Introduction: Commerce and the Problem of Jurisdiction

For trading at long distances in the Indian Ocean, you did not need only boats, ports, and products. You also needed the capacity for enforcement. For instance, the Aden merchant would finance goods to Calicut, appoint an agent in Hormuz, receive payment from partners in Kilwa, and settle the commercial debt owed to his ancestors through connections in Cairo. Products moved beyond political frontiers, jurisdictions, money, dialects, and faiths. Thus, disagreements did not occur occasionally but rather were normal as part of doing commerce.

Business difficulties include delayed payments, damaged cargo, delayed deliveries, dishonest agents, broken alliances, inheritance disputes, maritime disasters, and issues with product ownership. Commerce needs a process that addresses these problems without harming the prospects of future dealings. Therefore, the objective is not merely to get a judgment but also to keep communicating.

Modern legal systems assume that successful trade requires centralised courts, unified jurisdiction, and state enforcement of contracts. The Indian Ocean region had its own distinct approach. The stability of the trade network depended on the use of multiple legal systems, known as “legal pluralism,” to create a stable system. Islamic courts, merchants’ associations, port authorities, mediation, and diplomacy are all examples of how law was used within the trade network. Law was no longer a single authority, but rather a flexible set of options, and forum selection evolved into a commercial talent.

The Book of Gifts and Rarities (Kitāb al-Hadāyā wa al-Tuḥaf), edited by Ghada al-Hijjawi al-Qaddumi,[1] provides context for the relationships among various states, offers insight into how gifts were exchanged, and provides an overview of the expectations surrounding these exchanges. Gifts exchanged between nations indicate the relationship between those nations and demonstrate how gifts served as a form of obligation and support. Additionally, diplomatic meetings provided an opportunity to outline expectations regarding trade, protection, and cooperation, as well as the terms of the subsequent agreement.[2]

I. Merchant Courts vs Religious Courts

Law Was Layered, Not Unified

Indian Ocean merchants did not adhere to a single court system. A merchant sailing from Basra to Aden, Hormuz, Calicut, and Kilwa will encounter different authorities and legal requirements at each port. But business persisted because enforcement was not dependent on law compliance. It relied on the existence of several overlapping legal fora, and the merchant’s capacity to hop between them.

Merchants could have used many different methods to resolve disputes. These included qadi courts employing Islamic legal theories, merchant tribunals built on trade customs, port tribunals governed by the king, various local leaders of ethnic or religious trading groups, and private arbitrators between the parties to the dispute. These systems were not isolated from one another, nor were they always exclusive; thus, merchants had the ability to choose whatever system was most practical for them in terms of expediency in resolving their disputes or finding ways to collect debts.

As with all legal systems, Islamic law recognises the validity of written documents or contracts; thus, if an Indian dealer sells goods to a Muslim dealer in Aden, the dealer could seek a qadi to resolve the dispute. If the dispute was due to late delivery or damaged goods, the Indian dealer may choose to resolve the matter through arbitration rather than the courts. Arbitration is usually a more expedient method of resolving a matter than litigation and is often more business-oriented than court proceedings. As a result, merchants chose which tribunal to utilise based on the practicality of the resolution rather than on the rule of law.

As Engseng Ho writes about Indian Ocean mobility, traders relied on transportable legal systems rather than the authority of a single king in a permanent area. Commercial life could not expand until there was a legal status that allowed merchants to travel from port to port rather than be limited to a single city.[3]

Religious Courts and the Authority of the Qadi

Long-distance Trade is aided by qadi (Muslim judge) Courts. They permit businesses operating in multiple jurisdictions to do business under a consistent legal framework. Examples of this would be the qadi of Aden vs Hormuz — both are Islamic courts that interpret debt (transactions) and partnership laws, etc. In other words, a business operating out of Aden will use the same contract for another city as if it were located there. Hence, merchants operating out of Aden know that a partnership agreement created at the Aden port can be enforced at the Ports of other cities. Furthermore, Qadi Courts handle all disputes relating to debt, inheritance, agency, and disputes between individuals involved in commercial transactions; in addition to their political authority, they have jurisdictional authority under established legal principles.

Religious courts played a vital role in resolving cases that included:

• unpaid debts
• delayed payments
• Inheritance matters concerning capital invested by merchants
• differences arising between investors and their agents
• questions related to witness testimony on contractual agreements

Legal enforceability turned trust into a reliable commercial mechanism. And, The Book of Gifts and Rarities highlights this by showing how people can be held accountable outside court. The book clearly demonstrates that elite exchanges relied on the expectation of receiving something in return, not just on giving.[4]

Gifts, tributes, and other forms of wealth were not just gracious acts; they were obligations that defined access to protected trade and other diplomatic advantages. The law can be derived from diplomatic dealings, not only for recording past disputes defined by the courts, but also for establishing legal responsibility within and outside the judicial system.

Merchant Courts and Commercial Expertise

Not all economic issues were resolved in official religious tribunals. Merchant communities favoured business forums run by experienced folks who understood the industry. These groups dealt mainly with problems such as shipping methods, damaged goods, freight costs, late arrivals, cargo appraisal, and setting market prices.

Merchant councils often stepped in during conflicts since judges weren’t always up to the task of specific issues. These councils had experienced merchants making calls based on their vast commercial smarts, not because they had any official titles.

These experts knew about shipping timetables, cargo degradation, ocean risks, and fluctuations in seasonal markets. Plus, they focused on settling disputes quickly, since a delay could be far worse for business than resolving the actual conflict.

Back then, in many ports, merchant courts served as the first line of conflict resolution. If people needed more, they could always try the qadi courts. This setup just kind of grew out of what the maritime traders needed to handle their business smoothly.

II. Arbitration Practices and Enforcement Mechanisms

Arbitration as the Preferred Method

Most commercial disputes were settled informally and rarely went to court. The most common method of resolving a dispute is arbitration, which can help maintain commercial relationships, reduce the impact of long-term conflict, and provide a low-cost resolution through an independent third party who decides on behalf of the parties involved.

An independent third party could be a well-known and respected merchant, trader, or prominent member of a guild or trade association, such as an imam, a government agency member, a village elder, or a president of an organisation. The third party’s quality of authority was generally based on three elements: their credibility, neutrality, and their ability to enforce compliance with their resolution.

Late payments, lost cargo, late shipping, breaches of contract and trust, commission disputes, and deceptive agents can all be sources of commercial disputes. While these types of tragedies did occur, they are typically considered to be normal risks in the business world.

Arbitration gave a way to resolve disputes without jeopardising future commercial partnerships.

Fahad Ahmad Bishara’s research on debt systems in the western Indian Ocean reveals that commercial life was based on social enforceability rather than centralised punishment. Debt responsibilities trailed merchants from port to port, for reputation and acknowledged responsibility went with them.[5]

Enforcement Without Centralized Force

The success of arbitration was contingent upon the ability to enforce the arbitrator’s award. Enforcement was, in most instances, not dependent upon law enforcement or direct government penalties but rather upon creating noncompliance an economically burdensome event.

Merchants who defied arbitral awards risked losing future commerce, credit, warehouses and commercial ties. Exclusion was economically damaging because reputational information was frequently transmitted among commercial communities between ports. Business reputations were transmitted through correspondence, kinship relations, pilgrimage routes, and frequent maritime trade.

Enforcement of sovereign authority was another means of protecting business reputation. Port governance involved control over access to docks, tariffs and customs privileges, warehousing, and market advantages. A merchant unable to obtain government protection may be entirely excluded from future trade.

Therefore, to enforce businesses’ reputations, a multilayered enforcement method used merchant reputations, community social pressures, and residential political authority, thereby providing effective enforcement of business reputations without relying solely on the legal punishment available from civil courts.

Status and responsibilities had a similar function to that in The Book of Gifts and Rarities. When reputation is damaged, access to favours, connections in the political process and new business opportunities are also diminished. Therefore, damage to reputation has direct economic consequences.[6]

Maritime Loss and Shared Commercial Risk

The disputes arising from maritime trade could not be easily settled by a court. The frequent occurrences of storms, pirates, shipwrecks, changes in shipping routes, monsoon delays, and cargo destruction in shipping operations resulted in many forms and levels of commercial stress.

Determining who was responsible for an event was not always clear-cut. A merchant can argue that the cause of their loss was due to an act of negligence or an unavoidable maritime event.

Questions kept piling up:

• Did the captain change the course they were supposed to follow?
• Did an agent mess up with damaged items?
• Was the delay because of bad faith or just lousy weather?

Commercial issues often required a deep grasp of maritime trade before they turned into legal troubles. Merchant arbitrators usually handled these disputes better than official judges because they understood shipping techniques, freight rules, and business customs.[7]

This familiarity made partnership agreements and arbitration inseparable. Merchants needed consistent methods to determine whether a loss should affect everyone involved or only specific individuals.

III. Forum Choice and Strategic Litigation

Choosing the Forum

Merchants did not wait for an actual conflict to consider legal remedies. They would often set the venue of the trial in advance, employing witnesses, trusted intermediaries, political connections and business ties.

The creditor is willing to settle through a qadi based on written contracts and available witnesses, but the shipper prefers merchant arbitration because it takes less time and helps to preserve the value of the things shipped. The port authorities will use the authority of the foreign businessman since recovery is simpler (and faster) through sovereign powers than through courts.

This is akin to modern strategic litigation, but medieval merchants rarely utilised formal jurisdiction clauses. The choice of forum was influenced by religious, social, political and commercial factors.

A merchant with political power might reach through the royal channels. Merchants with a good reputation can rely on merchant councils. For traders who have written documentation, religious tribunals are preferred.

The commercial gain was the ability to choose between legal systems.

Lauren Benton’s study on legal diversity in maritime empires reveals that oceanic commerce depended more on negotiated jurisdiction than on established legal boundaries.

Legal Pluralism as Commercial Advantage

While modern-day legal systems tend to be homogeneous, there existed a multitude of legal systems for those involved in trade across the Indian Ocean. The availability of these different legal systems provided traders with multiple avenues of legal recourse, such that the failure of one legal system did not necessarily prevent merchants from re-establishing their business activities.

For example, if arbitration was unsuccessful, traders could take their disputes to the qadi courts; if those were unsuccessful, the parties could appeal to the king. Additionally, informal dispute resolution methods may have been used to resolve disputes that created political problems for kings arising from formally rendered decisions.

This variety of legal systems contributed to the flexibility of commercial transactions. Additionally, the existence of these legal systems reduced the need for merchants to depend on the political stability of any one ruler; therefore, the crumbling of a particular centre of power would not generally restrict a merchant’s ability to continue conducting business by relying on either commercial networks or merchant groups. At times, when merchant networks were unable to enforce their obligations themselves, kings would step in to provide the necessary resources and infrastructure to facilitate commerce.

Strategic Litigation and Structural Inequality

Legal pluralism has also illustrated that different levels of hierarchy exist. When individual parties have greater access to the courts, this may favour specific types of forum selection by affording advantages to, e.g., wealthy merchants, politically affiliated brokers, or well-known companies. Not all traders necessarily make forum selection decisions in the same way.

A small-company man without witnesses may be forced into an unfavourable arbitration. The local trader may beat up the foreign sailor with no societal protection. A merchant came in with political connections. Who could better wield sovereign authority than a newcomer?

In a pluralist society, hierarchy can exist when the governing institution controls the exchange of goods, services, and people. But that does not mean hierarchy cannot exist in a legal order with the enforcement of equality.

Regulatory enforcement ensures that trade is conducted fairly and helps prevent unfairness. Legal pluralism also provides an orderly resolution of disputes within a single legal system’s multiple hierarchies.

Comparative Note: Indian Ocean and Modern Arbitration

The present practice of international arbitration has been hailed as an elegant solution to the issues of global commerce, yet it is based on far older principles. Participants in the commercial sector seek an unbiased forum for conflict resolution, the confidentiality of their procedures, the authority to enforce decisions, and a quick resolution.

Both parties to a contract would prefer not to go to court if they anticipated delays or political exposure that would harm their business, and this was equally true for those who dealt in the Indian Ocean.

These differences are based more on the institution than the underlying idea.

Modern arbitration is based on well-defined courts, formal contracts, and internationally recognised enforcement mechanisms. Medieval arbitration was largely built upon the goodwill of merchants, mobile laws, and economic influence. Therefore, commercial transactions did not need to be based upon a perfect legal system, but rather upon an effective means of maintaining connections between buyers and sellers.

Chapter Post-Mortem: Legal Instruments Identified

Disputes in the Indian Ocean were resolved using overlapping legal systems rather than a centralised court system.

The systems used to resolve disputes consisted of:

• Courts (Qadi) for issuing rulings regarding: debt, succession, partnership, and enforcement of contracts (for the purpose of resolving disputes).
• Reached a settlement with arbitration as the primary mechanism.
• Sovereignty is controlled through customs inspections, port entry, and politics.
• Enforcing a state’s international commitments by gift exchange and reciprocity.
• Forum selection as an approach to international business; flexibility of jurisdiction encompassing multiple ports.
• In commercial practices as legislation until there is a clear conclusion.

Commercial activity did not depend on a single court; rather, it required merchants to skillfully navigate multiple legal systems. The waters of the Indian Ocean were not void of law. The merchants of the Indian Ocean did not do well because they had been protected by a single state, but rather because they were able to navigate through many separate systems of trust and penalty. Thus, they learned how to operate under many different rules simultaneously.

References

1. Ghada al-Hijjawi al-Qaddumi, ed. and trans., Book of Gifts and Rarities: Kitāb al-Hadāyā wa al-Tuḥaf , discussed in “Book of Gifts and Rarities (Kitab al-Hadaya wa al-Tuhaf),” Review of Middle East Studies, Cambridge University Press, (accessed April 28, 2026).
2. Ibid.
3. Engseng Ho, The Graves of Tarim: Genealogy and Mobility across the Indian Ocean (accessed April 28, 2026).
4. Al-Qaddumi, Book of Gifts and Rarities.
5. Fahad Ahmad Bishara, A Sea of Debt: Law and Economic Life in the Western Indian Ocean, 1780–1950 (accessed April 28, 2026).
6. Al-Qaddumi, Book of Gifts and Rarities.
7. Lauren Benton, A Search for Sovereignty: Law and Geography in European Empires, 1400–1900 , (accessed April 28, 2026).