Legal Maxims and Islamic Financial Transactions: A Case Study of Mortgage Contracts and the Dilemma for Muslims in Britain

Abstract

This article aims to focus on legal maxims related to financial transactions to explore whether they offer any solutions for Muslims concerned with this dilemma, and to investigate how such legal maxims can be used to shape the way in which Muslims in the West perceive today's mortgage issues. Some questions raised are the following. When entering a mortgage contract, does a Muslim's intention change the ruling of the transaction under the pretext of the two maxims al-ʿumūr bi maqāṣ idihā ("matters considered according to intention") and hal al-ʿibrah fī l-ʿuqūd bi l-maqāṣ id wa l-maʿanī aw bi l-alfāẓ wa l-mabānī ("in contracts, is effect given to intention and the meaning or expression and form")? Can one be certain that mortgages are completely ḥ arām (unlawful) when considering the maxim al-yaqīn lā yazūl bi l-shakk ("certainty cannot be repelled by doubt")? What aspects of ḥ arām are found in mortgages and can they be marginalized by the maxim al-ḍ arūrāt tubīh al-maḥ ẓ ūrāt ("necessity makes the unlawful thing lawful")? If Islam allows bayʿ al-istiṣ nāʿ (contract for manufacture) on the basis of ʿurf (custom), can mortgages also be permitted under the maxim al-ʿādah muḥ akkamah ("custom is authoritative")?

Exploring the Prospects for Islamic Home Finance in the UK: Evidence from the Industry Practitioners’ Perspective

“…Contrary to Dar's (2004) findings, Tameme (2009) suggested that the changing social and lifestyle trend in the Muslim diaspora may have been increasing the demand for Islamic home finance products. Zakariyah (2012) adopted an unconventional approach to review the Sharia'h authenticity of Islamic home finance products in the UK in light of Islamic principles. This research scrutinised the three major Islamic home products-murabahah, ijarah mutanaqisah and musharakah mutanaqisa-under the Sharia'h law.…”

On the regulation of the intersection between religion and the provision of financial services: Conversations with market actors within the global Islamic financial services sector

“…For example, the dominant Shia and Sunni sects who possess nuanced interpretations of Islamic law. The outcome of this diversity in Shariah interpretation is an increased potential for market inefficiencies such as incompatibility of financial instruments with similar payoffs across markets (Zakariyah, 2012). Azmat et al (2014) have also shown that inconsistencies in screening processes hamper the structuring process of Islamic financial instruments.…”

The actualization of maqāṣid al-Sharīʿah in Islamic finance: a conceptual framework

“…Some other studies emphasized other elements of maqāṣid al-Sharīʿah for its proper actualization. Among such studies are al-Būṭī (1973), Hasan-uz-Zaman (1997), Kamali (1997), Wūrqiyah (2003), Ḥarzullāh (2007), Ḥassān (2008), Ibn-ʿUmar (2009), al-Yūbī (2010), Laldin (2010), Ahmad, Osmani, Shahed and Karim (2010); Zakariyah (2012), Laldin (2013), al-Raysūnī (2013), Aziz and Noh (2014); Wasfi Ashur (2015), Tilout (2015), Samsudin and Hamjah (2015), Aḥmad (2016), Ibrahim and Momin (2016), Mustafa, Abdulsalam and Yusuf (2016), Saiti and Abdullah (2016)‏ ‏and Akhtarzaite (2018). However, each of the studies focused on some elements that are overlooked others.…”

“…The selection of appropriate means is stressed by Binti-Abdulaziz (2018), Aḥmad and al-Maysāwī (2016), Ibrahim and Momin (2016), Laldin and Furqani (2013) and Al-Raysūnī (2013). In addition, IFIs should observe the legal maxims in setting rules and regulations to establish maqāṣid al-Sharīʿah in the product design process as stressed by Zakariyah (2012), Aziz and Noh (2014), Mustafa et al (2016), Saiti and Abdullah (2016) and Qoyum (2018). Also, IFIs should abide by the micro provisions ( aḥkām juz’iyyah ) in setting rules and regulations, procedure, terms and conditions for the eligibility of consumers as emphasized by Al-Fawzan (2014), Al-Yūbī (2010) and others.…”

“…Al-Fawzan (2014) and Al-Yūbī (2010) also stressed the determination of the level of need (ma Á sla Á hah) whether an individual's need falls in Á darūrī, Á h ajī or ta Á hsīnī level. Besides, the consumer should assess his case, level of need and the amount of need according to the relevant legal maxims as stressed by Mustafa et al (2016), Saiti and Abdullah (2016), Aziz and Noh (2014), Zakariyah (2012), Ahmad et al (2010), Hasan-uz-Zaman (1997 and Kamali (2008). An individual should abide by the a Á hk am in consumption as emphasized by Kiani (2018), Hanapi et al (2019), Amanda et al (2018) and(Khan, 2020), besides the scholars mentioned above.…”