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REVIEW OF FATWAS ISSUED DURING THE ALBARAKA BANKING GROUP
SYMPOSIUMS (THE FIRST COLLECTION)

Prepared by
Al-Shaikh Mohamad Al Mukhtar Al-Sulami

29th Al-Baraka Symposium on Islamic Economics
Hilton, Jeddah

6 - 7 Ramadan 1429 H.D (according to Ummu al-Qura), corresponding to 6 - 7
September 2008

Islamic banks in non-Muslim countries

Sheikh Salih Abdullah Kamel, may Allah reward him, has established a

commendable path through this annual symposium. This symposium is a distinctive

contribution in assisting the Islamic banks to successfully penetrate the financial

market. Historically, the Al-Baraka Symposium on Islamic Economics was

inaugurated in Madinah Al-Munawwarah in the year 1401H, followed by Jeddah and

its suburbs Durratul ‘Aruus and Makkah. This is the 29th year of its establishment.

These symposiums have seen the contributions of the great scholars from the field

of Shari’ah and economics. These symposiums have been of great help to the

bankers, in terms of expanding their activities and at the same time, complying with

the principles of the Shari’ah.

These resolutions that were made by majority of the scholars recognize the

situation that the Islamic financial institutions are facing; they are facing many

challenges. Apart from trying to harmonize between Islamic and conventional

practices, so as to realize a Shari’ah-compliant financial system, the players in the

Islamic financial system are also facing rejections from most economists and facing

a fierce resistance from the market.

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As mentioned earlier, the players are also facing the challenge of harmonizing

between Islamic and conventional practices, where they would have to develop their

own operational models gradually, until the time comes when Islamic financial

institutions’  way  of  doing  things are distinct from the operational mechanisms of

conventional financial institutions. The aforementioned issues were mentioned in

the symposiums, as there are conventional practices that do not comply with the

Shari’ah. Nevertheless, the players can adopt those practices that do not

contravene the principles of the Shari’ah. With regard to this, the players must

continuously improve themselves and evaluate their position in the global Islamic

financial system. That is why the 28th Al-Baraka Symposium on Islamic Economics

reviewed the resolutions that were passed in the previous symposiums. However,

due to several reasons, the resolutions issued cannot be mentioned.

This year, the focus of attention is to review certain fatwas that were issued based

on exceptions. Did the reality and the current happenings in the world lead to the

stability of Islamic economic system which imposes itself within the international

banking scene? Did that result in a situation that is in line with mainstream thinking

and did the jurists themselves held accountable in this world before they will be held

accountable before the Lord of the lords, who descended His Shari’ah to be the

ruler not ruled, to be followed not to the subordinate? Was the resolutions firm or

flexible and do they need to undergo a review process, without the negligence of

the scholar about the practical picture on the basis of transactions, according to

those resolutions?

I was requested by Dr. Abdul Sattar Abu Ghuddah to review the following

resolutions:

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Decision (1-6): Guaranteeing capital deposited as part of the requirements of
the law

Situation – Islamic banks are established in non-Muslim countries, where according

to the local laws, a bank must guarantee the capital that is deposited with it.

So, what is the Islamic ruling on this?

The resolution is divided into sections, as follows:

1. It is permissible for the Al-Baraka Banking Group to establish Islamic banking

activities in London (United Kingdom), and adhere to the laws and system of

the United Kingdom.

This section is not jurisprudentially scrutinized. It was done in a rush without going

through a thorough thinking process.

In my view, the methodology requires an explanation on:

1. The ruling on migrating to a non-Muslim country;

2. The ruling regarding someone who embraces Islam while remaining in his

present locality, which is not Islamic;

3. The need to establish Islamic banks;

4. The local laws (e.g. as per the above) that contravene the Shari’ah;

5. Is this interest (maslahah, not riba) illusory or falls under a benefit that is

recognized by Islam (maslahah muktabaroh)?

For 1 and 2, indeed, according to the texts before me, the scholars of the Maliki

School of Thought had carefully studied this issue. And the Mudawwanah (one of

the books of the Maliki School of Law) had specified a book on trading in an enemy

country. As far as I know, this was not discussed in the books of the other Schools

of Thought.

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Imam Malik said in the Madawwanah, “I told Ibn Qosim, ‘Did Malik dislike someone

who conducts business in an enemy state? He said, ‘Yes, Malik dislikes it strongly,

he says: He should not go to countries where the rulings of infidelity prevail.”

(Mudawwanah, vol. 7, p. 253).

The text of Mudawwanah is based on a certain general principle that is the

consequences of faith is to enter under the rules of Islamic law and being a  ‘total

Muslim’, i.e. one that realizes the necessary commitments of a Muslim (But nay, by

thy Lord, they will not believe (in truth) until they make thee judge of what is in

dispute between them and find within themselves no dislike of that which thou

decidest, and submit with full submission; An-Nisaa, verse 65).

Ibn Rusd says,  “Malik was strongly disgusted on the notion of going to an enemy

country to trade by land and by air. According to Ibn Qosim while he was asked, he

once said, “Allah has provided for every soul an appointed time that will be reached

by it (time of death), and a livelihood. The rulings are based on things which I could

not see (one cannot predict the time of death and the amount of sustenance that will

be gained). The basis of this is that Allah makes migration from a non-Muslim

country to a Muslim country compulsory, with the goal of enabling Muslims to

practice Islam in its entirety. Allah says,  “… As to  those who believed, but did not

emigrate, you owe no duty of protection to  them until  they emigrate…” (Al-Anfaal,

verse 72). And He said, “Lo! as for those whom the angels take (in death) while they

wrong themselves, (the angels) will ask: In what were ye engaged ? They will say:

We  were  oppressed  in  the  land.  (The  angels)  will  say:  Was  not  Allah’s  earth

spacious that ye could have migrated therein ? As for such, their habitation will be

hell, an evil journey’s end; Except the feeble among men, and the women, and the

children, who are unable to devise a plan and are not shown a way. As for such, it

may be that Allah will pardon them. Allah is ever Clement, Forgiving (an-Nisaa,

verse 97 - 99).

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After Ibn Rusd had explained the rulings regarding the emigration or hijrah to

Medinah before the opening of Makkah, he made it clear that hijrah still remains

obligatory till the Day of Judgement. He  said,  “It is unanimously agreed that

whoever that embraces Islam from the land of infidelity, he/she must not stay there,

as the rulings of the unbelievers will be made compulsory on him/her. It is better for

him/her to emigrate to where Muslims live, where the rulings of Islam are practised.

The Prophet s.a.w. said,  “I am free from any Muslim living together with the

Mushrikin (unbelievers). However, with this migration, is not forbidden for the

emigrant to return to his country, provided that his country has been transformed

into a country of iman and Islam, as it was forbidden upon the Companions of the

Prophet s.a.w. to return to Mekkah which was preserved as a virtue for them.”

Then,  he  further  says,  “If an evidence is found in the Quran, Sunnah and the

Muslims have unanimously agreed upon it, that whoever accepts Islam while he/she

is in enemy’s territory (in a country that disbelieves Islam) he/she must emigrate to

a country of believers, then he should not stay among the unbelievers and live

together with them, so that he will not be subjected to their rulings in trading or other

things. Imam Malik dislikes it when someone stays in a country where those who

follow the path of Allah and His Rasul are mocked. How could one stay in a country

where Allah is disbelieved and the idols are worshipped besides Him? No one can

tolerate this, except a Muslim with a weak faith.”

He further says, “It is not allowed for any Muslim to enter a country of shirk for the

purpose of trading or other than for jihad (sacrifice of the Muslim). If he enters it with

other intentions willingly, i.e. not under duress, then doing so decreases his

shahadah and his leadership. (Al-Mukkadimmah wal Mummahidat, Vol. 2, page

151/54).

Ar-Rajajih based his statement on  Ibn Rushd’s stance. He starts with a summary,

which goes  thus,  “There are two types of buying and selling with the unbelievers;

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one are with unbelievers who are the enemies of the Muslims; second are Ahl
dhimmah (those who are secured under Muslim territory with an agreement). For

the first type, the transactions may be done in their territory or in the territory of the

Muslims. All Schools of Thought agreed that the former is not allowed.” Then, Ar-

Rajajih summarized the statement of Ibn Rushd and based his judgement on it

(Manahij Tahsil, Vol. 7, page 75).

The statement mentioned by Ibn Rushd was extracted by Abu Dawood: Reported

Jarir Ibn Abdullah he said,  “The Prophet s.a.w. sent a troop of army to Khath’am,

some people among them quickly hold to sujuud. But eventually, they were all killed.

He said, when the Prophet s.a.w. was informed about this, he ordered for them to

be paid half blood  money.  Then,  he  said,  ‘I am free from any Muslim residing

between the mushrikin. They said, ‘Oh you Prophet of Allah, why? He replied, ‘Their
fire is hidden cannot be seen. (Mukhtasar Munthir, Vol. 3, page 436).

Tirmizi also extracted it with the same word and ascription. He commented that

Imam Bukhari said that this hadith is mursal (a hadith reported by the tabi’i). It was

reported by Ismaeel bin Abi Khaleed from Qais bin Abu Hazeem from the Prophet

s.a.w. Munthir accepted it as irsal (a hadith reported by the tabi’i). An-Nasai also

extracted it as being mursal (sunan Nasai bi sharhi Suyuti wa Sindi, Vol. 8, page 76).

Abu Sulayman Al-Khattabi mentioned three meanings  for  the hadith. Firstly,  “their

Fire  is hidden cannot be seen”. The second one that he mentioned  is,  “Allah has

separated between the countries of Islam and Kufr. So, it is not allowed for a

Muslim to stay with the kuffar in their countries. So, if they kindle the fire, he (the

Muslim that remains with the unbelievers) will also be with them where he sees it.

The same meaning very close to this was also mentioned by Suyuuti, according to

Nihayah.

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Then, Abu Sulayman said, “This denotes that it is disliked/unfavourable for a Muslim

to enter Dar Harb  (enemy’s  land)  for  trading and staying  there for more than four

months (Vol. 3, page 437).

The aforementioned proof indicates clearly that it is impermissible for a Muslim to

stay in the land where Islam has no authority. However, of course it does not

mention about the ruling on opening a bank. This fiqh is related to the situation that

the Islamic world found itself in. Surely, it actualizes the independence of the Islamic

world and realizes unity and boosts the power of Muslims.

And I summarized it, after looking at the facts and the Quranic texts, I would like to

mention here what the great scholar of Islam, Ibn  ‘Ashoor  said  regarding  the

meaning of the verse in surah an-Nisaa,  “Indeed, the analogical deduction

regarding the ruling of this verse will open up a view for the mujtahidin concerning

the rulings on the obligation to leave a country where  Mukmin is being troubled
to practice his religion, these rulings are contained by six cases.

Case 1: If a Muslim lives in a country where he is disturbed in the course of

practising his faith and compelled to kufr, and he is able to get away from the
situation, then the ruling on this person is similar to the Muslims whom the verse

was intended. For example, the Muslims migrated from Spain when the Christians

forced them to Christianity. They left their wealth and homes behind for the safety of

their lives. A few of them even perished on the way.

Case 2: If a Muslim is not disturbed in the course of practising his faith, but is

susceptible to afflictions to himself or to his properties; susceptible to being killed or

his properties confiscated, then, in this case, this person has exposed himself to

harm and this is indisputably impermissible. This is what is termed as staying in

the balad harb, i.e. enemy’s land.

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Case 3: A Muslim is in a country where the non-Muslims are the rulers. However,

those rulers do not prohibit the Muslims from practising their faith. Furthermore,

their lives, properties and honour are also safeguarded. Nevertheless, by being in

that country, the Muslims are subjected to the rulings of those Non-Muslim rulers.

Nowadays, this situation is akin to someone residing in Europe, where the majority

are Christians. Regarding this, Imam Malik clearly said that staying in this kind of

environment is strongly disgusted because the rulings of those non-Muslims will
apply on that person. This is also the clear statement of Mudawwanah, in the

chapter of trading to the land of harb.  And  this  is  the  interpretation  of  Malik’s
statement by the scholars of Qairawan, as it is in Risalah. The statement of

Lakhami, Ibn Muhriz and Abdul Haqq are also consistent with it. Sahnuun, Ibn

Habeeb, Abdul Hameed, Sohiq and Maziri interpreted it as being tantamount to

prohibition.

Case 4: The kuffar occupies a Muslim country and rule the Muslims by force.

However, they do not disturb the Muslims with respect to the practice of Islam and

do not seize their properties. In addition, the Muslims are allowed to practise Islamic

law, as the case was in Bulgaria when Roger Normanda occupied the country. It

also happened in Spain when a tyrant ruler among the people of Damascus

conquered the country, with the stipulation that  he  would  respect  the  citizens’

religion. In that particular situation, most of the citizens of that country stayed and

among them were scholars, who were judges.

Case 5: Non-Muslims have absolute power and authority over the Islamic countries,

where the Muslim rulers are allowed to continue to rule, i.e. the rulers will also be

chosen among the Muslims. In addition, their religion and religious rites will be

respected. The only thing is that in this case, with their consensus, the Muslims are

under the authority of the non-Muslims. This is what is called himayah (protection);

wisayah; (guardianship); intidaab (mandate) in the past two centuries.

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Case 6: A Muslim lives in the country where abominable actions and heresies are

too rampant, and there are many rulings that run contrary to Islam. However, they

are not forced to do something that contravenes the Shari’ah. In such a situation, a

Muslim can only try to reform the said country verbally, and not by way of concrete

actions (refer to the hadith on the levels of faith, i.e. action, then verbal and finally,

by way of intention). Malik was reported to have said that it is better for that person

to leave that country, as was mentioned by Ibn Qosim. However, in Qairawan,

during the days of Banu ‘Abiid, there is no evidence that the scholars of those days

called on people to leave the country. Even scholars like Muhammad Ibn Abu Zaid

remained in that country. This same occurred in Egypt, i.e. in the period of the

Fatimis.

Other than the above six, there are many other cases that allow Muslims to stay in

their countries. These cases characterize the stages in the Islamic civilization.

Indeed, the stay of the Muslims in their countries has most greatest advantage for

Islamic confederation, provided that they will not be troubled of their religion ( at-

Tahrir wa Tanwir vol 5 p. 178/180).

Thus, Muslims should continue to reside in a particular country, except when the

environment in that country prevents him from practising Islam.

Being consistent and in line with reality

A person who ponders over the situation of Muslims nowadays and their situation in

the previous centuries will not deny the present. He would rather look into the

subject matter meticulously and consider the reality, so that the prestige of the

Muslims would be brought forth and their full potential would be realized, without

neglecting the responsibility of spreading Islam worldwide.

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First: Those juristic points of view pronounced by the jurists was made during the

time when the Islamic world was venerated, powerful and not in need (generally) of

the non-Islamic countries, with its riches, sciences, and its level of civilization. This

is what made the faqih (jurist) say that only a person with weak faith will deal with

non-Islamic countries, as said by Ibn Rushd.

Second: The situation of the world today has changed. Eventhough it has not

reached the zenith of perfection, there are many international humanitarian

organizations that would ensure that the rights of Muslims are safeguarded, even if

they are in non-Islamic countries. Rather, they have facilitated Muslims to practice

his religion and to carry out what his creed makes compulsory on him to do, all

these have been mandatorily respected by the world treaty and the internal laws.

Third: The verse of Surah Al-Anfal, as it was pointed to by the hadith (no hijrah after

the opening (of Makkah)) is a verse directed to the Mukminin before the opening (of

Makkah). It summons them to join Rasullullah s.a.w. in Medinah, in order to bolster

the distinguished group of Mukminin whom Allah has first given the priority to Islam

and as Allah pointed it out in the Honorable Quran. This is a support for this religion.

The Prophet s.a.w. did not permit any one of those people to return to Makkah until

after the conquest.

However, regarding the verse of Surah An-Nisaa, the global system does not permit

someone to move freely between countries, without a known complicated process

for a limited period. So, for instance, he who embraces Islam in Holland cannot

migrate to an Islamic country. If he enters any Islamic country and overstays, he will

be forced to leave, that is if a punishment has not been descended on him.

Fourth: Indeed, the Quran consists of general principles that can never change.

These principles are the rules of Allah for Its creatures and it is the task of human

beings to practise Islam. Allah the Highest said, “It is He Who has made the earth

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manageable for you, so traverse through its tracts and enjoy of the Sustenance

which He furnishes, but unto Him is the resurrection (Al-Mulk: verse 16).

The above verse is a permission from the Lord of the Earth to His creatures to move

onto the Earth that which He made tractable as the balky beast lowers itself for its

rider to ride it to anywhere he wishes. This verse is general in nature. It includes all

the places on earth where mankind can thrive and actualize the khilafah. This verse

does not restrict traveling to places of the same religion, as he is not facing hardship

to practise his religion, and his honour, property and rights are not compromised. So,

based on this principle, I prefer the view that the righteous Mukmin can go

anywhere, so far he is safe with his religion, property and honour, and he is

summoned to travel on all the surface of earth, not a mere movement, but, it is a

movement that brings along the concept of good khilafah that is considered by Lord,

the Owner of the great Throne in the creation of mankind, and commissioned them

with it, so that they can benefit from what Allah has created (and eat from His

sustenance) (He is the One who creates for you all things on the earth) (Surah

Baqarah: verse 29).

The hadith  that was  reported,  “I am free from any Muslim who lives together with

the Mushrikin.” It has been said by us that the hadith is mursal (a hadith narrated by

the tabi’i). The meaning of the hadith, according to the story that was mentioned in it

is that a Muslim army was sent to an enemy country. There, the Muslim army

encountered a group of Muslims that have been staying in that country, i.e. among

the unbelievers. Consequently, in the heat of battle, the local Muslims were killed by

the army, although during the battle, the local Muslims prostrated to show that they

are of the same faith as the soldiers. The army commander justified his actions by

saying that anyone can prostrate; even non-Muslims can pretend to prostrate; it is

not the sign of faith. So, in this case, the local Muslims were mistakenly killed, as

their faith was not known to the army.

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It is known that if the ruler or his deputy did a mistake, he will be held responsible to

pay the blood money for the mistake done. The Prophet s.a.w. informed that he is

free from the blood of those that continue to mingle with the unbelievers and is

subsequently killed in the battle with the unbelievers of whom they stayed with.

There is no indication in the hadith that that person has left the religion of Islam to

stay with the unbelievers. If Allah and His Rasul disowned certain people, it is

because of their weak faith that made them stay in non-Islamic countries, as in the

word of Allah the Highest, “And an announcement from Allah and His Messenger, to

the people on the day of the Great Pilgrimage, that Allah and His Messenger

dissolve (treaty) obligations with the Pagans (Surat At-Tauba: verse 3)

Fifth: The level of knowledge and the economic status of the Islamic world today

compel Muslims to go beyond the borders of the Islamic world. If Muslims remains

isolated from the world that has is far more advanced, in terms of scientific

knowledge and technology, Muslims will lag behind. So, Muslims must acquire the

science and technology from the non-Muslim world. If they do not do it, they would

not have the capability to innovate and market their products effectively. In relation

to this, many Muslims have had to migrate due to lack of employment opportunities

in their country. They are forced to migrate to secure a source of sustenance that is

not available in their country. Most of them support themselves and their relatives

that they left behind. Furthermore, the income earned overseas contributes to the

budget of their country. Thus, there are people from every country of the Islamic

world that are compelled to stay in non-Islamic countries, either for the short-run or

long-run, with the purpose being knowledge acquisition , medical treatment, trading,

working and others.

Sixth: Indeed, Allah obligated a general continuous obligation, that is for the

Muslims to propagate Islam to mankind. During the past, circumstances prevented

Muslims from doing this. They strived in the path of religious freedom in the world

and they did not compel anyone to enter into Islam.

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If we look at the history of the propagation of Islam, we would notice that Islam

spread to many countries by the virtue of determination and the character of the

Muslim merchants. In terms of Muslim population, the biggest country today is

Indonesia. Islam was conveyed to Indonesia with the virtue of Muslim merchants

who stayed there and did business with the inhabitants. Due to their character, Allah

assisted them to guide Indonesia, Malaysia and Burma, and those countries

became Islamic countries.

Islam was also propagated peacefully in China, Thailand and India. As another

example, in the Korean War, the participation of Muslims Turkish army personnel in

South Korea made it possible for Islam to expand into the Korean Peninsular. The

Muslims’  unity  augmented the presence of Islam there. Thereafter, most of the

commanders in the South Korean army got excited with Islam and promised to

spread it. Furthermore, Islam has become the second or third religion in many

European countries and in America. Some of those who embraced Islam have even

been elevated to positions of leadership, and command an influence in

organizations within the society.

Seventh:  The  obligation  of  the  Muslims’  solidarity  among  themselves  makes  it

necessary to help their brothers preserve the five necessities in these countries.

They can also safeguard the religion by inviting scholars to the country, so that the

scholars would help in their quest for knowledge and assist in the propagation of

Islam, and protection of wealth by purifying it from usury and from unlawful dealings.

And help in the process of establishing Islamic banks and enable Muslims to deal

with lawful things in saving their monies and transferring them; this is a perfect

necessary way to preserve the money.

Eighth: Some of the minor rulings that were imposed in the non-Islamic countries,

which are not deemed acceptable by the Muslim jurists must be solved one by one.

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For example, the issue of guaranteeing the capital in an investment venture,

whereby the investment manager is the trustee. However, he cannot be the trustee

and the guarantor at the same time, if losses are not due to his transgression and

negligence. This issue can be overcome by convincing the authority that this

investment is a partnership between the bank and the investor, or to call upon the

investors to create a cooperative fund between them that will act as a safety net

against losses.

However, I do not see the analogy between cooperative investment and cooperative

employee, because the analogical deduction here is between two things that are not

the same. The only similarity is the word ‘cooperative’. It is important to note that a

cooperative employee is entitled to receive his wages (guaranteed) regardless of

whether his actions led to profit or loss. However, cooperative investment is a

speculative activity, in which losses are possible, notwithstanding the fact that the

investment manager tried his best to realize a profit. Secondly, the employee is just

that; he is just an ‘employee’ of the investment vehicle. So, he does not have the full

information on the performance of the investment company, i.e. whether it is making

a profit or loss. Hence, guaranteeing the cooperative employee cannot be done.

Ninth: Indeed, the Islamic world should focus on the immigrants from non-Islamic

countries, so that those immigrants can be trained on Islamic behavior of integrity,

truthfulness in dealing, trustworthiness, how to give advice, and keeping promises

and being punctual. This is so that the immigrant will be instilled with the value that

the quest of life does not only concern the acquisition of sustenance alone, but also

the attainment of spiritual success. One must remember that Allah takes care of His

righteous servants, by giving them love and casts the feeling on admiration in the

hearts of His creatures.

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Acceptance of shares as mortgage for the shareholders in a riba-based bank
(11/7)

Money does not become haram just because it is deposited into an unlawful entity.

According to the word of Allah, the  Exalted,  “If you repent, your principal money

(capital) is yours, you should not oppress and you would not be oppressed.”  (Al-

Baqarah: verse 279). Eventhough the money is used usuriously, the money will

remain halal, in contrast to the status of the consequential activities arising from the

utilization of the money, which is haram. For this reason, I legalize the fatwa. I do

not see any flaw in it for specific circumstances.

The use of the expression ‘interest’ as an alternative to ‘profit’ or ‘returns’ (6/2)

I paused while reading the text in the paragraph. In a situation where the activities

of a financial institution are not  revealed, does  the  term  ‘interest’ carry a negative

connotation?

If it has a negative indication, how would the owner of the account benefit from

altering the term ‘interest’ to ‘profit’?

On the other hand, in Islamic jurisprudence, there is a ruling on the prohibition of

being in a place that resembles a bar, i.e. liquor is consumed and etc., even if the

drinks served are lawful. What I see is that priority has been given to the like of

these fatwa upon the precise rulings regarding the connection of prohibition and

imaginary negativities.

Indeed, imaginary haram cannot be converted into something that is halal and vice

versa. As an illustration, the people of Makkah used copper bowls to drink zamzam

water. At the same time, copper bowls are also commonly used by some people to

consume liquor. So, the similarity here is the utensil used. Hence, can we then say

the status of zamzam water is changed from halal to haram just because of the

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utensil used? Of course not. When Allah made liquor haram, He said it is filth of the

work of Satan. He also  said  regarding  the  water,  “He sends down from the sky

water to cleanse you with it.”

The matter is connected with the distinguished concept of usury that is correlated

with time and the increase in the amount of money. If this does not happen (time-

value correlation), then there is no way to pass a ruling that the transaction is

usurious. That is why I issued this fatwa. Unless if the specialists in this field think

that this fatwa needs some modification due to certain aspects that I have

overlooked, my fatwa remains.

Buying the shares of companies that sometimes deal with riba-based banks
(lending and borrowing) (6/5)

There is an answer for this, which is obviously not consistent with the view of the

majority:

Legalizing the participation in these companies with the intention to reform the

companies, with the end game of Islamizing they way they conduct their business,

provided that the core business of the companies are lawful. This ruling does not

include a reasonable time frame for the execution the aforementioned intention.

Doing so would mean that the goal of Islamizing the companies would not be

achieved at all.

It is a must to tell the shareholders that they need to do away with the forbidden

aspects of unlawful transactions for the benefit of the public (maslahah ‘ammah). All

kinds of usurious interest must also be avoided, including transactions that are

based on interest-based loans. Furthermore, the profit generated from those

transactions must not be taken. In this matter, one must remember that for clear cut

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elements, the ruling are either it is allowed (halal elements) or it is prohibited (haram
elements). For unclear elements (syubhah), it is better to avoid it.

The fatwa regarding the legality of buying the shares of companies in non-Islamic

countries: it is legal, with one condition: if they have no other alternatives. My

comments on this answer are:

1. I am not aware of any ruling by any Muslim jurist, which legalizes the

partnership between Muslims and non-Muslims, on the basis that the

company will be fully controlled by the non-Muslims;

2. I am not aware of any ruling by any Muslim jurist, which legalizes the act of

investing in companies that deal with unlawful transactions, if there is no

other alternative;

3. This fatwa may lead to unfavourable consequences upon the Islamic

economic system, because it will open the door for the expatriation of Islamic

capital into other countries, while the capitalists (the owner of the capital) do

not exert effort to create Shari’ah-compliant projects in their countries. So,

such a fatwa will be used by them to justify their action of investing in non-

Islamic countries, where there is no halal investment avenue;

4. This fatwa has closed the door for the discussion on the ruling of profits

resulting from these shares, i.e. whether they are halal or haram. So, we

cannot conclude by saying that is it legal to do so. We must remember that

those who are in charge of the said companies do not consider Islamic

rulings in their operations and they do not regard it as being important.

-  However, what was found in (j) its detail meaning is unclear to me, so it is

impracticable.

The procrastinating debtor

The answer to this issue involves three aspects:

18

The first one is on the permissibility of making it binding for the procrastinating

debtor to pay compensation to the creditor, i.e. for the damage that is caused to the

creditor, due to delayed payment. This is based on the Hadith reported by Imam

Bukhari, Muslim, Tirmidhi, Nasaai, Ibn Maajah,  Imam  Ahmad  and  Shafi’I,  “The

procrastination of the rich person is injustice and it is authorized for his honour to be

relegated and subject him to be punished.”

However, I observe that the Hadith does not indicate that the debtor is to be fined

for delayed payment. With  regard  to  ‘subject him  to be punished’,  there are many

types of punishments, e.g. disciplinary action, imprisonment and of course, fine. The

inference that the punishment mentioned in the Hadith refers to fine is an act of

generalizing the meaning of the Hadith.

Imam al-Baaji gave a comment on the phrase ‘his punishment’ when some scholars

opine that it means ‘jail him until he pays his debt’. (al-Muntaqa, Vol.5/26). It seems

that Imam al-Baaji has referred to what has been reported by Imam Bukhari, i.e.

that  the Prophet  said,  “The procrastination of the rich person is injustice and it is

authorized  for  his  honour  to  be  relegated  and  subject  him  to  be  punished.”  The

chain of narration for this Hadith is under the category of good transmission. Imam

Sufyaan said that ‘his punishment’ means that the debtor is to be jailed, in order to

punish him as being an unjust person, and the injustice that he has done is

prohibited, even if is very small (the comments of al-Qastalaani, vol.223, and Fayd

al-Qadir, vol.5/400).

And what is also important is to remind ourselves that one cannot be punished,

except through a judge. So, only a judge can decide whether the debtor is to be

punished through a fine or through other methods. In this regard, the creditor has no

right to impose such a fine upon the debtor.

My opinion on this issue and its proof:

19

The Islamic banking industry needs funds and calls upon devoted Muslims to

support it, in order for it to be strong, developed and used by more and more

quarters within the global landscape.

It has been noticed that there are some people who just get themselves involved in

the financial system for the sole purpose of generating profit. Some of them take

loan from conventional banks, in which the payments to be made are related to time,

i.e. positive time preference/time value of money. At the same time, they also

procure financing from Islamic banks. With regard to the obligation of servicing the

loan/financing, the said parties will religiously service the loans taken from

conventional banks, making sure that they pay on time. On the other hand, for

financing obtained from Islamic banks, they tend to delay the payments, because

they know that there is no penalty for late payment. This attitude leads to the

reduction of profit for Islamic banks, as well as causing liquidity problems for the

concerned banks. Because of this, the issue of solving this problem has come to

our attention.

The question raised is, “Is it lawful to impose penalty on delayed payment, not to get

profit but to punish the procrastinating debtors?” The legal opinion put forth is

unanimous on fining. However, the views herein are divided into two directions, i.e.

the creditor and the general public, in the sense that which party will benefit from

the fine?

Based on the second view, by fining the debtor, indeed, it serves as a deterrent to

prevent blatant abuse of the financial facilities offered by Islamic banks. However,

the investors are not compensated. Furthermore, while the first view allows for the

debtor to be fined, it did not specify the quantum of the fine, which could later be

formulated to be in correlation with time (may lead to riba). The fine has to be

calculated accurately and we need to determine the differences between an extorter

and aggressor, because of the ambiguities related to the clear dichotomy of both

20

terms. This confusion has compelled Shaykh Ibn ‘Arafah to separate the two. So, he

defines al-ghasb (extortion) as,  “Taking  other  people’s  property  and/or benefit

unjustly and forcibly, not due to enmity; not valid seizure of properties, like the

seizure (istiila) of a slave’s property by his master; not a situation where a master

takes  his  slave’s  property  with  the  consent  of  the  said  slave;  not  a  situation  of

seizing the property (or its usefulness) of the slave by force. So, in jurisprudential

terminologies, all the aforementioned acts are not called ghasb. Even properties

taken forcibly by harbii (enemy) are not considered as ghasb, because it has been

exempted by the statement, ‘not  due  to  enmity’.  In  the  case of harbi, it is due to

enmity.

Then, he defined at-ta’addii (aggression) as,  “The utilization of something without

the prior permission of the owner, and without the intention to possess the object.”

So, he confined at-ta’addii on the seizure of the usufruct of something without the

intention to possess it. Ar-Rassaa’ mentioned in his commentary that Shaykh Ibn

‘Arafah realized that the following are considered as at-ta’addii:
1. Unintentional utilization of other people’s property and without lawful right;

2. Intentional utilization of other people’s property; and

3. Utilization  of  other  people’s  property without their permission or the

permission of a judge/someone that acts on the owner’s behalf (e.g. agent).

Therefore, the aggression of lenders, employees and strangers will be included in

at-ta’addii (Sharih Huduud Ibn ‘Arafah, page 350-352).

The origin of this realization came from Imam Al-Maziriyy. During his explanation on

at-telqiin he (may Allah be pleased with him) raised a contradiction, stating therein

that, “The statement on unjust appropriation of properties, using the word at-ta’addii
and ghasb has been circulated among the scholars. The  scholars’  way  of

segregating between ghasb and at-ta’addii is different. The best elucidation on this

segregation is that a muta’addii (aggressor) has the following attributes:

21

1. Uses another person’s property without the said person’s prior permission;

2. Does not intend to own the property; and

3. Does not cause the property to be non-usable by the owner, i.e. the owner

can still use the property in the manner that he usually employs.

Imaam Sahnuun is of the view, “In the case where a person has no right to the profit

generated through the disposal of the property taken, he would be considered as

ghasib (extorter). However, the following are considered as muta’addii (aggressor),

if they transgress upon the authority given to them, as follows:

1. Leaseholder (muktarii);
2. Borrower (musta’iir);
3. Half slave (mubdi’); and

4. Business operator (mudharib).”

According to Ibn al-Mawaaz, he opined that those who cannot guarantee the

subject matter of something, due to the small defects that he caused to it, is an

aggressor but not an extorter. On the other hand, those who can totally guarantee

the value of a subject that suffer from small defects that he caused to that it is an

extorter. (Manuscript (Makhtuut) of commentary on at-Talqiin, the National Public

Library (Dar al-Kutub al-watoniyyah) of Tunisia, 167 pages).

Through studying the sayings of earlier scholars, it can be said that for an aggressor,

he acquired something lawfully at the beginning. Then, he exceeded the limits that

have been prescribed by the owner. Examples of this are as follows:

1. A mudharib who invests the mudharabah capital and exceeds the limits

specified by the capital provider;

2. A borrower who does not pay on time;

3. A trustee who utilizes the asset that has been entrusted to him, like as if he is

the owner (even if he does not intend to possess the asset); and

4. A debtor who delays the payment of his debt.

22

Initially, all the above enter into a lawful arrangement with the principal. However,

their subsequent attitude deprives the owner from utilizing his asset, without his

consent. This attitude constitutes aggression.

What concerns us here is with regard to the ruling to be applied on the

procrastinating debtor. Will he be fined for the duration that constitutes depriving the

lender of the use of money that is still owed by him?

Imaam Maaziri said that, “In the case of money, if the extorter only used the money

for consumptive spending purposes and not for trading, then he will not be liable for

the profit that might be generated by trading with that money. This is based on a

famous opinion in the Maliki School of Law. This is because since the profit is non-

existent, he cannot be made responsible for it.”

However, it is compulsory for him to be responsible for the amount of profit that the

owner may have possibly earned if he traded with the capital. In this regard, the

debtor must replace the amount that the lender may probably earn if he transacted

with the capital. This is the view of Abdul-Malik bin Maajishuun, which is based on

an earlier ruling that makes it compulsory for a person who seizes a house and

closed it (i.e. not staying in the house) to pay the rental that the owner might have

earned from renting out the house.

From the ruling issued by the scholars, it is clear that that the earlier scholars have

estimated the right of the owner of the property in utilizing his property. If someone

intervenes between him and his property, the extorter will be responsible for the

probable gains that he could have earned.

With the utilization of accurate mathematical method, there is no hindrance in

charging a fine on the financially capable procrastinating debtor, i.e. a fine that is in

23

proportion to the profit realized by them during the period of delay. As this is

legitimate money, it is not necessary to spend it for charity.

It is Allah alone who Knows and is Perfect. There is neither deceit nor power,

except by Allah, the Most High and Great. May Allah bless our Imam and our

Prophet Muhammad s.a.w. and his Household, and his Companions.

Translated and edited by:
Sa'id Adekunle Mikail and Mohammad Ashadi Mohd. Zaini (ashadi@isra.my)

mailto:ashadi@isra.my


BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
Shari'ah, Law, Islamic Finance and Muslim News
Daily Archives: August 8, 2014
August 8, 2014
DR. ZULKIFLI HASAN
ISLAMIC FINANCE IN MALAYSIA TODAY AND THE WAY FORWARD
ISLAMIC FINANCE IN MALAYSIA TODAY AND THE WAY FORWARD
Zulkifli Hasan
Islamic banking has emerged as an alternative and competitor to the commonly used conventional banking system.  Since its establishment, the system has been slowly adapted into the existing banking system and has proven its effectiveness and sustainability. In fact, it is reported that Islamic banking sector grew 50% faster than the overall banking sector. In 2011 alone, Islamic banking assets with commercial banks grew to USD1.3 trillion and expected to grow to USD2 trillion by the end of 2014. With the experience of more than 30 years, Malaysia is now witnessing tremendous development in Islamic banking and considered as one of the fast-growing and leading countries in the sector particularly in terms of growth of demands, regulatory reforms, corporate governance framework and Shari’ah advisory.
Islamic finance will grow with rapid pace in the year 2014 and its volume will pass through USD2 trillion, with Islamic banking dominating at 78%, sukuk at 16%, takaful at 1%, Islamic funds at 4% and Islamic microfinance with 1%. In 2013, global Islamic banking asset with commercial banks alone reach USD1.8 trillion representing 17% average annual growth. It is estimated that Islamic finance will be able to tip USD6.5 trillion by the year 2020 with the current growth rates.
In line with the consistent growth globally, Islamic banking in Malaysia is also experiencing considerable growth. In 2013, Malaysia has 16 full-fledged Islamic banks, 12 Takaful operators, five international Islamic banks and six development financial institutions that offering Islamic financial services and products. With the additional players including foreign Islamic banks, the Islamic banking industry in Malaysia has shown significant progress with market share increased up to 24.4% of the total banking system. Total Islamic financing continued to grow 16.6% and represented 26.9% of total loans in the banking system with the household sector continuing to account for the bulk of Islamic financing at 65.9%. Not only that, 799 Shari’ah-compliant securities were listed on Bursa Malaysia, representing 87.7% of the total listed securities, with a market capitalization of RM995.7 billion or 63.7% of the total market capitalization.
The legal framework of Malaysia’s Islamic finance system has undergone a tremendous change with the enforcement of the Islamic Financial Services Act 2013 (IFSA) and the Financial Services Act 2013.  These laws, which came into force in June 2013, have replaced the existing Banking and Financial Institutions Act 1989 (BAFIA), Islamic Banking Act 1983 and Takaful Act 1984. The new laws provide BNM with the necessary regulatory and supervisory oversight powers to fulfill its broad mandate within a more complex and interconnected environment, given the regional and international nature of financial developments. The law is also expected to place Malaysia’s financial sector, on a platform for advancing forward as a sound, responsible and progressive financial system. The IFSA contains 291 sections which covers numerous aspect of Islamic banking system from the establishment of an Islamic bank or financial institution and its winding up until the enforcement framework for any offence under such law. The IFSA has provided the BNM with statutory duty to foster fair, responsible and professional business conduct amongst financial service providers. The IFSA is expected to promote robust financial consumer protection regime particularly in the aspect of unfair and deceptive business conduct and disclosure obligations and to provide clear demarcation between conventional and Islamic banking.
In discussing the recent development of corporate governance in Malaysia, it is important to highlight the legal consequence of the IFSA on corporate governance framework for IFIs. Generally, the IFSA provides a clearer and more comprehensive set of provisions for corporate governance for IFIs. The IFSA vests the BNM with wide ranging powers to issue standards, which are binding upon every director, officer or Shari’ah committee member of the institution. More importantly, section 28(6) of the IFSA provides that a failure to comply with the standards issued is an offence under the Act and carries with a maximum penalty of eight years imprisonment or a fine of 25 million ringgit or both. In other words, this provision potentially exposes board or directors, management, officers and even Shari’ah committee members with heavy penalties including imprisonment. Therefore, IFIs are required to be more vigilant and diligent in carrying their business which failure may lead to potential jail terms and heavy fine to their personnel.
Shari’ah governance is one of the most developed areas of Islamic finance in Malaysia. Numerous efforts either top down initiatives by the BNM or bottom up endeavor by the practitioners shape the practice of Shari’ah governance. The International Shari’ah Research Academy for Islamic Finance (ISRA) and various Institutions of Higher Learning have been at the forefront in improving the Shari’ah governance related matters including research and development. The establishment of the Association of Shari’ah Advisors initiated by members of Shari’ah scholars further stimulates the degree of professionalism and talent development in Islamic finance. The level of awareness in the grass roots on Islamic finance is also increasing whereby Shari’ah scholars are now actively engaging the communities and civil society entities. To complement this, the mass media also have been very supportive by producing and publishing news, documentary, talk show and information on Islamic finance even during prime time hours.
Another interesting development of Shari’ah governance in Malaysia refers to potential exposure of Shari’ah scholars to jail terms for rule breaches as stipulated under the IFSA. As the only legislation of its kind in the world at this point of time, the IFSA makes Shari’ah scholars accountable and liable for their duties. This is very significant to the practice of Shari’ah governance as any Shari’ah committee members may be jailed for up to eight years or fined up to RM25 million which is equivalent of approximately USD7.6 million if they fail to comply with the rules. This latest development also raises another issue of having professional indemnity Islamic insurance as in the case of advocate and solicitor or medical practitioners.
Malaysia as one the Islamic finance leaders in the world has extensively facilitated the implementation of Islamic finance by enhancing their policies to suit with the domestic and global market behavior. With the understanding that strong, efficient and robust regulatory framework and balance with certain degree of flexibility will lead to market stability, Malaysian financial authorities are consistently enhancing and improving the Islamic banking framework through comprehensive means and various initiatives. These formulae seem working well as we can clearly witness the tremendous development in term of growth in market share, banking asset including the increase of domestic and global players. Year 2014 evidences another true potential of Islamic finance in Malaysia as it contributes not only to the economic development but also stimulates human capital initiatives and generates more opportunities. As Malaysian market is relatively small, Islamic finance players have no other options but to venture into more dynamic and competitive global market. In this regard, we must be ready to compete by offering competitive and universally accepted products and services.
Regards

Zulkifli Hasan
Tokyo, Japan
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BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
Shari'ah, Law, Islamic Finance and Muslim News
January 20, 2010
DR. ZULKIFLI HASAN
Islamic Finance Educational Hub in the UK
Islamic finance hub opened at Aston Business School
By Anna Blackaby: Available at:
http://www.birminghampost.net/birmingham-business/birmingham-business-news/financial-business-news/2010/01/19/islamic-finance-hub-opened-at-aston-business-school-65233-25628043/
Birmingham’s hopes to position itself as a centre for Islamic finance have moved up a notch after Aston Business School launched a ground-breaking Islamic Finance and Business Centre – the first of its kind in Europe. The centre has been developed as a result of a £1.5 million grant from Dubai-based business Surgi-Tech, the largest gift on record for the university.
It will be used to develop qualifications and advance research in the Islamic finance field. To be named after the director of Surgi-Tech, the El Shaarani Centre for Islamic Finance and Business will develop a suite of qualifications on Islamic finance for 2010, including undergraduate, postgraduate, PhD and executive programmes.
It will also continue with research into Islamic Finance and Shariah-compliant business, developing Islamic finance solutions for companies and providing an advisory service to the government and the commercial sector. The university said the sponsorship came as a result of Aston Business School’s excellent global reputation and the prestige of associating a Middle Eastern company with a UK university.
Dr El Shaarani, chief executive of Surgi-Tech Group, Dubai, said: “We are honoured to sponsor a UK business school as prestigious as Aston and help to fund research that will explore the role of Islamic finance in the future global financial system. “We believe that the creation of this centre will result in the development of new financial tools that will attract greater foreign investment to the West Midlands region. We look forward to continuing a prosperous relationship with Aston University.”
Dr Omneya Abdelsalam, Director of the Islamic Finance and Business Centre, Aston University, added: “We’d like to take this opportunity to thank the Surgi-Tech Group for their generous support. With their assistance, Aston has established this centre to meet the growing interest in Shariah-complaint finance across the world.
“Through the centre we will educate the next generation of Islamic economists and business leaders – both nationally and internationally. “Our research will allow us to investigate how mainstream financial institutions can learn from Islamic finance practices in their recovery from and avoidance of the next global economic crisis.”
The El Shaarani Centre for Islamic Finance and Business plans to exploit Birmingham’s large concentration of professional financial and legal services and culturally diverse business community to reposition the city as a centre for Islamic finance. A suite of executive education programmes in Islamic finance will be launched by Aston Business School in summer 2010, followed by a Masters qualification in the subject in October.
“The difference between school and life? In school, you’re taught a lesson and then given a test. In life, you’re given a test that teaches you a lesson.” Tom Bodett
Best Regards

ZULKIFLI HASAN

DURHAM, UK
With Sheikh Amen Fatih in Dubai.
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BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
Shari'ah, Law, Islamic Finance and Muslim News
Daily Archives: March 14, 2010
March 14, 2010
DR. ZULKIFLI HASAN
Dubai Financial Services Authority Launches Islamic Finance Handbooks
DFSA Launches Electronic Islamic Finance Handbooks

Available at:
http://www.dfsa.ae/WhatsNew/DispForm.aspx?Id=131
The Dubai Financial Services Authority (DFSA) has launched a series of electronic Islamic finance tailored handbooks, designed to help Firms undertaking Islamic finance activities in the Dubai International Financial Centre (DIFC). The Islamic finance handbooks are designed to assist with the identification of the DFSA’s Rulebook requirements applicable to financial activities conducted as Islamic or Shari’a compliant.
The five tailored handbooks relate to five different types of Islamic finance activities. Each handbook contains the parts of the DFSA Rulebooks which apply to that particular area of activity namely: Islamic Banking; Islamic Investment Business, other than Operating Funds; Islamic Insurance; Islamic Insurance Intermediation and Management; and Operation of Islamic Funds.
The Chief Executive of the DFSA, Mr Paul Koster said: “Islamic finance has witnessed tremendous growth and as such is an important area of focus for the DFSA. We want to provide the industry with improved access to our framework of Laws and regulations which is why we have created the Islamic finance tailored handbooks. By improving our delivery of information to Firms conducting Islamic finance activities, we hope that the handbooks will help Firms access the requirements that apply to their Islamic finance activities more easily.”
The electronic handbooks are available on:
http://www.complinet.com/dfsa/display/display.html?rbid=3022&record_id=1
“Writing a book is an adventure. To begin with, it is a toy and an amusement; then it becomes a mistress, and then it becomes a master, and then a tyrant. The last phase is that just as you are about to be reconciled to your servitude, you kill the monster, and fling him out to the public.” Winston Churchill
Best Regards

ZULKIFLI HASAN

DURHAM, UK
Statue of Liberty, New York
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(4/19) 178قرار رقن

 بشأى

وتطبيقاتها الوعاصرة وتداولها( التىريق ) الصكىك اإلسالهيت

ئْ ِجٍظ ِجّغ اٌفمٗ اإلعالِٟ اٌذٌٟٚ إٌّجضك ػٓ ِٕظّخ اٌّإرّش اإلعالِٟ إٌّؼمذ فٟ
جّبدٜ  5ئٌٝ  1ِٓ ( دٌٚخ اإلِبساد اٌؼشث١خ اٌّزذذح ) دٚسرٗ اٌزبعؼخ ػششح فٟ ئِبسح اٌشبسلخ

26٘ـ ، اٌّٛافك 1430ٜ األٚي – َ ،2009( ئثش٠ً ) ١ٔغبْ 30

) الصكىك اإلسالهيت ثؼذ اؽالػٗ ػٍٝ اٌجذٛس اٌٛاسدح ئٌٝ اٌّجّغ ثخظٛص ِٛػٛع
،ٚثؼذ اعزّبػٗ ئٌٝ إٌّبلشبد اٌزٟ داسد دٌٛٗ ، وتطبيقاتها الوعاصرة وتداولها ( التىريق

:قرر ها يأتي

:الوقصىد بالتىريق ، والتصكيل : أوالً

ِزغب٠ٚخ اٌم١ّخ لبثٍخ ٌٍزذاٚي ، ( عٕذاد)اٌزٛس٠ك اٌزم١ٍذٞ رذ٠ًٛ اٌذ٠ْٛ ئٌٝ أٚساق ِب١ٌخ
ٚ٘زٖ اٌغٕذاد رّضً د٠ٕبً ثفبئذح ٌذبٍِٙب فٟ رِخ ِظذس٘ب ٚال ٠جٛص ئطذاس ٘زٖ اٌغٕذاد ٚال

.رذاٌٚٙب ششػبً

ح اٌم١ّخ فٙٛ ئطذاس ٚصبئك أٚ شٙبداد ِب١ٌخ ِزغبٚٞ( اٌزٛس٠ك اإلعالِٟ)أِب اٌزظى١ه
أػ١بْ أٚ ِٕبفغ أٚ دمٛق أٚ خ١ٍؾ ِٓ األػ١بْ )رّضً دظظبً شبئؼخ فٟ ٍِى١خ ِٛجٛداد

لبئّخ فؼالً أٚ ع١زُ ئٔشبؤ٘ب ِٓ دظ١ٍخ االوززبة ، ٚرظذس ٚفك ػمذ ( ٚإٌّبفغ ٚإٌمٛد ٚاٌذ٠ْٛ
.ششػٟ ٚرأخز أدىبِٗ

:خصائص الصكىك : ثانياً

.ٍِى١خ دم١م١خ ٠ّضً اٌظه دظخ شبئؼخ فٟ              (1)

.٠ظذس اٌظه ػٍٝ أعبط ػمذ ششػٟ ، ٠ٚأخز أدىبِٗ              (2)

( .اٌّؼبسة أٚ اٌٛو١ً أٚ اٌشش٠ه اٌّذ٠ش )أزفبء ػّبْ اٌّذ٠ش              (3)

ً اٌخغبسح ثمذس اٌذظخ اٌزٟ ٠ّضٍٙب              (4) ّّ أْ رشزشن اٌظىٛن فٟ اعزذمبق اٌشثخ ثبٌٕغجخ اٌّذذدح ٚرذ
طه ، ٠ّٕٚغ دظٛي طبدجٗ ػٍٝ ٔغجخ ِذذدح ِغجمبً ِٓ ل١ّزٗ االع١ّخ أٚ ػٍٝ ِجٍغ ِمطٛع اي

 .

.رذًّ ِخبؽش االعزضّبس وبٍِخ              (5)

رذًّ األػجبء ٚاٌزجؼبد اٌّزشرجخ ػٍٝ ٍِى١خ اٌّٛجٛداد اٌّّضٍخ فٟ اٌظه ، عٛاء وبٔذ األػجبء              (6)
.فٟ اٌم١ّخ، أٚ ِظشٚفبد اٌظ١بٔخ، أٚ اشزشاوبد اٌزأ١ِٓ  ِظبس٠ي اعزضّبس٠خ أٚ ٘جٛؽبً

:أحكام الصكىك : ثالثاً

ال ٠جٛص أْ ٠زؼٙذ ِذ٠ش اٌظىٛن ثالشاع دٍّخ اٌظىٛن أٚ ثبٌزجشع ػٕذ ٔمض اٌشثخ اٌفؼٍٟ ػٓ              (1)
ػٗ ، ِٚب أْ ٠زجشع ثبٌفشق ، أٚ أْ ٠مش –ثؼذ ظٙٛس ٔز١جخ االعزضّبس  –اٌشثخ اٌّزٛلغ ، ٌٚٗ

. ػشفبً ٠ؼزجش وبٌزؼٙذ ٠ظ١ش

ِذ٠ش اٌظىٛن أ١ِٓ ال ٠ؼّٓ ل١ّخ اٌظه ئال ثبٌزؼذٞ أٚ اٌزمظ١ش أٚ ِخبٌفخ ششٚؽ اٌّؼبسثخ              (2)
. أٚ اٌّشبسوخ أٚ اٌٛوبٌخ فٟ االعزضّبس

ح أٚ ثبٌم١ّخ اٌزٟ ٠زفك ال ٠جٛص ئؽفبء اٌظىٛن ثم١ّزٙب االع١ّخ ثً ٠ىْٛ االؽفبء ثم١ّزٙب اٌغٛلٟ             (3)
. ػ١ٍٙب ػٕذ اإلؽفبء

٠شاػٝ فٟ اٌظىٛن ِٓ د١ش لبث١ٍزٙب ٌٍزذاٚي االٌزضاَ ثبٌؼٛاثؾ إٌّظٛص ػ١ٍٙب فٟ لشاس              (4)
: اٌزب١ٌخ ( 3/4)30: ِجّغ اٌفمٗ اإلعالِٟ اٌذٌٟٚ سلُ

. ٌظشفئرا وبٔذ ِىٛٔبد اٌظىٛن ال رضاي ٔمٛداً فزطجك أدىبَ ا          (أ )

ئرا أمٍجذ اٌّٛجٛداد ٌزظجخ د٠ٛٔبً وّب ٘ٛ اٌذبي فٟ ث١غ اٌّشاثذخ ف١طجك ػٍٝ رذاٚي اٌظىٛن      (ة )
. أدىبَ اٌذ٠ٓ ، ِٓ د١ش إٌّغ ئال ثبٌّضً ػٍٝ عج١ً اٌذٛاٌخ

 ئرا طبس ِبي اٌمشاع ِٛجٛداد ِخزٍطخ ِٓ إٌمٛد ٚاٌذ٠ْٛ ٚاألػ١بْ ٚإٌّبفغ فأٗ ٠جٛص رذاٚي       (ط )
طىٛن اٌّمبسػخ ٚفمبً ٌٍغؼش اٌّزشاػٝ ػ١ٍٗ، ػٍٝ أْ ٠ىْٛ اٌغبٌت فٟ ٘زٖ اٌذبٌخ أػ١بٔبً

أِب ئرا وبْ اٌغبٌت ٔمٛداً أٚ د٠ٛٔبً فزشاػٝ فٟ اٌزذاٚي األدىبَ اٌششػ١خ اٌزٟ عزج١ٕٙب . ِٕٚبفغ
.الئذخ رفغ١ش٠خ رٛػغ ٚرؼشع ػٍٝ اٌّجّغ فٟ اٌذٚسح اٌمبدِخ

.دٛاي ٠زؼ١ٓ رغج١ً اٌزذاٚي أط١ٌٛبً فٟ عجالد اٌجٙخ اٌّظذسحٚفٟ ج١ّغ األ

ال ٠جٛص أْ ٠زخز اٌمٛي ثجٛاصاٌزذاٚي رس٠ؼخ أٚ د١ٍخ ٌزظى١ه اٌذ٠ْٛ ٚرذاٌٚٙب وأْ ٠زذٛي  :رابعاً
اٌظٕذٚق ئٌٝ اٌّزبجشح ثبٌذ٠ْٛ اٌزٟ ٔشأد ػٓ اٌغٍغ ، ٠ٚجؼً شٟء ِٓ اٌغٍغ فٟ ٔشبؽ

.اٌظٕذٚق د١ٍخ ٌٍزذاٚي

: التىصياث

أطاللبً ِٓ أْ اٌشش٠ؼخ اإلعال١ِخ لبدسح ػٍٝ اعز١ؼبة اٌّغزجذاد ِٕٚٙب اٌذً ٌىً ِب
٠طشأ ٚاٌذىُ ػٍٝ وً ِب ٠غزجذ ، ٚأطاللبً ِٓ أْ اٌظىٛن اإلعال١ِخ رؼزجش اثزىبساً ألداح

ر١ٍ٠ّٛخ ششػ١خ رغزٛػت اٌمذساد االلزظبد٠خ اٌىج١شح فمذ رؼذدد ِجبالد رطج١ك اٌظىٛن ِٕٚٙب
ِٙب أداح فبػٍخ ِٓ أدٚاد اٌغ١بعخ إٌمذ٠خ أٚ فٟ ر٠ًّٛ ِٛاسد اٌجٕٛن اإلعال١ِخ أٚ اعزضّبس اعزخذا

فبئغ ع١ٌٛزٙب ، ٚفٟ ئػّبس اٌّّزٍىبد اٌٛلف١خ ، ٚر٠ًّٛ اٌّششٚػبد اٌذى١ِٛخ ، ٚئِىب١ٔخ
اعزخذاَ ٘زٖ اٌظىٛن فٟ اٌخظخظخ اٌّإلزخ شش٠طخ أْ ٠ىْٛ ػبئذ ٘زٖ اٌظىٛن ج١ّؼٙب ٔبشئبً

.ٚداد داسح ٌٍذخً ػٓ ِٛط

: فإى الوجوع يىصي بوا يلي

ػشٚسح اٌزضاَ اٌّظبسف اإلعال١ِخ ثبٌجذش ػٓ دٍٛي رٍجٟ اٌذبجبد االلزظبد٠خ ٚرٍزضَ     (1)
. ثبألدىبَ اٌششػ١خ

د١ش ئْ اإلؽبس اٌمبٟٔٛٔ ٌؼ١ٍّخ اٌزظى١ه ٘ٛ أدذ اٌّمِٛبد األعبع١خ اٌزٟ رإدٞ دٚساً د٠ٛ١بً فٟ     (2)
اٌزظى١ه فاْ ِّب ٠ذمك رٌه اٌذٚس ل١بَ اٌغٍطبد اٌزشش٠ؼ١خ فٟ اٌذٚي األػؼبء ٔجبح ػ١ٍّبد

ثا٠جبد اإلؽبس اٌمبٟٔٛٔ إٌّبعت ٚاٌج١ئخ اٌمب١ٔٛٔخ اٌّالئّخ ٚاٌذبوّخ ٌؼ١ٍّخ اٌزظى١ه ِٓ خالي
ئطذاس رشش٠ؼبد لب١ٔٛٔخ رشػٝ ػ١ٍّبد اٌزظى١ه ثّخزٍي جٛأجٙب ٚرذمك اٌىفبءح االلزظبد٠خ

.  ششػ١خ ثشىً ػٍّٟ ٚاٌّظذال١خ اي

 وهللا أعلن

Decision number 178 (19/4)

regarding

sukuk, its contemporary applications and its circulation

The International Council of Fiqh Academy (the Council), which is an offshoot of the

Organization of Islamic Conferences (OIC), in its 19
th

 session which was held in Sharjah, United

Arab Emirates, from 1 - 5 of Jamadil Ula 1430 AH, corresponding to 26 – 30 April 2009,

decided on the following:

Having reviewed the research papers that were presented to the Council regarding the topic of

sukuk, its contemporary applications and its circulation, and after listening to the related

discussions, the following were proposed:

First: Traditionally, sukuk is issued to convert debts into a monetary paper (documents), in which

its value is equal to the value that can be circulated. Sukuk represents a debt, in which the present

sukuk holder is accorded the same rights as the original owner. (It is the decision of the Council)

that it is impermissible for this type of sukuk to be issued and circulated.

However, a sukuk that is Shari’ah-compliant is defined as a document or monetary certificate

that is issued, in which it represents common share in the ownership of property (real property,

benefit from property, rights or a mix of real property + benefit from property + money + debts)

that are in existence or founded from the return of subscription, that are issued according in a

Shari’ah-compliant manner.

Second: Characteristics of sukuk:

(1) Sukuk represents common share in a true ownership.

(2) Sukuk is issued based on the Shari’ah.

(3) Absence of the issuer’s guarantee (the mudarib or the agent or the partner).

(4) Sukuk must be accompanied with a right to profit with a limited ratio, and to bear the loss

with the amount of share that the sukuk represents. It is prohibited for the returns accruing

to the sukuk holder to be guaranteed.

(5) The risks of investment are borne completely.

(6) The consequences of owning the sukuk, either in terms of the investment expenses or

decline in the value of the sukuk or maintenance expenses or insurance contribution must

be borne.

Third: Rulings on sukuk:

(1) The sukuk issuer is not allowed to write an undertaking to lend the sukuk or make good

the variance, i.e. if the real profit is less than the expected profit (before the actual

financial results are known). However, after the financial results are known, the issuer

can make good the difference or to lend it, and whatever has become custom will be

considered the undertaking.

(2) The issuer is the trustee, and will not be held responsible, except if it transgresses or is

negligent or does not comply with the stipulations of the mudarabah or partnership or

agency in the investment.

(3) The commitment to the stipulated criteria is considered in the sukuk, according to its

circulation, based on the decision of the Council number 30 (3/4), as follows:

(a) If the components of sukuk are still debts, the ruling of exchange will be applied on

them.

(b) If the existing sukuk become debts, as in murabahah, the the rulings of debts will be

applied on the circulation of the sukuk.

(c) If the sukuk is a mixture of money and debts, real property and beneficial property,

then the circulation of the sukuk is allowed, provided that most of the properties are

real and beneficial properties. But if most of the properties are money or debts, then

certain Shari’ah rulings need to be considered, i.e. with respect to the circulation of

the sukuk. This shall be explained in the next session.

In all situations, the circulation of the sukuk must be recorded.

Fourth: It is not allowed to say that circulation is allowed as a reason or deceit (hilah) to convert

a debt into sukuk and then to circulate it, as is the conversion of real economic activities to debt

trading that is based on real commodities.

Recommendations:

Verily, the Shari’ah is able to settle new issues and give ruling to every new issue. Verily, the

Shari’ah-compliant sukuk is considered a modification of existing Shari’ah-compliant financial

tools, and has enormous economic potential. The ways of utilizing sukuk are numerous, such as

for financing the development of a country, financing the operations of Islamic banks, improving

endowed properties, financing governmental projects and so on and so forth.

The Council recommends the following:

(1) Islamic banking institutions must commit themselves to research, to meet the economic

needs of the ummah, with due regard to ensuring compliance with the Shari’ah;

(2) The Shari’ah framework for the process of documentation is one of the major factors that

play a vital role in the success of documentation operations. That role can be actualized

by the existence of Shari’ah authorities in member countries, in which those authorities

create the suitable framework and the suitable Shari’ah environment that will assess the

documentation (taskik) during its issuance. Naturally, the taskik (documentation) differs

(depending on the type of sukuk), and each will contribute towards realizing economic

ability, while complying to the Shari’ah.

Allah Knows best.

Translated and edited by:

Ibrahim Ali and Mohammad Ashadi Mohd. Zaini (ashadi@isra.my)

mailto:ashadi@isra.my