almanawee

Islamic Credit Card

2012-03-10T00:18:00.000-08:00

by Manawee Niringjuerae

INTRODUCTION

The development of technology has enabled bank to issue product that satisfy the need of clients. Credit card is one of the latest banking gadgets. It facilitates people to make transaction without carrying cash since the credit card issuer pays the proceeds of the transaction on behalf of the buyer. Most goods and services can be bought either online or at the usual “brick and mortar” sales outlets by using this card. This convenience has led the widespread of credit card. Therefore, not only conventional banks interested to issue credit card, Islamic banks which notably have to comply with the Islamic principle also start to come out with this product.

Statement of the Problem

Credit cards are very important in the contemporary society. The need to use them has been a necessity in many circumstances although the safety considerations sometimes have to be compromised. The issue is that whether Islamic law allows the usage of credit cards. If their usages are allowed, another issue is whether they are considered as Islamic law compliant. To answer there issue, Muslim Jurist needs to address them accordingly.

Hypothesis

The best way to address the issue of credit cards is to adopt the principle pertaining to contracts of credit (aqd-qard) guarantee (aqd-kafalah) and agency (aqd-wakalah) in Islamic law as the underlying contract for credit cards.

CHAPTER 1 CONVENTIONAL CREDITCARDS

1.1 Definition

Credit cards are not new. They are some equivalents of them, have existed since the beginning of last century. The use credit cards originated in the United States in the 1920s according to some sources.[1] As per Tony Dury forms of credit cards have existed even before 1920; some large department stores in the United States began to issue “credit cards”.[2]

A credit card is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services on the holder’s promise to pay for these goods and services. The issues of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.[3]

The credit card, which is known as ‘plastic money’, is essential mode of payments in today’s society. People own credit card for various reasons such as to obtain credit facility, cash advance, easy payment, charge and prestige. It has become way of life in the society nowadays that different types of credit card such as Master and Visa and category gold and platinum, represent the wealth status of a person. Undoubtedly the role of credit card is more than that. It is important role in e-commerce transaction is undisputable.

However, how dose Islam accept the role of credit card as a medium of payment? What are the underlying principle required by Shari’ah in the functionality of credit card? What would be the possible legal issues and how Islam addresses these issues? What are the differentiation factors in the Islamic credit card?

1.2 Importance of Credit Cards in the Contemporary Society

Credit cards have become essential means of exchange in the economy because they provide consumers and merchants considerable advantages over cash and cheques. There is a lot of security risk involved in carrying cash. Cash is easier to steal and harder to trace once lost or stolen. Perhaps this is why most people do not like to carry to much cash of it on them. Cheques have their own disadvantages. To begin with, chequebooks are in convenient to carry. They are often difficult to use outside one’s local community because of the risk of bad cheques.[4]

Credit cards can offer certain advantages to the holder. Firstly, they provide easy means of obtaining credit for an interest free credit period from a week to a mouth. Secondly, credit card can easily be used to withdraw cash over the counter or from an Automated machine (ATM).[5] Furthermore, credit card may also offer the holder an additional protection such as, in the event of loss, damage or theft of an item bought by the card holder, he may be indemnified under the insurance.[6] And with the development of high technology and the internet, credit card also allow their holders to purchase goods from anywhere around the world over the phone or online.

Nevertheless, there are some disadvantages of credit cards, the holder will be encouraged to spend more money than they need. This is because the most credit cards do not limit the balance to pay off each month. Although the card holder, only has say, RM 100.00, he may still be able to spend up to RM500.00 or 1,000.00 on his credit card. While this may seem like ‘free money’ at the time, the customer will have to pay it off and the longer he waits the more money

1.3 How Payment System Work?

Visa, Switch and MasterCard all operate four party payment schemes. Any card transaction made through one of these schemes involves four main participants. These are:

• The customer, who makes a payment using the card;

• The card issuer who supplies the card to the customer and operates the account from which payment is made;

• The retailer (or ‘merchant’) who exchanges goods or services for the

customer’s card details and consent to make the payment;

• The merchant acquirer who recruits retailers to the scheme, reimburses the retailer and obtains funds from the card issuer.[7] The merchant acquirer often has an existing customer relationship with the merchant, but need not do so. A payment will involve both a flow of assets - money and goods - and also a flow of information about transactions that are taking place. These are shown on the diagram using solid and dashed lines respectively.[8]

Figure: 1 (Cruick shank, 2000) Main parties involved in credit cards system.

The transaction starts with a customer deciding to buy some goods from a retailer at a given price. The customer gives his card details to the retailer and confirms his identity, for example with a signature. For some transactions the retailer may be required to seek authorization from the card issuer, for example to check that the card is not stolen. The retailer then sends transaction details to the merchant acquirer. Transaction details may either be sent in a batch at the end of the trading day or online. The acquirer in turn forwards transaction and cardholder details to the relevant card issuers– usually through a telecoms network under the control of the scheme. The merchant acquirer pays the retailer the retail price less a fee, known as a merchant service charge (or MSC). The issuer in turn pays the merchant acquirer the retail price less a further fee known as an interchange fee. The timing of the payment from issuer to acquirer is typically determined by the rules of the payment scheme. The timing of the payment by the merchant acquirer to the retailer is determined by agreement between these two participants.

The final stage is for the issuer to debit the customer’s account - this might be a credit card account or a current or savings account, in the case of a debit card. The issuer will typically provide the customer with transaction details through a regular statement. The customer will be debited the retail price, plus any fees specified in the terms of the account.

1.4 Fatwa’s – What Scholars Say?

There are many questions pertaining to credit cards whether or not Muslim can or cannot use the credit cards. Some Muslim scholar, it is permissible if certain conditions are met. However, there is a large group which considers conventional cards are prohibited.

However, there are various areas of interpretation that enable some Muslims to believe that credit card usage can be done within religious beliefs by paying off the full outstanding balance every billing month and never rolling over any balance to next statement period and avoiding cash withdrawals. According to them, by not carrying any outstanding balance to next billing period and avoiding cash withdrawals, riba can be avoided and thus, using a card in this way could be halal. This argument can be supported further by stating that all deeds are by intention and since the intention is to clear the full balance every time and not withdraw cash, card is halal.

Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) argues that a contract of this type is not permissible, because it involves riba which is the price of the card, and it also means committing to pay interest if payment is delayed. (Shaykh, 2002)[9]

In another fatwa he issued he states that credit card transaction is haram, because the one who enters into it commits himself to paying riba if he does not pay on time. This is an invalid commitment, even if he believes or thinks it most likely that he will pay it before the time is up, because circumstances may change and he may not be able to pay it off. This is a matter that is in the future, and no one knows what will happen to him in the future. So dealings of this type are haram. (Shaykh)

CHAPTER 2 ISLAMIC CREDIT CARD IN MALAYSIA

2.1 Background

On 23rd of July 2003, Bank Islam Malaysia Bhd has issued a shariah compliant credit card named Bank Islam Card (BIC). This first Islamic credit card in Malaysian market was issued to response the need of its Muslim clients. It is also the first credit card in Southeast Asia adopting the Europay-Mastercard-Visa (EMV) Smart Card with the “chip” technology. The card has all features as payment instrument, however, profit rate is only charged to clients who fail to pay back the minimum repayment within the 20 days grace period.[10].

Malaysia is considered as one of the development of the Islamic banking and finance system and has continued a lead position in the field. In this chapter we are going to study how Islamic bank in Malaysia practice credit cards as well as the point of view of Islamic scholars pertaining to this issue.

2.2 What does it mean by Islamic credit cards?

Massey defined Islamic credit card as a payment instrument that meet with at least three criteria of Islamic principles. Firstly, the card must meet the shariah requirements on lending, which vary from region to region. In general, it must avoid the three essential prohibitions in Islamic finance, which are riba, gharar and maysir. Riba, as applied in the interest concept, is clearly proscribed in the Holy Qur’an and the Hadith of Prophet Muhammad peace be on him. Therefore, an Islamic credit card is not allowed to charge any interest to payments even if the user is late in paying. Gharar, or uncertainty, in the practice of Islamic credit card should be avoided by excluding a charging scheme where the monthly repayment or service charges are variable based on a number of factors. Maysir or gambling is also prohibited. Thus, apart from preventing the card holder to access sites such as online gambling, Islamic cards need some other form of insurance cover. Secondly, an Islamic credit card must have certainty to be accepted widely. It has to use international payment schemes, such as MasterCard or Visa. Besides that, the card should provide facilities that are not available on debit cards such as CVV numbers for “card not present” transactions and hold amounts. Furthermore, the merchant charges and issuer’s fees should not be withheld. Thirdly, an Islamic credit card should not encourage behavior that is considered haram. This includes all manner of forbidden behaviors and transactions of an inappropriate nature.[11]

To look forward on the application of Islamic credit card, this paper will discuss the practice of Islamic credit cards in Malaysia, by taking a closer look on BI Card which is issued by Bank Islam Malaysia Bhd.

2.3 Details of Bank Islam Card

The holders of the card are only permitted carry out halal transactions, which exclude transactions related with six categories that don’t meet shariah requirements. These categories are bars, discos, night clubs, purchase of beers, escort and massage services and gambling. Operation of BIC involves three aqad (contract), namely Bay al inah,Wadiah, and Qard al hasan.

Bay al inah consist of two agreements. In the first agreement the customer

buys merchandise from the bank at a stipulated price. Whereas, the bank buys back

the merchandise from the client at a lower price. The bank’s profit from this transaction is derived from the difference of the two prices. The profit rate levied by

Islamic bank is known in advance.

Furthermore, the cash proceeds of the second agreement are deposited into the

wadiah account of the customer. Wadiah is a contract of safekeeping where the custodian is not allowed to use or benefit from the asset. However, if the asset is destroyed or damaged he is not held liable unless proven negligent. The wadiah account is created and maintained by the bank. Then, the customer can use his or her card to purchase goods and services same as the conventional credit card. The only difference is that BIC card is backed by cash held in the wadiah account.[12]

The last contract used by Bank Islam in the operation of BIC is qard al hasan.

The bank enables the customer to withdraw more than the available balance in his wadiah account. No financial charge is levied on that extra amount used. However, the client is required to settle it in a specific time later.

Moreover, for BIC the profit is calculated monthly and it is based on the sum

of transaction made during that particular month, the profit is not compounded unlike

conventional bank and the total profit cannot be more than the profit stated in the contract of bay al inah. However, for conventional credit card the interest rate

imposed is undetermined.

Similarly, the fee charged for withdrawal service is not exorbitant as compared

to conventional bank because when a client withdraws RM 1,000 or below, a fee of RM 12 is charged. On the other hand, in the case if conventional credit card, a fee of

3% or RM 50 is charged for every withdrawal.[13]

2.4 The Figure of Bay Inah in Bank Islam

First of all, bay al’inah as the underlying contract consists of two separate contracts, the property sale agreement and the property purchase agreement, which are executed separately with a difference in both selling price. The transaction of the said contract works in the following fashion:

Step 1: Bank sells the its asset to the customer (hereinafter called card holder) on a deferred repayment basis. This transaction affects the debt payable by the customer to the bank.

Step 2: Bank buys the same asset from the card holder on cash basis at a lower price than the price it sold under step 1.

Step 3: The bank disburses the amount of cash proceeds from the “buy back” transaction into the card holder’s wadi’ah marginal account.

Step 4: The bank creates an Islamic credit card account for the card holder.

Step 5: The credit card is issued to the customer to utilize the balance available in the wadi’ah marginal deposit account

Step 6: The card holder makes a credit purchase from a merchant. In cases where the card holder makes purchases over the financing limit and exceeds his available balances, the bank in its jurisdiction, will decide whether or not to give the card holder qard al hasan on a case-to-case basis. If the bank decides to allow the card holder an overdraft, he will not be levied with extra charges or fees but will be required to repay the amount used.

Step 7: The merchant transfers his right to claim the debt to the bank under the contract of hawalah mutlaqah (absolute transfer to debt).

Step 8: The card holder settles his outstanding balance and that results in his line of credit being revolved.[14]

Suppose Aminah intends to obtain BIC card from BIMB. Firstly, she will be asked to fill up an application form, notifying her annual income to the bank. Based on Aminah‟ financial circumstances, the bank will offer different types of BIC card. Premium card (gold or platinum) with large amount of credit will be offered if her annual income is pretty high. Let us assume that Aminah is qualify to have a gold BIC card with credit facility up to RM11,000. In granting the said amount to Aminah, the bank will execute a bay' al-Inah transaction. BIMB will identify a specific asset, for example a piece of land which will then be sold to Aminah, say for RM15,000 in deferred sale. Immediately, the bank will buy back the land from Aminah for RM11,000 in cash. When the second transaction is executed, Aminah who formerly came to the bank with empty pocket now will have a substantial amount of cash to spend with. The bank will disburse the cash (RM11,000) which is the proceeds of the second agreement into Aminah's BIC wadi‘ah account. Having the money, Aminah now can use her BIC card for various commercial transactions just similar to the conventional credit card. She is required to pay back the money she had used from the account within a given period. Otherwise, the bank will impose additional payment for the late settlement.

BIMB contends that its additional payment for the late settlement is legitimate since it is regarded as profit not interest. The profit is referred to the difference between the sell and the buy back prices (RM15,000 – RM11,00) in the bay' al-Inah transaction executed earlier. In other words, through the act of selling land to Aminah, BIMB is actually entitled RM4000 of profit. However, the profit is only claimed on Aminah when she struggles to pay her debt on time. The maximum additional payment however is fixed (RM4000 in our example). According to BIMB, the fixed maximum profit demonstrates BIC card main advantage over its conventional counterparts. This is because in the conventional credit card system, the interest is perpetuate as it is charged compounded until cardholders‟ outstanding debts are been settled.

2.5 Bai’inah according to Muslim scholar

The main issue here is how does the shari’ah regard such a contract: should the sale be allowed or disallowed because motive behind the sale is to legalize that which is illegal or usurious? There are two different opinions on this matter.

First: Shafi’i Opinion

According to Imam Shafi’i, “if a man buys from another goods on debt which he received it from the seller, there is no harm that the buyer sells it back to the same seller or to another person either at a lower price or higher one. There is no relationship between the first sale and the second one.”[15] The contract is valid as long as the condition of the contract is fulfilled. The real intention is left to God there is no way we can discovered it. The unlawful intention (niyah,qasd) of the parties is immaterial and it is dose not invalidate their act, unless expressed in the act. For that Shafi’i takes the example of someone who marries his wife for a short term. This marriage, however, is valid because others do not know the real intention. Although the said marriage is reprehensible (makru), it is valid, whereas a temporary marriage (mutah) is invalid.[16] Furthermore, Shafi’i above view is only applicable in the case where the true intention of the parties is hidden and unknown.

According to al-Imam Nawawi, Bay’al-inah is not of the prohibited sale. It is to sell a person an item on deferred payment and hand over the item to him. Then the seller buys it from the same person on the spot with a lower price cash before receiving the previously agreed upon payment. Likewise, it is permissible to purchase an item on cash and later sell it back with an increased price on a deferred basis, regardless of the fact whether the first seller received the price or not and weather or not the inah becomes the dominated culture in the country.[17]

Second: Hanafi’, Maliki and Hanbali Opinion

Hambali and Maliki assert that the contract of inah is not valid. According to them, the permissibility of the contract is determined by the motive of the parties. In the case of BIC, the motive of the parties is to get the loan. Hence, invalid. And the sale is not valid because it constitutes a legal device (hilah) to obtain a loan with interest which should be averted at all cost according to the Shairi’ah.[18] Another Hambali scholar said that if someone sells his grape to someone else and knew that the buyer would use it for the purpose of making wine, this contract is void. This is analog of bay al inah.

Furthermore, nowadays there are documents indicating the objective of the contract. Since the sale and contract is a cover up to give a loan, then this is considered as invalid contract.[19]

The Hanafi view is base on a narration pertaining to Aisha’s disapproval of Zaid bin Arqam’s practice of bay’ al-inah:

لما روي من قصة زيد بن ارقم مع السيدة عائشة رضي الله عنها : وهي ان العالية بنت ايفع قالت : دخلت وأنا ام ولد زيد بن أرقم وامرأته على عأشة رضي الله عنها, فقالت أم ولد زيد بن أرقم: (اني بعت غلاما من زيد بن أرقم بثمانمائة درهم الي العطاء, ثم اشتريته منه بستمائة درهم : (أي حالة) فقالت عائشة: بئسما شريت و بئسما شريت, أبلغي زيدا أنه قد أبطل جهاده مع رسول الله صلى الله عليه وسلم ان لم يتب) وقال صلى الله عليه وسلم: ادا ضن الناس بالدينار والدرهم, وتبايعوا بالعينة, واتبعوا أدناب البقر, وتركوا الجهاد في سبيل الله, أنزل الله بهم بلاء, فلا يرفعه حتى يراجعوا دينهم.

‘Aisha binti Awfa’ said: the wife of Zaid, the mother of his child and I visited Aisha, then the mother of his child said: “I sold ‘Aisha’s slave to Zaid ibn ‘Arqam in exchange for 800.00 Dirhams deferred, then I bought him back for 600.00 Dirhams in cash”, Aisha said: “Woe to what you sold and what you bought, tell Zaid that he has voided his jihad with the Prophet unless he repents”. ‘The Prophet, may Allah bless him and grant him peace, said: When people are miserly with their Dinar and Darhams and siver coins, (comprising the currencies being used at his time), trade in ina, follow the tail of cows, and disert the striving in the cause of Allah, Allah will send unto them a suffering that he will never lift until they rediscover their religion”.[20]

In bay’ al-‘inah, the object of sale is made to exist only to fulfill the requirements of contract (‘aqad) as the buyer has no intention to use the object of sale (mahallul ‘aqdi). Likewise the seller too is interested to conclude the deal as doing so brings profits to the bank. He can only make a loan with a contractual extra payment. However, both will not enter into a contract of debt bearing a contractual returns, but will use the contract of sale (al-bay’) to achieve the same end as any profits made from sale is deemed permissible (halal) in Islam.

Now, some may say the intention of the buyer and seller is not sincere, as there is no real intention to consume or utilize the object of sale. The object (‘ain or ‘in) holds a mere fictitious function. This transaction is pursued only to legalize making loan with interest. At least this is what many Middle-eastern jurists have been saying all along.

Whatever suspicion one has about bay’ al-‘Inah, the Shafi’ school of fiqh still considered legal and valid contract. The Shafi’ school says the intention or niyyah is not a significant element in determining the validity of a contract. This is the viewpoint taken up by the Shari’ah scholars in Bank Negara and the Securities Commission. However, the niyyah element is a crucial factor in the Hanafi, Hanbali and Maliki schools.[21]

In credit card transaction, the doctrine of Bai Al-Inah is used to validate the transaction. The argument of validity of bai al Inah is debated between Muslim The doctrine of bai al-Inah or buy back sale is not recognized by some scholars including the Ulama from the Middle-East. But in Malaysia, the doctrine of Bai Al-Inah is recognized, and is used as one of the basis to justify the implementation of credit card under the Shariah discipline.[22]

In the primary sources there are no clear indications of validity in Bai Al-Inah transaction. But there is one hadith saying that this type of transaction is not valid however the authentic of the hadith and the class of the hadith is unknown.[23] In the context of bai Al Inah, the use of doctrine Al Masalih Al Mursalah is adopted in order to justify the using of such transaction in the credit cards. In the new era of globalization, many financial dealings were not exactly the same to the practice in time of prophet (peace be upon him) People try to innovate a new thing that can make life better off. This is not only goods and service innovation but to the financial products as well. The idea was to ensure a comfortable life, which is also a wish of Allah(s.w.t.) as evident in the following ayat:

“ Allah (s.w.t.) intends every facility for you; He does not want to put you to difficulties”[24]

The used of Masalih Al Mursalah can be applied in the credit card transaction, since Allah want us to have easiness in the life but off course to be harmonized with the Quran and Sunnah so it will not deviate from the Shariah teaching.

CONCLUSION

Islamic credit card is issued by the Islamic banks especially to meet the need of

Muslim customers to make transactions without holding any cash on hand. Despite of

It’s function to let those customers to do transaction that in line with Islamic principles, the Islamic credit card also has invited debates among jurists. Some of them said that the aqad used in the operation of this card is like another form of interest which is applied in the conventional credit card. Others argued that Islam permits the use of a credit card so long it does not involve the element of riba, e.g. however, In the credit card transaction among the advantages of using it is convenience to the buyer, security wise, and cost effective are considered to benefits the user in tern of giving comfortable life. Thus, the principle of Maslahah Al Mursalah can be applied in the credit card transaction, since Allah want us to have easiness in life but of course to be harmonized with the Holy Quran and Hadith of Prophet Muhammad p.b.u.h. so it will not deviate from shariah teaching.

Reference

1. Al Quran,

2. Adil Manzoor Bakhshi, “Developing a financial model for Islamic credit card for the UK”, Dissertation submitted in partial fulfillment for the degree of MSc in International Banking & Finance, University of Salford 2006

3. Abu Zakariya Yahya bin Sharaf al-Nawawi, Rawdat al-talibin, Dar al-kutub al-Ilmiyyah, Beirut, 142H/2000,

4. Abu al-Walid Muhammad ibn Rushd, Bidayat al-Mujtahid wa Nihayat al Muqtasid, Beirutsee

5. David S. Evans, paying with plastic: The digital Revolution in Buying and Borrowing, Cambrige, Massachusetts, London,1999

6. James Massey, What is so special about Islamic credit cards? ,MONEYworks , September 2007

7. Peter E. Sayer, Credit Cards and The Law :An Introduction, Fourmat Publishing, London, 1988

8. Tony Drury, Charles W Ferries, Credit Cards, Butterworth, London,1984

9. See:www.wikipedia.com/creditcard

10. Sunan al- Dar Qutni, Kitab al-Bayu’, Hadith no 2983, Dar al Kutub al ilmiyyah, Beirut, 2003

11. See http:// www.mtscil.org/skills budget-12.html

12. See http://www.bankislam.com.my/product_pgnpempiyck01_e.htm

13. Pheng, Banking Law

14. Ilham Reza Ferdian, Miranti Kartika Dewi, Faried Kurnia Rahman, The Practice of Islamic Credit Cards: A Comparative Look between Bank Danamon Indonesia’s Dirham Card and Bank IslamMalaysia’s BI Card, No date status.

15. Obaidullah, M 2005, Islamic Financial Services, Jeddah, King Abdulaziz University, 5 February 2008,

16. Ilham Reza Ferdian, Miranti Kartika Dewi, Faried Kurnia Rahman, The Practice of Islamic Credit Cards: A Comparative Look between Bank Danamon Indonesia’s Dirham Card and Bank

17. Muhammad Idris al=shafi’I, Kitab al-umm, Dar al-kutub al ‘Ilmiyyah, Beirut, 1973,

18. Mohd. Ma’sum Billah Islamic Credit Card in Practice,

19. Prof. Saiful Azhar Rosly, Critical issues on Islamic banking and financial markets”, Authorhouse, 2005.www.authorhouse.com Some viewpoints on Bay’ al-‘Inah,

20. Ilham Reza Ferdian, Miranti Kartika Dewi, Faried Kurnia Rahman, The Practice of Islamic Credit Cards: A Comparative Look between Bank Danamon Indonesia’s Dirham Card and Bank IslamMalaysia’s BI Card

[1] Peter E. Sayer, Credit Cards and The Law :An Introduction, Fourmat Publishing, London, 1988, p.1.

[2] Tony Drury, Charles W Ferries, Credit Cards, Butterworth, London,1984, p.19.

[3] See: credit cards and debit card

[4] David S. Evans, paying with plastic: The digital Revolution in Buying and Borrowing, Cambridge, Massachusetts, London,1999, p.30-31.

[5] Pheng, Banking Law, Bangkok,2000, p 232.

[6] See http:// www.mtscil.org/skills budget-12.html

[7] Adil Manzoor Bakhshi, Developing a financial model for Islamic credit card for the UK. Master dissertation, University of Salford 2006, p.5

[8] Adil Manzoor Bakhshi, “Developing a financial model for Islamic credit card for the UK”, Dissertation submitted in partial fulfillment for the degree of MSc in International Banking & Finance, University of Salford 2006, p.6.

[9] Ibid, p.20

[10] Ilham Reza Ferdian, Miranti Kartika Dewi, Faried Kurnia Rahman, The Practice of Islamic Credit Cards: A Comparative Look between Bank Danamon Indonesia’s Dirham Card and Bank IslamMalaysia’s BI Card, No date status.

[11] James Massey, What is so special about Islamic credit cards? ,MONEY works , September 2007

[12] Obaidullah, M 2005, Islamic Financial Services, Jeddah, King Abdulaziz University, 5 February 2008,

[13] Ilham Reza Ferdian, Miranti Kartika Dewi, Faried Kurnia Rahman, The Practice of Islamic Credit Cards: A Comparative Look between Bank Danamon Indonesia’s Dirham Card and Bank IslamMalaysia’s BI Card, No date status.

[14] See http://www.bankislam.com.my/product_pgnpempiyck01_e.htm

[15] Muhammad Idris al shafi’I, Kitab al-umm, Dar al-kutub al ‘Ilmiyyah, Beirut, 1973, Vol.3, p.95.

[16] Ibid, p.74

[17] Abu Zakariya Yahya bin Sharaf al-Nawawi, Rawdat al-talibin, Dar al-kutub al-Ilmiyyah, Beirut, 142H/2000, vol.3 pp.85-86.

[18] Abu al-Walid Muhammad ibn Rushd, Bidayat al-Mujtahid wa Nihayat al Muqtasid, Beirut, vol.2, p.58. see also al-Zuhayli, al-Fiqh a-Islami wa Adillatuh,pp.3457.

[19] Ilham Reza Ferdian, Miranti Kartika Dewi, Faried Kurnia Rahman, The Practice of Islamic Credit Cards: A Comparative Look between Bank Danamon Indonesia’s Dirham Card and Bank IslamMalaysia’s BI Card, No date status.

[20] Sunan al- Dar Qutni, Kitab al-Bayu’, Hadith no 2983, Dar al Kutub al ilmiyyah, Beirut, 2003

[21] Prof. Saiful Azhar Rosly, Critical issues on Islamic banking and financial markets”, Authorhouse, 2005.www.authorhouse.com Some viewpoints on Bay’ al-‘Inah,

[22] Mohd. Ma’sum Billah Islamic Credit Card in Practice, No date status, p.5

[23] Ibid, p.6

[24] Al Quran, surah Al Baqarah 2:185

Mercy Killing in Islam

2012-03-09T23:56:00.004-08:00

by Manawi Niringjuerae

Table of Contents

Abstract 2

Introduction. 3

Definition. 3

i. Islamic View of Human Being. 5

ii. Islamic View on Ailments and its Concept of Sympathy. 8

iii. Criminal Liability. 11

a.Good Motive. 12

b. Consent of the Victim or His Guardian. 13

c. Duress (Al-Ikrāh) 16

Fatwas (Statements of Great Muslim Scholars): 17

Euthanasia: A Comparison. 22

Conclusion. 23

Bibliography. 25

Abstract

Undoubtedly, the Islamic notion of human sufferings, sickness and disasters strongly blames to end a human life based on the ground of mercy and human sympathy. But the developments of scientific in the field of medical science nowadays have changed the traditional position of declaring an ailing person as clinically dead. Now, the issue is how Islam views stopping the drugs or life-stretching devices from a person, who because of brain damage is totally paralised and shows no sign of life except that his heart-beat or breathing is sustained by a life-saving apparatus.

The purpose of this assignment is to find the extent to which right to life is given to an individual on a religious basis and to compare it with the man-mad law.

Introduction

Mercy killing or euthanasia is where the patients give their consent to end their lives. The physician on the request of the patient would withhold treatment or life supporting machines, inject lethal drugs or give electric shocks that would accelerate the death of the patient.

Active euthanasia by positive acts of injecting lethal drugs or giving electric shocks or such is not accepted by most whereas passive euthanasia by withholding treatment or life supporting apparatus has controversies in reception.

Involuntary euthanasia is conducted without the expressed consent of the individual. This is considered illegal in almost all countries.

Euthanasia under strict conditions has been legalised in few states but its acceptance is still a topic for debate among many under both religious and moral values.

Definition

The word mercy killing or Qatl-Al-Marḥamah is synonymous with the English terminology euthanasia.[1] It is a compound word consists of Qatl means killing and Marḥamah which is derived from the word raḥema and raḥma which means: to have mercy upon someone; have compassion; and be merciful. [2]

And the word “euthanasia” is a word derived from Greek eu and thanatos meaning ‘good death’ or ‘dying well’.[3] In a broader context it is defined as ‘ending the life of an individual in a painless manner.’[4]

Mercy killing (Qatl Al-Marḥamah) refers to the killing of a person who suffers from an irrecoverable illness or sickness that is terribly painful.[5]

However, it is broadly known that the word mercy killing is covered all forms of killing, which are included elderly person, a terribly disfigured baby, and a person in the state of permanent coma.[6]

Retrospectively, this form of aggression on human life has its precedent even among some primitive tribes where the elderly people who lost all their social and economic utility were made to climb a tree and hold fast onto its branches. Then they ordered some strong men to shake the tree strongly. If the man was able to hold on, he was declared worth living otherwise he was put to death. On other occasions he was taken to the desert and left to follow his destiny.[7]

At present with the great stride made in the field of medical science, and affliction of new ailments, it is not only the life of the elderly whose machine has lost function and no more deserves maintaining it is at stake but that of terribly disfigured infants at uterus, of those whose heart beat is sustained by life-saving devices, or suffering from AIDS or chronic cancer. It further becomes an issue of great concern when there is an apprehension that any simple ailment might be declared irrecoverable in order to dissect its vital organs for transplantation, and escape any legal consequences under the pretext of mercy killing.[8]

Mercy killing already has been decriminalized[9] in some secularist societies but its legalization is becoming debatable in others. This is normally carried out either by the close relatives against their most loved and dear ones,[10] or is done by the doctors.[11]

To address the issue from an Islamic perspective, this involves serious moral and legal questions such as Islamic view of mankind, the notion of Islamic compassion and sympathy, its view on diseases even if they are incurable, and ultimately its legal stand on the issue.

i. Islamic View of Human Being

Since we did not create ourselves we do not own our bodies. We are entrusted with them for care, nurture and safe keeping. God is the owner and giver of life and His rights in giving and in taking are not to be violated. Attempting to kill oneself is a crime in Islam as well as a grave sin. The Qur'an says:

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"Do not kill (or destroy) yourselves, for verily Allah has been to you most Merciful" [12]

Islam, indeed views human beings with great respect, and Allah (swt) has made him to be the most noble among his creatures, as Allah says

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We have honoured the sons of Adam; provided them with transport on land and sea; given them for sustenance things good and pure; and conferred on them special favours, above a great part of Our creation. [13]

And Allah has created him with the object of carrying out His vicegerency on earth. Thus He has declared his life to be absolutely inviolable. No matter if that life is of an aged, or ailing, or of a completely abnormal human being. This is very vivid from the Qur’anic verse,

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"It is not lawful to take away a human life except with due process of law".[14] And the Prophet’s (pbuh) Ḥadith where he is reported to have declared "It is unlawful (ḥaram) to violate the sanctity of another’s life that Allah (swt) has declared to be inviolable."[15]

Commenting on the above Qur’anic provision, the leading authorities on the Qur’an hold that no human life can be destroyed save as provided by the Shari’ah. It is agreed that on the authorities from the Qur’anic provisions and the Prophetic traditions there are five instances where a person’s life can be terminated rightfully, namely for promiscuity, Apostasy, Ḥirabah (Highway Robbery) and intentional killing of a human being (culpable homicide) and rebellion.[16]

Thus to kill an ailing person based on sympathy is not among the list of instances which can be taken lawfully and thus is unlawful act (Ḥaram).

Moreover, in an Islamic view to push an ailing person into the jaws of death is not sympathy but amounts to an utter act of cruelty. Similarly Islamic view on diseases and calamities rests on a distinctly different premises.

ii. Islamic View on Ailments and its Concept of Sympathy

Firstly, according to Islamic worldview, ailments and infirmities in life are facts of life that must be met with patience and the adversities and calamities of any type are regarded as challenges to be faced with fortitude.[17]

Therefore, an afflicted person with ailments and other calamities is directed to regard his sufferings as a test from Allah (swt) and exercise patience to the effect. This is very clearly stated in the Qur’an where Allah (swt) states

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“O you who believe! seek help with patient perseverance and prayer; for Allah is with those who patiently persevere.” [18]

And yet in another place He declares patience in the face of adversities as a real act of righteousness.

Moreover the Qur’an, in order to in-still the fighting spirit in believers at facing the odds and adversities in life, narrates the story of Prophet Ayyub (pbuh) who was afflicted with most devastating skin disease and other calamities in terms of loss of property and his most dear and near members of his family, but still he was grateful to his Lord - where Allah (swt), described him as "How excellent in our service he was,[19] and "a veritable picture of patience for commemoration, for all who have for all who serve us "[20]

Among the scholars Ibn Kathīr says that according to an authentic Ḥadith, Prophet Ayyūb (pbuh) was suffering from a chronic skin ailment for 18 years. And his ailment was so horrible that all deserted him except his faithful and obedient wife. At times she used to work as a labourer and feed her husband. And at stages where she was refused employment on account of her being the spouse of Ayyūb (pbuh), she was made to sell his Pigtail on two occasions to provide a loaf of bread for her ailing husband.[21]

This narrative of the Qur’an contains a lot of wisdom for the serious-minded from among which two aspects are relevant for our discussion on mercy and sympathy as envisioned by Islam:[22]

i. Man has to exercise the utmost patience on the face of adversities in life, no matter how horrible they may be.

ii. Islamic notion of mercy dictates rendering services to a long-suffering ailing person.

Secondly, the Sunnah of the Prophet (pbuh) declares that ailments and calamities are blessings in disguise. This is evident from his consolement to a patient. "Have no fear, the ailment will prove purifying you from sin if Allah wills so."[23] This Ḥadith in itself not only enhances one’s belief and confidence for his salvation in the hereafter, it also has great psychological effect in relieving the pain suffered by the ailing person.

Thirdly, Islamic religion not only makes it incumbent upon the person related to the patient to take care of him, but it strongly urges its believers at large to pay service and spiritually support him by visiting him, and this is what mercy means in Islamic world view.[24]

For instance to render service to one’s parents is made next to serving Allah (swt). This is by virtue of the Qur’anic verse (Al-Isra’: 23-24) and many traditions from the Prophet (pbuh).

Again Qur’an makes it obligatory to extend a helping hand and treat fairly other blood relations, neighbours and humanity at large even if such assistance affects one’s economy and financial standing.[25]

For instance, the Qur’an obligates an affluent person to spend for the needy and the poor. This is in the form of paying the obligatory dues to the poor (Al-Zakāt), tithe (Al-Ushr) and other forms of benevolent acts of charity (Al-Ṣadaqāt). The Sunnah also, among other things, declares it a sin to hold back the sustenance of one whose living depends on him.

Finally, an ailing person is recommended to seek medical treatment through lawful means and never resort to medications which facilitates death. For instance the Prophet (pbuh) is reported to have said, "Allah (swt) descends diseases and for each ailment He facilitates cure, therefore you should seek treatment."[26] According to another report, "but never seek cure from malignant and harmful substance like poison."[27]

In a nutshell, Islam never approves ending someone’s life just on account of him becoming ill, handicapped, mentally retarded and paralised. Instead it strongly urges the afflicted person to exercise patience and highly exhorts his relatives and the community at large to help relieve his sufferings.

Therefore, Islamic law never excuses such killing and regard it considered as a crime for that matter.

iii. Criminal Liability

Islam does not only declare that the life of human being is absolutely sanctified. It also provides motive to protect and save one person’s life to salvaging the whole human race in terms of greatness of its reward. Thus, to violate it is a serious crime and to preserve it is the best form of righteous conduct in the eyes of the Shari’ah.

Therefore to kill someone deliberately by act or omission because he is suffering from an unbearable painful ailment or injury, or that he is too old, having lost all utilities and prays for death, or where his ailment is declared incurable, amounts to culpable homicide and is punishable by Qiṣās[28] unless pardoned by the next of kin of the victim. If such killing occurs unintentionally, he has to pay compensation (Diyah)[29] for the relatives of the victim.[30]

Nevertheless an accused indicted for this offence which normally is committed intentionally but with the motive of alleged genuine sympathy, among other things may put up the following defences:

a. Good Motive

According to Islamic Criminal law the motive which impels a person to intend the commission of wrongful act is irrelevant. As Abdul Qadir ‘Awdah says to the effect. "The Shari’ah from the outset has drawn a clear distinction between intending to commit a wrong and the motive which impels the criminal to do such wrong.[31] It does not attach any significance to motive in determining the guilt of the accused or its ensuing penalty.[32] Thus, it is not important to determine whether a killing is committed by a noble motive like for vengeance and protection of one’s dignity or it is committed with a base motive of killing for the sake of stealing.[33]

However, one may argue that in the Qur’an we read about the killing of a youth by Khidr who killed him with the view of preventing his rebellion against his parents. If it is the case then why the motive is not taken into account in removing the liability of the accused from this crime.[34]

This will not hold good because the incident in question belonged to a category of mysterious conduct which was a special gift by Allah (swt) to Khidr. It is held that it was nothing but a special implementation of Allah’s command, because the verse 65 of Al-Kahf states that Khidr was given special kind of knowledge from God.[35]

Therefore, the defence of good motive does not pardon the culprit from criminal liability on the issue.

b. Consent of the Victim or His Guardian

Mercy killing may occurred by the consent of the victim or his guardian. If the culprit, is a relative, contends that the deceased either orally or in writing has authorised him that in the event he becomes too old or irrecoverably ill, he should be put to death by a very peaceful and least painful means, or if he is a medical doctor, may contend that he has stopped providing medical services to his patient when it becomes obviously clear to him that he will not be cured. But such contention has been done away with the express consent from the relative or by virtue of the will (Waṣiyyah) from the deceased himself.[36]

Mercy killing in the aforesaid situations involves two distinct issues:

i. It occurs when a person, being in charge of caring for an ailing or elderly person, who by losing patience puts such life to death or refuses to attend to him anymore.[37]

ii. It is done by a medical officer by stopping to provide drugs or by administering some injection to a person whose illness with all probabilities is proven to be incurables.[38]

In the first case, it is generally held that consent of the deceased does not excuse the offender from the liability. Since human life is of the nature of a thing upon which man has no transferable right. That is why suicide is a grave and sinful act and is prohibited in Islam.[39] Therefore, if someone requires another person to end his life is considered as a great sin.

However, there is some discussion among Muslim jurists on the issue when they address the right of pardon by the relatives of the victim in advance.

In case of consent by the victim the jurists (fuqaha’) advance the following views.

The Ḥanafies view the pardon by the victim before his death as consent which in turn is a mitigating ground for dropping Qiṣās.[40] This is further justified that such consent is a sufficient ground to constitute doubt which is the remover of Qiṣās punishment as a principle in criminal law.[41] However, as to whether diyah is due or not Hanafies are divided.[42]

Al-Dassuqi, representing to Maliki school stand says "if a person before infliction of a deadly blow says to another, "I exonerate you from liability if you kill me", it has no any validity since he has exempted the accused before such right is due to him".[43] But according to a famous opinion of the school, diyah would be due.[44]

Al-Sharbini, of the Shafi’e holds that, "Qiṣās is dropped because of doubt created by the victim’s consent, but diyah is due."[45]

Al-Baḥuti of Ḥanbali School says, "if an injured person pardons his assailant from the consequent death which resulted from that injury, the offender is not under any liability whatsoever, because the victim has rightfully forgiven him after the effective cause was present at his body."[46]

From the above opinions given by the jurists from the four Sunni schools, it is clearly shown that some like Malikis and Ḥanafies (analogically) uphold the view that man has no alienable right over his life thus his pardon made in advance (Al-Afw ma taqaddam) does not exonerate the culprit from the liability.[47] Others like Ḥanabilah and some Shafi’es hold to the contrary, while the majority holds a middle-course approach on the golden rule that where there is difficulty in applying the Shari’ah ruling on the point involving Qiṣās cases and doubt emerges, the original penalty is dropped and an alternative penalty becomes due.[48]

c. Duress (Al-Ikrāh)

The culprit who happens to be the spouse or other (closely) related persons to the deceased may contend that he killed the victim because he was under great pressure and mental distress because of his long period of attending him or in legal terminology he did it under incorporeal duress (Al-Ikrāh al-Ma’nawi).[49]

This is agreed by the majority of Muslim jurists that in crime of killing, duress even if it is to the extent of physical threat to one’s own life and limb (Al-Ikrāh Mulji’), does not exonerate him from the liability. Mental distress which is of the type of non-physical threat has no significance to the issue.[50]

Indeed, mercy killing is a serious crime, and no one is allowed to resort to it under any pretext. It is punishable in the same way as a crime of deliberate homicide.

And no plea of mercy, duress and consent can justify and remove its criminality. However, the challenges of the tremendous advancement in the field of medical facilities, whereby a person who is the state of a permanent coma can have his heart-beat or breathing sustained for so long, finds its answer on the opinion which maintains that the liability of removing such device is mitigated by consent of the legal heirs.[51] Nevertheless, it still remains to be subject of dispute because; to make such person to linger on to breathing is analogous to sustaining his life with food or drink, and rejection of the view by Ḥanbalis and Shafies of the legality of the consent on ground of their non-acceptability of institution (juristic preference).[52]

Fatwas (Statements of Great Muslim Scholars):

Saudi Arabia’s grand mufti Shaikh Abdul Aziz bin Abdullah bin Bāz has ruled that mercy killing or Euthanasia (removing life supporting apparatuses keeping alive a person inflicted with an incurable disease or under coma) is un-Islamic. Sheikh Bin Bāz said it was against Shari’a to decide the death of a person before he is actually dead.[53] The popular Egyptian scholar Sheikh Yusuf al-Qaraḍawi, recently issued a fatwa, or religious ruling, equating euthanasia with murder, but allowing the withholding of treatment that is deemed useless.[54] Al-Qaraḍawi issued a fatwa that allows physicians to discontinue the life equipment used for the person who is clinically dead or whose brain stem is dead. Al-Qaraḍawi stressed that the fatwa is based on medical researches as well as on the Shari’a. [55]

Ayatollah Khamanei leader of Islamic Republic of Iran, as a Shiite Muslim scholar, also has issued a fatwa considering euthanasia “in all forms” forbidden (haram)[56] Ayatollah Nuri Ḥamadani another Shiite Ayatollah also regards all forms of euthanasia as ḥarām.[57]

According to Ali jumåh, Grand Mufti of Egypt,[58] “Islamic law does permit the removal of the medical equipment utilized to keep a person alive when it is no longer hoped that such a person will be cured and no progress is being made in the attempt to restore their health—due to being “clinically dead”— only when physicians advise to do so. If, however, the equipment has another purpose, like the removal of fluid to improve respiratory health, it is not permissible to deactivate them. This is different, though, from what is called “euthanasia” wherein the sick person requests from the physician to end their life or when the physician decides that unilaterally due to some handicap that will afflict the sick or because of severe pain. Such decisions are unequivocally unlawful because the sick is still living and their life is not dependent upon the life preserving equipment. Rather, the only concern is that the sick or the physician desires to put an end to life due to the excessive pain experienced by the sick. To end life in such an instance will be considered homicide and a murder of a soul that God has declared sacred.”

Euthanasia in Different Legislations

1. United Kingdom

In England and Wales, even though suicide itself is no longer a crime, the Suicide Act 1961 makes it illegal to “aid, abet, counsel or procure the suicide of another” and sets a maximum prison sentence of 14 years.[59] Thus Active Euthanasia or assisted suicide is not allowed as whatever the case may be active euthanasia under English Law is equal to murder.[60]

Conversely, the study of case law shows that when specific requirements are met with, passive euthanasia is allowed.

A competent patient may refuse treatment including life sustaining treatment. In the case of Re T (Adult: Refusal of Treatment),[61] the patient whose mother was a member of the Jehovah’s Witnesses refused blood transfer after delivery of a stillborn child following an accident. The father of the child applied for a declaration that it would be lawful to administer the blood transfer even without her approval. The declaration was granted and the decision was appealed. On appeal it was held that “an adult whose mental capacity is unimpaired has the right to decide for herself whether she will or will not receive medical or surgical treatment, even in the circumstances where she is likely or even certain to die in the absence of the treatment.”

It is now an established principle that a competent patient may refuse treatment even to the extent that such refusal may lead to death. The issue now arises regarding patients of vegetative states with no hopes of recovery. The question whether the doctors are under a duty to sustain and prolong the life of such patients were dealt in the case of Airedale NHS Trust v Bland [1993] AC 789. In this case a distinction was drawn between the concept of causing death and letting to die. Causing death which is active euthanasia will not release a person from liability whereas letting to die which may be termed as passive euthanasia would incur no liability provided that the patient is in a permanent vegetative state and ultimately would die. Letting to die would be done by withdrawing life supporting machines and other contraptions.

2. Australia

Suicide is no longer a crime in the Australian jurisdictions. However, assisting an individual to end his or her own life is a crime in Australia.[62] The Rights of the Terminally Ill Act, which permitted euthanasia initially passed in the Northern Territory of Australia in 1995 was later overruled by a 1996 law.

The Australian Law on euthanasia or assisted dying is similar to the law of UK as the Australian Courts have received the principles laid down in the common law cases such as Airedale NHS Trust v Bland and Re T (Adult: Refusal of Treatment).

The most recent ruling in Australia is where the Supreme Court of Western Australia in August 2009 ruled that Christian Rossiter was entitled to decide if he wanted to continue medical care. He was paralysed, a condition known as quadriplegia, which is a paralysis caused by illness or injury to a human that results in the partial or total loss of use of all of their limbs and torso. It was also stated by the court that the carers of Rossiter will not be held criminally responsible for following his instructions.[63]

3. United States

Euthanasia is illegal in most of the U.S. However, in the States of Washington and Oregon it has been legalised. In Texas, it is allowed to a limited extent.[64]

Texas Advance Directives Act or Texas Futile Care Law passed in 1999 authorises hospitals and physicians to withdraw life support measures such as mechanical respiration, from those patients who are terminally ill such that the treatment becomes both futile and inappropriate.[65] The most controversial provision of this Act is where the health care institution is given the authority to discontinue the life sustaining treatment against the consent of the patient or the family.[66]

Under the Oregon Death with Dignity Act which was approved in 1994, a patient who has been diagnosed with a terminal illness that will kill the patient within six months may request for a prescription for a lethal dose of medication from his or her physician.

The Washington Death with Dignity Act or Initiative Measure No. 1000 similar to the Oregon Act also allows prescription of medication to terminate life on the written request of the patient who will then self administer the injection of the lethal medication. While there are stipulations restricting the prescription, this is clearly a situation where active euthanasia is permitted.

While the law of Texas permits a form of passive euthanasia, active euthanasia or assisted suicide is legal in both in Oregon and Washington despite the resistance to the sanction.

Euthanasia: A Comparison

Passive euthanasia is allowed under the Islamic Law according to the views of the Muslim Scholars where any treatment with no result can be stopped or withheld. Additionally, active euthanasia or killing a person through positive means such as lethal injections or electric shocks is not permitted and is equated to intentional homicide.

The law on euthanasia is in UK and Australia is basically along the same lines as the Islamic view on euthanasia where active euthanasia whether it is voluntary or involuntary is not lawful but the withdrawal of life supporting systems that prolongs the life of a patient is held to incur no liability under strict conditions where the patient is known to be in a permanent vegetative state with no probability of recovering. Furthermore refusal of treatment is a given right to any individual, even if it will probably result in the death of the person.

The law of Texas of US provides that the withdrawal of life supporting systems of a patient is permissible with or without the consent of the patient or the family provided the patient has no chance of recovery. The right to seek treatment is fundamental to the right to life. Hence, this may be a violation of right to life.

The Acts legalising euthanasia in the US states of Washington and Oregon permits the physician to prescribe a lethal dose of injection on the request of the patient which will be administered by the patient on his own to end his life. Even though the physician does not commit the act to end the life, still the prescription of the medication will not be permitted under the Islamic Law as this is assistance to suicide and suicide is completely prohibited in Islam whereas suicide is not a crime in US legislation.

Conclusion

Islamic jurisprudence, based on a convincing interpretation of the holy Qur’ān, does not recognize a person’s right to die voluntarily. The Islamic arguments against mercy killing can be summarized in two main reasons: First: Life is sacred, and mercy killing and suicide are not included among the reasons allowed for killing in Islam. And second: Allah decides how long each of us will live and the moment of death, ajal, is under the control of Allah and the human has no say in this matter; the human cannot and should not attempt to hasten or delay the ajal. The prohibition on life applies equally well whether for self, suicide, or others, homicide or genocide. The concepts of autonomy, freedom and individual choice does not apply here for these two reasons: a. life does not belong to the human; and b. taking life will cause harm to the family and society in general. An individual's freedom of choice is constrained by the harm it causes to others.

As a conclusion we can say that the Islamic position is that life belongs to Allah. It is He who gives and takes away life. No human can give or take it. Muslims are against euthanasia. They believe that all human life is sacred because it is given by Allah, and that Allah chooses how long each person will live. Human beings should not interfere in this.

There are two instances, however, that could be interpreted as passive assistance in allowing a terminally ill patient to die and would be permissible by Islamic law: Administering analgesic agents that might shorten the patient’s life, with the purpose of relieving the physical pain or mental distress, and withdrawing a futile treatment in the basis of informed consent (of the immediate family members who act on the professional advice of the physicians in charge of the case) allowing death to take its natural course. If a patient is medically presumed dead through what is known as brain death, switching off the life support may be permissible, with due consultation and care.

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[1] Oxford Wordpower, (Oxford University Press UK 2003), p. 257.

[2] Abdul Wahhab Ḥawmad, Dirasāt Mu ammaqah Fil-Fiqh Al-Jinā’i Al-Muqāran, (Matbu’at Jami at-e-Kuwait, 1983), pp. 301-308.

[3] See, Web master, “Essays Tagged: word euthanasia”, < http://www.writework.com/tag/word-euthanasia> (accessed 27 October, 2010).

[4] Ibid.

[5] Abdul Wahhab Ḥawmad, Dirasāt Mu ammaqah Fil-Fiqh Al-Jinā’i Al-Muqāran, (Matbu’at Jami at-e-Kuwait, 1983), pp. 301-308.

[6] Syed Sikandar Shah, “Mercy Killing in Islam”, Islamic Criminal Law, (accessed 15 October, 2010).

[7] Abdul Wahhab Ḥawmad, Dirasāt Mu ammaqah Fil-Fiqh Al-Jinā’i Al-Muqāran, (Matbu’at Jami at-e-Kuwait, 1983), pp. 301-308.

[8] Syed Sikandar Shah, “Mercy Killing in Islam”, Islamic Criminal Law, (accessed 15 October, 2010).

[9] The meaning of decriminalization is that in many instances individuals especially the spouse commits this against his partner merely because that the former is partially paralyzed or is suffering from other chronical diseases like cancer. When he is charged, he simply contends, "I did it out of sympathy," and gets acquitted. See for cases Abdul Wahhab Ḥawmad, Dirasāt Mu ammaqah Fil-Fiqh Al-Jinā’i Al-Muqāran, pp. 305-313.

[10] For instance in 1949, a female student by the name of Paigat Carol Ann killed her father who was suffering from cancer, and got acquitted. See Ibid, p. 306.

[11] For instance Dr. Mair an English medical doctor in 1975, said, "a lot of medical practitioners are resorting to euthanasia like me surreptitiously but now we talk about it loudly," see Ibid, p. 313.

[12] Al-Qur’an, 4:29.

[13] Al-Qur’an, 17:70.

[14] Al-Qur’an, 6:151.

[15]Moḥammad Ibn Ismail Al-Bukhāri, Ṣahīh Al-Bukhāri, (Bayrūt, Dār Al-Fikr, 1981), vol. 8, p. 148.

[16]Syed Sikandar Shah, “Mercy Killing in Islam”, Islamic Criminal Law, (accessed 15 October, 2010).

[17] Ibid.

[18] Al-Qur’an, 2:153.

[19] Al-Qur’an, 38:41-44.

[20] Al-Qur’an, 21:83-84.

[21] Isma’il Ibn Kathīr, Qiṣās Al-Anbīa’, (Al-Qāhirah, Al-Maktāb Al-Thaqāfi, 1989), pp. 256-262.

[22] Syed Sikandar Shah, “Mercy Killing in Islam”, Islamic Criminal Law, (accessed 15 October, 2010).

[23] Yahya Ibn Sharaf Al-Nawawi, "Riāḍ Al-Sāliḥīn," ed. Abd Aziz Riban and Ahmad Yusuf (Al-Daqaq, 1991), p 302.

[24] Syed Sikandar Shah, “Mercy Killing in Islam”, Islamic Criminal Law, (accessed 15 October, 2010).

[25] Ibid.

[26] See, Mohammed Ibn Ali Al-Shawkāni, Nail Al-Awṭār-Sharh Muntaqi Al-Akhyār, (Riasatoedarat Al-Bahuth Al-’Ilmiyah wal-Ifta, Saudi Arabia, n.d.), vol. 9, p. 93.

[27] It is narrated by Abi Hurairah, see Ibid.

[28] Qiṣās is the original punishment for deliberate homicide and it can be compounded or remitted for diyah. Its authority is by virtue of the Qur’anic Ayah, 2:178.

[29] Diyah designates the amount of compensation given to the heirs of the victim for wilful killing if forgiven, and as original penalty for killing by mistake or negligence. The authority for this is by virtue of the Qur’anic verse (Al-Nisa: 92).

[30] Syed Sikandar Shah, “Mercy Killing in Islam”, Islamic Criminal Law, (accessed 15 October, 2010).

[31] Abdul Qadir ‘Awdah, Al-Tashrī Al-Jinā’i Al-Islāmī, (Al-Qāhirah: Dār Al-Turāth, 2005) vol. 1, p. 387.

[32] Ibid.

[33] Ibid.

[34] Al-Qur’an, 18:65-82.

[35] Ahmed Mawafi, Min Al-Fiqh Al-Jinā’i Al-Muqārin Bain Al-Shari’ah Wal-Qanūn, (Al-Qāhirah, A.M. Al-A’la Lil-Shu’un Al-islami, 1965), pp. 220-223.

[36] Syed Sikandar Shah, “Mercy Killing in Islam”, Islamic Criminal Law, (accessed 15 October, 2010).

[37] Ibid.

[38] Ibid.

[39] Suicide is explicitly prohibited by the Al-Qur’an, Al-Nisa, 4:29.

[40] Abdul Qadir ‘Awdah, Al-Tashrī Al-Jinā’i Al-Islāmī, (Al-Qāhirah: Dār Al-Turāth, 2005), vol. 1, p. 381.

[41] Ibid.

[42] Ibid.

[43] Shams Al-Din Moḥammed A’rafah Al-Dassuqi, Ḥashiyah Al-Dassuqi A’la Sharh Kabir, (Al-Qāhirah: Dar Al-Ihya Al-Kutub Al-Arabi, 1994), vol. 4, p. 240.

[44] Ibid.

[45] Moḥammed Al-Khatib Al-Sharbini, "Mughni Al-Muhtāj", (Bayrūt: Dār Al-Fikr, 1998.) vol. 4, p. 50.

[46] Mansūr Ibn Yunus A-Baḥuti, Kashshaf Al-Qina Ala Matu Al-Iqnā, (Bayrūt: Dār Al-Fikr, 1982). vol. 5, p. 546. See also, Abdul Qadir ‘Awdah, Al-Tashrī Al-Jinā’i Al-Islāmī, p. 382.

[47] Syed Sikandar Shah, “Mercy Killing in Islam”, Islamic Criminal Law, (accessed 15 October, 2010).

[48] Ibid.

[49] According to Al-Sarakhsi and Bazdawi, any form of threat which is not material or physical is called Al-Ikrah Al-Adabi or Ma’nawi. For instance to threaten someone to do some act by imprisoning his spouse amounts to Al-Ikrah Al-Ma’nawi.

[50] Ibid.

[51] Syed Sikandar Shah, “Mercy Killing in Islam”, Islamic Criminal Law, (accessed 15 October, 2010).

[52] Ibid.

[53] Islamic Voice news site. (Accessed on 4-7-2010).

[54] Al-Qaraḍawi Y. Question and answer about Euthanasia.In: Islamonline site.

Ask_Scholar/FatwaE/FatwaEAskTheScholar> (Accessed on 1-7- 2010).

[55] http://www.arabwestreport.info/node/16252, (Accessed on 16-10-2010).

[56] Khamenei A. Islamic medical Jurisprudence. In: Official website of Ayatollah Khamenei.

<http://www.basijmed.com/esteftaat/ahkam_kh/detail.asp ?iNews=116&iType=24> (Accessed on 1-1- 2007).

[57] Noori Hamadani H. Islamic Medical Jurisprudence. InOfficial website of Ayatollah Noori Hamadani.

http://www.noorihamedani.com/noori/home.asp?idnumber=114&Languageurl=1&Pageurlnumber=403&location=none&zone=0&srch. (Accessed on 1-7- 2010).

[58] See, <http://www.aligomaa.net/fatwacollection.html> (Accessed on 16-10-2010).

[59] Section 2(1).

[60] Brazier. M. and Cave. E. Medicine, Patients and the Law, (London :LexisNexis/Butterworths, 2007), p. 488.

[61] [1993] Fam 95.

[62] Devereux. J.A. Australian Medical Law. (Abingdon, Oxon; Routledge-Cavendish, 2007), p. 725.

[63] http://en.wikipedia.org/wiki/Euthanasia_in_Australia, (Accessed on 19 August 2010)

[64] Chapter 166 of the Texas Advance Directives Act 1999

[65] Ibid.

[66] Ibid.

The Practice of Conditional Divorce

2012-03-07T01:28:00.003-08:00

by Manawee Niringjuerae

Table of Contents

Abstract 2

Introduction. 3

Religious Sanction. 5

The Validity of Prenuptial Agreement 9

Ta’liq: The position in Malaysia. 12

Analysis cases. 15

Suggestion for reform.. 18

The Possibility of Implementation. 20

Conclusion. 20

Bibliography. 22

Abstract

It is a very important provision of Muslim law of marriage and enables a wife to safeguard her future married life. She can make it a condition of her marriage that the husband should delegate his power of divorce to her so that she can exercise it, that is, divorce herself on his behalf, whenever she is not satisfied with his behavior or the husband commits a breach of terms agreed upon.

In Malaysia, ta’liq agreement was introduced as a means of protecting the right of Muslim women in marriage. In recent years, it seems that there is tendency of wives to use ta’liq agreement pronounced by their husband after the solemnization of the marriage, as a way of out of it. It is a delegated right of repudiation (talaq) given to the wife based on the stipulation agreed upon by the husband, She would be given this delegated right under certain circumstances.

Furthermore, a divorce does not take place automatically if conditions are breached. To affect a divorce, a wife must lodge a report with the Syariah Court. Once it has been shown that there is a legitimate ta’liq and that one party has acted in contravention to it, the court has the power to decide on the matter of the divorce.

In this paper the writer attempts to discover the truth of this contention and to identify whether there is a room for betterment or reform in the procedure. Prenuptial agreement seems to be a good selection that the writer would like to propose on this matter. The paper will also ascertain the feasibility of such changes in the Muslim Society.

Introduction

Ta’liq[1] or conditional or delegated divorce, is another way of divorce[2] where the wife includes a condition in her marriage contract that allows her to divorce on her own initiative under certain specific circumstances. Under a ta’liq divorce, a woman has the right to divorce her husband if he violates one of the conditions listed in the ta’liq agreement (stipulations in the marriage contract) agreed upon at the time of the marriage. These conditions may include desertion, failure to pay maintenance, and harm caused to the wife. Upon a woman’s petition, a court will make an inquiry into the validity of the divorce and, if satisfied, confirm and record the divorce.

However, there are another form of conditional divorce called ta’liq al-talaq where the husband proclaim a divorce under certain conditions and it come into effect immediately when the condition has been fulfilled.[3] And this type of divorce are effected without intervention of the court. The condition may refer to the occurrence or non-occurrence of certain specified future event or it may refer to a certain time or place.[4]

The condition subject to which a divorce is pronounced may relate to a specified place.[5] Thus, he may say that, “You are divorced when you enter Makkah,” and in such a case the wife would not be divorced till she actually enters Makkah. Similarly, he may say to his wife, “If you enter your father’s house or the house of ‘A’ then you are divorced.” A divorce shall take effect in that case only when she enters her father’s house or A’s house but till then the divorce remains in suspense.[6]

The Pakistani jurist Kazi Nasir-ud-Din Ahmed mentions ta‘liq al-talaq in his work The Muslim Law of Divorce, one of the most comprehensive and detailed works in Islamic law on the matter of divorce written in English, covering all of the four Sunni law schools and Shi‘ism. He explains it as follows: [7]

“A condition can be attached while pronouncing a divorce so that the divorce takes effect only upon the fulfillment of the condition to which it is subject. The condition may refer to the occurrence or non-occurrence of a certain specified future event or it may refer to a certain place or time. A conditional divorce remains in suspense and the marriage subsists till the condition, subject to which it was pronounced, is fulfilled. A divorce is effected as soon as the condition is fulfilled. If, however, the condition becomes impossible of fulfillment then the declaration of the husband, that is, the conditional divorce becomes ineffective, and the marriage continues to subsist as before. If the divorce is made contingent on a default on the part of the husband in the performance of certain condition or conditions agreed upon between the parties, a divorce would be effected on the occurrence of the breach of the condition”.

This form of divorce very rare occurs in Malaysian community. However, it was a widely acknowledged form of divorce in classical Islamic law and supported by jurisprudence in classical Islamic law.[8] Ta‘liq al-talaq seems to have enhanced the unilateral power of the husband in pronouncing the repudiation of his wife in the historical reality of the Middle East and North African Muslim societies.[9] Furthermore, it seems to have been generally pronounced only in anger or excitement not the result of cool deliberation nor, as a general practice, intended to be effected.[10]

As a husband, he has the right to divorce his wife without the intervention of the court. He can either exercise the right of dissolving the marriage by himself or appoint an agent to exercise this power on his behalf or, in other words, he can delegate his power of divorcing his wife to another person who may be the wife herself. This delegation of power of divorce to the wife is called Tafwid and is well recognized in Muslim Law. [11]

Delegated divorce is another way of divorce where the wife includes a condition in her marriage contract that allows her the right to divorce on her own initiative under certain specific circumstances.[12] For instance upon the husband’s breach’s of a condition agreed upon by the parties in the ta’liq agreement. In other words, if the husband breaches the consent that he had pronounced, the wife could bring the case to the court to confirm that the divorce has occurred.[13] In having ta’liq, it is hoped that husbands would give due care to the rights of the wife generally mentioned in the statutory agreement. It is a statutory regulation that ta’liq consent should be pronounced by the husband and signed by him after the marriage contract ceremony.

Religious Sanction

The basis of the type of divorce is the stipulation agreed upon by the husband, that the wife would be entitled to a divorce under certain circumstances for instance, upon the spouse’s breach of a condition agreed upon in the marriage contract. This type of divorce is also known as tafwid at talaq.[14]

The husband is bound by his agreement, as Muslims are generally bound by their agreements, and are expected to fulfil their obligations. For instance, in the Qur’an Allah says:

$yg•ƒr'¯»tƒ šúïÏ%©!$# (#þqãYtB#uä (#qèù÷rr& ÏŠqà)ãèø9$$Î/ 4 [15]

O you who believe! Fulfil all obligations.

At another place, the verse refers to the honouring of commitments, when it states that:

(#qèù÷rr&ur Ï‰ôgyèø9$$Î/ ( ¨bÎ) y‰ôgyèø9$# šc%x. Zwqä«ó¡tB[16]

‘And Fulfil every covenant. Verily, the covenant will be questioned about.’

With regard to agreements or settlements made between a husband and wife, in Surah an Nisa Allah says:

ÈbÎ)ur îor&z�öD$# ôMsù%s{ .`ÏB $ygÎ=÷èt/ #·—qà±çR ÷rr& $ZÊ#{�ôãÎ) Ÿxsù yy$oYã_ !$yJÍköŽn=tæ br& $ysÎ=óÁãƒ $yJæhuZ÷�t/ $[sù=ß¹ 4 ßxù=�Á9$#ur ×Žö�yz 3 ÏNuŽÅØômé&ur Ú[àÿRF{$# £x’±9$# 4 bÎ)ur (#qãZÅ¡ósè? (#qà)Gs?ur cÎ*sù ©!$# šc%x. $yJÎ/ šcqè=yJ÷ès? #ZŽ�Î6yz[17]

If a wife fears cruelty or desertion on her husband’s part, there is no blame on them if they arrange an amicable settlement between themselves; and such agreement is best; even though men’s souls are swayed by greed. But if you do good, and practice self-restraint, Allah is well- acquainted with all that you do.

The prophet (s.a.w.) himself was asked to give his wives an option to obtain a divorce from him as Allah says:

O Prophet! Say to thy consorts: “If it be that you desire the life of this world, and its glitter, - then come! I will provide for your enjoyment and set you free in a handsome manner”.[18]

Regarding conditions or stipulations in marriage contracts, there are Traditions of the Prophet (s.a.w.) to that effect, for instance:

Uqbah b. Amir reported the Messenger of Allah (may peace be upon him) as saying: The condition worthier to be fulfilled by you is the one which you made the private parts (of your wives) lawful (for you).[19]

In Ahmad Hasan’s explanatory English translation of Sunan Abu Dawud, it is elaborated in the footnote to this Hadith that:

The condition imposed by the wife at the time of marriage or the word a man gives before his marriage must be fulfilled. For instance, a woman marries on condition that the husband will not take her outside the place she wants to stay. The husband should fulfil this condition. He cannot legally take her outside the city where she has her residence. He can do so with her consent. The condition, it should be noted, laid down at the time of marriage must be lawful such as dower, residence, maintenance and good living.[20]

In Islamic Family Law, all the Sunni schools recognize the doctrine of the delegation of the power of divorce to the wife. The injunction regarding the prophet (s.a.w.) and his wives referred to in Surah al-Ahzab 33:28 cited above is also put forward by some jurists as a basis for this doctrine. It is explained by the jurists that the Prophet (s.a.w.) had, in obedience to the Qur’anic injunction, empowered this wives to choose between living with him or a separation; the wives chose the Prophet (s.a.w.) and so the marriages were not dissolved. It is inferred that a husband can lawfully delegate to his wife the power to dissolve the marriage, if she so chooses.[21]

It is based on the major texts like the Qur’an and Sunnah that the conditions in the ta’liq agreement are validated. All the Sunni schools recognize the doctrine of the delegation of the power of divorce to the wife, i.e. the basis of separation by ta’liq.

According to the majority of Muslim scholars, the power given by tafwid or delegation cannot be revoked, and the wife to whom the power is delegated exercises it in respect of her own person and has absolute right to exercise the power or not as she may choose.[22]

However, there are some differences of opinions between the traditional scholars as to the validity of certain conditions that entitle the wife to a dissolution of marriage e.g. the Hambali view is that a husband who agreed in his marriage contract not to take another wife during the continuance of the marriage would be bound by such a stipulation so that the first wife would be entitled to a dissolution of marriage in the event of its breach, while the Hamafi and the Shafi’i is would hold such a stipulation to be void.[23]

The Hanbali approach is that any condition agreed between the parties, orally or in writing, must be honoured and given effect, and any party who made that condition shall retain the right of cancellation if the condition is broken, unless there is a Sharia proof of its being void.[24] If a condition could be proven void under the Sharia, it must be deemed null and void e.g. a condition by a wife to have a previous wife divorced.[25]

With such given to the wife through the ta’liq pronounced by the husband, it is acknowledged that a few arising issues should be made clear. As previously highlighted, from the rules and regulations observed, it is obvious that a husband cannot avoid from pronouncing the ta’liq agreement. Not only it is a statutory requirement, but also the occasion in which it takes place obviously shows that a husband does not have any choice or say in the matter. Since ta’liq is usually pronounced after the ‘aqad ceremony. Once pronounced, the form of ta’liq agreement shall be signed by both husband and wife and attested by witnesses.

Thus, from the whole occasion an issue arises as to whether the husband consented to the agreement. It seems that there is an element of coercion present during the whole occasion. If such is the case, then the ta’liq agreement automatically becomes void[26]

Under the Islamic Law of contract consent is one of the foundations to a contract.[27] The Quran says:

“…But let there be amongst you traffic and trade by mutual good-will…”[28]

Similarly, consent obtained by coercion, misrepresentation, deceit, or fraud cannot be valid as it is not free but brought about by external forces.[29] Even the Prophet (s.a.w.) had also said that, ‘Indeed, Allah has released my Ummah (from liability) mistake, forgetfulness and things done under coercion.’[30]

Thus, the consent of husband and wife is a vital element in order to be a valid contract. It is also arguable that although agreement is given for the performance of the ta’liq procedure, but lack of acknowledgment or ignorance of the effect of the contract will also affect the validity of the ta’liq pronounced. Hence, it is contended that the procedure of ta’liq made by the prospective husband in this country might causes uncertainty to the validity of the ta’liq pronounced by spouse and would probably make the ta’liq and agreement signed invalid.[31]

The Validity of Prenuptial Agreement

Allah SWT says in surah al-Baqarah in ayah 177, about the believers:

šcqèùqßJø9$#ur… öNÏdÏ‰ôgyèÎ/ #sŒÎ) (#rß‰yg»tã

‘…To fulfil the contracts which you have made…’

Regarding conditions stipulated in marriage contracts in particular, there is a tradition of the prophet (s.a.w.) stating to the effect that, Uqbah b. Amir reported the Messenger of Allah SWT as saying: “The condition worthier to be fulfilled by you is the one which you made the private parts (of your wives) lawful (for you).”[32]

Ahmad Hasan quoted from Ibn Qayyim who comments to this Hadith said that:

“The condition imposed by the wife at the time of marriage or the word a man gives before his matrimony must be fulfilled. For instance, a woman marries on condition that the husband will not take her outside the place she want to stay. He should fulfil this. He cannot legally take her outside the city where she has her residence. He can do so with her consent. The condition, it should be noted, laid down at the time of marriage must be lawful such as dower, residence, maintenance and good living.”[33]

Under the Hanbali school, the bride and groom have the right to add provisions to the marriage contract at the time of marriage or afterwards by including additional clauses. In order to be valid, such clauses must further the object of the marriage and not violate the Shari'a.[34] For instance, conditions that the husband needs not to maintain the wife, or that the husband must divorce a previous wife are deemed void. However, clauses that eliminate the husband's right to take a second wife, or grant the wife greater freedom of movement or the power to divorce her husband at will, are valid.[35] A valid clause is enforceable by the party who made it; that party has the power to cancel the contract if the clause is violated. The Hanafi school generally does not allow additional clauses to the marriage contract. However, many Hanafis jurists today recognize that certain conditions may be added. While, such Hanafis accept the conditions that give the wife the right to divorce the husband at will, they consider a condition prohibiting the husband from taking another wife as void.[36] Malikis accept the validity of additional clauses, but complicate the wife's right to add a condition granting her the power of divorce by requiring that the right be transferred from the husband in a certain form.[37]

The Shariah jurists have accepted that a marriage contract may include condition for either or both spouses which must be observed if they are advantageous to either party.[38] There are some differences of opinions, however, between the traditional scholars as to the validity of certain demands. The difference of views among the classical jurists on this issue is closely related to their different opinions as the freedom of contracting parties in general to regulate their contractual relationship by means of stipulations in the contract under the Islamic law of agreement.[39]

For those scholars who do not accept such external stipulations at all, they have no effect, and are not binding, and do not affect the validity of the underlying contract. For those who accept them, they give the woman the option to annul the marriage if the condition is violated.[40]

However, the underlying basis for the validity of prenuptial agreement under Islamic law of contract would be based upon the ‘Contingent Contract’ principles. This is due to the fact that prenuptial consent is drawn and signed before the marriage contract itself.

Contingent contract is defined as ‘a contract to do, or not to do something, if some event collateral to the contract, does or does not happen.’[41] If such contract depends upon the happening of a future event, it cannot be enforced unless that event happens and if the event becomes impossible, the contract becomes void. Thus, if A contracts to pay B a sum of money when B marries A and B later dies before the marriage contract, then the agreement becomes void.[42]

There are three kinds of contingent contract:[43]

1) A contract, which does not admit of suspension or contingency. Such are agreements by which ownership in property is transferred, contracts of marriage, and divorce by khulu’.

2) A contract which is contingent upon a condition fitting the agreement, or a condition, required for it. This condition is also known as collateral contract.

3) A contract, which is contingent upon a condition that is not connected or collateral to the agreement.

The Shafi’es have no doubts in regard to the validity of condition collateral to the contract. Whereas, the Malikis and Hanbalis are in favour of its validity on the ground that the condition is not repugnant to the contract and it is correct on the ground of public policy. The Hanafis have validated it on the principle of Istihsan. However, jurists argued that the time of completion of the condition must be duly fixed.[44] The performance of the prenuptial agreement is contingent upon the occurrence of the marriage contract. If there is no marriage contract, then the agreement is void.

Ta’liq: The position in Malaysia

In Malaysia, ta’liq agreement seems to be an ideal means of protecting Muslim women’s right in their marriage. Therefore, it is usual for the husband to pronounce the statutory ta’liq agreement in the prescribed form immediately after the marriage is solemnized.[45] According to Section 2 of the Islamic Family Law (Federal Territories) Act 1984 ‘ta’liq’ means a promise expressed by the husband after solemnization of marriage in accordance with Hukum Syara’ and the provision of the Act. [46]

The prescribed agreement in the statutory from normally entitles the wife to apply for a ta’liq divorce in the event of the husband leaving or neglecting or not providing maintenance to the wife for a period of four month or more, or causing hurt to her person.[47]

In the Federal Territories the prescribed form of the ta’liq reads as follow:[48]

“I do solemnly declare when I leave my wife for four months voluntary or involuntarily and I or my representative do not give maintenance for such period whereas, she is obedient to me or I cause hurt to her person, then she makes a complaint to the Shariah Court and if found by it to be true, and she gives to the Shariah Court for me a sum of one ringgit, then she is divorced by a talaq khul’i .”

Whereas, Section 22 of the same Act provides for the responsibility of the Registrar, amongst others:

1) Immediately after the solemnization of a marriage, the Registrar shall enter the prescribed particulars and the prescribed or other ta’liq of the marriage in the Marriage Register.

2) The entry shall be attested to by the parties to the marriage, by the wali, and by two witnesses other than the Registrar, present at the time of the marriage is solemnized.

3) The entry shall then be sighed by the Registrar.

Section 26(2) of the act gives the Registrar the right to issue a ta’liq certificate in the prescribed form, upon payment of the prescribed fee.

While Section 50 of the Act provides[49]:

1) A married woman may, if entitled to a divorce in pursuance of the terms of a ta’liq certificate made upon a marriage, apply to the Court to declare that such divorce has taken place.

2) The Court shall examine the application and make inquiry into the validity of the divorce and shall, if satisfied that the divorce is valid according to Hukum Syara’, confirm and record the divorce and send one certified copy of the record to appropriate Registrar and to the Chief Registrar for registration.

Section 22 of the Act allows for additions to be made to the standard ta’liq, or for altogether different ta’liq to be registered. It is worth noting that the conditions that may be set are undefined by the Act except that they may not contradict hukum syara’.[50] In other words, a married couple can add conditions to their existing ta’liq after the marriage is solemnized, So long as both partners agree to the addition of conditions to ta’liq.

It is noted that generally, the scope of protection provided by the prescribed ta’liq agreement is only based on matters of maintenance, desertion, and hurt caused to the wife. Although Section 22(1) of the Act provides for the entry of “the prescribed or other ta’liq of the marriage in the Marriage Register” it is not possible for additional or optional conditions to be included in the prescribed statutory ta’liq agreement.[51]

According to the Registrar of the Shari’ah Court of Kuala Lumpure, Ustaz Abu Zaky Mohammad, any additional conditions in the ta’liq agreement are not allowed. Even if stated they would not be enforceable by the Shari’ah Court due to the fact that the court does not have jurisdiction to do so.[52] In other words, under the Act, it is not possible for parties to the marriage to provide for any additional conditions.

However, he further stated that the Shari’ah Technical Committee (JAKIM) is in the process of adding an additional condition in the present ta’liq agreement.[53] Once gazette, it would be included in the statutory ta’liq consent. But it is obvious that if that additional condition is specific in nature, any other agreed upon by both husband and wife or the wife’s wali, to be included in the ta’liq agreement, would not be enforceable in the Shari’ah court. Besides, according to Ustaz Abu Zaky, in his years as the Registrar, he had not come across any cases where parties claimed additional conditions from the statutory ones.[54]

Analysis cases

From the cases involved, it is observed that ta’liq divorces are those where the wife claims that she has not been paid maintenance. In some instances the husband attends the court, in others he is not present. There are also some cases where the wife applies for ta’liq divorce on the ground of assault by the spouse.

I. Cases of desertion or failure to maintain where husband was present

In such cases the court the court will hear both the parties and the witnesses and then decide on the evidence.

In the federal territory case of Salemawegam v Mohd Anuar,[55] a case in Kuala Lumpur, the wife applied for ta’liq on the ground of the non-maintenance. The husband did not deny that he had not paid maintenance, but alleged that the wife had refused to consummate the marriage. Hence he claimed that he was not bound to give support. The court asked both parties to take the solemn oath. His wife took the oath and said that there had been sexual intercourse between them. The husband however, had refused to take it as required by the court. It therefore gave judgment in favour of the wife and decreed a ta’liq divorce by one talaq.

In the Perlis case of Aminah v Ahmad[56] the wife complained that the husband has deserted her and had not given her maintenance for over three months. The husband admitted that he had not lived with the wife and not had maintenance her but said that he had tried to take her back and to settle the dispute but this had failed. The wife called two witnesses to support her case. The Kadi give judgment for the wife and after ascertaining that she was in state of purity decreed that one talaq divorce had been affected. The appeal of the husband to the Appeal Committee was dismissed.

In Aisny btn Mohd Daris v Haji Fahro Rozi bin Mohdi,[57] the wife applied to the Shariah Subordinate Court for the confirmation of the cerai ta’liq under section 50(1) of the Islamic Family Law (Federal Territories) Act 1984. The parties had lived together for almost 20 years and had three children. Subsequently, however, when the husband married another woman, problems arose and the wife alleged that the he had neglected to give maintenance to herself and her children. The wife made a report to the Kadi but efforts at conciliation were not successful and eventually she applied to the Shari’ah Court to confirm the ta’liq which had been pronounced by the husband on the wife.

The learned that judge held that the wife was not nusyuz and was therefore entitled to maintenance. Although she had moved from the matrimonial home this had been done with the knowledge of the husband, and in fact he had acquiesced in the moving of the matrimonial home as he continued to live with her and their children in the new house for about six months before he deserted them. It was also held that the wife was justified in confiscating lands which was registered in the husband’s name as they were properties jointly acquired during the marriage. However, the learned trial judge dismissed the wife’s application of divorce as he held that she could have obtained the maintenance by selling the shares in her possession (which was owned by her).

The wife appealed to the Shari’ah Appeal Board. The Board allowed her appeal as there was no proof or evidence that the shares belonged to the husband and therefore it would be wrong to expect the wife to maintain herself or own property. The Board distinguished this case from Hadith relating to Hendon and her husband Abu Sufian as in the Hadith, the lady was asked to take from her husband’s property and spend for her needs (“Take from his property what is enough for your needs and those of your children”), not to maintain herself out. In this case as the husband had not given maintenance to his wife for over four months, she was entitled to the divorce in accordance with ta’liq.

II. Cases where the husband was absent

In the Penang case of Siti Zainab v Mohamed Ishak[58] the wife claimed that her husband had deserted her for over three months. Although a registered letter was sent to the husband and an advertisement inserted in the news papers he did not attend court. The wife then gave evidence and called two witnesses who could not support her story. Later she called two other witnesses who did so. The wife claimed that she had remained in matrimonial home and had not left it and in this she was supported by the witnesses. The court asked her to take an oath, Yamin ul Istizhar, to support her case and after she had taken it, judgment was given in her favour. The court confirmed the divorce by one talaq.

In the Kelantan case of Piah v Muhammad Zainal [59] the wife applied for cerai ta’liq on the ground that the husband had deserted her for over two years and had not given her any maintenance. She gave evidence and called one witnesses to support her. She was then asked to take the oath. She was asked to pay RM1 to Kadi for the husband and after that the court declared that she was divorced by one talaq khuli.

III. Cases of assault on the wife

In the Perles case of Hasnah v Saad [60] the wife claimed cerai ta’liq on the ground that her husband has assaulted her on her face near her right ear. She produced the taliq declared by the husband, and a medical certificate as evidence of her injuries. The husband denied that he had assaulted her and claimed that the injuries were self-inflicted. The court gave judgment for the wife and declared that she was divorced by one talaq.

In another Perlis case of Dah v Abdullah [61] the wife complained that she has been assaulted causing injury to her hand and she had been treated in hospital. She also made a report to the police. The husband denied the charges but he did not cross examine the wife when she gave evidence. There was evidence that he had asked the wife to forgive him. The court gave judgment in favour of the wife and declared she was divorced by one talaq.

Suggestion for reform

After analyzing the area of practicing the ta’liq contract in this country, it can be seen that there is some uncertainty related to the procedure of the ta’liq made by the prospective husband, which would affect the validity of the ta’liq pronounced by him.

It is suggested that the practice of ta’liq should be replaced with prenuptial agreement, this is because the scope of protection provided is only limited to matter pronounced or mentioned in the ta’liq.[62] A great deal of the heartache can be avoided by a woman in her marriage if she, as the bride-to be, agrees to and signs a carefully considered Prenuptial Agreement that guard her rights before entering into wedlock[63]

A common practice in Western society, a prenuptial agreement is a binding agreement entered into prior to the marriage in which the parties, in however much detail they wish, set forth what will happen to their income and assets in the event the marriage ends in death, divorce, or separation.[64] It is a contract entered into before the marriage takes place.

This agreement must be in writing, signed by both sides, and signed before witnesses and entered into the court records. Unlike the agreement made by Western couples which only focuses on issues pertaining to wealth and property, it can also be used to safeguard Islamic rights within a marriage and, if necessary, in the case of divorce.

The Prenuptial Agreement can also guarantee a woman many of her Islamic rights, which can be enforceable by law even if she lives in a Western country. Arguable women’s Islamic rights are more fair and equitable than women’s rights in the West, so it makes sense to know just what her Islamic rights are and how they can be relinquished, should she neglects to claim them before marriage. A great deal of misinformation abounds concerning the Prenuptial Agreement and women’s Islamic rights.[65]

It is clearly shown that a prenuptial agreement grants more strength to Islamic marriage contract and the determination placed therein. Husband and wife are allowed to put conditions in the marriage contract, provided they do not contradict Islamic Law. Furthermore, a prenuptial Agreement must also comply with the laws of the country in order to be enforceable by law, in which it is drawn up and singed.[66] This will guarantee that the agreement will legally binding on both the husband and wife.

Such an agreement, would be a better method to solve the problem of misunderstanding of the effect of the ta’liq agreement and lack of consent in accepting the agreement, since a prenuptial consent is individual in nature and has to be carefully drawn up by both parties and mutually agreed upon before signing it. If both side to be married had understood the content, effect of the agreement and consented to it, then it would be valid and binding upon them.

Besides that, the agreement could guarantee more rights to both sides in the marriage. In addition certain stipulations could also be made by parties in order to protect their interests in case of difficulties arising in their marriage. In other word, a prenuptial consent is capable of granting a wider range of protection to both spouses, instead of limited ones under the ta’liq agreement.[67]

The Possibility of Implementation

In Malaysia, any new policies or proposals in regard to Islam and its community will have to be dealt with by the Department of Islamic Advancement of Malaysia, Prime Minister’s Department (JAKIM). JAKIM functions as the central agency in the planning and management of affairs and the advancement of the ummah. The main function of (JAKIM) is to formulate policies for the progress of the Islamic affairs in the nation and to safeguard the sanctity of aqidah in the teaching of Islam; to help draft and streamline laws and regulations that are necessary.[68]

According to Mr.Yahya Md Zaid, an Assistant Director of Coordination of the Law Unit of Jakim, the process of adapting any new policies, proposal or amendment will involve a dialogue at the state level and at the national level. It usually takes quite an amount of time before a final decision can be achieved on any particular matter.[69]

Regarding to prenuptial agreements, Mr.Yahya commented that the prospective parties to be married could make such an agreement. But, for the propose of implementation, it will depend on whether the terms fall under any of the provision of the present law.[70] Thus, the idea for a reformation would have to take many stages before it could ever be approved.

Conclusion

The Muslim jurists who see no objection in the granting of absolute power of divorce by the husband to the wife have considered the matter from the point of tamaluk or transfer of right and agency. Some Muslim jurists have explained tafwid is a special kind of tamaluk as it is clear, according to them, the fact that in the case of ordinary tamaluk, the original owner loses altogether the ownership of the thing or the right; but in the case of tafwid al-talaq he retains his right of evidence while the wife is also invested with it.[71] Such is the basis for the application of ta’liq divorce in Malaysia.

It is argued that Muslim women in Malaysia are not actually protected by the statutory ta’liq pronounced by the husband, since Malaysia’s legislation does not grant the freedom to stipulate any other conditions or stipulations in the protection of wife’s right in marriage, except for the one provide in the statute. Besides that the procedure of ta’liq in Malaysia arguably has shown some element of coercion where a husband cannot avoid from pronouncing the ta’liq agreement. Not only it is a statutory requirement, but also the occasion in which it take place obviously shows that a husband does not have any choice or say in the matter and thus its validity is uncertain.

Therefore, due to these reasons it is believe that the practice of ta’liq should be reformed, by either giving more freedom of right to stipulate or couples could draw sign a carefully drafted prenuptial agreement in order to protect their rights in the marriage.

A prenuptial agreement would be a better solution in order to protect the rights of both spouses if difficulties arise in their marriage. In other words, it is capable of granting a wider range of protection to both sides, instead of limited ones under the ta’liq agreement. Furthermore, it is able to sole the issue of lack of understanding of the effect of the ta’liq agreement and lack consent in accepting the contract, since a prenuptial agreement is individual in nature and has to be carefully drawn up both sides and mutually agreed upon before signing it. If both parties to be married had understood the content, effect of the agreement and consented to it, then it would be valid and binding upon them.

Bibliography

Ahmad Hasan, (200) Sunan Abu Dawud: English translation, Kitab Bhavan,

Jamal. Nasir, (2002),The Islamic Law of Personal Status , London, Kluwer Law International,

Harun Din, (1990)Ta’liq: Antara Humum Feqah dengan Hukum Kanun, UKM, Malaysia

Kazi Nasir-ud-Din Ahmed, (1978),The Muslim Law of Divorce, New Delhi: Kitab Bhavan,

Kamaruddin (2004) (Research Center IIUM, Kualalumpur,)

Liaqat Ali Khan Nazi, (1991), Islamic Law of Contract, Lahore, Research Cell, Dyell Sing, Trust Library,

Mohammed El-Fatih Hamid, (1976) The Freedom to make Stipulations in the Islamic Law of Contract, Journal

Noriani Nik Badli Shah, (2000) Marriage & Divorce under Islamic Law, International Law Book Service.

Rabia Mills, Women’s Rights in the Islamic Prenuptial Agreement: Use Them or Lose Them,

http://www.zawaj.com/articles/prenup mills.html.

Sulaiman bin As’as, Sahih Sunan Abi Dawud, (2002) Kuwait, Gharas’

Elayne B. Kesselman, Frequently Asked Question: The Prenuptial Agreement.

http://www.divorcecentral.com/legal/legal_answer_5.html.

Rabia Mills, Women’s Rights in the Islamic Prenuptial Agreement: Use Them or Lose Them,

Syed Peer, Webmaster, the Marriage Contract http://nikahsearch.com/marriage/marriage.html

Tanzil-ur-Rahman, (1978) A Code of Muslim Personal Law, Karachi, Islamic Publisher.

http://www.sistersinislam.org.my/index.php?Itemid

http://www.zawaj.com/article/prenup mills.html

http://www.islam.gov.my/portal/fungsi.php

Wahbah Zuhaili, (1985) Fiqh Islami wa adilatuhu, Syeria,Darul Fikri,

and Comparative Law, Vol.6

Web master, Protecting Married Women’s Rights with Ta’liq http://www.sistersinislam.org.my/index.php?

[1] Ta’liq is usually pronounced immediately after the aqad ceremony. Once pronounced, the form of ta’liq agreement shall be signed by both husband and wife and attested by witnesses.

[2] There are several ways to dissolve a marriage, such as talaq, khul‘ and faskh.

[3] Kazi Nasir-ud-Din Ahmed, The Muslim Law of Divorce, New Delhi: Kitab Bhavan, 1978, p. 79.

[4] Ibid.

[5] Ibid, p. 80.

[6] Ibid.

[7] Ibid.

[8] See Schacht, art. “Talak”, in The Encyclopaedia of Islam, 2nd edition, Leiden: Brill, 1950–2004, vol. X, pp. 151–55.

[9] Ibid.

[10] Kazi Nasir-ud-Din Ahmed, The Muslim Law of Divorce, New Delhi: Kitab Bhavan, 1978, p. 81

[11] Ibid, p. 183.

[12] Nik Noriani Nik Badli Shah, Marriage and Divorce under Islamic Law, Kuala Lumpur, International Law Book Services, 1998, p. 73.

[13] Ibid.

[14] See Noriani Nik Badli Shah, Marriage & Divorce under Islamic Law, p. 73. The meaning of tafwid is the wife to whom the power is delegated exercises it in respect of her own person and has got a right to exercise the power or not to do it

[15] Qur’an, 5:1

[16] Qur’an, 17:34.

[17] Qur’an, 4:128.

[18] Qur’an, 33:28.

[19] See, Sulaiman bin As’as, Sahih Sunan Abi Dawud, Kuwait, Gharas’, 2002, vol. 6 p. 356.

[20] See, Ahmad Hasan, Sunan Abu Dawud: English translation, Kitab Bhavan, 2000, vol. II Kitab al- Nikah, note 1460 to Hadith 2134.

[21] Tanzil-ur-Rahman, A Code of Muslim Personal Law, Karachi, 1978, p 340.

[22] Ibid, pp. 339, 340

[23] Ahmad Ibrahim, Islamic Law in Malaysia, p. 105.

[24] Jamal. Nasir, The Islamic Law of Personal Status, Kluwer Law International, London, 2002, p 58.

[25] Ibid.

[26] Harun Din, Ta’liq: Antara Humum Feqah dengan Hukum Kanun, UKM, Malaysia, 1990, p. 107.

[27] Liaqat Ali Khan Nazi, Islamic Law of Contract, Research Cell, Dyell Sing, Trust Library, Lahore, 1991, p. 80.

[28] Qur’an, 4:29.

[29] Liaqat Ali Khan Nazi, Islamic Law of Contract, Research Cell, Dyell Sing, Trust Library, Lahore, 1991, p. 81.

[30] As referred to by Harun Din, Ta’liq: Antara Humum Feqah dengan Hukum Kanun, UKM, Malaysia, 1990, p. 108.

[31] See, Nor Fadzlina Nawi, “Ta’liq Agreement” in Islamic Family Law, edited by Zaleha Kamaruddin, Kuala Lumpur, 2004 p. 68.

[32] See, Sulaiman bin As’as, Sahih Sunan Abi Dawud, Kuwait, Gharas’, 2002, vol. 6 p. 356.

[33] Ahmad Hasan, Sunan Abu Dawud: English translation, Kitab Bhavan, 2000, vol. II Kitab al- Nikah, note 1460 to Hadith 2134.

[34] Wahbah Zuhaili, Fiqh Islamī wa adilatuhu, Darul Fikrī, Syria, 1985, vol. 7 p. 56.

[35] Ibid.

[36] Ibid.

[37] Ibid.

[38] Jamal J.Nasir, The Islamic Law of Personal Status, p. 55.

[39] Mohammed El-Fatih Hamid, “The Freedom to make Stipulations in the Islamic Law of Contract”, Journal of Islamic Comparative Law, Vol. 6 (1976) p. 22.

[40] Syed Peer, Webmaster, “The Marriage Contract”, see http://nikahsearch.com/marriage/marriage.html

[41] Liaquat Ali Khan, Islamic Law of Contract, p. 96.

[42] Ibid.

[43] Ibid.

[44] Ibid, p. 97.

[45] Nor Fadzlina Nawi, “Ta’liq Agreement” in Islamic Family Law, edited by Zaleha Kamaruddin (Research Center IIUM, Kuala Lumpur, 2004), p. 64.

[46] Islamic Family Law (Federal Territories) Act 1984, section 2.

[47] Nor Fadzlina Nawi, “Ta’liq Agreement” in Islamic Family Law, edited by Zaleha Kamaruddin (Research Center IIUM, Kuala Lumpur, 2004), p. 64.

[48] Ibid.

[49] Islamic Family Law (Federal Territories) Act 1984.

[50] Web master, Protecting Married Women’s Rights with Ta’liq see <http://www.sistersinislam.org.my/index.php? > .

[51] See Nor Fadzlina Nawi, “Ta’liq Agreement” in Islamic Family Law, edited by Zaleha Kamaruddin (Research Center IIUM, Kuala Lumpur, 2004), p. 65.

[52] Ibid, p. 66.

[53] Ibid.

[54] Ibid.

[55] (1983) 5 JH 109.

[56] (1971) 3 JH 81-Decided under the Administration of Islamic Law Enactment 1964, s 13(2) (b).

[57] (1990) 2 MLJ xxvi.

[58] (1976) 2 JH 323.

[59] (1981) 4 JH 222.

[60] (1975) 3 JH 84.

[61] (1974) 3 JH 120.

[62] See Nor Fadzlina Nawi, “Ta’liq Agreement” in Islamic Family Law, edited by Zaleha Kamaruddin (Research Center IIUM, Kuala Lumpur, 2004), p. 68.

[63] Rabia Mills, “Women’s Rights in the Islamic Prenuptial Agreement: Use Them or Lose Them”, see <http://www.islamfortoday.com/prenuptial.htm> (accessed 23 October 2010).

[64] Elayne B. Kesselman, Esq, “Frequently Asked Questions:The Prenuptial Agreement”, see <http://www.divorcecentral.com/legal/legal_answers_5.html>(accessed 23 October 2010).

[65] Rabia Mills, “Women’s Rights in the Islamic Prenuptial Agreement: Use Them or Lose Them”, see <http://www.islamfortoday.com/prenuptial.htm> (accessed 23 October 2010).

[66] See, Nor Fadzlina Nawi, “Ta’liq Agreement” in Islamic Family Law, edited by Zaleha Kamaruddin, Kuala Lumpur, 2004 p. 70.

[67] Ibid.

[68] See, http://www.islam.gov.my/portal/fungsi.php

[69] See, Nor Fadzlina Nawi, “Ta’liq Agreement in Islamic Family Law, edited by Zaleha Kamaruddin, Kuala Lumpur, 2004 p. 73.

[70] Ibid.

[71] K.N. Ahmad, The Muslim Law of Divorce, Kitab Bhavan, New Delhi, 1978, pp, 187-188.

Gold Investment

2012-03-01T01:02:00.000-08:00

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Table of Contents

ABSTRACT

RULES ON TRANSACTION OF GOLD IN ISLAM

The sale of gold jewellery for pure gold of a greater weight

HOW TO INVEST IN GOLD?

PHYSICAL GOLD INVESTMENT

Gold Coins

Gold Bars

Jewellery

How to Purchase Physical Gold?

GOLD INVESTMENT ACCOUNT

CIMB Bank- Gold Deposit Account (GDA)

Maybank- Gold Savings Passbook Account (GSPA)

Public Bank- Gold Investment Account (GIA)

United Overseas Bank- Gold Savings Account (GSA) and Premier Gold Account (PGA)

Kuwait Finance House -KFH Gold Account-i

COMPARISON BETWEEN FIVE BANK GOLD ACCOUNTS

CONCLUSION

BIBLIOGRAPHY

ABSTRACT

The value of national currencies rises and falls but the value of gold remains, remarkably stable. Gold is an asset that does not depend upon governments or corporations promise to repay. It is not directly affected by the policies in any country and it cannot be repudiated or frozen, as in the case of assets.

Gold is a popular investment because it is believed to be a stable way of hedging customer’s savings against inflation. Malaysia offers both residents and non-residents a unique method of investing in gold. Bank in Malaysia allow anyone to open a gold investment account, where customer’s balance is measured in grams of gold rather than as a traditional currency. This allows the customer to make deposits when gold price are low, and then withdraw the funds at a profit when the price of gold rises. The customer can even opt to receive gold instead of cash when he or she withdraws funds.

The purpose of this study is to provide a detailed description of the way in which gold investment operate in Malaysia, It then provides several type of gold investment been used in Malaysia. The paper also outlines some rules of gold transaction in Islamic perspective, including the concept of riba al-fadl and riba al-nasi’ah . The last part of this research is to compare and contrast the gold investment in Islamic bank and conventional bank and contains recommendations for reform in gold transact.

RULES ON TRANSACTION OF GOLD IN ISLAM:

One of the important sources of unjustified earning is receiving any monetary advantage in a business transaction without giving a just counter value. Riba represents, in the Islamic value system, a prominent source of unjustified advantage.

The prophet (PBUH), also condemned, in the most unambiguous words only those who take riba, but also those who give riba and who record the transaction or act as witnesses to it. He even equated the taking of riba to committing adultery thirty- six times or being guilty of incest with one’s own mother.[1]

It is, however, not every increase or growth which has been prohibited by Islam. In the Shari’ah, riba technically refer to the ‘premium’ that must be paid by the borrower to the lender along with the principle amount as a condition of the loan or for an extension in its maturity. In this sense, riba has the same meaning and imported as interest in accordance with the consensus of all the fuqaha’ (jurists) without any exception.

The term riba is used in Shari’ah in two senses. The first is riba al-nasi’ah and the second is riba al-fadl: [2]

i. Riba al-Nasi’ah:

Riba al-Nasī’ah is derived from the Arabic root “nisā’a” which means to “delay” or “defer”. This type of riba falls into two categories:

First: charging interest on the loan lent to an insolvent debtor. This category was commonly practiced in the pre-Islamic era. A person, for example, may lend another person a sum of money to be paid back on a specified date. When the date agreed upon is due, the creditor gives the debtor the choice either to repay the debt or defer repayment in return for charging additional interest on the principal.

Second: Exchanging two items of the same type which bear the common cause of riba al-Fadl while stipulating deferment of delivery of one or both of the exchanged items. An example of this includes exchanging gold for gold or for silver or exchanging silver for gold while stipulating deferment of delivery.

ii. Riba al-Fadl:

Riba al-Fadl is derived from the Arabic root “fadl” which means “increase” or “growth” this type of riba involves increase in either of the two articles subject to exchange. According to Hadith of the Prophet, six things are susceptible to riba al-fadl; gold, wheat, barley, dates and salt.

It is prohibited to change interest on such transactions where any of the above things are exchanged for articles of the same type. The same holds true with regard to exchange two articles which bear the same common cause of prohibition. It is, for example, prohibited to exchange a kilo of gold of inferior quality for half kilo of superior quality. The same is applicable in the case of exchanging a good type of silver, wheat, barley, dates, or salt for a poor type.[3]

It is only permissible to exchange articles of the above mentioned things provided that they are equal in weight and the exchange has to be made in hand to hand transaction.

However, it is permissible to exchange a kilo of gold for two kilos of silver provided that it is a hand–to–hand transaction. This is because gold and silver are of different types. The Prophet (peace be upon him) said, “gold to be exchanged for gold, silver for silver, wheat for wheat, barley for barely, dates for dates, and salt for salt, like for like and equal for equal, payment being made hand to hand. If these classes differ, then sell as you wish if payment is made hand to hand”. Narrated by Muslim.[4]

Another Hadith, Narrated Ibn Shihab that Malik Ibn Aws said: ‘I was in need of change for one-hundred Dinars. Talhah Ibn ‘Ubaydullah called me and we discussed the matter, and he agreed to change (my Dinars). He took the gold pieces in his hands and fidgeted with them, and then said: ‘Wait till my storekeeper comes from the forest.’ ‘Umar was listening to that and said: ‘By Allah! You should not separate from Talhah till you get the money from him, for Allah’s Apostle said: ‘The selling of gold for gold is Riba except if the exchange is from hand to hand and equal in amount, and similarly, the selling of wheat for wheat is Riba unless it is from hand to hand and equal in amount, and the selling of barley for barley is Riba unless it is from hand to hand and equal in amount, and dates for dates, is Riba unless it is from hand to hand and equal in amount’.[5]

Narrated Abu Hurayrah: The Prophet said: ‘If you give gold, then receive back the same gold: the same weight and the same quality; and if you give silver then receive back the same silver: the same weight and the same quality, because the one who gives more or expects more, then that is exactly Riba’.[6]

The sale of gold jewellery for pure gold of a greater weight

The first opinion on this matter is that the sale of gold jewellery for pure gold of a greater weight is not permitted. The same applies to the sale of silver jewellery for pure silver. This is the view held by the majority of scholars. They base their opinion on the previously-discussed hadîth and other hadîth like them, which together number more than seventeen texts. In fact, some scholars have declared these hadîth to be mutawâtir.

Ibn `Abd al-Barr writes:

“The position upon which all are agreed is that nothing of gold – it matters not whether it is in the form of bullion, ore, or jewellery just as it matters not if it has been smelted or is of a low grade – may be sold for anything of gold except of an equal quantity in a hand-to-hand transaction. The same goes for silver – whether it is in the form of bullion, jewellery, or ore and whether it is white or black, of good quality or bad, it is all the same – it must not be sold for itself except of an equal quantity in a hand-to-hand transaction. Whoever makes an increase or decreases in any of that or defers any payment has in doing so engaged in usury”.[7]

The other opinion on this matter is that this kind of sale is permissible. It is the preferred opinion of many Hanbalî jurists. This opinion was chosen by Ibn Taymiyah

Ibn Taymiyah says:

“The sale of gold and silver jewellery for gold and silver is permissible without being conditional upon the quantities being equal. The excess is considered to be in lieu of the craftsmanship. It does not matter whether the sale is immediate or deferred, as long as it is not intended for monetary purposes”. [8]

Ibn al-Qayyim writes:

“Permitted jewellery becomes, by virtue of permitted craftsmanship, of the same category as clothing and merchandise and is not of the category of monetary instruments. This is why there is no Zakâh required upon it. Therefore, the question of usury does not apply to traffic between it and monetary instruments any more than it applies to traffic between monetary instruments and other forms of merchandise, though admittedly those other forms are made of other substances. The reason for this is that this jewellery has become removed from the intent of being a monetary instrument and has been prepared for sale as merchandise. Consequently, there is no prohibition of selling it for something of the same physical makeup. The issue of “pay up front or fall into usury” does not enter into it except in the way that it does with other forms of merchandise when they are sold for a deferred payment”.[9]

The scholars who hold the opinion that the sale of gold jewellery for pure gold of a greater weight – and silver jewellery for pure silver of a greater weight – is permitted provide various arguments and evidence in support of their view. The following arguments are presented by both Ibn Taymiyah and Ibn al-Qayyim:[10]

1. The effective cause in Islamic Law for the usurious nature of trading gold for gold and silver for silver is that gold and silver are monetary instruments. When gold and silver are crafted into jewelry, the resulting product becomes no different than other merchandise.

2. The exchange of gold jewelry for gold of a greater quantity is based on the idea that the excess is in lieu of the craftsmanship and labor involved. No rational person would sell gold jewelry for gold of equal weight. That would be foolishness and a waste of a craftsman's labor. Islamic Law does not demand a goldsmith to sell his jewelry for the same quantity of gold and lose out on the value of his labor. It does not demand from him to abandon his profession. It also does not command him to devise some legal loopholes to get around the prohibition and sell his jewelry for a greater weight of gold. Islamic Law is far more precise than to impose such requirements.

2. HOW TO INVEST IN GOLD?

In Malaysia, there are two ways to invest in gold. First: through physical gold investment and second: by opening gold investment account.

2.1 PHYSICAL GOLD INVESTMENT:

Physical gold investment means investors hold their gold investment in the physical form.[11] Investand it can be divided into three categories: gold coins, gold bars and Jewellery.

2.1.1 Gold Coins:

Gold coins are a common way of owning gold. Gold coins are made from an alloy composed of that metal and a small amount of another metal to ensure hardness.[12]
Gold coins are priced according to their fine weight, plus a small premium based on supply and demand. The exquisite designs of gold bullion coins and the history behind them further enhance their value. They come in a great variety of weights that typically range from 1/10 ounce to 1 ounce, but by far the most commonly traded coins weigh one ounce. Instant worldwide liquidity and the ability to take physical possession give investors complete control over their gold bullion coin investments.[13]

Different countries worldwide have their own set of gold bullion coins. In Malaysia, ‘The Kijang Emas Gold Bullion Coins’ is the official bullion gold coin of Malaysia. It is minted by the Royal Mint of Malaysia[14] and only distributed by selected Maybank branches throughout Malaysia. It was first issued in 17 July 2001 and launched by the fourth Prime Minister of Malaysia, Tun Dr. Mahathir Mohamad.[15] Malaysia is the 12th country in the world to issue its own gold bullion coins and now joins the ranks of other international gold bullion coins.[16]

The design on the obverse of the Kijang Emas depicts a barking deer ("kijang") in its natural habitat in the Malaysian jungle. Also appearing on the obverse are the words BANK NEGARA MALAYSIA, for the central bank of Malaysia as the issuer of the coins; KIJANG EMAS; the weight; gold purity; and the year of minting.The reverse side features the hibiscus, the national flower of Malaysia together with the denomination face value, as well as the words BANK NEGARA MALAYSIA in Jawi (an adapted Arabic alphabet for writing the Malay language).[17]

The Kijang Emas has a gold purity of 999.9 millesimal fineness. The coins come in denominations of RM200, RM100 and RM50 which are nominal face values, and weighs 1 oz, ½ oz and ¼ oz respectively.The purchase and reselling price of Kijang Emas is determined by the prevailing international gold market price. It has a low spread[18] (3.9%-7.4%). The daily market price is posted on the BNM web site.[19] These coins can be charged at Ar-Rahnu and if the customers want to sell the coins to Maybank, they must ensure that the coins are not broken, scratched, bent or dented otherwise Maybank will not accept the coins back.[20]

Besides acquiring the Kijang Emas which is the official bullion gold coin of Malaysia, investors also have other options:

§ Dinar Emas Kelantan / Kelantanese Gold Dinar

§ Gold coins distributed by United Overseas bank

§ Gold coins distributed by Public Fine Gold Sdn. Bhd

· Dinar Emas Kelantan / Kelantanese Gold Dinar:

Gold dinar is a bullion gold coin made from 4.25 grams of 22k gold with historical Islamic significance.[21]

The Kelantanese Gold dinar was created by the Government of the Malaysian state of Kelantan in 2006 (27 Shaban 1427 AH corresponds to 20th Sep 2006). It features the Kelantan state crest, the date of production, as well as the weight and purity of the gold used on its face. The DEK (Dinar Emas Kelantan) is similar to the original dinar in weight and purity of gold used.[22]

All these coins are having the description "EMAS DINAR KELANTAN" with Kelantan arms. The AH 1427 corresponds to 2006-2007 CE are also visible on these coins. The word "Emas" written in Malay language using Arabic script means gold. These coins are produced and minted by: Mariwasa Kraftangan Sdn. BHD. These coins are inserted inside holed colourful cardboard with an extra-thick transparent plastic lamination to make them sturdy. This way the coins will retain their weight and look authentic. Among the size of the gold dinar for sale are; 2 Dinar, 1 Dinar, ½ Dinar and ¼ Dinar.

· Gold coins distributed by UOB Bank:

United Overseas Bank is one of the five banks in Malaysia that sell large variety of gold products, ranging from gold coins, gold wafers to kilobars. The coins can be sold to the Bank at the Bank's daily published rates. These coins are legal tender with face values, and accepted and tradable worldwide.[23] As for gold coins they are offering as follows:[24]

1) Canadian Gold Maple Leaf 2) Australian Kangaroo Gold Nugget

3) Swiss Kinebar 4) Swiss Palm Gold

5) Singapore Lion Gold Coin

It has a low spread (2%-16.5%) and can be charged at Ar-Rahnu.[25] If the customers want to sell the coins to UOB Bank, they must ensure that the coins are not broken, scratched, bent or dented otherwise UOB will not accept the coins back. The same applies to gold purchase certificate, if the customers lost it, the coins cannot be sold back to UOB. UOB issues receipts for the gold that they sell and is committed to buy them back at a small discount to the spot price of gold at any time, as long as the receipts are presented. This means that the customer can sell their gold back to UOB at their convenience without having to look for a buyer themselves.[26]

· Gold coins distributed by Public Fine Gold Sdn Bhd:

Public Fine Gold International Sdn Bhd otherwise known as "Public Gold "is a private company that sell and purchase gold coins, gold dinar and gold bars. Public Gold is the first company in Malaysia that sell gold investment in international market prices and offers opportunities for communities to have gold with reasonable price. Public Gold also has been recognized by Malaysian Book of Records to be the first Malaysian company to produce certified gold bullion locally. The main goal of Public Gold is to create awareness and educate the public about the importance of store the physical gold as the ultimate safe investment. Public Gold has appointed agents throughout the Malaysia to facilitate the sale and purchase of gold by communities throughout the country.[27]

Public Gold has its own mint which is known as Public Gold Mint Sdn Bhd. It provides minting facility covering tooling, design, dies, and the production of Gold Bars and Gold Coins.[28]

Public Gold Coin: Public Dinar:

As far as gold dinar is concerned, it is under Public Gold subsidiary company known as Public Dinar Sdn. Bhd. Public Dinar. It was incorporated with the intention to buy and sell own Islamic Gold Dinar coins. Public Dinar buys and purchases Dinar coin within Public Gold Group.[29]

Public Gold offer low spread between 5% - 6% and can be charged at Ar-Rahnu. What is great about Public Gold, it guarantees that if the gold scratched, bent or dented, customers can still sell it back to Public Gold as long as the weight is the same according to market price.[30]

2.1.2 Gold Bars:

Apart from gold coins, the best way to invest in gold is by buying gold bars. Gold bars are made of pure gold.[31]

The price of gold bars usually is close to the international gold price, with purity
999.9, and has low spread.[32] Gold bars are made in a wide variety of sizes. Gold bars have their weight and purity written right on them. This makes it easy to identify and authenticate the bars, as well as calculate their value.[33]

In Malaysia there are three popular types of gold bars that can be purchased:

1. Public Gold Bars.
2. Poh Kong Bunga Raya.
3. PAMP Suisse.

· Public Gold Bars:

Public Fine Gold Sdn. Bhd. which has been mentioned previously also produced gold bars. The sale of gold bars weighing as follows: 20 grams, 50 grams, 100 grams and 1 kg. Each gold bar has a certificate of authenticity and a unique serial number.

· Pamp Suisse Gold Bars:

PAMP is an abbreviation for (Artistic, precious metals products). PAMP which base in Switzerland is one of the world's leading in purifying precious metals, and produce products of precious metals such as silver, gold, platinum and palladium. Gold produced by PAMP is recognized worldwide. All PAMP gold bars have a serial number and certificate of authenticity. In Malaysia, PAMP Suisse gold bars can be purchased at some stores of gold, Habib Jewel and UOB Bank and available in two forms:[34]

PAMP Suisse Gold Bar with pink certificate: Lady Fortuna PAMP Suisse:

· Poh Kong Gold Hibiscus:

Gold shop Poh Kong has sold their output of gold bars own. It is called Bunga Raya gold bars.[35]

Poh Kong Gold Hibiscus:

2.1.3 Jewellery:

There are two main reasons that people buy gold jewellery. One is because of its beauty and status symbol and two for investment. Unlike other forms of gold investment, by investing in gold jewellery one can enjoy its beauty and at the same time have strength against a weak economy.[36]

916 Gold is a standard for jewellery without gemstone in Malaysia. The jewellery made from 22 carat[37] gold is soft enough, but will not damage or bend when worn, please note that jewellery of any carat does not damage by wearing it on the body, but does so by storing it unsafely, 22 carat jewellery if stored properly can, last for years. Gold jewellery made in 22k purity, has be worn for generations in India, China, far east, middle east, most of Africa and many other parts of the world.[38]

However, according to Wang Lixin, the China Representative for the World Gold Council[39] said that vesting in jewellery is not a good investment because people are paying a lot for the design and the skill in its manufacture.

2.1.4 How to Purchase Physical Gold?

Previously, we have discussed thoroughly about types of physical gold investment and where it can be acquired. The question now, how to buy it?

If the physical gold distributed by the bank, customers can go straight to the bank to buy it and they will possess the physical gold on the spot during the sale transaction took place as long they still have stock of the gold. For example: Kijang Emas distributed by Maybank and Gold coins and bars distributed by UOB. The same also apply if customers want to purchase gold bars or jewellery from gold shop like Habib Jewel and Poh Kong Sdn. Bhd. For Dinar Kelantan, it can be purchased and possessed it immediately at Wakalah[40] and Ar-Rahn branches.

However for Public Gold, gold coins or gold bars can order it through online or authorizes dealers. If order through online, customer will receive an agreement by e-mail or fax stated the terms and conditions together with total price. Upon agreement, customers have to bank in the payment within 1 ½ hours. The time limit will be stated on the agreement. Customers then are requested to fax the bank in slip together with the signed agreement to the Public Gold (fax no: 04-6464916) or email: payment@publicgold.com.my. Customers can collect the item from Public Gold branch 3-5 days from the day of the payment been made.[41]

If customers choose to buy from dealer, the customers will be able to obtain the gold at once if the dealer has the item is his possession at that moment. Otherwise, the customer will have to order the gold from the dealer and wait for the dealer to get the gold from Public Gold branches. The dealer has right either to ask the customers to pay deposit to secure the promise to buy made by the customers or payment only be made at the moment the dealer has the gold and give it to the customers.

Thus, does this transaction permissible in Shariah?

As far as transaction of physical gold are concerned, the rule that applies on the transaction must be hand in hand and if the gold is not delivered to the customer immediately during the transaction or the gold is not existed during the sale contract, it amounts to riba. Therefore, it is permissible for customers to buy physical gold like Kijang Emas, physical gold distributed by UOB, Dinar Kelantan, gold bars and jewellery from gold shop provided that the gold is existed and delivered to the customer on the spot time and the payment is on cash basis.

However, in case of Public Gold, buying gold via the internet is not a transaction that is conducted hand to hand, because the customer are sending the money to institution then they send that gold to the customer after a while.[42] If that is the case, then buying and selling in this manner is not permissible, If customers deals with dealer, they have to ensure the dealer have the gold with him during sale transaction in order for the transaction to be permissible.

2. GOLD INVESTMENT ACCOUNT:

Apart from physical gold investment, investment in gold can also be made through bank account. There are five banking institutions that offer Gold Investment Account:

i) CIMB Bank- Gold Deposit Account (GDA)

ii) Kuwait Finance House- Gold Account-I (GAI)

iii) Maybank- Gold Savings Passbook Account (GSPA)

iv) Public Bank- Gold Investment Account (GIA)

v) United Overseas Bank- Gold Savings Account (GSA)

The purpose of Gold investment account is to provide the Bank's customers with the convenience of investing in gold without the hassle of keeping physical gold. The passbook or statement will record every purchase and sale of gold made through the account.

Gold investment account operates in a way where customer’s investment amount is converted to gold holdings expressed in gram based on the Bank’s prevailing counter gold selling price and will be recorded in a Passbook or statement. The savings will be recorded in “gold grams” unit. Subsequently, if a customer wants to sell the gold, the gold will be converted to RM equivalent at the Bank’s prevailing counter gold buying price. Customers will benefit if there is an appreciation on gold price or vice versa. Gold purchase and sale will be based on the Bank’s prevailing gold selling price quoted in RM per gram. For Gold account investment there is no interest payout plus it is not insured by The Malaysia Deposit Insurance Corp (PIDM).

As far as these four banks abovementioned are concerned with an exception to Kuwait Finance House, when the customers open gold account, the physical gold to represent the amounts of their purchase units are not available during the sale transaction took place. The physical gold will only be available for the purpose of gold withdrawal and at certain weights only.

With regard to withdrawal options, the gold holdings can be disposed and converted to RM equivalent at the Bank’s prevailing counter gold buying price. The proceeds will be paid in cash or credited into customer’s account. Besides, the customers are also allowed to perform physical gold withdrawal. General practice of conventional bank is that, for the purpose of physical gold withdrawal, the customers are subjected to a maximum waiting period of four weeks and period of collection of physical gold is within 30 days of working days at selected designated branches of bank only except for Kuwait Finance House.

Further discussion regarding the gold investment account as follows:

CIMB Bank- Gold Deposit Account (GDA):

CIMB Bank has launched Gold Deposit Account effective on 17^th January 2011 that allows individual customers to purchase the purest available gold commodity in 99.99% fineness at daily prices in Ringgit Malaysia per gram.

It requires customers to open an affiliate conventional savings/current account prior to opening a GDA to facilitate the purchase or sale of gold and other charges. The designated affiliate account is compulsory and customers without a CIMB Bank savings/current account would be required to open one. Mode of operation of account is through Passbook.[43]

The initial gold purchase quantity to open a Gold Deposit Account is at only 10 grams and subsequent minimum trading quantity is 5 grams and in multiples of 1 gram. The Bank can make available the physical gold in denominations of 100 grams in multiples 100 grams should the customer require physical withdrawal of gold. A minimum quantity of 1 grams of gold is to be maintained by the customer to ensure the account remains active.[44]

Maybank- Gold Savings Passbook Account (GSPA):

Maybank has launched a gold investment account in 1997. It is100% backed by physical gold and in collaboration with the World Gold Council[45]. The Gold Savings Passbook Account (GSPA) is an account that allow customers to invest in gold in a convenient, more secure and cheaper way of gold in 999.9 fineness at all Maybank branches at daily quoted gold prices for 1gm in Malaysian Ringgit. It is cheaper as gold prices quoted are pegged to international gold prices without additional charges. All transactions will be recorded in GSPA passbook. Customers also have opportunity for capital gain if the price of gold appreciates. Mode of operation of account is through Passbook.

The minimum quantity of initial gold purchase is 5 grams and subsequent minimum trading quantity is 5 grams and in multiples of 1 gram. A minimum quantity of 1 grams of gold is to be maintained by the customer to ensure the account remains active. The Bank can make available the physical gold wafer in denominations of 10 grams, 20 grams and 50 grams should the customer require physical withdrawal of gold.[46]

A conversion charge to cover the shipping and insurance will be charged for the physical gold withdrawal. The amount of gold holdings can be converted to Ringgit Malaysia at the prevailing market price. The amount in RM will be credited into customers Maybank deposit account.[47]

Public Bank- Gold Investment Account (GIA):

Public Bank has launch a new investment product effective on 21^st April 2008 known as the Gold Investment Account that allows individual customers to purchase the purest available gold commodity in 99.99% fineness at daily prices in Ringgit Malaysia per gram. According to its Managing Director Dato' Sri Tay Ah Lek; the launching of the Gold Investment Account is in line with recent rise in gold demand and at the same time to provide alternative investment products to the Bank’s customers who wish to earn potentially higher returns. The world demand for gold as a precious metal is ever growing as evident from the India and China markets which are among the world's largest consumers of gold.[48]

The initial gold purchase quantity to open a Gold Investment Account is affordable at only 20 grams and subsequent minimum trading quantity is 5 grams and in multiples of 1 gram. The difference between the selling and buying prices is relatively small. As a global practice, the Gold Investment Account does not pay interest as this is not a deposit placement and furthermore, the Bank keeps the gold with an authorised custodian bank. Mode of operation of account is through Passbook.[49]

The Bank can make available the physical gold in denominations of 100 grams, 500 grams and 1,000 grams should the customer require physical withdrawal of gold. A minimum quantity of 2 grams of gold is to be maintained by the customer to ensure the account remains active. For the purpose of physical gold withdrawal, the minimum quantity is 50 grams. Besides that, customers can perform gold purchases and sales via online for GIA at discounted price.[50]

United Overseas Bank- Gold Savings Account (GSA) and Premier Gold Account (PGA):

United Overseas Bank has launched its new product of Gold Savings Account and Premier Gold Account on 15^th October 2010. It is a gold investment without the need to hold actual physical gold where it allows customer to buy the purest gold commodity in 999.9 % fineness at daily prices in Ringgit Malaysia per gram. Prior to opening a gold investment account, the investor is required to maintain either a savings account or current account in RM to facilitate the transaction, administrative fees or and other charges. Mode of operation of account is through statement.

The preliminary purchase quantity to open Gold Savings Account [51] is at 20 grams and the subsequent minimum trading quantity is 5 grams and it must be in multiple 5 grams. The minimum gold balance to be maintained in GSA is 10 grams.

For Premier Gold Account,[52] the initial purchase quantity is 1 kg and the subsequent minimum trading quantity is in multiple of 1 kg. The minimum gold balance to be maintained in this account is 1 kg.

The return of customer investment is based on the movement of gold price.[53] This statement-based accounts allow customer to buy and sell gold at UOB Bank’s Prevailing market rate.[54]Investors can deposit or withdraw gold grams at their convenience in cash form. However, gold grams cannot be exchanged for physical gold for retail investors. The gold grams can only be deposited or withdrawn in cash.[55]

Kuwait Finance House -KFH Gold Account-i: [56]

Kuwait Finance House has launched KFH Gold Account-i effectively on 29 April 2010. It enables customers to invest in gold without having to keep the gold physically. It is the first Shariah-based gold account offered in Malaysia where Kuwait Finance House (KFHMB) sells physical gold to the customers.

Customers have a choice to either collect the gold or keep it with the bank for safe custody, at no charge. By choosing to keep the physical gold with the bank, customer will have a peace of mind, as there is no need to worry about any security or storage issues. Customers can always sell or withdraw their gold at the branch based on the bank’s daily purchasing price. Physical withdrawal of gold can be made in a denomination of one, five, ten and fifty grams.

The Shariah concepts used are Ba’i As-Sarf and Qardh Hasan. Ba’i As-Sarf refers to the exchange of one monetary form for another in the same or different form i.e. gold for gold coins, silver for silver, silver for gold etc. Qardh refers to benevolent loan whereby the Bank as the borrower only required to repay the principal borrowed.Under the Islamic contract of Bai As-Sarf, the customers will purchase amount of gold (in gram) hereinafter referred to as “the gold”) at the bank’s selling price from KFHMB, and there after the purchased gold and any amount of gold to be subsequently purchased shall be deposited into the account based on Islamic contract of Qardh with KFHMB as the debtor (Muqtaridh) and the customer as the creditor (Muqridh).

The customer may, on any business day and from time to time purchase from the bank such amount of gold by submitting a duly completed application form. The minimum initial purchase of gold shall be not less than ten grams of gold for individual customers or fifty grams of gold for non-individual customers. Thereafter, for each and subsequent purchase of gold shall be for not less than five grams of gold. The purchase price per gram at which each purchase will be made by the customer shall be selling price as quoted by the bank to customer upon placement of the purchase order. The selling price quoted shall be determined by the bank at its sole and absolute discretion taking into account all factors the bank shall deem relevant including the prevailing world and local market conditions for gold, the exchange rate between United States Dollar (USD) and Ringgit Malaysia (RM) and the gold fineness. The daily purchase and sell prices of gold shall be displayed during the business hours at the branches of the bank. Furthermore, The customer have to make full payment for any gold purchased from the bank by authorizing the bank to debit the designated account and the bank will not be obliged to effect any purchase order if there is insufficient funds in the customer’s designated Account.

For sale of gold, the customer may instruct the bank to sell the gold maintained in the account by completing the relevant withdrawal or sale form. The proceed of the sale shall be paid to the customer on the same business day by crediting into the customer’s designated account. Each sale of gold by the customer will be at the purchase price quoted by the bank to the relevant purchase transaction. And no physical gold to be delivered to the bank for opening and deposit into the customer’s account and the bank shall be entitled to reject such deposits. Therefore, the customer can get the profit from this activity when he resells the gold to the bank for a higher purchase price.

The customer can request for physical of gold from the account. The quantity of gold standing to the credit of the account of the account is sufficient; the customer may withdraw any of physical gold from the account in the denomination of one, five, ten, one hundred grams or such other denomination as may be denominated by the bank from time to time. The customer may request for withdrawal of physical gold from account provided that the maximum withdrawal of physical gold shall be not more than fifty grams within three months.

The customer agrees that they will collect the gold from the designated branch of the bank, on the date the customer submits the withdrawal form or on such other time and date as notified by the bank subject to availability of gold. The customer further agrees that all risk of delivery of the physical gold shall pass to the customer upon receipt of the gold by the customer. In the event the customer fails or neglects to be present at the designated branch of the bank on the collection date, the customer and the bank agree that the bank shall hold and store the gold so withdrawn until the customer collects the physical gold from the bank.

After acquiring the physical gold from the bank, the customer may resell the physical gold withdrawn to the bank and the bank may repurchase from the account at purchase price quoted by the bank to the customer and provided that;

(a) The packing and security seal of the physical Gold remain intact; and

(b) The serial number and the barcode printed on the face of the packing must match the bank’s record.

The minimum of repurchase of physical gold from the customer is one gram. And the minimum redeposit physical gold shall be for not less than five grams of gold or other minimum quantity determined by the bank from time to time and multiples of one gram of gold or other minimum multiples quantity as determined by the bank from time to time.

In the event that the customer has closed the account, the customer may resell the physical gold withdrawn from the closed account to the bank provided always that the gold security seal embossed or marked on is remain intact and the proceeds from the sale of gold above shall be credited into the customer’s designated account or the customer may open a fresh account subject to the terms and conditions herein contained.

The account shall be deemed closed upon the withdrawn of all gold available in the account by the customer or by operational law. The closing of the account shall be deemed as an act of terminating of the Qardh contract (benevolent loan) and neither the bank nor the customer shall have any liability to the other save for any antecedent breaches under this terms and conditions.

The bank shall at any time, at its discretion prevent the customer from operating the account, if the bank suspect that KFH Gold account-i is being used for any illegal purpose or whatever.

COMPARISON BETWEEN FIVE BANK GOLD ACCOUNTS:

CIMB Bank

Gold Deposit Account

Kuwait Finance House

Gold Account-i

Maybank

Gold Savings

Passbook Account

Public Bank

Gold Investment Account

UOB

Gold Savings Account

Launch Date

17-Jan-11

29-Apr-10

1997

21-Apr-08

15-Oct-10

Minimum Initial Deposit

10 grams

5 grams

20 grams

Minimum Balance in the Account

1 grams

2 grams

1 grams

2 grams

10 grams

Charges for Gold Balance Below Quantity Required

RM5 will be charged in the event gold balance falls below 10 grams at the end of year

Not Applicable

RM10 will be charged in the event gold balance falls below 10 grams at the end of year

RM2 will be charged per month if the balance of account falls below 10 grams at the end of year

Minimum Subsequent Purchase/ Sale

5 grams and must be in multiples of 1 gram

Fineness of Gold

99.9 % Fineness

99.5 %

Fineness

999.9 %

Fineness

99.9 %

Fineness

999.9 %

Fineness

Minimum Quantity for Physical Gold Withdrawal

100 grams in multiples of 100 grams

1 grams, 5 grams, 10 grams, 50 grams

Gold Wafers at 10, 20, and 50

50 grams and 100 grams,

To be Confirmed

Account Opening Requirement

Either a savings or current account is acquired

Not Applicable

Either a savings or current account is acquired

Mode of Operation

Passbook

Statement

Passbook

Statement

Gold Sale/ Purchase Price

Based on the Bank’s prevailing gold SELLING/ BUYING price quoted in RM per gram

Gold Withdrawal

a) Credit into savings or current account

Physical gold withdrawals at selected branch

a) Credit into savings or current account

Physical gold withdrawals at all branches

a) Cash

Credit into savings or current account

c) Physical gold withdrawals at selected branch

a) cash

Credit into savings or current account

c) Physical gold withdrawals at selected branch

a) Credit into savings or current account

b) Physical gold withdrawals subject to UOB’s bank approval

Interest

No interest payout

Online Trading

Yes

Protection of PIDM

Investment is not insured by PIDM

Note

Physical gold withdrawal will be charged

RM 1 per gram of gold ordered

First shariah based gold account in Malaysia

Malaysia’s largest bank, 100% backed by physical gold

Online gold trading via PBeBank.com-gold purchases and sales are offered at discounted price

Premier gold account is available at smaller difference between selling and buying prices 4 big investors.

After analyzing the above gold account investment practicing in this country, it can be seen that there are five banking institutions that offer gold investment account whereby Kuwait Finance house the only one institution which is compliance with Shari’ah based on bai’Sarf contract.

In Kuwait Finance House, after conclude the sale contract, the customer have two options whether to collect the gold physically and keep it with him or keep it with the bank for safe custody at no charge based on the Islamic contract of Qard. This kind of transaction is permissible. Because of the exchanging gold for silver or cash is only permissible if the exchange occur in a hand-to-hand transaction. This is based on the Hadith in which the Prophet (peace be upon him) is reported to have said, (gold for silver is usury except hand to hand equal in amount.

Furthermore, Kuwait Finance House does not offer online trading, the customers must go straight to the bank to buy the gold and they will possess the physical gold on the spot during the sale transaction took place.

However, CIMB bank, Maybank, Public Bank, and United Overseas Bank have different transaction where the gold is not delivered to the customer instantly and the gold is not existed during the sale contract. This kind of transaction is not permissible according to Shari’ah since it is involved with riba. It is necessary for the seller and the buyer that before they separated from each other, they should deliver the commodity, and its exchange to each other. And if even a part of the thing about which agreement has been made, is not delivered to the person concerned, the transaction becomes void.

The transaction involves delaying the delivery of the gold for a certain period after making the deal in which a buyer pays a certain amount of money for a quantity of gold that he receives after a span of time. This really contradicts the stipulation of the Sunnah. In his Hadith, the Prophet (peace and blessings be upon him) says: “Sell not gold for gold or silver for silver unless when you do so on the spot and unless they are equal in quantity”.

CONCLUSION

Gold investment is a good option where investors can look at when they want to diversify their investments portfolio. As had been discussed previously, investors have two options either to invest in physical gold or to open gold investment account.

For Muslims, whenever they intend to purchase physical gold, they have to ensure that the gold will be obtained on the spot during the transaction in order to make the transaction permissible in Islam.

If they opt for gold investment account, in Malaysia there are five banks that offer such product. However it is recommended that to those who want to open gold investment account, Kuwait Finance House is the best choice. This is because based on our research; Kuwait Finance House’s gold investment account is the only product which complies with Shari’ah.

In conclusion, it cannot be denied that gold is considered as the most precious commodity in the world and as a sign of wealthy. In Islam, Muslim is not forbidden to acquire wealth through gold investment as long as done in accordance with Shari’ah.

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