MUDARABAH SUKUKS: ARE THEY REALLY RISKY?
Mudarabah sukuk (sukuk is plural form of sakk-
commercial certificate/document, nevertheless here the term is used as a
singular word as generally treated) came to the forefront when Dana Gas case
was at its highest point in 2017/2018. Then everyone was discussing Dana Gas in
the context of the so-called impending default when the company declared that
its Mudarabah sukuk was no longer Shariah compliant and thus illegal and
unenforceable under UAE law. The issue then was about profit payment by Dana
Gas to holders of the sukuk: what are the rights of the sukuk holders when the
so-called profit was not going to be paid as expected and as to whether that
would trigger a default. Basically there are many questions that have been
raised in this Mudarabah sukuk, among others are the followings:
·
Whether
non-payment of profit by the Mudarib (Dana Gas) constitutes a default?
·
What are actually
profits in the context of Mudarbah?
·
Whether the
purchase undertaking provided in the agreement was valid and enforceable in
law?
·
What are the
rights of Mudarabah sukuk holders when the sukuk was declared as not valid or
not Shariah compliant?
·
What laws are to
be used the settling the dispute between the sukuk issuer and its sukuk
holders?
·
What was actually
the nature of a Mudarabah contract entered into by the parties: whether it is
truly a Mudarabah of something else?
As it turned out later, the parties to the debacle had
managed to resolved their dispute seemingly through an amicable settlement
toward the end of 2018, and that development was indeed something that was
commendable given the fact that settlement of disputes through compromise (sulh) leading to final resolution is in
fact the best Islamic option among several other options in dispute settlement.
Notwithstanding the positive development and the terms used by the parties in
their settlement agreements, many relevant questions about Mudarabah and Sukuk
Mudarabah are far from being clearly addressed in actual practices.
