Fatwa
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A Fatwā (فتوى; plural fatāwā فتاوى) is an Islamic religious ruling, a scholarly opinion on a matter of Islamic law, issued by a recognized religious authority in Islam. The Islamic jurist issuing the fatwa is called a mufti. Due to the absence of a formal religious heirarchy in Islam, adherents of the religion and Islamic governments effectively choose to follow whichever rulings they find most convincing (or, perhaps, most attractive).
Binding vs. non-binding fatwas
This dichotomy between state and scholar, however, was absent during Muhammad's life and the early caliphates of Muhammad's companions, and the dichotomy remains absent in modern day Iran. This is because: Muhammad himself was considered infallible, the companions who ruled as caliph after Muhammad were themselves considered scholars of the law capable of giving (at the time informal) fatwas, and Shi‘ites hold their Imams and Ayatollahs (modern-day rulers of Iran) to be infallible as well. In these cases, the governmental rulings were binding (and while belief in agreement with the rulings of the companions was not required, compliance was - this is distinct from most others who would come to claim the title of caliph, as most subsequent caliphs throughout history would not be considered competent jurists or muftis capable of delivering fatwas).