UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance


Theme I : Waqf Endowment in Islam : Its Meaning and Implications

Linguistic meaning of Waqf endowment

From a linguistic point of view, “waqf” means forbidding movement, transport or exchange of something. The root meaning of the word applies to the act and praxis, and  the same meaning applies to the object of the action, i.e. the endowed object. In this sense, the plural is “awqaf” and “wuquuf”. Thus, we say ” I endow someone when I stop him from movement and transport;  i.e., I order and oblige him to stop. One can also say, “I endow the Holy Book”, which means I forbid its ownership and its removal from its place. Also, “He endows his house for the benefit of orphans” means that he forbids his heirs and himself from owning or using it. In this sense, waqf endowment has always the connotation of forbidding. The meaning adapted to it depends on the context of each separate usage thereof.

The meaning of “waqf endowment” is very close to that of “habs” (literally “locking up”) linguistically and conventionally. In fact, both words have become synonymous in the conventional use; so much so that they are used interchangeably as we will see shortly.

Conventional meaning of Waqf endowment

Endowment is a canonical Islamic concept, which refers to a special kind of charity given for the purposes of benevolence. The word is used for charities and gifts that have permanence and continuity, so that people can benefit from them for years, generations or even centuries. This means that Waqf endowment is made of entities from whose usefulness, yield and fruit people can benefit, while the capital asset of the entity lasts and stays for a short or long period of time, such as a lot, a construction, a well and a tree.

Bequest (Habs) or Waqf endowment can express the same meaning; for both Waqf endowment and ‘Habs’ are synonyms in the canonical meaning. In fact, some Islamic canonists consider both words synonymous linguistically and conventionally. In his explanation of “Hudud Ibn Arafa”, Sheikh Qadi Abu Abdellah Ar-Rassaa ” says: “Some canonists use “bequest” (habs) while others use “Waqf endowment”. But endowment for them is stronger than bequest, while linguistically they are synonyms. Thus, we say, “I endow it” or “I bequest it”. “Habs” is used for what is endowed and for the verbal noun, which means “giving”. This is also the case in legal usage.”(2)

As for the exact definition of “Waqf endowment”, Islamic canonists differ in their definition depending on their position concerning some elements and conditions of “Waqf endowment”. Yet the basic meaning is the same for all. Needless to indulge in the exposition of the different definitions, comparisons and preferences, I have chosen one definition considered one of the easiest and most correct, namely that of the knowledgeable Hanbali Muwaffiq Addin bni Qudama who says: “and it means bequesting the property and dedicating the fruit.”(3)

What gives this definition a connotation and denotation strength is the fact that it is quoted from the Prophet’s words Peace Be Upon Him (PBUH) in his advice to Omar Ibn Al Khattab, when the latter consulted him about a land lot of his: “Bequest its stock and dedicate its progeny.’ The whole Hadith will be given shortly.

This definition implies that the source of the money becomes bequested and neither its owner, nor his heirs nor anybody else is allowed to use it, except the people for whom this money was bequested such as the poor, the ill, orphans, holy fighters,  knowledge seekers, passers-by, and widows. Thus, “bequest” here means terminating the owner’s right or whoever would replace him. That is, his right to this property is ended and he is not allowed to use it. Dedication means offering the progeny of this property in the cause of Allah to those for whom this property has been bequested by the bequester. And this is “the lasting charity” as it was labeled by the Prophet (PBUH) in his well known Hadith, “When a human being dies, his work for God comes to an end except for three: a lasting charity, knowledge that benefits others, and a good child who calls on God for his favor.”(4)

Waqf endowment terminates the right to property of its owner

If Waqf endowment is made properly, the right of ownership is withdrawn from the person making the endowment. Most Islamic canonists from the different doctrines agree on that, as expressed by Ibn Qudama:” If the Waqf endowment is made correctly, the person making the endowment loses his right over it. This is stated in the “Sahih” doctrine (authentic version of the Hadith), and is widely known in  the Chafii doctrine and the doctrine of Abu Hanifa”.(5)

Confirmation of the fact that Waqf endowment withdraws ownership from the bequest maker is the saying of the Prophet  (PBUH) to Omar Ibn Al Khattab: “If you want,  bequest its stock  and offer it as a charity, provided that its stock can neither be sold, bought, given as a gift nor inherited”. Moreover, once the offer of endowment is made, it is irreversible. Shoukani said: “The truth is that Waqf endowment is one of the offerings that cannot be broken after having been made, neither by the Waqf endowment maker nor by anybody else.” (6)

What property then is left for the person who makes the bequest if that person or his heirs have no right to sell or give that property as a gift? These are in fact the sum of rights and dealings which  define the notion of property. Once they are taken away, ownership over the bequest that has been made is withdrawn. Moreover, the bequest is an offering to Allah Almighty, for the benefit of His subjects to whom the property is bequeathed. Bequests become like mosques, which are the houses of Allah. A mosque is used and benefited from, but does not belong to anybody; be it the mosque endowment maker, its   builder, or its caretaker.

It follows then that the bequeathing person is not responsible for expenditure, maintenance or care of the bequest unless he volunteers to do so. Hence, he is not obliged to repair the construction, clean the wells or take care of the animals. But all these expenses are taken care of by the bequest itself, and whoever is responsible for it, in conformity with the regulations devised to each bequest or to the general rules of endowments, as we will see below, by the Will of Allah Almighty.

Shariite texts advocating Waqf endowment

In addition to what has been said above, there are many texts from the Holy Qur’an and from the Hadith sayings that advocate religious bequest,  advise making it or explain its canons.

As for the Holy Qur’an, there are general texts that comprise all kinds of charity and beneficence, including Waqf endowment and other deeds, as stated in Allah Almighty’s verse: “O ye who believe! Bow down, prostrate yourselves and worship your Lord; and do good, that haply ye may prosper.(*)”(7) And bequest is one of the best kinds of charity that this verse advocates, for its benefit lasts and a large number of people gain advantage from it.

Also from His saying Praise Be To Him: “Ye will not attain unto piety until ye spend of that which ye love”(8) Most of what mankind loves in wealth is permanent and lasting property such as houses, land and trees. The verse then encourages the pious to spend from the most cherished of their property.

There is also Allah Almighty’s verse:” Lo ! We it is Who bring the dead to life. We record that which they sent before (them), and their footprints.”(9) Thus, Allah the Great and the Dignified records people’s deeds and the impact of their deeds before and after their death, be they good or bad. There is no doubt that bequeathed property leaves good effects after the death of the person who did it, while its reward lasts as long as it benefits one of Allah’s subjects or mankind in general.

Hadith Sayings and the deeds of the Prophet’s Companions:

1- According to Abdullah bnu Omar May Allah be well-pleased with both of them, Omar obtained a land lot in Khaibar; he came to the Prophet PBUH asking him for advice. He said: “Ye Apostle of Almighty, I obtained a land in Khaibar. I never obtained a property more precious to me than this. What do you advise me? He said: “If you want, you can bequeath it, and give it as a charity; provided that it should not be sold, bought, given as gift or inherited.” He said, “then Omar gave it as charity for the poor, relatives, slaves, wayfarers, and guests. There is no harm for the person responsible for it to feed himself or a friend from it but for free.”(10)

2- And according to Anas, May Allah be Pleased with Him, Abu Talha was the richest Ansari person near the Madina. And the property he cherished most was “Bir Ha’e” (a palm tree orchard near the Prophet’s Mosque). When the verse : was revealed, Abu Talha went to the Apostle of Allah PBUH and said:”Allah Most High says in His Book:” : “Ye will not attain unto piety until ye spend of that which ye love”(11), and the most cherished property I have is Bir Ha’e. I am giving it as charity, wishing goodness and preservation; thus, O apostle of Allah, use it the way you want.”(12)

3- According to Othman, May Allah be Pleased with him, the Prophet PBUH arrived in Al Madina and realized that the city had very little drinking water except the water of Bi’r Ruma (Ruma Well). He asked: “Who will purchase Bi’r Ruma to equally share the water drawn therefrom with his fellow Muslims(13) and  shall be rewarded with a better well in the Garden (of Eden)?” Then I bought it from my own money.”(14)

It was said that this well belonged to a man from Bani Ghaffar, who used to sell a waterskin full for a dry measure (mudd) of cereal. The prophet PBUH asked him: “Do you want to sell it to me for a water source in Heaven?” The man answered: “That’s the only source of income that my children and I have”. When Othman heard about this, he paid for it thirty five thousand Dirhams. Then he came to the Prophet PBUH and said: “Can you make me the same offer?” He said, “Yes”. “Then I offer it to the Muslims ”(15).

Since the Prophet PBUH instructed his Companions about bequest and its benefits, they never stopped attending to it and putting their money and property in it; so much so that Jabir said: “Any of the Prophet’s (PBUH) Companions who could afford it made endowments.(16)”

From then on, Waqf endowment has become one of the pillars of the religious, social, scientific, economic and political life of the Islamic society. In this way, it became a big support for scientific and holy war movements as well as for the protection of inlets and the source for living and beneficence for the needy in society. It served also as a source for financing and developing many economic and development sectors. 

Permitted bequest

It is uncontroversial that Waqf endowment is permissible for property (land, buildings, trees, wells…) because this kind of property is stated in Shariite canonical texts and because it fully satisfies the requirements of Waqf endowment. Canonists, on the other hand, differ over movable property, “such as animals, clothes, money, books, food, and industrial and war machinery.” Are they permissible for Waqf endowment or are they just mere charity that is not governed by the Waqf endowment canons?

Yet, the most comprehensive analysis in this matter is that of Ibn Qudama. He states: “In sum, what is permissible for Waqf endowment is what can be sold and benefited from while its capital asset remains linked with its stock such as real estate, animals, arms, furniture and the like.(17) “This means “what cannot be benefited from while its capital asset remains such as Dinars, Dirhams, food and drink, candles and the like, cannot be Waqf endowed for most canonists and scholars.(18)”

Other texts were mentioned confirming the permissibility of endowing movable property that can be benefited from, provided it lasts for a period of time. In confirmation of this, Abu Hurayra, May Allah Be Pleased with Him, quoted the Apostle of Allah, PBUH, saying “he who bequests a horse in the cause of Allah out of piety and consideration, then the animal’s satiety, dunging and urination are all benefactions in his balance on the Day of Judgement.”(19)

Also, in ‘Sahih’ Al Bukhari (Authentic version of the Hadith), it is reported by Abu Hurayra that the Prophet PBUH said that Khalid Ibn Al Walid bequested his armature and ammunition(20) in the cause of Allah(21). Al Hafid Ibn Hajar said:” He took the story of Khalid as a proof for the legality of animal bequest.”(22)

Thus, in general, the Malikite doctrine is considered as the most liberal in terms of the properties that can be permitted in bequest and also the most indulgent in terms of the conditions of bequest, as it was related by Al Qarafi:” Conditions of (bequest) should be made easier…”(23)

Objectives and importance of Waqf endowment

Waqf endowment is a kind of benefactor charity. Put otherwise, it is one of the forms of worship involving financial matters dictated by Islam. Hence, its purpose within this common general framework is similar to the purposes of spending money as a form of  worship.  Likewise,  Waqf endowment fulfills the following:

1. Endeavour towards the forgiveness afforded by the hereafter 

Normally, when property holders indulge in gathering, developing, managing, protecting and diversifying the source of their wealth, their life, thinking and ambition become slave to its demands; hence, they become trapped in the process of protecting it. For this reason, they are more in need than others of being reminded to pay attention and aspire to the hereafter and to seek its merits, especially through their money, complying with Almighty’s saying: “But seek the abode of the Hereafter  in that which Allah Hath given thee.”(24)

2. Thanking the Benefactor, the Praiseworthy

The best form of thankfulness for a beneficent gift should be in the form of a gift of the same kind. Thus, thanking for the gift of property should be to spend from that same property, while thanking for the gift of knowledge must be through teaching and enlightening others. Bequest in the cause of Allah is a kind of gratitude to the Beneficent, May His Sublimity be Greater, and an acknowledgement of His blessing and gift.

3. Purification of the soul

Waqf endowment saves the soul from the worry, fear and  covetousness surrounding money; and it makes it used to generous spending as the following verse indicates concerning almsgiving: “Take alms of their wealth, wherewith thou mayst purify them and mayst make them grow.”(25)

While these are all lofty and useful purposes that can be applied to Waqf endowment and other types of spending in the cause of Allah, the Waqf endowment has other purposes peculiar to it and cannot be realized otherwise. These are:

4. Insuring basic needs for society and its needy classes in a lasting,  guaranteed way

Short term charities for present necessities is short-lived. Societies may experience times when either these charities become scarce because the supremacy of greed and selfishness prevails, or simply because of natural disasters. Likewise, and in spite of its continuity and renewal, almsgiving  may become smaller in value while the circle of poverty widens. The same thing applies to the public treasury.

In such circumstances, then, Waqf endowment money keeps functioning by, providing for the people deserving it. In this sense, the Knowledgeable scholar Shah Din Wali Allah Dahlawi says: “Among the forms of giving we find Waqf endowment. In the pre-Islamic period, people did not know about it. Thus, the Prophet PBUH devised it for services that do not exit in other charities. People can spend a lot of money in the cause of Allah, but this money perishes, and the poor would be in need again; then other large groups of poor people arise, and remain deprived. Consequently, the best and most useful plan for the people would be to bequest something for the poor and homeless so that its benefits are spent on them while its stock remains untouched…”(26)

5. Thinking and making plans for the future

The issue to be discussed here completes the previous one. However, it is meant to make people get used to thinking of the future and planning for it, with a sense of responsibility towards the generations to come. Usually, while the bequest giver is deciding upon his bequest, he takes into consideration the needs of the coming generations. Those who run endowment administrations have the obligation to take all these factors into consideration. Therefore, Waqf endowment is considered as a process of anticipating and managing the future: a hereafter future for the person making the Waqf endowment, and a worldly future for the person benefiting from it.

6. Habituating  people to exercise their duties

Among the most dangerous plagues that afflict nations and societies and drive them towards disintegration, paralysis and inefficiency is the plague of resigning from thinking about and practising public matters. You would find people leaving these matters entirely to government officials and institutions. All they do is criticize negatively, blame and make claims constantly.  They also lay responsibility and rely on each other.

This is the main reason why Islam addresses common people, commanding and warning them. It does not address their leaders, princes, or judges, not even in matters usually devised for princes, leaders or judges… More specifically, Allah Most High orders and stresses spending for the cause of Allah, His religion, and all kinds of charity. He did not address governments and their officials, but common Muslims and common people in general. Even the rich, the owners of wealth, were not singled out for this matter which concerns them more than others, as the following verses show: “The (true) believers are those only who believe in Allah and His Messenger and afterward doubt not, but strive with their wealth and their lives for the cause of Allah.”(27); “Spend your wealth for the cause of Allah, and be not cast by your own hands to ruin; and do good. Lo! Allah loveth the beneficent.”(28); “And in whose wealth there is a right acknowledged for the beggar and the destitute.”(29)

Within the realm of these verses -and so many like them in the Qur’an and Hadith- all people feel that they are the ones addressed and concerned, whether they are wealthy, poor or average, as the firm koranic rule indicates : “Allah asketh naught of any soul save that which He hath given it.”(30),”Allah asketh no soul beyond its scope”(31).

This is what made the Companions spend enthusiastically and compete for it, especially spending via Waqf endowment; so much so that whoever could put something in Waqf endowment would do it, as it was related above by Jaber.  Thus, the whole society became involved in dealing with people’s needs, present and future. The Islamic society knew an activity and efficiency seldom found in history. This activity lasted for centuries giving and building and strengthening, which allowed for the building of an Islamic civilization and glory that prevailed the world for a long time. Bequest and endowment institutions had a leading role in all this as will be shown below, Allah willing. 

UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance

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