Shariah Decision Making
by Islamic Banking and Finance Institute Malaysia
It has been twenty years since Islamic Banking was first introduced in Malaysia, i.e. with the
establishment of Bank Islam Malaysia Berhad (BIMB) in 1983. Since then, we have seen and
experienced the rapid development and growth of Islamic Finance both the financial and capital
market, not to mention, the innovation and dynamic range of products and services as well as
financing structures offered.
In view of these ever-changing scenarios, it is inevitable for us to be cautiously reminded that in any
aspect of the Islamic Finance operations, the need to constantly ensuring Shariah compliance is of
Meeting clients' financing requirements while having an innovative structure alone is meaningless
should the product structure or financing package failed to comply with the Shariah requirements.
This would not only render the structure or financing package null and void or invalid, but also create
room for irresponsible quarters to ridicule Islamic financing structures/instruments.
Hence, in this two series article, we will be discussing on the areas that need to be given special
attention in developing product structure and/or financing structure/package. In this first article, we
will focus on the origin of muamalah (man to man activities) and the sources of Islamic Law.
Islam is a complete way of life (syumul) which encompasses all the things people do in their lives. It
demonstrates the finest way to conduct our private, social, political, economic, moral and spiritual
affairs. For the purpose of illustration, we segregate the three basic components of Islam, presented in
the following diagram.
AQIDAH SHARIAH AKHLAQ
(Faith & Belief) (Practices & Activities) (Moralities & Ethic)
The law that governs Aqidah is “Hukm Aqidah”. Aqidah means a strong belief in the heart of
a person to Allah subhanahu wa ta’ala (s.w.t) and His last prophet, Muhammad, peace be
upon him (p.b.u.h.). It consists of six main parts namely: belief in Allah s.w.t., belief in
Angels, belief in the Sacred Books, belief in Prophets, belief in the Resurrection and belief in
Qada’ and Qadar.
To realise this component and in order to be meaningful and practical, every Muslim should
have vision, mission and commitment.
Shariah means “the way that directs man’s life to the right path”. From the word “the right
path” therefore, comes the meaning “law”. The law that governs this component is “Hukm
Shariah” (Shariah Law).
Shariah covers the total way of life that includes faith and practices, personal behaviours,
legal and social transactions. It can be classified into four main parts, which are Ibadat
(relates to worship), Muamalat (relates to transactions), Ahwal Shakhsiyyah (relates to family
matters) and Jinayat (relates to crimes, offences and punishments).
The law that governs activities in this component is Hukm Akhlak. It consists of “man to man”
and “man to Allah s.w.t.” relationships. Under this component, every Muslim's activities must
be based on ethic, morality and discipline. Akhlak in Islam is based on the submission of a
Muslim to Allah s.w.t. and his acceptance of Prophet (p.b.u.h.) as a role model to all Muslims.
Although the above diagram appears to suggest that Islam is segregated into three components, the
actual implementation of Islam and submission to Allah (s.w.t.) is inter-related and integrated between
one another. It is the spirits and values behind each of the components that becomes the basis for
Muslims in achieving true meaning of excellence.
Sources of Islamic Law
In general, Shariah rulings are derived from the revealed sources namely the Quran and the Sunnah.
It is undeniable that there are other sources that are recognised by the majority of jurists and are
equally important in deriving Shariah rulings.
In order to derive Shariah rulings from these sources, those concerned should be well-versed in
relevant fields especially in the science of the Quran and the Sunnah. The task must be carried out by
those who possess the right qualification and expertise, which qualify them to express Shariah
decisions or Shariah opinions. According to Imam Shafii, it is not permissible for any person who is
not well-versed in the Quran as well as acquainted with the science of abrogation to give any Shariah
opinion. Normally in deriving a Shariah ruling, the first source of Islamic Law must be referred,
followed by other sources of Islamic Law.
The sources of Islamic Law are divided into two main classifications, i.e. the primary and the
A. Primary Sources
These are unanimously agreed upon by the four major Sunni schools of Islamic Law. These
categories of sources (stated below in descending order of importance) should be given
priority in deriving a ruling. The sources are as follows:
i. The Quran
The Quran may be defined as the Book containing Allah’s revelation to the Prophet
Muhammad (p.b.u.h.), which is in Arabic and transmitted to us by continuous
testimony. The Quran is the very Word of Allah and has the absolute authority in
deciding the legality of every legal obligation.
The Quran can be defined as follows, “the speech of Allah s.w.t. sent down upon the
last Prophet Muhammad (p.b.u.h.) through the Angel Jibrail ‘alaihi al-salam (a.s.) in
its precise meaning and precise wording. The early Muslims from the time of Prophet
Muhammad (p.b.u.h.) memorised and inscribed the verses of the Quran. The verses
of the Quran were later collected and compiled in a single volume. The entire text of
the Quran is established by tawatur that is authentically proven by universally
It can be said that the Quran complements three scriptures revealed to earlier
prophets, namely the Torah of Prophet Musa a.s., the Zabur (Psalms) of Prophet
Daud a.s. and the Injil (Gospel) of Prophet Isa a.s.
Prophet Muhammad (p.b.u.h.) was the last messenger from Allah s.w.t. to mankind
and he brought the final revelation from Allah s.w.t. to man. Therefore, the scripture
containing this revelation is the last of the Holy Scriptures.
Prof. Dr. ‘Abd al-Rahman I. Doi in his book The Sciences of the Quran: A Study in
Methodology and Approach elaborated that the basic message of the Quran is the
same as the basic message of the previous revelations and books, and the directives
and instructions, by which it provides guidance for man are of a universal nature.
They apply for all times to come and in all situations. This revelation corresponds to
man’s position on earth and in history. Man has reached, in his development, the
stage when universal principles need to be applied to safeguard his purposeful
ii. The Sunnah /The Hadith
The Hadith literally means a method, a story, a narration or a report. The word
Hadith or Sunnah refers to all that is narrated from the Prophet, his acts, his sayings
and whatever he has tacitly approved, plus all the reports which described his
physical attributes and character.
The ulama’ are unanimous to the effect that the Sunnah is a source of the Shariah and
that its rulings with regard to halal and haram stand on the same footing as the
Quran. It is a proof for the Quran, testifies to its authority and enjoins Muslims to
comply with it.
Ijma’ is the unanimous agreement of the qualified legal scholars of any period
following the demise of the Prophet Muhammad (p.b.u.h.) on any matter. The
emergence of this concept as a source of law is in line with the Quran and the Hadith.
Qiyas literally means ‘measuring by’ or ‘comparing with’. The ulama’ defined Qiyas
as the application of a ruling to a new case on which the law is silent, (the ruling of an
original case because of the effective cause in both instances are similar or common).
The ulama’ of the four major Sunni schools of Islamic Law have validated and
accepted that Qiyas constitutes an absolute authority in deciding the legality of every
The original case is regulated by a text/or nass from the Quran or the Sunnah and
Qiyas seeks to extend the original ruling to the new case. The emphasis of Qiyas is
identification of a common cause between the original and the new case. Jurists do
not consider a law derived through Qiyas as a new law. However, for all practical
purposes, Qiyas leads to a new ruling on a different matter.
B. Secondary Sources
Besides the four primary sources of the Shariah aforesaid, there are other secondary sources
in Islamic Law. They refer to those that are not unanimously accepted by the Sunni schools.
However, this does not mean that these secondary sources cannot be referred to in deriving a
particular Shariah ruling. Whilst these secondary sources can still be applied as a reference or
a guide, the authority is less significant as compared to the four primary sources.
The secondary sources are:
i. Istihsan (Juristic Preference)
Istihsan literally means to deem something preferable. In its juristic sense, Istihsan is
a method of exercising a personal opinion (ra’y) in order to avoid any rigidity and
unfairness that might result from literal application of law. Istihsan is essentially
based on Divine law.
Istihsan is not independent of the Shariah. It is rather an integral part of the Shariah
and an important branch of Ijtihad1. It has played a main role in adaptation of Islamic
law to the changing needs of society. It is the Hanafi, Maliki and Hanbali jurists who
had validated Istihsan as another source of Islamic Law.
Ijtihad is defined as “the using of a person’s mental capability to arrive at a Shariah ruling”.
ii. Maslahah Mursalah (Consideration of Public Welfare)
Maslahah Mursalah literally means benefit or interest. It refers to unrestricted public
welfare. Maslahah consists of considerations that secure a benefit or prevent a harm.
Protection of religion, life, intellect, lineage and property is Maslahah. Shatibi and
some other scholars had divided Maslahah into three descending levels of
• Daruriyyat (essential)
• Hajiyyat (complementary)
• Tahsiniyyat ( beautification)
To validate Maslahah, the following conditions have to be met:
• Maslahah must be genuine;
• It must be general (kulliyah);
• It must not be in conflict with clear nass (texts of the Quran and the Sunnah)
iii. Urf (Custom)
Urf is defined in Usul as "recurring practices, which are acceptable to people of sound
nature”. The following are the conditions of Urf in order to apply it as a source of
• Urf must be common and recurrent;
• It must be in practice at the time of transaction, i.e. past Urf is no basis;
• It must not violate the nass or clear stipulation of the Quran and the Sunnah;
• It must not contravene the terms of a valid agreement (from the Shariah point of
iv. Istishab (Presumption of Continuity)
Istishab literary means “courtship or companionship”. In Usul al-Fiqh, Istishab
means “presumption of existence or non-existence of facts”. It can be used in the
absence of other proofs (dalalat – plural of dalil). A large member of scholars has
validated it, though not all. In its positive sense, Istishab presumes continuation of a
fact (marriage or ownership) till the contrary is proven. However, the continuation of
a fact would not be proved, if the contract is temporary in nature (for instance, Ijarah
or lease). Istishab also presumes continuation of a negative nature.
Because of its basis in probability, Istishab is not a strong ground for deduction of the
rules of the Shariah. Hence when it comes in conflict with another proof (dalil), the
latter takes priority.
v. Sadd al-Zhara’i (Blocking the means)
Zhara’i is the plural of Zhari’ah which means ways or means. Sadd, on the other
hand, refers to blocking. In Usul, it means blocking the means to evil. Sadd al-
Zhara’i is often used when a lawful means is expected to produce an unlawful result.
The concept of Sadd al-Zhara’i is founded on the idea of prevention of an evil before
it materializes. The means must conform to the ends (objectives of the Shariah) and
ends must prevail over means. If the means violate the purpose of the Shariah, these
must be blocked.
A general principle has been adopted by jurists that “preventing a harm takes priority
over securing a benefit”. As such, if a particular means leads to an evil deed, it must
be rejected. Authority for Sadd al-Zhara’i is also found in the Sunnah. The Prophet
(p.b.u.h.) on one occasion, forbade a creditor to take a gift from a debtor (as it could
lead to taking of interest).
vi. Revealed Laws prior to Islam
All divine laws emanate from Allah s.w.t. The Quran holds that the Torah was a
source of guidance. The question is, what does it mean in terms of source of law after
the revelation of the Quran? The general rule is that laws revealed before Islam are
not applicable to the ummat of Prophet Muhammad (p.b.u.h.), except as mentioned
The Ahkam (laws) of Islam (Shariah) is self-contained. The rules of the Shariah
should not be sought from any source other than the Quran and the Sunnah because
the rules of other Shariahs do not constitute binding proofs for the Muslims.
The Quran refers to the previous Shariah in three forms:
The Quran may refer to the previous Shariah and make it also obligatory on
Muslims to follow. For instance, fasting was prescribed upon the earlier
ummah and has also been prescribed for the Muslims. Such rulings of the
previous Shariah are made part of the Shariah.
Secondly, the Quran (or the Sunnah) may refer to a ruling of a previous
Shariah and then abrogate it. For instance, some restrictions on food for the
Jews have been withdrawn from the Muslims. In this respect, Muslims must
not follow the previous rulings of the Shariah.
Thirdly, the Quran may mention a ruling of the previous Shariah without
mentioning whether it is upheld or abrogated. The majority of Jurists
consider these to be part of the Shariah of Islam, which should be followed,
while only a minority does not accept this view.
vii. Fatwa of a Sahabah (Opinion or ruling of a companion of the Prophet (p.b.u.h.))
A Fatwa of a Sahabah is indeed very important and deserves the highest consideration, they
being close to the Prophet (p.b.u.h.) and because of their direct knowledge from the Prophet
(p.b.u.h.) . A Sahabah is defined by the majority of ulama’ as anybody who met the Prophet
(p.b.u.h.) and believed in Him. A Fatwa of a Sahabah means, “an opinion reached by a
Sahabah by way of Ijtihad”.
In the next article, we will be deliberating on the four major Sunni schools of Islamic law, followed
by the methodologies and approaches in deriving a Syariah opinion, together with the issues that
need to be addressed and areas that need to be given special attention.
About Islamic Banking and Finance Institute Malaysia Sdn Bhd (IBFIM)
Islamic Banking and Finance Institute Malaysia Sdn. Bhd. (IBFIM) was incorporated as a private
limited liability company in Malaysia under the Companies Act, 1965 on 13 April 1995 and
commenced operations on 1 August 1995.
Pursuant to Financial Sector Masterplan (FSMP), IBFIM emerged as an industry-owned institute to
produce well trained, high calibre individuals and management teams with the required expertise in
the Islamic finance industry. Its establishment is in line with Malaysia’s target to become a regional
and international Islamic banking and takaful centre. IBFIM promotes and facilitates the
understanding and appreciation of the philosophy and principles of Islamic financial system.
Our people’s excellence is our pride. Our human resources hail from different backgrounds, various
fields and expertise. The staffs of IBFIM converge at the institute with one primary agenda: excellent
performance. We uphold the highest integrity and accountability in conducting business with our
esteemed clients. Our deliverables are benchmarked against international standards to maintain top-
notch quality. As a regional centre of training and research and development in Islamic finance, our
team is dedicated to the acquisition and dissemination of both theoretical and practical knowledge for
the professional development of human potential.
Our strategic alliances. Our close relationship with the industry allows us the opportunity to share
knowledge and resources. Our intellectual partnership with the industry places us where we are today.
We also enjoy a strong network with local and international authorities and financial institutions.
Having assisted numerous governments, financial institutions, and other organisations in this arena,
we are propelled to serve the need for further enhancement of the industry in years to come.
Our customers’ success is our success. Backed by an impeccable track record, we strengthen the
performance and productivity of our clients by maximising their resources and capabilities while
taking into account the Syariah aspects. To complement our knowledge and technical know-how, we
also collaborate with governments, regulatory bodies and relevant organisations in this endeavour. We
stand by the successful performances of our numerous clients worldwide.
For more information, please contact:
Islamic Banking and Finance Institute Malaysia Sdn Bhd (340040-M)
Roslan Abdul Razak
Director, Business Advisory
Manager, Business Advisory
Mohammad Khairi Saat
Manager, Business Advisory
1. Dr. Wahbah al Zuhaily (1996) Usul al-Fiqh, Dar al-Fikr al Mu’asir, Beirut
2. Sheikh Ahmad Bin Sheikh Mihamad al-Zarqa’, Syarh al-Qawa’id al-Fiqhiyyah (1996) Dar al-
3. Abdul Wahab Khalaf, Ilm Usul al-Fiqh, Maktabah al-Da’wah al-Islamiah Syabab al-Azhar
4. Dr. Abdul Karim Zaidan (1976), al-Wajiz fi Usul al-Fiqh, Muassasah al-Risalah
5. Mohammad Hashim Kamali (2000), Principles of Islamic Jurispudence, Ilmiah Publishers, 3rd
6. Hj. Hassan Hj. Soleh (1994), al-Qawid al Fiqhiyyah, 5th Edition, Pustaka Aman Press Sdn Bhd
7. Hj. Hassan Bin Hj. Hj. Ahmad & Hj. Mohd. Soleh Bin Hj. Ahmad, Usul Fiqh & al-Qawaid al-
Fiqhiyyah (2000), 2nd Edition, Pustaka Hj. Abdul Majid
8. Prof. Dr Mahmood Zuhdi Abd. Majid (1992), Sejarah Pembinaan Hukum Islam, 2nd Edition,
Jabatan Penerangan UM
9. BIRT (1998), Konsep Syariah Dalam Sistem Perbankan Islam
10. Hj. Mohd. Bakir Hj. Mansor (1995), Shariah Decision Making Process, BIRT
11. Prof. Dr. ‘Abd al-Rahman I. Doi, The Sciences of the Quran – A Study in Methodology and
Approach, Synergy Books International