Análisis de resultados de los instrumentos aplicados

Gharrar basically means ‘Uncertainty, risk and speculation’.153 The concept of

gharrar is derived from the doctrine of the Quran where out of concern for the possibility of human beings harming themselves from their own folly and

152 _{Saleh (n 119) 36} 153 _{Saleh (n 119) 48}

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extravagance, the Quran has banned games of chance/ hazard( gambling and speculations) in surah .II:219 and s.V:93 of the Quran which says:

They ask you about wine and gambling. Say, "In them is great sin and [yet, some] benefit for people. But their sin is greater than their benefit." And they ask you what they should spend. Say, "The excess [beyond needs]."Thus Allah makes clear to you the verses [of revelation] that you might give thought.154

Another tradition that has led to the suspicion towards Gharrar is the concept of protection of one party with a stronger bargaining position from exploiting the weaker of the two parties and thus giving rise to the command that all commercial and business transactions should be devoid of any uncertainty and speculation and this could only be secured through ensuring that both the parties have perfect knowledge of the counter values intended to be exchanged.155 Thus the reason for the modern day suspicion of sharia’s scholarship of any transaction that entails any kind of transaction where the subject matter, the price or both are not determined and fixed in advance, is that any such transaction would fall short of the requirements of ‘Gharrar’.

The Definition of Gharar has been of some controversy amongst the scholars of Islam both traditional and contemporary, some of the most prominent scholars have given their understanding of Gharar in the light of both the Quran and the teaching of the prophet Muahamad as well as on the basis of Ijma and Qiyas. Ibn Qayyim Al- Jawziyya156 defined Gharrar as being the subject matter that the vendor is not in a position to hand over to the buyer, whether the subject matter is in existence or not. Sanhuri157 on the other hand focused on the ‘jahl’( the want for knowledge), saying

154 _{The Quran as quoted in Nabil A.Saleh (n 119) 49} 155

Saleh (n 119) 50

156 _{Ibn Qayyim Al-Jawziyya, I’Lam Al-Muwwaqqi’ In ,Vol.I, 357-61} 157 _{Sanhuri, Masadir Al-Haqq, Vol.III, 49}

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that jahl brings about Gharrar in the following circumstances: i) when it is not known whether the subject matter exists or not, or ii) if it exists, whether it can be handed over to the buyer, or iii) when want of knowledge affects the identification of the genus or species to which the subject matter belongs or its characteristics or its quantum, its identity, or its condition remaining satisfactory or iv) the want of knowledge with regard to the date of future performance, if any also creates Gharar.

Ibn Juzay158 outlined ten differing cases and circumstances where Gharrar is a possibility:

a. Difficulty in putting the buyer in possession of the subject matter b. Want of knowledge with regard to the price or the subject matter

c. Want of knowledge with regard to the characteristics of the price or of the subject matter.

d. Want of knowledge with regard to the quantum of the price or the quantity of the subject matter, such as an offer to sell ‘at today’s price’ or at the ‘market price’ e. Want of knowledge with regard to the date of future performance, such as an offer to

sell when a certain event happens.

f. Two sales in one transaction, such as selling one article at two different prices, one for cash and one for credit, or selling two different articles at one price, one for immediate remittance and one for deferred one.

g. The sale of what is not expected to revive, such as the sale of a sick animal.

h. The last three categories are of different sale transactions which involve the inadequate inspection of the sale object by the buyer called, Bay ‘al-hasah, Bay ‘al-

munabadha and Bay ‘mulamasa, which is the sale performed by the vendor without giving the buyer the opportunity for properly examining the object of the sale.

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Ibn Rushd159 has defined the parameters of when Gharrar can occur and when

Gharrar can be avoided in the following terms: “Gharrar in sale transactions causes the buyer to suffer damage (ghubn) and is the result of a want of knowledge which affects either the price or the subject matter.” However according to Tarek “

Gharrar can be averted if i) both the price and the subject matter are known to be in existence, ii) if their characteristics are known, iii) if their amount is determined, iv) if the parties have such control over them as to make sure that the exchange shall take place and v) if the date of future performance is defined.”160

So in summary the following three conditions can be used as a guideline on how to avoid gharrar161: first of all there should be no want of knowledge (jahl) regarding the existence of the exchanged counter values. Secondly there should be no want of knowledge regarding the characteristics of the exchanged counter values or the identification of their species or knowledge of their quantities or of the date of future performance, if any. And third control of the parties over the exchanged counter values should be effective.

From an ethical point and Maqasid Sharia point of view the reason for banning

Gharrar is simply to give both the parties the opportunity to trade on equal terms, it need not be that the parties have to have exactly the same position for that would render the concept of competitive trading completely null and void and leave Islamic finance ill-suited to modern day finance. The point is to provide justice to both parties and avoid exploitation of any one particular party. Thus any transaction or financial instrument that falls foul of the provision of Gharar will be deemed as

haram (illegal and impermissible) in the eyes of Sharia. For the modern day IFI’s to

ensure that such a transaction does not occur has to be a top priority, however it is

159

Ibn Rushd, Bidayat Al-Mujtahid, Vol.II, 148 and 172 160 _{Diwany (n 28)}

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also asserted that for modern day IFI to function and compete at an international level the temptation to introduce Gharrar based instruments is very high as the rest of their competition in the conventional financial industry employ future based transactions like derivatives in one way or the other, which have proven to be extremely profitable for the banks. It is thus argued that IFI’s need to be extra careful to ensure that they do not follow such practices as they are outside the ambit of the sharia provisions regarding finance and will surely fall foul of the Maqasid of the prohibition. The need is to follow a Islamic moral economic model which embodies the basic principles and tenets of Sharia.

13.Conclusion

It is thus argued in light of the foregone discussion regarding both Riba and Gharar

and the strict conditions of the law of contract under sharia, that a regulatory and governance system for IFI’s which does not take into account these specifities of Islamic finance cannot be deemed suitable for the Islamic finance industry. It is actually of essence that the services and products that IFI’s offer are based purely on the basis of the Islamic law of contract(s) and ensure that no transaction has any element of Riba or Gharar. The principles of Islamic law are immutable and must remain so if Islamic financial industry has to succeed. Just like the general laws of Sharia, the specific issues surrounding the enforcement of contracts is an issue of great importance for IFI’s to successfully operate as ‘Islamic’. Therefore the adherence to maqasid al Sharia are deemed to be fundamental for the success of a regulatory framework which seeks to be sharia compliant as well as be flexible to adapt to modern day finance architecture.

However it is argued that one of the major hurdles for any one IFI specifically or the whole Islamic finance industry in general will be the recognition of the specific

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forms of Islamic contracts or financial instruments based on the Islamic contracts in the international regulatory context. Without this recognition IFI’s as an industry may never achieve their full potential. In the current regulatory framework for the IFI’s in the non-Islamic countries, it is very unlikely that national regulators or the judiciary are going to recognize contracts based on sharia and therein lays a major source of contention for the Islamic finance industry. On the other hand the substance over form debate is at the heart of regulatory and governance debate for IFI’s and the issues of recognition of sharia based contracts lies at the heart of this debate too. The focus of the whole industry and their stakeholders including the governing and regulatory bodies should be on a principle based framework which encapsulates the Maqasid and Maslalha frameworks so that the IFI’s are allowed some flexibility to devise their own operations, systems, supervision, strategy, reporting, management, product development etc. competitively and according to the local laws but the over sight of the implementation/ enforcement of the sharia principles is made the top priority by both the local regulators and the Islamic financial industry itself. This, it is latter argued, can only be done if the local regulators accept, understand and facilitate in applying the basic principles of Islamic finance or allow the international standard setting bodies for Islamic finance like IFSB and AAOIFI to enforce these principles, since without this enforcement capabilities of either the local regulator or the international standard setting authorities the whole Islamic finance industry faces major systemic risks. It is thus being argued that the Islamic finance industry needs to move towards a more principle based regulatory framework where the responsibility of ensuring sharia compliance is made the responsibility of an international supra national regulatory body.

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