Resolutions of the Securities Commission Shariah Advisory Council

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Capital Market Issues According to Islamic Jurisprudence pay compensation to the owner. In the case of a delayed payment of debt, the creditor stands to lose because he is deprived of the opportunity of using the funds for other trading purposes, which he could if the debt is settled within the stipulated time frame. Therefore, this loss should be compensated by the debtor based on qiyas. Maxims of Islamic Jurisprudence There is a maxim of Islamic jurisprudence which can be used in dealing with this matter, that is: Meaning: “Nothing is a loss or results in a loss (in Islam).” Based on this principle, the debtor’s act of delaying payment is a loss to the creditor. This situation has to be avoided so that businesses are conducted according to the istiqrar ta`amul principle, that is the smooth running of the market. It is supported by another maxim of Islamic jurisprudence: Meaning: “Whatever loss should be removed.” 293 In the context of this discussion, losses that are borne by a creditor must be removed by the provision of a suitable approach. Imposing ta`widh on a delayed payment of debt is a suitable approach for covering the loss borne by the creditor and it encourages the debtor to settle the debt within the stipulated time frame. Qadhi Syuraih’s Resolution There is a basis in Islamic jurisprudence to show that ta`widh can be imposed in a trade. An example is the resolution made by Qadhi Syuraih in a case narrated by Bukhari from Ibnu Sirin: A potential customer said to the owner of some animals for hire: “Prepare for me one of your animals. Should I not hire it on such a 293 Al-Suyuti, Al-Asybah wa al-Naza’ir, pp. 83–84. 127
Resolutions of the Securities Commission Shariah Advisory Council 128 date, I will pay you of 100 dirham.” Apparently, the customer did not proceed with the deal, and so, according to Qadhi Syuraih: “Whoever imposes a condition upon himself voluntarily, then that condition is binding.” 294 Qadhi Syuraih resolved that the condition stated by the potential customer is binding. Based on this resolution, it can be used as an Islamic jurisprudence principle to permit the imposition of a condition in the form of ta`widh in a business transaction. The payment is for opportunity loss borne by the creditor. Al-Zarqa’ sums it up by saying: Meaning: “Compensation is for loss (borne by parties involved in a business transaction) as a result of waiting and the disruption of a transaction.” 295 294 Al-’Asqalani, Fath al-Bari, vol. 5, p. 707. 295 Al-Zarqa’, Al-Madkhal al-Fiqhi, vol. 1, p. 496.
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Resolutions of the Securities Commission Shariah Advisory Council

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