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Fiqh al-Ijarah al-Mawsufa fi al-Dhimma — Forward Lease: How Islamic Finance Uses Future-Delivery Leases to Structure Sukuk, Project Finance, and Infrastructure Funding Without Interest

فِقهُ الإِجَارَةِ المَوصُوفَةِ فِي الذِّمَّة — الإِجَارَةُ الآجِلَة: كَيفَ يَستَخدِمُ التَّمويلُ الإِسلَامِيُّ عُقُودَ الإِيجَارِ المُؤجَّلَ لِهَيكَلَةِ الصُّكُوكِ وَتَمويلِ المَشَارِيعِ وَالبُنيَةِ التَّحتِيَّةِ بِدُونِ فَوَائِد
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Fiqh al-Ijarah al-Mawsufa fi al-Dhimma (فِقهُ الإِجَارَةِ المَوصُوفَةِ فِي الذِّمَّة — Jurisprudence of the Forward/Described Lease; lit. 'lease described in the liability/obligation'; a lease whose object does not yet exist or is not yet in the lessor's possession at the time of contract — the lessee commits to pay rent for usufruct that will be delivered in the future; analogy to the bay' al-salam [forward sale] in the ijara context: the lease benefits are described precisely but their delivery is deferred to a future date; Shari'ah basis: the majority position of Maliki and Hanbali schools permits leasing described future benefits by analogy to salam, provided the object is precisely described; Shafi'i and Hanafi classically required the object to be in existence and in the lessor's possession — this is the basis of the classical debate; AAOIFI Standard 9 provides the governance framework; used extensively in Islamic project finance: a SPV leases the future output of a power plant or toll road to the government, collecting rent from the moment of delivery; this structure allows Islamic banks to participate in project finance where the asset does not yet exist) is the key instrument enabling Islamic participation in infrastructure development.

Why Classical Ijarah Cannot Finance Projects

Classical ijarah requires an existing, identified object in the lessor’s possession. A power plant that has not yet been built cannot be the object of a classical lease — the usufruct (electricity output) does not exist.

Ijarah mawsufa fi al-dhimma solves this by treating the lease like bay’ al-salam: instead of an identified existing asset, the lessor commits to deliver described future usufruct. The object is described with sufficient precision (capacity, quality, duration) that its delivery can be verified, even though it does not yet exist.

The AAOIFI Framework

AAOIFI Standard 9 (Ijarah and Ijarah Muntahia Bittamleek) permits ijarah mawsufa fi al-dhimma on conditions:

  1. The usufruct must be described with sufficient precision
  2. The period and rent must be fixed at contract
  3. The lessor bears the risk of being unable to deliver the described usufruct
  4. The lessee’s obligation to pay only begins upon delivery

Sukuk al-Ijarah al-Mawsufa fi al-Dhimma

In sovereign sukuk for infrastructure:

  1. Government sells land or identified assets to an SPV
  2. SPV contracts to build the facility (using the proceeds)
  3. SPV enters an ijarah mawsufa fi al-dhimma with the government: the government commits to lease the described future usufruct of the completed facility
  4. The ijarah payments to investors during construction come from an investment account funded by sukuk proceeds
  5. Upon completion, the operating lease generates actual ijarah payments

See also: Fiqh Al Ijarah, Fiqh Al Musharaka Al Mutanaqisa, Fiqh Al Mudarabah Al Mutlaqa, Fiqh Al Kafalah, Fiqh Al Gharar

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