Commercial Sponsorship

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Author: Monzer Kahf
Year: 2005


Commercial Sponsorship

 

Dr. Monzer Kahf

Professor, Faculty of Sharīʿah, Department of Banking and Economics

Irbid National University, Jordan

Research presented to the International Islamic Fiqh Academy at its 16th Session, held in Dubai, the United Arab Emirates from 30 afar to 5 Rabīʿ al-Awwal, 1426H (9-14 April, 2005 CE)

Majallat Majmaʿ al-Fiqh al-Islāmī, Session 16, vol. 3, pp. 11-42

 

 

باسم الله الرحمن الرحيم

INTRODUCTION AND DEFINITIONS

All praise is for Allah, the Lord of the Universe. Peace and blessings of Allah be upon Muhammad, the master of the prophets and messengers, and upon all of his family and companions.

In this research, the term kafālah tijāriyyah (commercial sponsorship) means an agreement, written or spoken, between two persons on the condition that one of them must comply with particular procedures and commitments vis-a-vis the government or any other official authority. This facilitates the interests of the other person by allowing them to work or initiate a commercial or investment project in the country of the first person.

Commercial sponsorship according to this understanding began because of legal and political decrees and regulations which some countries chose [to enact] prohibiting non-citizens from pursuing employment or participating in commercial projects or investment opportunities in the country.

There are two other scenarios that are similar to commercial sponsorship, but both occur within a country between its citizens. They are:

  1. The scenario in which licenses are issued to certain individuals for projects or the importation of goods or the operation of vehicles for public transport; then they sell them to other citizens while maintaining the license in the sellers’ names. This is because the law does not allow them to be sold nor does it recognize such sales.
  2. The other scenario is the existence of quotas in some sectors of economic activity stipulated by law for certain ethnic groups of the population. A member of the stipulated group sells his [quota-based] right to another citizen who performs the work and actually owns the project, with a contract between the two of them. However, the project remains in the name of the first party because the law does not allow this kind of sale nor does it recognize it in the first place.

According to the aforementioned definition, commercial sponsorship does not include a number of scenarios that may seem similar in some people’s minds. It does not include a merchant guaranteeing another merchant vis-a-vis the latter’s creditor. It also does not include what some traders call “iʿārat al-tawqīʿ” (signature lending) in which a merchant signs a promissory note to another merchant that is due after six months, for instance. It is as if the issuer is indebted to the payee for that amount; then the debtor takes it and cashes it at a conventional bank to get cash on the spot (except for the amount taken by the bank as interest due to the time difference). Then the merchant who facilitated the credit pays the amount of the promissory note to the bank upon its maturity.

In addition, commercial sponsorship does not include the sponsorship that a person offers to a country’s embassy on behalf of an individual who wants to obtain an entrance visa to that country. The person guarantees that the other individual will not be a financial burden on the country he intends to visit and that the guarantor will, if necessary, bear all financial costs that may arise from the other individual’s visit to that country.

In addition, it does not include the sponsorship offered by an individual to a particular country or to an agency or ministry of that country as the guarantor of another person upon whom the country is planning to spend a large amount of money. For example, guaranteeing that a person sent abroad to study at the government’s expense will come back to work for the country within a specified period.

Lastly, it does not include the guarantee offered to a judicial authority to produce a wanted person before that authority at a fixed time.


 

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