The Emerging Sharīʿah Issues of the Covid-19 Pandemic in Contemporary Islamic Financial Applications

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EXECUTIVE SUMMARY
 
The outbreak of the coronavirus epidemic (COVID-19), classified by the World Health Organization as a pandemic, has led to the emergence of many challenges. It started as a health crisis and then turned into a global economic crisis that most countries could not manage or control as a result of lockdown policies and restrictions on movement and travel. This is not to mention the forms of damage that have affected the contractual obligations and rights of various contracting parties at the level of financial institutions such as banks, takāful companies and others.
 
The challenges imposed by the coronavirus pandemic have led to a reexamination of the fiqh treatment of catastrophes. The role of Islamic economic experts and the Islamic financial industry has had to be clarified in addressing its effects on contractual relations and future obligations in distressed financing contracts. The theory of catastrophes (jawāʾiḥ) is one of the most important jurisprudential theories in Islamic fiqh . It comprises a set of principles and provisions that deal with the harmful effects upon one of the parties bound by a contract as a result of damage to what the party is obliged to deliver, or failure to obtain the intended benefit from the obligation. It is based on achieving justice in the practical application of financial transaction contracts, removing difficulty, taking into account arising circumstances, and preventing abuse in the exercise of rights and the freedom to contract. It thus regulates the rights of people related to the exchange of properties and usufructs.
 
The coronavirus pandemic has received great attention from the supervisory authorities, supporting institutions of Islamic finance, and research bodies. It has been given high priority in research and scrutiny of the most important Sharīʿah issues, especially those related to financial transactions. Among the most important platforms that have dealt with these Sharīʿah issues are the two Barakah symposia on Islamic economics. The first was held on 16‒17 Ramadan 1441AH, corresponding to May 9‒10, 2020, and the second was held on 12‒13 Ramadan 1442AH, corresponding to April 24‒25, 2021. AAOIFI also dedicated its annual conference held on 25‒26 October 2020 to the coronavirus pandemic, as did the conference of the Muslim World League held in Dubai in July 2020.
 
Our research started as a paper presented to the Barakah Symposium on Islamic Economics in 2020. It was further developed by adding new problems and deepening the research on the Sharīʿah issues. In its developed form, the paper adopted the descriptive approach to describe the coronavirus pandemic and show its relationship to jurisprudential and legal theories such as the theory of catastrophes and the theory of emergency conditions. Along with that, it adopted analytic tools to study the extent to which the theoretical rules of fiqh and law can be applied to contractual obligations in the Islamic financial industry and to address their consequences on existing contracts. We also adopted the comparative approach in studying the relationship between the theory of catastrophes and the theory of emergency conditions in the doctrines of classical and contemporary jurists and the recognized fiqh academies.
 
The study concluded that the coronavirus pandemic can be classified as one of those events that are impossible to avoid and cannot be indemnified, thus rendering contracts void or impeding the performance of contractual obligations in existing contracts. This is clearly manifested in the challenges imposed by the coronavirus pandemic on many countries and its transformation from a health crisis to a global economic crisis that most countries and institutions have been unable to effectively confront or control. It differs from a human act that could be averted and indemnified as it has spread over a very wide geographical area. The study also concluded that there is a similarity between the fiqh principle of jawāʾiḥ and the legal theory of emergency conditions in terms of the foundation, principles and effects of each of them. The theory of jawāʾiḥ remains the most relevant fiqh theory to the coronavirus pandemic due to the latter’s wide impact on individuals and governments. This is evident from the vast number of those injured or affected by the coronavirus pandemic, which exceeds the average number arising from other events. And that is without including its clear economic impact on the contractual relations and obligations between various parties.
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Keywords: theory of catastrophes, coronavirus pandemic, theory of emergency conditions, non-performing funds, rescheduling, construction and supply contracts, funds to be cleansed.

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