What would stay a private settlement between the 2 people took on a public dimension and sparked a real political storm. In the court in Vienna (Landesgericht für Zivilrechtssachen, file 47 R65/25 v), 2 men agreed that the money dispute would be settled in accordance with the principles of muslim law – specifically according to Ahlus-Sunnah val-Jamaah – and thus it was decided validly that 1 of them would pay the another EUR 320 000.
When the loser decided to challenge this decision, citing the ambiguity and subjectivity of Sharia and the contradiction with the fundamental values of Austrian law, however, the court reiterated the judgment, stating that it was only crucial that the result was not opposed to ‘Grundwertungen’ — the fundamental values of Austrian law — alternatively than what circumstantial rules were applied. The conviction was handed down on 18 August 2025 and immediately became the subject of harsh criticism. Law supporters inform that this opens the door to a dangerous, parallel jurisdiction in the centre of Vienna, where private matters – even financial ones – can be settled internally according to spiritual standards, regardless of compliance with the dominant legal order. This is simply a phenomenon in which private courts, acting on rules different from state law, gain real influence and binding power in monetary matters, which may undermine the uniformity of the legal system. It can be imagined that future economical conflicts, even those that are not complex, can be decided outside the state jurisdiction if the parties conclude an appropriate arbitration agreement based on the rules of spiritual law. This in turn will rise concerns about fragmentation of the legal system, difficulty in enforcement, undermining the balance between citizens and, finally, losing assurance in the institutions of the state.
Public life observers and lawyers note that although the court has not formally assessed the content of muslim law, the very fact of accepting the execution of specified a judgement sends a strong signal: if the agreement provides for the application of spiritual law and the result does not violate constitutional values, it can be considered legally binding. And without an in-depth analysis of the content of these standards. In this context, the dispute afraid an amount of EUR 320 000 – a crucial sum, but not an absurdly large amount – for outstanding commitments between the parties. In spite of the scepticism about Sharia, the court found that since the parties had agreed to do so and the result did not violate the fundamental principles of Austrian law, there was no reason to annul. This decision, although formally method and limited to civilian matters, may in practice become a precedent. There have already been voices that if spiritual law, including Islam, can be applied in agreements between the parties, what prevents the usage of another spiritual systems in a akin way? Where's the line? Will private arbitration under muslim law have the same legal power as judicial decisions? Will specified papers be honored by banks, offices, contractors? Is the institution of state law losing its primary in the eyes of citizens?
Sharia law, which was the basis for the arbitration decision in this peculiar case, is simply a legal strategy derived from Islam, including religious, moral, social and legal standards. There is no single sharia – its interpretations vary according to the legal school, region and local tradition. The origin of Sharia is the Koran, the sunnah (meaning traditions of the prophet Muhammad), the ijam (consensus of scholars) and the stick (legal analogy). In many Muslim countries, sharia functions as the main origin of state law, but in Europe there is no power in force as public law. However, in any countries private settlement of disputes according to spiritual principles is allowed, if both parties agree and the result does not conflict with the basic legal standards of the country. This opens the way for controversy, especially since Sharia law is frequently criticised in Europe for ambiguity, arbitraryity and non-compliance with the principles of equality, individual freedom or world-view neutrality.
In Austria, as in Germany or the United Kingdom, there have already been cases of private arbitration based on spiritual standards, but they have never previously afraid specified advanced amounts and have not been the subject of specified formal confirmation by the general court. Critics indicate that sharia may lead to unequal treatment of the parties, especially in the context of gender, inheritance or witness credibility. On the another hand, many Muslims believe that Sharia provides moral coherence and compatibility with their spiritual values – which is crucial to their identity. In this tension between the secular state and multicultural society lies the root of the problem. Does the State have the right to interfere in voluntary agreements between citizens if they concern only them and do not violate the law? But does it have a work to guarantee that any specified agreement does not lead to a disguised violation of equal rights? These questions stay open.
Critics besides respect social tensions – a situation in which Muslims include Habus-Sunnah-compatible arbitration can be seen as privileged. This could make disputes between different spiritual groups and yet distort the thought of equal rights. In turn, the defenders of the court's decision emphasize that the contract is simply a contract. If individuals have reached an agreement on the management of their financial affairs, public policy is respected, then the State has no right to interfere. This approach is intended to warrant the freedom of contract and the autonomy of the parties, which in itself is nothing different in civilian law. However, the question is whether this freedom does not lead to unintended consequences erstwhile it crosses the limits of recognised standards. Can contract freedom and the right to private arbitration scope the limit of blurry boundaries between the state strategy and private spiritual normality? For the time being, the decision concerns only 1 case, 1 contract, 1 amount. But the future will show if it will become a foothold to a wider trend. Citizens' debates are already taking place, both in Austria and outside Austria, on whether this judgement is simply a dam for law policy or, rather, a yellow card for legislators and legal institutions to clarify the limits of the application of spiritual law in transactions between citizens. Any decision in this dispute present can affect the balance between freedom and unity, between effective diversity and fragmentation weakening the foundation of trust in the legal system. The debate has begun. Time will tell who wins.
