|Mian Muhammad Nazir|
To this extent, it is encouraging to note that for the modern application of Shariah nominate contracts and structures, compliance with local laws, in relation to transfer of ownership, possession and legal effects of the sale and purchase contract, is well recognised by Shariah scholars and the AAOIFI (which is a standard setting organisation). However, the more important question is what are the effects of non-compliance with the local law requirements on the Shariah compliance of underlying transactions in view of the AAOIFI's resolution, which obligates transfer of ownership in the sukuk assets to be in accordance with local law requirements.
Compliance with the AAOIFI's resolution appears to entail certain legal and commercial consequences for the entities that wish to use their immovable assets to raise Islamic liquidity. In view of the difficulties involved in complying with the AAOIFI's resolution, the AAOIFI and Shariah scholars should consider an alternative instrument, which should be capable of ensuring a transfer of ownership and possession in the respect of the underlying assets under the principles of Shariah and compliance with local laws from enforceability perspective. It should not only be the responsibility of Shariah scholars but other stakeholders (lawmakers, regulators and the Islamic finance industry) should also contribute towards effective resolution of this important issue as it seems to affect the growth of the industry.