|
DOCUMENTED
SHARI’AH – JURISPRUDENCE –
OPINIONS
A
Group of Pioneering Scholars Headed by
His Eminence Sheikh Dr. Yusuf Al-Qaradawi
– Algiers, Algeria – 1990,
originated this series of Fatwas
Translated from Arabic by Professor
Mahmoud Elgamal
1.1.
Translation of Selected Fatwa of Al-Baraka
Seminars - Seminar 6: --(pp.77-78)
Algeria 5-9 Sha’baan 1410 A.H. - 2-6
October 1990 C.E.
The sixth Baraka seminar was held in
Algeria during the period 5-9 Sha’baan
1410 A.H., 2-6 October 1990 C.E. In
addition to the scholars whose names are
listed below, representatives of Al-Baraka
and other Islamic banks were invited.
During
those five days, the seminar program
covered the practices of Al-Baraka Bank,
London, including issues raised by the
environment within which the Bank has to
operate. The goal of this review was to
find appropriate Shari’aa solutions to
said issues. In addition, branch
managers raised a number of questions,
which were also addressed by the
scholars.
The
participating scholars in this seminar
have issued a number of fatwas for the
relevant issues, based on the
explanations of specialists and
documents prepared by the Bank
management team in London The committee
of scholars in this seminar included the
following, after appointing Sheikh
Abdul-Hamid Al-Sa’ih as chairman, Dr.
Sami Homoud as secretary, and Dr. Abdul-Sattar
Abu-Ghuddah as assistant-secretary:
1.
Dr. Yusuf Al-Qaradawi.
2.
Dr. Abdul-Sattar Abu-Ghuddah.
3.
Dr. Muhammad Al-Mukhtar
Al-Salami.
4.
Dr. Yusuf Qasim.
5.
Sheikh Abdul-Hamid Al-Sa’ih.
Special
circumstances prevented Dr. Al-Siddiq
Muhammad Al-Amin Al-Darir from
participating in the seminar
deliberations. However, he had sent his
suggested answers to the paused
questions, which answers were
distributed to all participants along
with the other seminar papers. In the
event, his opinions were utilized in
composing the final fatwas.
1.2.
(6/2) – pp.81-82 Using the term
“interest” as an alternative to the
term “profit” or “rate of
return” when interest payments can
relieve the payers of certain financial
obligations
Question:
Is it possible to use the term
“interest” instead of the term
“profit” or “rate of return”,
without meaning in fact the essence of
interest, to benefit from the financial
advantages granted by the relevant
authorities in the West to interest
payments in the cases of deposit and
financing?
Fatwa:
The committee has reviewed some of the
legal benefits that the British tax
system gives to paid and received
interest in bank dealings.
Applying the principle for reviewing
transactions stipulating that what
matters in contracts are intentions and
substance – not words and forms – we
have reached a consensus that there is
no objection to using the term
“interest” as an alternative to the
term “profit” or “rate of
return”. This opinion is based on the
view that what is intended here is not
to effect Riba, which is forbidden in
Shari’aa. Thus, following our
deliberations, we reached the following
conclusion:
“Despite the fact that interest, as
conventionally used in banking
transactions, coincides precisely with
the Riba that is forbidden in Shari’aa
to pay or receive, and regardless of
whether the underlying transaction is a
consumption or production loan, we have
found that there is no objection to the
use of the term “interest” in the
cases related to those dealing with Al-Baraka
Bank, London, aiming to benefit from the
financial advantages given to interest
in various cases of deposits and
financing.
In this regard, it is imperative to
ensure that the term “interest” in
the sense described above is used only
in the forms required by entities other
than the bank, e.g. tax declaration
forms for depositors, or special forms
used in various financing cases.
However, if the intent is to change the
nature of the transaction to make it an
interest-bearing loan, then such
transaction will be fundamentally
impermissible.”
1.3.
(6/4) – pp.84-87 - The Al-Baraka,
London, Home Financing Contract Language
Question:
The contractual relationship between the
proposed partner and the Bank on the
basis of mutual possession of real
estate for sale in accordance to the
proportions advanced towards the
purchase price. Those proportions are
expressed in terms of shares, the value
of each of which is agreed upon at the
inception of the contract as £1 only.
This value remains constant throughout
the contract period. Moreover, the real
estate remains eligible for sale, to
allow the Bank to sell its shares on a
periodic basis (e.g. monthly) to the
buyer, or vice versa.
Accordingly, ownership of the property
is transferred gradually to the buyer
over the agreed-upon period. In
addition, since the buyer controls the
usufruct of the property, he pays the
bank a rent corresponding to said
usufruct. This rent is labeled
“profit” in the contract, and its
amount is determined by the Bank’s
share in ownership.
In this regard, the rental value of the
property is determined each year
according to a fixed and agreed-upon
rule, relying on rental values in London
as a baseline for determining the rental
of purchased property. Correspondingly,
the amount of rent paid by the buyer to
the Bank declines in proportion to the
decline in the Bank’s ownership and
corresponding buyer’s increased
ownership, as the latter buys a
pre-determined number of ownership
shares each year, until he ultimately
becomes the sole owner of the property
at the end of the period [of financing].
What is the ruling in Islamic
Jurisprudence regarding this form and
contract language for financing the
purchases of homes and real estate?
Fatwa:
The participating scholars discussed the
method of financing homes and real
estate followed by Al-Baraka Bank,
London, in light of the Laws governing
this type of transactions. The scholars
recognized the need for Muslims to own
appropriate homes to meet their needs.
In this regard, the scholars considered
the following related points:
1.
Registering the home’s title in
the partner’s (customer seeking to
purchase the property) name from the
inception of financing
2.
Making the partner responsible
for all fees and costs associated with
registering said title.
3.
Insurance premiums for the home.
4.
The method of calculating annual
rents.
5.
Means of liquidating the
partnership and releasing the Bank’s
lien on the property in cases where the
property’s price is insufficient.
After
a long discussion of those topics, we
reached the following consensus:
1.
That registering the home’s
title in the partner’s name, based on
trust, from the inception of the
contract is permissible under Shari’aa.
Registering the property’s title in
this manner does not contradict the
agreed upon partnership, especially
since the partner’s ability to sell
the home is restricted until his full
ownership of the property is
established. In this regard, we took
into consideration the fact that this
registration of title is a form of
documentation insured by the officially
established lien on the property
according to the conditions agreed-upon
with the partner.
2.
Making the partner alone
responsible for all registration,
survey, and other documentation costs
associated with the jointly owned
property from the inception of the
contract, and absolving the bank from
responsibility for such costs, is
permissible if the partners agreed
accordingly. This is particularly
appropriate since the partner will
ultimately become the sole owner of the
property at the end of the financing
contract.
3.
With regards to insurance, the
default ruling would require both
partners to bear responsibility for
insurance premiums, as a shared burden
of the jointly owned property. However,
the bank may take that into
consideration when determining the
rental of its share of the property to
include appropriate compensation for the
appropriate share of insurance costs.
4.
The default ruling in joint
ownership is sharing in profits and
losses in proportion to ownership, based
on the principle that entitlement to
profit must be commensurate with risk
exposure. In this regard, since the
regulatory framework requires that the
Bank should not be exposed to the
possibility of losses when the
partnership is dissolved, the model
should be altered such that the order of
the transaction proceeds as follows:
a.
The Bank and the customer share in
purchasing the home according to the
agreed-upon proportions.
b. The Bank sells his share in the
physical property ownership (milk al-raqabah)
to its partner, while retaining his
share of ownership of its usufruct (milk
al-manfa`ah) until the time its partner
pays the remaining portion of the price.
c. The Bank collects an annual rent in
accordance with the actually paid
portion of the property’s price.
d. If the partner is delinquent in
paying the installments for which he is
obligated, the Bank has the right to
keep the sale agreement intact, and
collect its right to the remaining
portion of the price according to the
obligatory performance clauses of the
lien; or the Bank may void the initial
sale and take full ownership the
property if the partner agrees. In the
latter case, the Bank should pay back to
the partner whatever he had paid
previously, as a revocation of the sale
from its inception. (Item d. was
agreed-upon by a majority of the
participating scholars).
1.4.
Seminar 9: --pp.149-150 - Jeddah 5-7
Ramadan 1414 A.H., 15-17 February 1994
C.E. (The third Jurisprudence Symposium
on contemporary banking issues)
All praise and thanks are to Allah, and
prayers and peace upon the Messenger of
Allah (peace be upon him) and upon all
his family and companions, then:
In the framework of the activities of
the research and development group in
Dallah Al-Baraka group, the ninth Al-Baraka
seminar (the third Jurisprudence
Symposium) was held to discuss some
banking issues, during the period 5-7
Ramadan 1414 A.H., 15-17 February 1994
C.E. in Jeddah (Dallah Tower). The
following scholars participated in this
seminar:
1.
Sheikh Dr. Ahmad `Ali `Abdallah.
2. Sheikh Dr. Al-Siddiq Muhammad Al-Amin
Al-Darir.
3. Sheikh Dr. `Abdul-Sattar
‘Abu-Ghuddah.
4. Sheikh Dr. `Abdullah bin-Sulayman Al-Manee`.
5. Sheikh Dr. Muhammad Sulayman Al-‘Ashqar.
6. Sheikh Dr. Muhammad Al-Mukhtar
Al-Salami.
7. Sheikh Mustafa Al-Zarqa’.
8. Sheikh Dr. Yusuf Al-Qaradawi.
To
discuss the following issues:
After lengthy detailed discussions, and
after listening to the explanations of
relevant practitioners, the scholars
reached the following recommendations:
1.5. (9/4) – p.155 Establishment of
pro forma ligatures or contracts, or
formation of sister or branch special
purpose entities to benefit from tax
advantages given to Ribawi interest
Fatwa:
1. Islamic banks should be wary of
writing pro forma Ribawi contracts or
ligatures with pro forma Ribawi interest
to benefit from tax or other advantages
legally offered to Ribawi interest.
2. There is no harm done if Islamic
banks use language in their financial
statements to explain the nature of
permissible profit. For instance, the
Bank may say that [such profit] is
“the Islamic alternative for interest
in the Ribawi system” or that “it is
the return on investment” if such
language will allow them to benefit from
the tax advantages offered by Ribawi
systems. However, the terms “Riba”
or “interest” must never be used in
any financial statement issued by the
Islamic bank.
This fatwa is considered complimentary
to the third fatwa of the sixth Al-Baraka
seminar (#51), according to the view
that the earlier fatwa was restricted to
forms that are not issued by the Islamic
bank.
|
Save
