MUQASAH / المقاسة

ياسين محمد بن يونس محمداالسالمية االقتصادية العليا الدراسة الطالب

الماليزية الوطنية الجامعة

Definition

Legally: it’s the clearance of an obligation and

involves setting-off debts of the debtor and creditor who is indebted to each

other

Literally: Equality, Set Off

Terminology: Debt settlement by contract transaction or set off. It

also means the discharge of debt receivable againt a

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• Imam Al-Dardir defines Muqasah as the setting-off of a debt that is due to the debtor by creditor is at the same time indebted to the debtor with certain conditions.

(Al- Dardir, Al-Sharah Al-kabir,3/227)

• Imam Ibn Al-Qayyim define it as the clearance of the debt which is due, with a debt similar in nature and character

(Ibn al-Qayyim, A’lam al-muwaaqqi’in 1/232)

Definition

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Legality of Muqasah

Basically, there is not explicit Qur’anic verse that indicates the legality of Muqasah. However there are a few verses that sued thee work

Qisas that is derived from the same root of Muqasah.

• Allah the Almighty says” O you who believe! The law of equality is prescribed for you in cases of murder (Qisas): free for free …….”

(2:178)

• In other verse, Allah (S.W.T) says: “ In the law of equality (Qisas) there is saving of life for you (2:179).

Some Muslim scholars are of the view that the meaning of the word “Qisas” mentioned in the verses refer to the arrangement of setting-off

by way of payment of the compensation money (Diyyah) by the murderer. In this context the Diyyah is regarded as a kind of debt which is

due on the offender.

• From tradition of the prophet (P.B.U.H) narrated by Ibn Umar as follow: “ I came to the prophet (P.B.U.H) and said that I sell camels in Baqi’

for a price name in gold coins, but I collected in silver, and vice versa. The prophet (P.B.U.H) said: there is no harm to do so if the

exchange is carried out according to the exchange rates of the day, and as long as you part without any debts between you.’ “(Sunan Al-

Nisa’I 7/281).

So based in these evidence, it is logic to accept Muqasah in practice. Muqasah is acceptable by modern Muslim scholars as stated in AAOIFI’

Shariah Standard No 4, Clause 3 that spells out it is permissible for Islamic Financial Institutions and their customers to exchange bilateral

promises that debts which may be created between them in the future will be setteled by way of set-off/ Muqasah.Assamahah Consultation

Debts that can be

available to be sett off by

Muqasah concept

Currency Debts الديون

النقدي

Commodity Debts

العرض الديون

Usufruct المنفعه

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Types of Muqasah (Each type has certain element of conditions)

Mandatory Set-Off ( الجبارية (المقاسة

Mandatory Set-Off on Demand

( التالبية (المقاسة

Contractual Set-Off االتفاقية ((المقاسة

MANDATORY SET-OFF ( الجبارية (المقاسة

A mandatory set off is the spontaneous discharge of two debts that is not contingent on the consent of both or either party. The majority of muslim scholars are of the opinion that this type of Muqasah is permissible. On the other hand, Maliki scholars opine that Muqasah shall only be allowed with demand with mutual agreement.

(AlMawahib Al-Jalil, 4/549)

The Mondatory Set-Off has four Condtion

1. Each party should be a creditor and debtor simultaneously.

2. Both debt should be equal in kind, types description and maturity.

3. Neither of the two debts should be encumbered by an obligation to third party ( rights of pledgee to one of the debts . in other words the Muqasah shall not bring any harm to the contracting parties or other related parties.

4. The Muqasah should not result in the violation of the Shariah (involves riba).

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MANDATORY SET-OFF ON DEMAND ( التالبية (المقاسة

This type of Muqasah is affected by the demand of one of the parties to discharge the debts by away of set-off. Usually it is effective upon the request of the superior creditor, who has a preference over the other.

The Muqasah Set-off on Demand has four Condtion

1. Each party should be a creditor and debtor simultaneously.

2. The creditors for the superior debt in terms of quality and duration should consent to relinquish his additional right or privilege.

3. Both debts should be equal in kind and types but not necessarily in quality and date of maturity.

4. The Muqasah should not result in the violation of the Shariah such as involves in riba

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CONTRACTUAL SET-OFF االتفاقية ((المقاسة

This type of Muqasah is the discharge of tow debt by the consent of the tow parties to extinguish their obligation toward each other. In contractual set off, there is no need for the debt to be similar in kind, type, desperation or maturity.

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The Condtion of a Contractual Set-Off

1. Each party should be a creditor and debtor simultaneously.

2. Both parties must consent to the Muqasah /set –off.

3. The Muqasah should not result in the violation of the Shari’ah such as Riba and so on.

EXAMPLE OF MUQASAHAli owns Abu RM2, 000 then Abu owes Ali the same amount 2,000. This mean Ali and Abu are no longer in debt with each other. Because implicit settlement takes place between Ali and Abu to discharge of a debt receivable against a debt payable.

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How IFI (Islamic Financial Institutions) apply the Muqasah as a supporting contract:

Under the Mudharabah financing contract, when the customer default

The IFI may purchase the asset from the customer in default on cash, based on a mutually agreed price. The proceeds of which may be used to settle the outstanding debt on the basis of set-off (Muqasah)

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