(13.2) Bills of lading

(13.2) Bills of lading

Question:

Is it permissible to finance Murabaha import transactions according to bill of collection provided that the bank has made prior agreement with the exporter (The beneficiary)?

Answer:

The board explained that the bank is allowed to enter into such transactions provided that the role of the bank should be clear since the outset of the transaction with regard to the sequence of the procedures according to Shari'ah; in the sense that the objective and aim is to provide the expenses of the documentary credit.

Source:

Fatwas of Shari'ah Board of Qatar Islamic Bank, Fatwa No. (21).

(13.3) Arrival of the goods prior to the arrival of the

documents Question (1):

Sometimes, in Murabaha credits, the goods arrive before the arrival of its shipment documents. In such a case the purchase orderer might ask the clearance of the goods prior to the arrival of the documents, whereby we fail to conclude the sale contract, because we do not know the cost of the goods and the other expenses.

Hence, is it permissible to hand over the goods to the client pursuant to a letter of guarantee issued by us, and at our expenses, to the shipping company until the arrival of the goods to know the actual cost and hence be able to conclude the contract with the purchase orderer?

Answer:

It is permissible to hand over the goods which were promised to be sold in Murabaha transaction if such goods arrived before the arrival of the documents. In this event reception of goods by the It is permissible to hand over the goods which were promised to be sold in Murabaha transaction if such goods arrived before the arrival of the documents. In this event reception of goods by the

Source:

Kuwait Finance House, Book of Fatwas on economic Issues, part (1), and (2), Fatwa No. (55).

Question (2):

Some times credits of import are opened by virtue of promises issued by the clients to purchase the goods in connection with such credits through Murabaha transactions. However, in some cases the Some times credits of import are opened by virtue of promises issued by the clients to purchase the goods in connection with such credits through Murabaha transactions. However, in some cases the

Please find attached herewith a copy of a contract for the sale of goods through bargaining. Kindly read the terms and approve it with a copy to be sent to the purchase orderer?

Answer:

Since what has happened between the client and the Kuwait Finance House is nothing but (a desire and promise) then it is possible at any time prior to the signing of the contract to change the mutual desire to other form of contracting with the agreement of the two parties, and in this case it is permissible, based on the agreement of the two parties to enter into a contract through bargaining irrespective of the capital in the estimation of the price as well as the statement of the previous promise as Murabaha, bearing in mind that the proposed wording to promise and desire is Since what has happened between the client and the Kuwait Finance House is nothing but (a desire and promise) then it is possible at any time prior to the signing of the contract to change the mutual desire to other form of contracting with the agreement of the two parties, and in this case it is permissible, based on the agreement of the two parties to enter into a contract through bargaining irrespective of the capital in the estimation of the price as well as the statement of the previous promise as Murabaha, bearing in mind that the proposed wording to promise and desire is

Source:

Kuwait Finance House, Book of Fatwas on economic Issues, part (1), and (2), Fatwa No. (443).

Question (3):

To what extent is it permissible to execute the Murabaha transaction in case the goods arrived prior to the arrival of the documents and the bank is forced to allow the client to clear the goods pursuant to a customs clearance permit and then documents received with a violation i.e. they are issued in the name of the client, and to what extent is it allowable to execute the Murabaha transaction in case of the arrival of the documents before or at the arrival of the goods, while the invoices are issued in the name of the client?

Answer:

The board considered that the receipt of invoices in the name of the bank is one of the main pillars of the process of Murabaha as these invoices are the basic documents that prove the ownership and possession of the goods by the bank, hence the board opined that, for the second case which concerns the arrival of the documents before or at the goods arrival, since the invoices are issued in the name of the client, the documents should be rejected and the goods shall not be delivered to the client unless the bank gets, either by mail or by telex, new invoices issued in the name of the bank.

With regard to the first case, which is the arrival of the goods prior to the arrival of the documents and the bank was forced to allow the client to clear the goods through a customs clearance permit, then the documents were received with a violation of being issued in the name of the client, the board has set forth the following provisions to issue the clearance permit for the client:

First: To ensure that the credit did not state the name of the client.

Second: to take into consideration as far as possible that invoices are not issued in the name of the client from the same beneficiary.

Third: The credit should state that it is necessary for the beneficiary to notify the bank with the details of the consignment, and the invoice confirming that the invoice is issued in the name of the bank.

Fourth: If the beneficiary did not send any notice and upon the client request to issue a customs clearance permit, then a telex shall be sent to the beneficiary requesting him to notify the bank with the details of the invoice with regard to its value and its issuance in the name of the bank. However, the release permit should not be issued unless the beneficiary confirms that the invoices are issued in the name of the bank, except if the non-issuance of such permit will no doubt cause damage.

Notice: The general manager had commented that there are some cases which can not wait as well as the client can not wait Notice: The general manager had commented that there are some cases which can not wait as well as the client can not wait

The board opines, in principle that the invoices shall be issued in the name of the bank; but, if they are issued in the name of the client, then this is considered an exceptional case that can not be taken as a reference.

Source:

Fatwas of Shari'ah Board of Qatar Islamic Bank, Fatwa No. (58).

(13.4) Non-receipt of invoices in the name of the bank Question (1):

Is it permissible to complete the execution of the promise to purchase and complete the sale of Murabaha for goods imported from abroad under a documentary credit, which did not show the name of the Islamic bank as a buyer in its bills while the bill of lading has been in the name of the bank?

Answer:

The board opines that in order to avoid recurrence of such cases, the documentary credit should essentially be opened in the name of the bank and should not show the name of the client. However, in the case before us the board allowed to submit another invoices in the name of the bank, even if the invoices are received by the telex provided that this telex invoice cancels the previous invoice.

Source:

Fatwas of Shari'ah board of Qatar Islamic Bank, Fatwa No. (46).

Question (2):

To what extent is it permissible to execute a Murabaha transaction based on a documentary credit if the documents have arrived as collection items due to non-issuance of the invoices on behalf of the bank?

Answer:

The board is of the opinion that to avoid the recurrence of such cases the documentary credit should essentially be opened on behalf of the bank except in cases where the bank fails to convince its client for a reason or another (such as presence of a power of attorney due to which the exporter refuses the appearance of the name of the customer on the order), in this case the credit should

be opened in the name of the bank, for the account of the client provided that such case shall be presented later to the board.

However, the board has accepted the proposal of the general manager to pursue this technique on a limited scale at the beginning and then be subjected to evaluation according to results.

With regard to the case before us, which is the non-receipt of invoices on the name of the bank, the board has approved the submission of invoices on behalf of the bank, even if the invoices are received through the telex provided that the invoice sent by the telex cancels the invoice previously received.

Source:

Fatwas of Shari'ah Board of Qatar Islamic Bank, Fatwa No. (47).

Question (3):

To what extent is it permissible to execute the Murabaha transaction in case the goods arrived prior to the arrival of the documents and the bank was forced to allow the client to clear the goods pursuant to a customs clearance permit and then documents received with a violation i.e. they are issued in the name of the client, and to what extent is it allowable to execute the Murabaha transaction in case of the arrival of the documents before or at the arrival of the goods, while the invoices are issued in the name of the client?

Answer:

The board considered that the receipt of invoices in the name of the bank is one of the main pillars of the process of Murabaha as these invoices are the basic documents that prove the ownership and possession of the goods by the bank, hence the board opined that, for the second case which concerns the arrival of the documents before or at the goods arrival, since the invoices are issued in the name of the client, the documents should be rejected and the goods shall not be delivered to the client unless the bank gets, either by mail or by telex, new invoices issued in the name of the bank.

With regard to the first case, which is the arrival of the goods prior to the arrival of the documents and the bank was forced to allow the client to clear the goods through a customs clearance permit, then the documents were received with a violation of being issued in the name of the client, the board has set forth the following provisions to issue the clearance permit for the client:

First: To ensure that the credit did not state the name of the client.

Second: to take into consideration as far as possible that invoices are not issued in the name of the client from the same beneficiary.

Third: The credit should state that it is necessary for the beneficiary to notify the bank with the details of the consignment, and the invoice confirming that the invoice is issued in the name of the bank.

Fourth: If the beneficiary did not send any notice and upon the client request to issue a customs clearance permit, then a telex shall be sent to the beneficiary requesting him to notify the bank with the details of the invoice with regard to its value and its issuance in the name of the bank. However, the release permit should not be issued unless the beneficiary confirms that the invoices are issued in the name of the bank, except if the non-issuance of such permit will no doubt cause damage.

Notice: The general manager had commented that there are some cases which can not wait as well as the client can not wait Notice: The general manager had commented that there are some cases which can not wait as well as the client can not wait

The board opines, in principle that the invoices shall be issued in the name of the bank; but, if they are issued in the name of the client, then this is considered an exceptional case that can not be taken as a reference.

Source:

Fatwas of Shari'ah Board of Qatar Islamic Bank, Fatwa No. (58).