Halal Soap

Penang halal expo from Friday

GEORGE TOWN: The Penang International Halal Exposition and Convention will be held from Friday to Sunday, here, for the fifth time.

State Domestic Trade and Consumer Affairs committee chairman Datuk Abdul Malik Abul Kassim said over 200 local and foreign companies would set up their booths at Subterranean Penang International Convention and Exhibition Centre.

"The halal market is an emerging industry worth billions of ringgit in the global market.

"The huge international market is a big opportunity for Malaysia trade exhibitors to showcase their products," said Malik.

He said a total of 266 booths would be put up at the concourse and main arena.

Malik said the international exhibitors would be from the Netherlands, Belgium, United Arab Emirates, Algeria, Morocco, Turkey, Iran, Pakistan and Thailand.

He added that non-Muslim groups had been the main consumers in the halal industry. 

Source: NST

Muslims having problem in "halal meat" in US

Owner of the biggest halal slaughter facility said 60 percent of "halal" certified meat was not actually halal

NEW YORK - One of the most important questions for Muslims abroad is "halal meat" certificate and how they can trust them.

The need of "halal meat" for millions of Muslims in the US is met by many facilities.

The slaughter facilities are inspected by several certification bodies but there are also black sheep among them which send the certificate via internet.

Especially in New York's smallest and most densely populated neighborhood, Manhattan, you can buy "halal meat" phrased food on every corner. However, there are some questions about the hygienic conditions and whether the meat was slaughtered according to Islamic law.

Suleyman Duman, an official for Islamic services in Turkish Consulate General in New York told AA, "our people who live abroad must examine whether the meat they consume is halal slaughtered or not."

Duman said that a Muslim had to say the words "Bismillahi Allahu Akbar" before slaughtering the animal, and added that he had to cut its throat and let it bleed before using electroshock.

Ali Kucukkarca, the owner of the biggest halal slaughter facility in the east of the US, told AA that many institutions which gave a halal certificate were not reliable.

Kucukkarca said, "60 percent of the meat which is being sold with halal certificate in New York and New Jersey is not halal." Kucukkarca underlined that some Turkish butchers also sold meat which was not halal and noted, "one of the most reliable and biggest institutions giving "halal meat" certificate is 'Shari'ah Board of America'."

Kucukkarca reminded that the Jewish butchers were also checked by inspectors who handed out certificates. "But the inspectors, who check the Muslims do not visit their stores or control anything because the Muslim community do not make such a demand."

Source: Turkish Press

Jakim slams falsifying of halal logo on pictured beer can

KUALA LUMPUR: The Malaysia Islamic Development Department (Jakim) today denied approving the use of the halal logo on alcoholic drinks as depicted on a beer can shown on Facebook and the Whatsapp application.

The department's Halal Hub director, Hakimah Mohd Yusoff in a statement said Jakim had lodged a report on the matter at the Putrajaya police station for investigation.

This followed complaints and information received from the public on the picture of the Carlsberg can of beer with the halal logo on it appearing on the social media.

"We stress here that Jakim has never issued the halal certification or approved the use of the halal logo by the company or on its products. In fact, other products produced at the same manufacturing plant would not be issued with the halal certification or logo even it these are not alcoholic drinks," Hakimah said.

She said action could be taken against any quarters under the Trade Description (Certification and Marking of Halal) Order 2011 for misuse of the halal logo.

"Jakim regards the display of the picture as ill-intended and an attempt to undermine the department's credibility as a body responsible for halal certification in Malaysia and which is recognised nationally and internationally.

"The action will also not only create negative perception of Jais but could also hurt religious sensitivities.

"Therefore, Jakim condemns the falsifying of the halal logo, whether deliberately or with the intention to provoke, which could also create polemic among the public on the matter," she added.

She hoped consumers would not be taken in by false news spread via the social websites by irresponsible quarters and that such misdeeds should stop.

Meanwhile, Putrajaya police chief, ACP Abdul Razak Abdul Majid, when contacted, confirmed having received the police report on the matter.-- BERNAMA

Source: www.nst.com.my

Jordan is promoting Islamic/Halal Tourism

Jordan has launched a campaign to attract tourists from Muslim countries to boost the domestic tourism sector, reported the al-Hayat newspaper.

“The board launched a campaign to promote Islamic tourism in Jordan and attract tourists from Muslim countries, especially from Malaysia and Indonesia, given that Jordan is a base and a gateway for holy Muslim and Christian shrines,” said Abdul Razaq Arabiyat, the managing director of the Jordan Tourism Board, in a released statement.

The campaign aims to boost the profile of religious sites in Jordan as an attraction for foreign tourists and seeks to promote religious tourism as “a main source of tourism revenues in the kingdom,” added Arabiyat.

A number of promotional programs have been adopted by the board to attract those Muslim tourists intending to travel to Saudi Arabia to perform the annual hajj pilgrimage, who then continue on with their religious tour by traveling to Jordan and Palestine.

“We’ve signed a number of agreements with tourism companies in Indonesia and Malaysia on visiting religious shrines in Jordan and Palestine… such as the site of the battles of Islamic conquests,” said Arabiyat.

International Halal accreditation centre to open in Dubai

The centre will ensure all products are free from chemical or artificial additives

Hussain Nasser Lootah, Acting DG of Dubai Municipality.

Dubai will soon have a new International Centre for Halal Food and Product accreditation in compliance with Islamic law.

Hussain Nasser Lootah, Director-General of Dubai Municipality, announced that the civic body will soon establish an international accreditation centre for Halal food in Dubai based on the initiative of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to make Dubai the world capital of Islamic economy.

Lootah said that an action team has been appointed to work according to administrative decision No 359 of 2013 headed by Salem bin Mesmar, Assistant Director-General, Health, Safety and Environment Monitoring Sector, Dubai Municipality.

The members of the team include Khalid Sharif, Director of the Food Control Department; Amina Ahmed, Director, Accreditation Departmentp; Hawa Bastaki, Director, Dubai Central Laboratory; Noaf Al Naqbi, Head of Certification Bodies, Accreditation Section; Arif Marzouki, Head of Inspection and Certification Section; Maryam Salem Al Sallagi, Senior Food Microbiology Analyst; and Yousef Abdul Samad Al Rashid, Operations Health Specialist.

"The proposed centre will undertake the required tests for Halal food and other products to ensure that all such products are free from any chemical or artificial additives which are not complying with Islamic law, with the aim to be the first international reference in the food industry worldwide," Lootah added.

Salem bin Mesmar said, "A specific centre for accreditation and certification has been already established for the comprehensive systematic coverage of Halal food operations at local level. The current facilities and infrastructure of Dubai will help it easily establish this first international centre in the field of Halal food accreditation."

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اسلامی مالیات کے لیے 2014 بہترین سال ہو گا

2014 will be promising for Islamic Finance Industry

Islamic finance volume will be reaching at US $ 2 trillion with having 78% share of Islamic banking, 16% Sukuk, 1% Takaful, 4% Islamic funds and 1% Islamic Microfinance: Zubair Mughal

31-12-2013

(Lahore) Islamic finance will grow with rapid pace in the year 2014 and its volume will pass through US $ 2 trillion where Islamic banking keeps 78%, Sukuk 16%, Takaful 1%, Islamic Funds 4% and Islamic Microfinance has 1% share in the Islamic Finance industry. In the year 2014, Dubai and London will be in competition to be the global hub of Islamic Banking and Finance while Kuala Lumpur will also attempt to be in this contest but the Islamic finance industry can be grown more through synergizing approach and alliance with industry stakeholders rather than setting any competition. These views were expressed by Islamic Finance expert, Mr. Muhammad Zubair Mughal, CEO - AlHuda Centre of Islamic Banking and Economics (CIBE) during an analysis on Islamic finance industry in the beginning of year 2014.        

He said that the Islamic finance industry growth will go on double digit in 2014 which will turn the US $ 1.6 trillion volume of Islamic finance industry in December 2013 to US $ 2 trillion by the end of 2014 including North African countries (Tunisia, Libya, Morocco, Senegal and Mauritania etc), rising trends of Islamic finance in Europe and UK, also the rising and substantial share of international market of Sukuk shall contribute to it. It is anticipated that India and China may step towards the Islamic finance in 2014 where more than 200 million Muslim populations are in search of a compatible financial system with their religious beliefs and thoughts. He said there is no doubt that international financial crisis will not hit the Islamic finance industry but due to the Arab Spring, Islamic finance industry has faced recession in some countries of MENA but there are chances of  their revival in 2014.

He, giving an analysis, said that Sukuk will grow rapidly in 2014 and Muslim countries including non-Muslim countries e.g UK, China, South Africa and Europe etc will also get benefit from it which will enhance the growth in Islamic finance industry but Takaful Industry is not supposed to have any substantial breakthrough. It is being hoped that 2014 will prove better period for Islamic Microfinance industry as different international institutions including Islamic Development Bank (IDB) have declared it a potential tool for poverty alleviation around the globe. He also added that Islamic finance industry may face recession in certain countries including Indonesia while in Nigeria and Tunisia it may face some problems on religious and political grounds. He said that the Islamic finance initiatives in America and Canada including Latin American countries (Brazil, Argentina and others) have been taken and it is hoped that Islamic Funds market will come into existence in these regions by the year 2014.

UAE: Halal food gains momentum

The halal food industry is gaining momentum in conventional and non-conventional markets across the globe due to its hygienic and safety qualities, say exhibitors at second OIC Halal Middle East Exhibition and Congress.

The industry stakeholders said investors are increasingly looking opportunities to make investments in halal food products to capitalise growth in this untapped market across many geographies. They also hailed various initiated launched by the UAE government to promote halal industry and said Dubai has strong potential to become the capital of Islamic economy in coming years.

The three-day exhibition and congress attracted exhibitors from non-conventional halal food markets like Italy, South Korea, Russia and Japan, among others. They were upbeat about the outlook of halal food market even in those countries where Muslims are in minority. Over 125 exhibitors and 200 delegates are attending the three-day event, which concluded on Wednesday.

“Halal food is picking up in Italy and we are confident of its success in the country because of its popularity even in non-Muslim population,” Mansur Giuseppe Baudo, audit manager at Halal Italia, told Khaleej Times.

He said Halal Italia is the Italian organisation for Islamic certification and it is also recognised from UAE’s Ministry of Environment and Water and Majlis Ugama Islam Singapura — Islamic Religious Council of Singapore.

“The UAE ministry issued a decree in 2012 to recognise Halal Italia certification, and now our certification is acceptable in all other countries of Gulf Cooperation Council including Saudi Arabia, Kuwait, Qatar, Oman and Bahrain,” he said.

Baudo said halal food is very popular in Italy and playing a key role in establishing close relations between East and West.

Echoed the same views from another non-conventional market, Korea Halal Association advisor Jo Young Chan said halal food prospects are bright in the country. “Our association is a non-profit body that has been formed to provide a common platform to stakeholders in Korea halal industry,” he said.

Chan said the association right now has only 10 members, but due to growing popularity and demand of halal products he is confident of about 200 to 300 members in next five years. “

Halal food industry is growing rapidly in Korea despite low Muslim population and the association will start issuing its own halal certification from next year,” he said.

The exhibitors from Muslim nations are also buoyant about the future of halal food industry and said enormous opportunities exist in this fast growing segment. They underlined the need to uniform standards for halal certifications to realise the true potential of halal trade even in conventional markets of Muslim majority population countries.

“Halal food is progressing well and we see a promising outlook for the industry in coming years,” said Darningsih Rustiadji, director at Indonesian firm Deka Adiguna.

She said Indonesia is a big potential market for halal food and demand for halal products is on the rise as people are more cautious about edibles and shifting towards halal items.

“Halal food is not only for Muslims, it is getting popular even in non-conventional markets in Europe and Asia as we secure orders for our products from Netherlands, Korea and Japan,” she said, and adding that there is need to explore markets in South America.

Rustiadji said Middle East is a big potential market for Indonesian halal food products. “We have more than 100 halal products and secured reasonable orders from Saudi Arabia and the UAE,” she said.

Hamed Abedian, commercial manager at Iran’s Sefid Goosht Hamoon Company, said halal food future is good due to its growing demand and awareness in major markets. “We deal in fresh and frozen fish, chicken and beef. We are participating in the exhibition for the first time and hope to get good business,” he said.

Abedian appreciated the halal exhibition and congress to promote the halal food products and called for more strenuous efforts to explore new markets across the world.

Source: halalfocus.net

Halal Industry Thrives In Russia

CAIRO – Foreseeing a bright future for halal industry, a growing number of Russian Muslims have led demands for uniform standards for halal products and certification in their country.

“The halal food industry is growing in double-digit numbers in Russia,” Madina Kalimullina, director of the Economic Department of Russia Muftis Council, told Khaleej Times on Monday, December 23.

“Annually, we certify more than 40 enterprises in different spheres of production.”

“The present stage of the halal industry development can be considered as mutual acquaintance and deeper knowledge of each other among certification bodies,” said Kalimullina, who is also a director of Moscow Halal Expo.Over the past three years, the Russian Muslims have been calling for issuing common standards for halal food production.

“The efforts of the Standards and Metrology Institute for the Islamic Countries (SMIIC) to work out common standards for halal production started in 2011 are likely to give results in the coming years.

“Based on commonly-recognized standards, system of audit, constant research and innovations, the halal industry, by the will of Allah, has the ability to become the world brand of healthy, ecological and safe products and services.

“In the coming years the issues of logistics, regulation, customs clearance and distribution would be put on the agenda more often as the concept of halal will require new routes in the international trade,” she said.

According to Kalimullina, the OIC has exclusively the right to unite views on uniform standards for halal certificates.

“The issue, however is complicated due to different mazhabs and business practice,” Kalimullina, who holds a PhD in economics, noted.

“At the same time, unanimous efforts of Muslims around the world are sure to result in a deeper integration and development of halal production, trade and investment.”

The concept of halal, -- meaning permissible in Arabic -- has traditionally been applied to food.

Muslims should only eat meat from livestock slaughtered by a sharp knife from their necks, and the name of Allah, the Arabic word for God, must be mentioned.

Now other goods and services can also be certified as halal, including cosmetics, clothing, pharmaceuticals and financial services.

Halal Expo

In a bid to attract new investors to the growing halal market, the Russia Muftis Council (RMC) launched the project of Moscow Halal Expo in 2010.

“Their [native Muslims’] number now exceeds 25 million,” Kalimullina, the director of Moscow Halal Expo said.

“Apart from that number we have 10 million Muslim work migrants from CIS countries that form the demand for halal products; although they are from a low income group, but the demand is massive.

The success of halal food industry was not limited to Russian Muslims.

“Another big group of consumers are non-Muslims, who choose halal for its quality,” Kalimullina said.

Thee halal food industry has been one of the RMC' priorities.

In 2002, it established the centre for Halal Standardization and Certification.

By 2011, the administrative structure of RMC has formed the Economic Department for the council.

“In general, there is a plan of umma economic development worked out by the RMC Economic department which includes the enlightenment in the sphere of Islamic business ethics and Islamic finance, halal certification system development, educational courses, translation into Russian language of the international Shari’ah standards in Islamic finance adopted by the AAOIFI, support is halal business and Islamic finance companies, Business Development Club, and, finally, Moscow Halal Expo,” Kalimullina explained.

“Now, we direct efforts at development of new business and investment projects in halal sphere. Presently the most important of which is the chain of halal distribution chain all over Russia.”

The Russian Federation is home to some 23 million Muslims in the north of the Caucasus and southern republics of Chechnya, Ingushetia and Dagestan.

Islam is Russia's second-largest religion representing roughly 15 percent of its 145 million predominantly Orthodox population.

Spain Regulates Halal Food

CAIRO – In a bid to normalize, regulate and control the Halal market in Spain, the Cordoba-based Halal Institute has cooperated with the Spanish standardization authority to develop new regulations related to the growing halal market.

“This is the first time that a Technical Committee on Standardization, addresses technical and religious aspects,” a press release obtained by OnIslam.net quoted Hanif Escudero, the director of Halal Standardization, as saying.

In a meeting held last week, the Halal Institute of the Islamic Board of Spain, based in Cordoba, together with the Spanish Association for Standardization and Certification (AENOR), to agree on the recently developed standardization activity related to halal food.

Escudero noted that the Technical Committee on Standardization AEN/CTN 308 'Halal' is the body created for this activity, whose Secretariat functions will be carried out by the Halal Institute, on behalf of the Islamic Board of Spain.The meeting was held with the support of the main Islamic federations, consumers, manufacturers and the Administration.

The Halal Institute is the Islamic and scientific organization dedicated to normalize, regulate and control the Halal market in Spain.

Escudero added that the Halal Institute of the Islamic Board was the driving force behind the development and signing of the Cooperation Agreements of 1992 (26/1992) and the registrant of the Guarantee Mark Halal (2466790 M 0. Halal).

It is, as has been pointed out, “a global concept that refers to the set of practices and behaviors that are acceptable according to the Shariah/Islamic Law,” he added.

In addition, as indicated by the responsible for the Halal Institute, the normalization process now begun also implies a historical event.

“In the sense that, after 20 years since the signing of the Cooperation Agreements (26/1992), it seems that the subject of Halal will be the first aspect in which there will be a normative progress,” the press release said.

“In other words, we now have an example to follow in aspects that the Cooperation Agreement itself restricts or even left undefined.”

Spain has a Muslim minority of 1.4 million, making up about 3 percent of the country’s population, according to the Islamic Commission of Spain.

Islam is the second religion in Spain after Christianity and has been recognized through the 1967 law of religious freedom.

Growing Market

The new agreement was passed as the halal market continues to hit new successes in the Spanish market.

“The Halal market, at international level, grows by 10/12%, while in Spain has a main consumer segment close to two million consumers, and a market revenue of 620 million euros generated by more than 240 industries, with 500 certified products and more than 600 retail stores,” the responsible of the Halal Institute said.

In the meantime, Aenor technical committees of normalization working bodies announced their willingness to the participation of all interested parties to develop the referred UNE Standards, which are voluntary and demanded by society.

In this sense, the first objective of this new Technical Committee on Halal Standardization “will consist in following-up to a European standard draft on Halal food requirements, the use of additives, animal slaughter and welfare, the traceability or labeling.”

In addition to the follow-up of this European project, the Halal Institute, as Hanif Escudero has pointed out, “has brought up the idea of organizing several working groups to assume other areas, as is the case of beverages, tourism, cosmetics or finances. Emerging sectors in which Spain must also be a reference.”

Another of the reasons for organizing various working groups is that the Committee of the Whole 'is a broad, representative and also diverse body.

The director of Halal Standardization has concluded that, “the working groups are a necessary tool in order to take advantage of the working meetings and all the efforts and dedication put in by the members of the Committee.”

The concept of halal, -- meaning permissible in Arabic -- has traditionally been applied to food.

Muslims should only eat meat from livestock slaughtered by a sharp knife from their necks, and the name of Allah, the Arabic word for God, must be mentioned.

Now other goods and services can also be certified as halal, including cosmetics, clothing, pharmaceuticals and financial services.

Halal food is consumed not only by 1.5 billion Muslims around the world, but also by at least 500 million non-Muslims in the $2 billion global industry.


Source:www.onislam.net

"A Big Question Mark on Islamic Finance Industry", Muhammad Zubair Mughal

Apparently, it is a matter of pleasure that global volume of Islamic Finance Industry has crossed $ 1.3 Trillion approximately, which is, definitely, providing the best and compatible sources of finance with interest free modes. According to a careful estimate, there are more than 2000 Islamic Financial Institutions are offering Islamic Banking, Islamic Insurance (Takaful), Islamic Funds, Mudaraba, Islamic Bonds (Sukuk), Islamic Microfinance and some other institutions actively providing Islamic financial services on different modes in adherence of Shari’ah principles of Islamic Finance. If we look into the market share of above mentioned institutions, we get shocked and depressed for a while with the fact that Islamic Banking and Finance has been nearly confined to the rich people and as per the ideology of capitalism, the profit urge has captured the Islamic Financial Industry and discriminated the underprivileged people and letting them deprived from Islamic financial services. Keeping in view these facts, it should be said as the commercialism has captured Islamic Finance institutions in such a way that business with and financing to the poor has gone astray from their agenda. According to the facts and figures (March-2013) by Consultative Group to Assist the Poor (CGAP), (an associated institution to the World Bank), the global volume of Islamic Microfinance has reached at USD 800 million with serving about 1.3 million beneficiaries. While as per the latest research (July-2013) conducted by AlHuda Centre of Excellence in Islamic Microfinance, the global volume of Islamic Microfinance has reached at $ 1 billion. Total number of Islamic Microfinance Institutions is more than 300, operating around the globe while the share of Islamic Microfinance is less than 1% from the overall volume of $ 1.3 trillion of Islamic Finance Industry, which, itself, is a big question mark on Islamic finance industry and proving its misfortune. These stated facts and figures give rise to different question such as: is social segmentation between poor and rich 1% : 99% ? Does Islamic Finance have financial resources only for the rich people? Not for the Poor? Is Islamic Finance an option only for the particular segment of society? Is it justice system of Islam? etc, whereas the answers to all these questions are in negative and awful, definitely. As per the analysis of Islamic Finance in the light of Islamic teachings, we get into, the Islamic ideology of finance which aims at justice, cooperation, welfare of the poor and financially deprived people of society with its best principles. Islam is a name of revolution starting from poor and will ending at same. If we have a look at comparative study of different religions regarding the view point of poverty, then we come to know that poverty alleviation is not only the social responsibility in Islam rather a religious obligation as well. Zakat, Charity, Sadqa, Fitr, Usher and Qarz-e-Hasan etc are amongst the key religious responsibilities of Muslims, whereas it is a social responsibility in other religions rather than a religious one which recognized as branded name of “Corporate Social Responsibility” (CSR), and they doing good work for poverty alleviation and social development in the whole world, but unfortunately, Islamic Financial Industry have ignored its social or religious responsibilities. If we look at the world poverty, we get surprising facts and figures. The 46% of whole world poverty exists in Muslim World while Muslim population in the world is 26%. United Nations have marked 26 out of 57 member countries of OIC, as the least developed countries. Current statistical information is highlighting that the poverty in the Muslim World is increasing day by day which is, as per the serious observation, caused by none or least response of poor people to Microfinance facilities because of interest, none or limited Islamic Micro Financing facilities provided by Islamic Financial Institutions and the least attention and interest of International Donor Agencies (UNDP, World Bank, IFC) towards Islamic Microfinance which, in return, is throwing the Muslim world into an era of poverty. As per the praiseworthy analysis of economics experts of modern age (Mr. Tariq Ullah and Mr. Ubaid Ullah 2008), 650 million Muslims in the world are living below poverty line with less than $ 2/ per day income. While on the other hand, only the 1.3 million Muslims out of 650 million were tried to get them out of poverty through Islamic Microfinance services whereas remaining 649 million Muslim, living in poverty, are still looking forward any financial assistance through Islamic way. Islamic Finance Industry is facing lot of criticism in different aspects e.g. acceptability of Islamic Finance, objections from Shari’ah Scholars, Conflicts in Shari’ah related issues etc are the main challenges to Islamic Finance Industry. But objection to neglect the poor is very critical, once not resolved, can damage and bring a perpetual loss to the Islamic Banking and Finance Industry. The optimal results for the economic prosperity of Islamic Finance can be ensured if Islamic Microfinance Institutions established by the Islamic Finance Industry. Although Islamic Microfinance can be energized by utilizing available charity amount of Islamic Banking and Finance industry which is worth in Million Dollars. Inter alia Zakat, Sadqaat, Waqf, other Islamic Microfinance products e.g Murabaha, Musharaka, Salam and Istisna etc can be used prolifically for poverty reduction and social development. Our Shari’ah scholars are also responsible for insisting and pursuing the Islamic Financial Institutions to execute and promote Islamic Microfinance otherwise there is a definite chance of rumors that Islamic Banking and Finance services are only for rich people making discrimination of “Do Have and Have Not” and ensuring its ultimate benefits only to rich people. ( Muhammad Zubair Mughal as a Chief Executive Officer of AlHuda Centre of Islamic Banking and Economics (CIBE) has been working consistently for last nine (9) years for poverty alleviation through Islamic Microfinance concept; he can be reached at zubair.mughal@alhudacibe.com )

Shariah and BLOM Bank

In the case of Investment Dar Co KSCC v Blom Developments Bank Sal, the Investment Dar (TID) was an investment company registered in Kuwait and the Blom Development Bank (BDB) was a bank incorporated in Lebanon. A wakalah investment agreement was entered into between the two parties governed by English law. The agreement provided that Blom deposit a certain amount of money with TID, appointing TID as its wakil (agent) to manage the money as an investment. When TID defaulted on payments under the wakalah agreement, BDB sued TID in the High Court of England and applied for summary judgment on the grounds of default in payment (claim in contract) and the deposits held in trust (claim in equity). The master found that there was an arguable defence to the contractual claim, but not to the trust claim due to a misunderstanding of Shariah and the application of common law to an Islamic finance transaction.

TID raised the defence of ultra vires. TID argued that the wakalah agreement, which was approved by its own Shariah board, did not comply with the Shariah and was therefore void and against TID's constitutional documents. Although within the wakalah arrangement some issues of Shariah non-compliancy arose, since the contract was approved by the TID Shariah Board and constituted a binding contract in both common and Islamic law with valid offer and acceptance. Thus, TID should have been held to the terms of the contract.

In terms of Islamic law, the Hanafis stipulated a valid offer and acceptance as the cornerstones of the agency contract. While the Hanafis restricted the contracts cornerstones to offer and acceptance or actions implying acceptance, the other jurists enumerated four cornerstones: (i) principal, (ii) agent, (iii) object of the agency contract, and (iv) the contract language. If the compensation is a ji'alah, whereby the task and the time period are not explicitly stated in the contract, then the majority of jurists agree that the contract is non-binding on the parties.

However, the Malikis ruled that the contract was, in this case, binding on the principal once the agent begins working. If the compensation renders the contract an ijarah, then the Hanafis and most Malikis ruled that the agency contract is thus binding. In contrast, the Shafis and Hanbalis ruled that the contract was still not binding in this case. In this instance, according to the Hanafis, the contract had valid offer and acceptance with principal and an agent consenting to the terms of the contract and initiating investment activity in the form of a wakalah. In addition, the wakalah contract appears to be an ijarah and thus valid and binding according to the Hanafis and Malikis.

According to the AAOIFI Shariah standard No. 23 (4/3) and as occurred in this case, "when agency is paid, involves the rights of others, when the agent commences tasks that cannot be discontinued or phased out without causing injury to him or to the principal, and/or when the principal or the agent undertakes not to revoke the contract within a certain period, it falls under the Shariah rulings on Ijarah and is binding." The judge ignored the valid and binding contract and the original contractual intent of the parties, applied western trust law to the wakalah arrangement, and unjustly ruled that TID was only liable to pay Blom the principle amount.

In the concerned wakalah arrangement, at the end of every wakalah period, TID was obligated to pay five percent profit to Blom . The issue arose when TID defaulted on payments of Blom 's principal and the agreed profits. Blom claimed that TID should pay it the principal deposits plus the contractually agreed five percent profit. However, TID argued that the agreement was not Shariah-compliant, being an agreement for deposit taking with interest, and therefore null, being ultra vires and beyond its legal capacity to conform. The Judge concurred and stated, "I agree...that where one finds, as one does in this master wakalah contract, a device to enable...the payment of interest under another guise, that is at least an indirect practice of a non-Shariah compliant activity." Due to constraints faced by the Islamic banking industry in terms of risk management, the reality of operating in a conventional system, and the need to compete, it is difficult to adhere to true Shariah banking at this moment in time[SO1] . It may be argued that in fact all Islamic banking products are devices to enable the payment of interest in another guise.

According to the AAOIFI Shariah Standard No. 5(2/2/2) on Guarantees, "it is not permissible to combine agency and personal guarantees in one contract at the same time, because such a combination conflicts with the nature of these contracts. In addition, a guarantee given by a party acting as an agent in respect of an investment, turns the transaction into an interest-based loan since the capital of the investment is guaranteed in addition to the proceeds of the investment (i.e. as though the investment agent had taken a loan and repaid it with an additional sum, which is tantamount to riba)." In this case, TID, as agent, also guaranteed Blom a five percent return. However, even if the wakalah agreement in question really was a loan with interest in disguise or a similar contraption, due to the fact that this agreement was approved by the TID Shariah board, TID should be held to the terms of the contract. TID should not be allowed to suddenly claim that the transaction is non-Shariah compliant in order to evade its contractual obligations to Blom Bank.

According to records, Jurists agree that an agent's possession is one of trust, analogous to deposits and similar to possessions. This ruling follows from the fact that the agent would possess goods as a legal representative of the principal (who is the owner). Thus, his possession is similar (but not the same) to that of a depository, following its rules for trust and guarantee. Under Shariah, TID was holding the five percent profit on trust for Blom as agent for principal even if the guarantee combined with agency is thought by some to have turned the wakalah into a deposit taking with interest or to have simulated an interest-bearing loan.

Although under Shariah, TID was technically only supposed to receive an agency fee, in this wakalaharrangement, TID was contractually to receive an agency fee plus all return above five percent, thus bearing risk of loss. In a proper wakalah arrangement, the principal bears all risk of loss and profit, while the agent only receives an agency fee. According to the AAOIFI Shariah Standard No. 21(4/2/c), "the amount payable as remuneration for agency should be known, whether in lump sum or as a share of a specific amount of income. It may also be defined in terms of an amount of income to be known in the future, as when remuneration is linked to an indicator that may be quoted at the beginnings of different intervals of time. However, it is not permissible to leave remuneration for agency undetermined and allow the agent to take an unspecified share from the entitlements of principal." In this arrangement, the agent was to take an unspecified share from the entitlements of the principal, being any amount of return above five percent. These Shariah issues were totally ignored by the judge. In this transaction, the judge misapplied Shariah law, ignored the reality of the Islamic finance and banking industry, and then judged the contracts in relation to Western trust law, unfairly ruling that Blom was only entitled to the principal amount.

The judge ordered an interim payment to be paid to Blom based on the fact that the contract was null and void (no trust) and that the transaction was ultra vires (non-Shariah compliant). The judge should have ruled thatBlom was entitled to the deposit amount plus any profit made up to a limit of five percent (if profit was made) rather than just the deposit amount. TID ultimately withdrew the case.

About: Camille Paldi is associate with Alhuda-CIBE, She is a legal expert and founder of FAAIF Limited as well as the popular ilovetheuae.com. In addition to being a qualified Islamic finance specialist with a Masters Degree in Islamic finance from Durham University (UK), Camille is also a lawyer in four countries and nine jurisdictions around the world and has received legal training in common, civil, and Shariah law in six countries spanning five continents.

Source: Zawya