

Senior Judge Denzil Lush, a retired Court of Protection Judge was the keynote speaker and provided an insight and overview of past discussions relating to Muslims and the interaction between their personal religious beliefs and English Law. Religious obligations will generally be taken into consideration so far as is possible under the English Law, though serving the best interests of the claimant is paramount.

What is zakat?

Zakat is one of the five pillars of Islam and represents a religious obligation for all Muslims who meet the necessary criteria of wealth to give 2.5% of their wealth away in charity (or deemed as a religious tax by some) every year. This is a personal decision made by Muslims living in England & Wales in addition to their obligations imposed by English law to pay tax.

In recent years, there has been growing awareness about the crossroads faced by many Muslims bringing personal injury claims and those without capacity and represented by Deputies in the Court of Protection. There is currently no practical guidance to enable Deputies to make such payments, if requested, on such settlements. The issue to be determined relates to the religious duty of the claimant and Deputy’s responsibility to ensure the damages received are managed and are secured to maintain a reasonable standard of living.

Are damages deemed wealth for the purposes of zakat?

While zakat is incumbent on Muslims, there are a number of questions that arise when it is raised as an issue by a Muslim claimant within the English legal system. For example:

i) Is it payable on damages that are usually insufficient to meet a client’s future needs and to compensate them for their past losses?
ii) Is zakat payable by children who are awarded compensation?
iii) What about adults who lack capacity but, because of their PI award, meet the necessary criteria of wealth?

These are important questions that are increasingly being put to lawyers, deputies and the courts alike. Furthermore, clarification is being sought by specialist investment fund managers who are instructed to invest such awards like Simply Ethical.

This was the aim that tied everyone together at the roundtable consultation that was held at Anthony Gold on 28 November.

Attendees & discussion points

We were fortunate to host delegates with a wide breadth of experience from many different organisations and backgrounds, including Senior Judge Denzil Lush, Mufti Faraz Adam, an Islamic Scholar from the National Zakat Foundation, Patricia Wass from the Office of the Public Guardian, Stuart Hutton, CEO of Simply Ethical, the mother and sister of a beneficiary of the Court of Protection and other solicitors, barristers, finance and investment advisers and court deputies.

Presentations were given by:

• Simply Ethical – The purpose of this event, our experience of the key issues
• Denzil Lush – Role of the Court of Protection and how it sees/deals with faith issues like zakat, investments etc
• National Zakat Foundation – What is Zakat, Key Principals and Key Issues re Court of Protection/PI cases
• Court Deputy’s Perspective: Stacey Bryant from Foot Anstey
• The Office of the Public Guardian: It’s role and how it could assist
• A Beneficiary’s perspective: How they view this issue
• A Law firm’s perspective: Anthony Gold – Overview of the Discount rates

With a wealth of knowledge and experience at the table, a range of important topics were discussed, including:

i) Shariah-compliant investments;
ii) Wills;
iii) the nature of zakat as an Islamic principle and to who it applies; and
iv) personal injury claims and the nature of damages awards.

The outcome of the discussion was very positive and showed that those involved in looking after the best interests of the claimants are generally enthusiastic to help Muslim clients who seek to fulfil this religious obligation. The discussion allowed for a better understanding of the nature and conditions of zakat in order to be able to advise their clients.

It was agreed that tangible, written guidance about the issues discussed would be the most useful for all the parties involved. This is to act as a guide to advise claimants, beneficiaries and their lawyers and advisors on everything from Shariah-compliant investments and wills to the pluralism of the Islamic laws surrounding zakat and their various interpretations.

A draft paper that translates the day’s discussions will be produced early in the New Year and this will be distributed for feedback. It is hoped that the Office of the Public Guardian will eventually publish the paper in its final form going forward to provide the much-needed guidance for all concerned.

Anthony Gold were very pleased to host the consultation and be part of the discussions that will clarify the issues surrounding the difficult questions posed by the payment of zakat in the modern world, for the benefit of claimants, beneficiaries, their representatives and the courts.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*