The interplay of religious principles on PI settlements
I have previously touched on this topic, however following recent discussions I have had with a provider of Ethical and Sharia compliant investment solutions, it has been brought to the forefront of my mind once again.
Whilst there are many instances when religious views may interact with English Law, there is a specific interplay when dealing with personal injury claims and settlement of damages. Religious obligations will generally be taken into consideration as far as is possible under English Law, however, it is expected that serving the best interests of a Claimant is paramount.
This issue becomes important when Claimants with a devout sense of religious duty do not have the capacity to manage their own property and affairs. The responsibility then lies on their Court appointed Deputy to manage this on their behalf. Where this religious duty impacts on their damages (for example annual payments to Charity and the consideration of this being paid from their lump sum or periodical payments), it would be prudent for the Claimant’s Solicitors to obtain a report from an Independent Financial Advisor to comment on the form of award which would be most beneficial for the Claimant in line with their religious beliefs, as far as it is possible to do so.
The Deputy may also then wish to obtain a report on the investment of damages to ensure that their clients are advised on whether these can be done in a way which is complaint with their religious beliefs. For example, this may involve the consideration of avoiding investing in gambling or alcohol companies, all of which are forbidden for followers of the Islamic faith. An application may have to be made to the Court of Protection to decide whether investments may be made in line with the Claimant’s religious beliefs or whether investments can be made in risk appropriate manners but without reliance on any religious beliefs.
This is of course a very simplified version of events, but what can Claimant Solicitors do before settlement to assist the Claimant and ultimately the Deputy and the Court? The answer is speak to the Claimant and their families.
It is useful to find out, specifically for Muslim clients, the following:
- What are their views on interest? Under Islamic Law, payment or receipt of Interest is considered forbidden. This can impact on their award as Schedules of Losses usually includes an element of interest for both General Damages and past losses. Interest may also be received from certain periodical payments which are funded by way of an annuity. It is therefore useful to obtain their views on interest as it may be their view that the interest claimed in Schedules reflect the increase in the value of the services and items etc. provided or purchased until now and not yet paid for. As this is statutory not usurious interest, it may be acceptable to them.
- Would they consider conventional lump sums to be subject to Zakat? Zakat is a compulsory payment Muslims are required to make to charities each year. It is a set amount of 2.5% of a person’s wealth, including money in savings and current accounts as well as assets. There are a range of opinions from Muslim scholars as to whether Zakat would apply to a lump sum award of damages (in whole or in part), with some considering that the damages would be exempt and some believing the contrary. Claimant Solicitors should consider this with their clients and find out what position they adopt. It may be that a client would not consider Zakat to apply to lump sums but they may have a desire for the Deputy to make occasional charitable donations to established organisations provided this does not deprive them of the means to meet their needs.
- What are their views on Sharia-Compliant Investments? A claimant who lacks capacity is likely to have many long term needs including future therapy and the need for support workers. In order to meet such future needs, any lump sum award (in whole or in part) would be invested to generate a return and that investment can take place in different sectors. Some of these sectors of investment may be forbidden by Muslims, for example in companies that deal with alcohol or gambling. Claimant Solicitors can therefore find out their views on whether the lump sum should be invested in such a way as to achieve as high as possible a rate of return but have some sort of compromise on the types of companies their lump sum is invested in.
As Solicitors specialising in personal injury litigation, we cannot provide financial advice to clients however these topics of discussion are universal amongst followers of the Muslim faith and interlink with our role of obtaining compensation for our clients.
It is therefore only prudent that we consider these issues at the outset with our clients and understand their beliefs so that they can be well informed when settling their claim and taking the next steps to ensure that their future needs are met.