Ḥawālah (حوالة)
Definition
Ḥawālah (حوالة) is an Islamic legal term signifying the transfer of a debt obligation from the original debtor to a third party. It involves shifting the responsibility of repayment from the initial borrower to another person who agrees to take on the debt.
Etymology
The term Ḥawālah is derived from the Arabic root ح و ل (h-w-l), which conveys various meanings such as change, transformation, and transfer. In financial context, “ḥawālah” refers specifically to the transfer of debt obligations.
Arabic and Turkish Translations
- Arabic: حوالة (Ḥawālah)
- Turkish: Havale
Key Concept
The essence of Ḥawālah is the removal or transfer of a debt by way of security or corroboration. The original debtor relieves himself of the debt by assigning it to another party who then becomes responsible for repayment. This transfer can occur for various reasons, such as mutual convenience or financial necessity.
Legal Underpinnings
Ḥawālah is discussed extensively in classical Islamic jurisprudence. The authoritative text “Hidāyah” elaborates on its detailed legal implications:
<p>“Ḥawālah: A legal term signifying the removal or transfer of a debt by way of security or corroboration from that of the original debtor to that person to whom it is transferred.” (Hidāyah, vol. ii. p. 606.)</p>
In essence, Ḥawālah must involve a clear and consensual agreement between all parties involved: the original debtor, the transferee, and the creditor.
Significance in Islamic Finance
In contemporary Islamic finance, Ḥawālah plays a crucial role in facilitating smooth business operations without violating Islamic law prohibiting interest (riba). It helps manage credit risks and provides a Sharīʿah-compliant mechanism for debt settlement.
Implications
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For Debtors: Debtors can alleviate their financial burden by transferring their debt.
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For Creditors: Creditors must agree to the transfer and recognize the new debtor.
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For Transferees (new debtors): They must be willing and financially capable of assuming the debt.
Suggested Books for Further Studies
- “Islamic Finance: Law, Economics, and Practice” by Mahmoud A. El-Gamal
- “Introduction to Islamic Finance: Theory and Practice” by Zamir Iqbal and Abbas Mirakhor
- “The Islamic Law of Transactions and Its Application in Islamic Finance” by Mohd Ma’sum Billah
Takeaways
- Ḥawālah is an essential concept in Islamic financial jurisprudence.
- It allows for the transfer of debt with mutual consent.
- Thorough understanding ensures adherence to Sharīʿah principles in financial dealings.
Conclusion
Understanding Ḥawālah is vital for anyone involved in Islamic finance, as it provides a legal means to manage debt obligations while complying with Islamic law. The implementation of Ḥawālah can help facilitate various transactions, ensuring that financial operations remain transparent and equitable.
For further study, consider the recommended readings which delve into broader aspects of Islamic finance and law.
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