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Principles and application of Preemption in Islamic finance: A critical analysis

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  • Uddin, Md Akther

Abstract

This paper discusses the concept of Al-Shuf’ah (pre-emption), literally means amalgamation, addition, subjunction or joining. In Islamic law, Al-Shuf’ah implies that a co-owner has the right to demand a pre-emption from his partner in a jointly owned property to purchase it at a certain price, before other people (Al-Zurqani, 1981). The study confirms (Al-Zuhayli, 2003) preemption is a weak right, fortified and confirmed by requesting its exercise; preemption was legalized to protect the preemptor’s interests. All jurists agree that a partner in the property is a preemptor, but the Hanafis included neighbors as well, and preemption cannot result in a harm to the buyer by partitioning the sale. The study finds that in contemporary Islamic commercial law and transactions, the doctrine of Al-Shuf’ah might play an important role in partnership contracts, immovable real estate and can be drawn similar analogy in the context of venture capital and housing financing, moreover, many scholars argue for extending the principle of pure ownership rights in intangible assets, options and preemptive rights of the shareholders of a corporation.

Suggested Citation

  • Uddin, Md Akther, 2015. "Principles and application of Preemption in Islamic finance: A critical analysis," MPRA Paper 67713, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:67713
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    References listed on IDEAS

    as
    1. Mohammed Obaidullah, 2005. "The Islamic Financial Services الخدمات المالية الإسلامية," Books published by the Islamic Economics Institute, KAAU., King Abdulaziz University, Islamic Economics Institute., edition 1, number 40, July.
    2. SElF I. TAG EL-DIN, 1996. "The Stock-Exchange from an Islamic Perspective سوق الأسهم في إطار إسلامي," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 8(1), pages 31-50, January.
    3. Alsayyed, Nidal, 2009. "The Guide to Islamic Economics, Banking, and Finance," MPRA Paper 20128, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Islamic finance; Al-Shuf’ah (Pre-emption); Al-Shafi (Preemptor); Ownership Rights;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • G2 - Financial Economics - - Financial Institutions and Services

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