TITULIZACIÓN CORPORATIVA EN EL DERECHO COMPARADO 122

The discussion pertaining to risk from the perspective of the Islamic commercial law also covers another two issues. The first issue is pertaining to the subject of risk which refers to the origin of the integral risk that is inherent to a financial transaction. It is established by now that risk is an important component of the legitimate profit. Hence, it is important to consider the subject from which the risk may emanate as this risk has to be dealt with in accordance with its subject. In addition, as will be further addressed in Chapter 3 ̶Musharakah, the

45 _{Hossein Askari and others, An Introduction to Islamic Economics: Theory and Application (John Wiley &}

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variety of opinion among the jurists pertaining to the legitimate (and illegitimate) form of partnership is also traced to have originated from this issue, particularly as to the basis of profit entitlement in Musharakah (Islamic partnership based on profit-loss sharing).

In general, risk may originate from two things, namely the asset/wealth and the labour. As for the asset risk (Makhatir Maliyah), the risk is pertaining to the subject matter (Al-Maqud Alaih) of a financial transaction; both transacted asset (Mal) and its agreed price. In a sale transaction, for instance, the seller must bear the possibility (risk) of an uncalled circumstance such as damage, loss (due to theft or fire for instance) or value depreciation. Reciprocally, any benefit that arises from this asset such as physical growth, appreciation of value or revenue shall belong to him. This also entails the liability of ownership. In order for the profit to be considered as legitimate, the seller must also acquire the full ownership of the asset for it shall allow him to dispose the asset as he wills. Having said this, the buyer cannot sell the

commodity he bought before he has the full possession over the asset (before it is delivered to him, for instance) as it is still under the seller's liability (the issue of ownership of the property will also be re-addressed in the discussion of the prohibition of Riba of Chapter 2).

Risk can also emanate from the labour contributed by the involved parties thus provides the basis for the contributor’s entitlement to the profit. For instance, the Mudarib (entrepreneur) in Mudharabah arrangement (Islamic partnership based on profit sharing and loss bearing), despite not contributing capital like the Rabbul Mal (capital provider), contributes his skill and labour work in running the business. The business, like any other businesses, may face loss which will cause the Mudarib not be able to get the expected portion of return and have to bear the loss in terms of his time and effort. On the contrary, he is then entitled to the profit based on the pre-agreed ratio should the business manages to generate income (since this study, as shall be explained later, put Musharakah as its focal point the discussion on the existence of risk taking/risk sharing in it shall be engaged in the later part). At the institutional level, this type of risk can be observed in various forms. These forms include the reputational risk where the institution is liable for the risk which arises from the failures of governance, business strategy and process. Also, the risks that can be classified under this category are the operational risks which arise from the day-to-day activities and legal risk which may arise from a lack of qualified legal personnel, or in the case of Islamic finance, from the special task which is improperly discharged to operationalise Islamic financial products and

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services.46 _{By assuming this type of risk, the institution in question, therefore, deserves the} profit arising from the business.

It is also worth to mention here that in some circumstances the risk may emanate from different subject risks although the contract used is the same. For instance, in Ijarah (lease) the risk may emanate from the leased asset (Mal) or the rendered labour (Amal), depending on the type of the lease (the former exists in asset leasing, Ijarah Al-Ain while the latter exists in the case of hiring the individual, Ijarah Al-Ashkhas. Nevertheless, the common practice shows the term frequently refers to the former, especially when it is used in an absolute manner, ie without further specifying the type). It is a contract where the ownership of the asset is maintained under the lessor while the ownership of the specified usufruct of the asset is transferred for a specified consideration. For instance, in the case of Ijarah/Ijarah Al-Ain, the ownership of usufruct is being transferred to the lessee while the ownership of the leased asset is maintained under the lessor. As such, the lessor is liable for the loss in case the leased asset is damaged, stolen or has depreciated in value as well as he is to assume the liability for its maintenance to the extent its usufruct can be enjoyed by the lessee.47 In return, he is eligible to receive the rental payment.