Sheikh `Atiyyah Saqr, former head of Al-Azhar Fatwa Committee, states the following: “It is controversial among scholars whether non-Muslims have to abide by the subsidiary rules of the Shari`ah or not. According to that, some scholars have stated that the citizens of Muslim countries must all abide by the rules of the Sharia`h whether they are Muslims or non-Muslims, because it is possible to apply the Shari`ah in Muslim countries.
If a Muslim or a non-Muslim living under the protection of an Islamic state travels to a non-Muslim state and breaks any of the rules of the Shari`ah, then the Islamic law can not be applied on him because in this case a Muslim judge will no have jurisdiction in the place where the breach was committed. The same thing is true if that person returns to a Muslim country after committing such a breach. It is reported that Imam Abu Hanifah, may Allah rest his soul in peace, stated that it is permissible for Muslims or non-Muslims living under the protection of an Islamic state to deal in Riba with a warring non-Muslim. In that case, both sides would have agreed on wasting money on interest besides wasting the money of a warring non-Muslim is permissible because his money and blood have no sanctity.
Abu Yusuf quotes Abu Hanifah as saying: “For laws to be enforced, they should be known to everyone. If a person does not know about a certain law, then he will not be held accountable for violating it.” So according to Abu Hanifah and Muhammad, a Muslim in a non- Muslim country is allowed to make a contract that entails interest or any other contract that is null from the Islamic point of view. The late Sheikh Muhammad Bekhiet, former Mufti of the Arab Republic of Egypt, gave a fatwa allowing that, and published it in his thesis about the laws of insurance (p. 7, An-Neel Press, Egypt, 1906) and the late Grand Sheikh of Al-Azhar Jaad Al-Haqq quotes this opinion in his book Fatawa Mu`asirah, p. 86.
On the other hand, Abu Yusuf states that a Muslim living in a warring non-Muslim country is only allowed to do what is permissible under Islam and since Riba is forbidden in Islam for the Muslim who should abide by the Islamic law and the non-Muslim being responsible for the subsidiary rules of Shari`ah: “And of their taking usury where they are forbidden it” (An-Nisaa’: 161).
The three Imams maintain that the rules of the Islamic Shari`ah apply to all Muslims and non-Muslims living under the protection of a Muslim state. A Muslim is held accountable for any breach of the Shari`ah he commits in a foreign country, even if the laws of this country allow it, like usury and gambling.
Sheikh Jaad Al-Haqq argues that the debate between the Hanafi scholars is about the ability to apply Islamic Shari`ah when a Muslim breaks the Islamic law in a non-Muslim country. He prefers the opinion of the majority of scholars that usury is strictly forbidden whether in Muslim or in non-Muslim state, except when a Muslim is borrowing money at an interest to meet essential needs, but when he is the lender, he is forbidden to charge an interest, because there is no necessity to do so.
According to this analysis, a Muslim’s acts should conform to Islamic law, as regards what is permissible and what is prohibited whether he is in an Islamic or non-Islamic state, since the positive laws, does not alter the rules of Allah.”