Structuring Sukuk Al-Ijarah in the Netherlands

Abstract

The Islamic banking & finance market is growing fast. With an annual growth of 15%, this sector seems much promising. Within the Islamic finance market, sukuk (Islamic securities) are arguably the most important Islamic financial products. Although several European countries are entering the market with success, the subject is still rather unknown in the Netherlands. This raises the question to the possibilities for sukuk in the Netherlands. The main focus of the study is to analyse the legal aspects of the sukuk al-ijarah structure under Dutch civil law. Adapting these instruments to the Dutch legal context requires a thorough understanding of sukuk and of its religious, legal, and transactional requirements. Through an interdisciplinary approach and a comparative study, this research will lead to more insight into Islamic financial principles and Islamic financial contracts, enabling the reader to understand sukuk structures and transactions. This study illustrates whether the sukuk al-ijarah can be structured under Dutch civil law, raising questions in regard to the fiducia-prohibition of section 3:84 (3) Dutch Civil Code, the concept of a trust under Dutch property law, and the certification of assets under Dutch civil law.