Ownership Transfer of Sovereign Sukuk’s Assets: A Shariah and Legal Analysis

Abstract

The research addresses the possibility of transferring the assets of sovereign sukuk in view of the fact that such assets belongs to both the state and the public. Since the current sovereign issuances have been debated on their Shariah compliance, this research aims to revisit and re-establish the Shariah and legal principles on the basis of which sovereign sukuk could be issued. The research emphasizes beneficial interest as a Shariah and legal basis for a government to issue sukuk. Equally important is the principle related to the validity of restricting ownership of a sold asset with prior conditions. Another principle is public interest dictated mainly by economic factors justifying the issuance of sovereign sukuk. In its attempt to establish sound Shariah and legal principles of sovereign sukuk and by reevaluating existing established principles, this research adopts a qualitative method of literary survey by analyzing and establishing Shariah and legal principles for sovereign sukuk from current debates and discussions. Outcome of research confirms five major Shariah and legal principles forming the grounds for sovereign sukuk. The research proposes two general structures of sukuk to avoid uncertainty (gharar) in view of objections raised by some renowned Shariah authorities.