54 ALRAQABA . ISSUE 18 Second: Financial Leasing in Islamic Jurisprudence: Article (1) of Kuwait’s Civil Law 67/1980 states that, “1- The provisions of the law apply to all matters to which the said provisions refer explicitly or implicitly. 2- In case there was no relevant provisional law, the judge would rule according to the Islamic law provisions that are most compatible with the reality of the State and its interests; If there were none, the judge would then rule according to custom.” In the case of a Finance Lease, it falls in with the second provision, which refers to the lack of provisional laws. Thus, when a dispute arises over an issue that is not regulated by the provisions of the leaseor that issubject to the judge’s interpretation, the judge then would rule when resorted to by the conflicted parties in accordance with the provisions of the Islamic Jurisprudence. Islamic Financing is defined as “providing wealth in kind or cash for the purpose of profiting, and that is from the owner of the said wealth to another individual who would manage and dispose of it for a return that is permitted by Sharia Law.” Therefore, it appears that Islamic financing can be in line with the concept of Financial Leasing that is regulated by other comparable laws, provided that the return or the rental payment complies with the provisions of Sharia. As for leasing in Islam – commonly referred to as “Ijarah,” it is defined by Hanbali scholars as a contract on the usufruct of a specified or described asset or service for a specific period against an agreed compensation. This definition is inclusive of all other interpretations that came from other Islamic schools. Prof. Hassan Ali AlShathli, from the Faculty of Sharia and Law at Al-Azhar University, in his research paper presented at the first Islamic Jurisprudence Symposium at Kuwait Finance House (KFH), pointed out that in the case of a Sharia-compliant finance lease, the asset would be owned and received by the financing institution at the time of signing the lease. Consequently, a few provisions that are combined in the legal form of this lease would be abbreviated, and their combination may affect the fulfillment of the obligations and requirements of the agreed contracts and promises, as in the case of an agency contract, a supply contract, or an Ijarah contract, etc. Accordingly, if the lease is associated with a promise to sell back for a definite purchase price or allows for extending the leasing period or returning the asset to the financing institution at the end of the lease term, there will be no prohibition in such conduct. This form of leasing is permissible as it is equivalent to leasing with a promise to sell the asset at its actual value, in addition to being more flexible for the lessee as it offers the three options by the end of the leasing period. Theme 2: Regulation of Financial Leasing Thesis
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