LEGAL STRATAGEMS (ḤIYAL) AND USURY IN ISLAMIC COMMERCIAL LAW by MUHAMMED IMRAN ISMAIL A thesis submitted to The University of Birmingham for the degree of DOCTOR OF PHILOSOPHY Department of Theology and Religion College of Arts and Law The University of Birmingham May 2010 ABSTRACT This thesis investigates the subject of legal stratagems (ḥiyal) in Islamic jurisprudence, in general and more particularly the ḥiyal used to evade the usury (ribā) prohibition. The context of this thesis is the nascent Islamic finance industry in which these ḥiyal play a leading role. The ḥiyal have been appropriated from the classical Islamic legal corpus without appreciating their historical contextual framework. This thesis seeks to explicate that framework and clarify the purpose and role of those ḥiyal as envisaged in the discourse of the classical Islamic jurists. The ḥiyal are shown to be premised upon a teleology which demarcates them as normative exits, makhārij. The makhārij are conditioned by the systematic reasoning of the Ḥanafī jurists, which both justifies their utility and provides their juridical remit. The ḥiyal of ribā are demonstrated to have been utilised primarily as substitutes for philanthropy, and not in the commercial sector. The commercial sector relied on the Islamic prescriptions for equity investment partnerships which precluded the need for interest based loans. Although the jurists sanctioned the ḥiyal of ribā for the poor, they did so at the expense of systematic consistency. This meant that these ḥiyal, as opposed to the makhārij, are not regarded as normative exits, but rather, as transitory concessions. The use of these ḥiyal as financial norms is therefore unwarranted. The substantive repercussions of this juridical reassessment were demonstrated using the historical experience of the Ottomans, where the long term use of the ḥiyal of ribā resulted in the negative socio-economic conditions associated with usurious economies. هذا البيع يف قليب كاجلبال ذميم اخرتعه أكلة الربا - اﻹمام حممد نب احلسن الشيباين ACKNOWLEDGEMENTS All praise is due to Allah the almighty without whose innumerable favours this thesis could not have been what it is. A contingent aspect of that gratitude is to thank those individuals who have aided or facilitated this work. I would like to begin by thanking my parents and family who have shown resolute patience in this prolonged journey. My brothers Zarar Ismail and Abrar Ismail provided financial assistance for which I am duly grateful. I would like to thank my supervisor Dr Bustami Khir, whose sincere advice and critical feedback was essential in the development of this thesis. In addition, it is incumbent upon me to thank all those who facilitated the acquisition of the source material. I would first like to thank the Jumaa Al Majid Centre for Culture and Heritage and the Royal Danish Academy of Science and Letters, for providing material free of charge. I would also like to thank the staff of the various libraries I visited: the Oxford University Bodleian libraries (Old, New and Law); the John Rylands and the Joule libraries at the University of Manchester; the Main library and the Palace Green law library at Durham University, the Islamic Foundation Library, Leicester, and the libraries of the University of Birmingham. In addition, I would like to thank my brother Arfan Ismail and his associates who acquired material from Saudi Arabia, Egypt and Pakistan. Finally, I would like to express my deepest gratitude to Mufti Husain Kadodia, who not only provided me with critically important texts, both in published and unpublished form, but whose extensive knowledge of the Ḥanafī literary corpus was put at my disposal. Mufti Husain was unexpectedly generous with his time and expertise. CONTENTS LIST OF TABLES ……………………………………………………………………… viii TRANSLITERATION TABLE ………………………………………………………… ix ABBREVIATIONS ……………………………………………………………………... x INTRODUCTION ………………………………………………………………………. 1 PART ONE RIBĀ IN ISLAMIC JURISPRUDENCE CHAPTER ONE Ribā in the Qurʾān and the Sunna …………………………………. 15 1.1 Ribā in the Qurʾān ……………………………………………………………….. 15 1.1.1 ʿĀmm and Mujmal …………………………………………………………... 16 1.1.2 The Mālikīs …………………………………………………………………. 17 1.1.3 The Shāfiʿīs …………………………………………………………………. 19 1.1.4 The Ḥanafīs …………………………………………………………………. 20 1.1.4.1 Mujmal in Ḥanafī Uṣūl ………………………………………………… 21 1.1.5 Summary of the ʿĀmm/Mujmal Dispute ……………………………………. 24 1.2 Ribā in the Ḥadīth ………………………………………………………………... 24 1.2.1 Ribā al-Faḍl and Ribā al-Nasāʾa …………………………………………... 24 1.2.2 The Two Groups ……………………………………………………………. 26 1.2.3 Ratio of the Two Groups …………………………………………………… 27 1.2.3.1 The Mālikī-Shāfiʿī Method ……………………………………………. 29 1.2.3.1.1 The Dalīl for the Mālikī-Shāfiʿī Ratio …………………………… 29 1.2.3.1.2 The Istidlāl for the Mālikī-Shāfiʿī Ratio …………………………. 32 1.2.3.2 The Ḥanafī Method ……………………………………………………. 33 1.2.3.2.1. The Dalīl for Genus ……………………………………………… 34 1.2.3.2.2 The Dalīl for Qadr ……………………………………………….. 36 1.2.3.2.3 The Istidlāl for Measurement and Genus ………………………… 38 1.2.3.2.4 Applying the Ḥanafī Ratios ………………………………………. 41 1.2.4 Summary of the Jurists’ Positions ………………………………………….. 43 1.3 Integrating Ribā al-Qurʾān and Ribā al-Sunna ………………………………….. 43 1.3.1 Credit sales, Ribā and the Time Value of Money …………………………... 45 1.3.2 The Definition ………………………………………………………………. 47 1.3.2.1 al-Faḍl – The Excess ………………………………………………….. 47 1.3.2.2 al-Khālī ʿan al-ʿIwaḍ – Devoid of a Countervalue ……………………. 48 1.3.2.3 al-Mashrūṭ – Stipulated ……………………………………………….. 50 1.3.3.4 Fī al-Bayʿ – In a Sale Transaction …………………………………….. 52 1.3.3 Ribā Proper and Quasi-ribā ………………………………………………… 52 iv CHAPTER TWO Applying the Theory ……………………………………………… 54 2.1.1 Mithliyyāt and Qīmiyyāt ……………………………………………………. 55 2.1.2 ʿAyn, Dayn and Taʿyīn ……………………………………………………… 55 2.2 Forward Sale – Salam ……………………………………………………………. 57 2.2.1 Salam in Animals ……………………………..…………………………….. 58 2.3 The Concessionary Exchange, Bayʿ al-ʿArāyā ………………………………….. 60 2.4 Debt: Qarḍ and Dayn ……………………………………………………………. 62 2.4.1 Qarḍ ………………………………………………………………………… 62 2.4.2 Dayn – Ḍaʿ wa Taʿajjal …………………………………………………….. 65 2.5 Contractual Stipulations – Shurūṭ ………………………………………………... 67 2.6 Pledge – Rahn ……………………………………………………………………. 70 2.7 Currency Exchange – Ṣarf ……………………………………………………….. 72 2.7.1 Gold, Pearls and Embellished Swords ……………………………………… 74 2.7.2 At the Systematic Periphery ………………………………………………... 77 2.8 Summary of the Ḥanafī Theory of Ribā …………………………………………. 79 2.9 Ibn al-Qayyim’s Theory of Ribā ……………….................................................... 80 2.9.1 Two Types of Ribā ………………………………………………………..... 80 2.9.2 The Ratio …………………………………………………………………… 81 2.9.3 Necessity and Need ………………………………………………………… 82 2.9.4 Jewellery and Workmanship ……………………………………………….. 83 2.9.5 Ibn al-Qayyim and Reform …………………………………………………. 85 PART TWO RECEPTION OF THE ḤIYAL: POLEMIC AND GENRE CHAPTER THREE Reception of the Ḥiyal: The Polemic ……………....................... 88 3.1 al-Bukhārī and his kitāb al-Ḥiyal ………………………………………………... 88 3.1.1 al-Bukhārī’s Juridical Stance ……………………………………………….. 94 3.2 Ibn Baṭṭa’s Ibṭāl al-Ḥiyal ………………………………………………………… 95 3.2.1 Ibn Baṭṭa’s Juridical Rebuttal ………………………………………………. 96 3.2.2 Ibn Baṭṭa on the Jurists ……………………………………………………... 99 3.3 The Ḥanbalī Reformers and the Ḥiyal …………………………………………… 100 3.3.1 Maqāṣid al-Sharīʿa …………………………………………………………. 101 3.3.1.1 Outward Forms Vs Underlying Meaning ……………………………… 102 3.3.1.2 Using the Maqāṣid to Delineate the Ḥiyal ……………………………. 104 3.3.2 Intentions and Motives ……………………………………………………... 107 3.3.3 Blocking the Means – Sadd al-Dharāʾiʿ …………………………………… 110 3.3.4 Summary of Ibn Taymiyya’s Approach ……………………………………. 112 3.4 The Maqāṣid and al-Shāṭibī ……………………………………………………… 113 3.5 The Ḥanafī Defence of the Ḥiyal ………………………………………………… 116 3.5.1 al-Shaybānī’s Prolegomena ………………………………………………… 117 3.5.2 Prescribing Exits - Taʿlīm al-Makhārij …………………………………….. 120 3.5.2.1 The Plan of Prophet Yūsuf (as) ………………………………………... 122 3.5.2.2 The Oath of Prophet Ayyūb (as) ………………………………………. 123 3.5.2.3 Selling High Quality Dates for Low Quality Dates …………………… 124 3.5.3 al-Khaṣṣāf on Intentions ……………………………………………………. 125 v 3.5.4 al-Sarakhsī’s Paradigm ……………………………………………………... 127 3.5.4.1 The Ḥiyal and Concessions ……………………………………………. 128 3.5.4.2 The Sharīʿa and its Exits ………………………………………………. 129 3.6 Conclusion to the Ḥiyal Polemic ………………………………………………… 131 CHAPTER FOUR Reception of the Ḥiyal: The Genre ………………….................... 133 4.1 Occidental Contentions ………………………………………………………….. 133 4.1.1 The Fiqh as a Legal System ………………………………………………… 135 4.1.1.1 Theory and Practice …………………………………………………… 138 4.1.2 Islamic Commercial Law in Theory and Practice ………………………….. 141 4.1.2.1 Partnerships ……………………………………………………………. 142 4.1.2.2 Commenda and Muḍāraba ……………………………………………… 144 4.1.2.3 Commenda and Usury …………………………………………………. 147 4.1.3 The Ḥiyal as a Modus Vivendi ……………………………………………… 150 4.2 The Kitāb al-Ḥiyal ………………………………………………………………. 155 4.2.1 al-Shaybānī and the Kitāb al-Ḥiyal ………………………………………… 158 4.2.2 The Kitāb al-Ḥiyal as the Kitāb al-Makhārij ………………………………. 161 4.2.3 The Authorship of al-Shaybānī’s Kitāb al-Ḥiyal …………………………… 163 4.3 Ḥiyal in the Other Schools ………………………………………………………. 165 4.3.1 The Shāfiʿīs and the Ḥiyal ………………………………………………….. 165 4.3.2 The Mālikīs and the Ḥiyal ………………………………………………….. 166 4.3.3 The Ḥanbalīs and the Ḥiyal ………………………………………………… 168 4.4 The Controversial Ḥiyal …………………………………………………………. 171 4.4.1 Zakāt – Alms-tax …………………………………………………………… 171 4.4.2 Shufʿa – Pre-emption ……………………………………………………….