Hawala (transfer of debt)

الحوالة

Hawala lexically is transfer; technically it is the transfer of a debt from one liability to another by offer and acceptance between two of three parties: the creditor, the debtor and the one who undertakes payment. ^{1 2} The transferor is the debtor, the transferee the creditor, the transferee-debtor the one who undertakes payment, and the debt is the object. ² Hawala differs from surety in that it releases the transferor's liability, and from release in that it moves a right rather than dropping it. ² It is lawful by the saying 'delay by a rich man is wrong, and when one of you is referred to a solvent man let him follow the reference', by consensus and by analogy with surety. ^{2 3} On the command to accept, Ibn al-Humam takes it as permission, and a creditor known for good payment may be followed as recommended. ⁴ On the nature of the contract, the Hanafis, Hanbalis and the sounder Shafii view treat hawala as an exception to the sale of debt for debt; others call it a sale; Ibn Taymiyya and Ibn al-Qayyim deny that it runs against analogy, and the Hanbalis treat it as an act of accommodation. ^{4 5 6 7} The article closes at p.7413. Hawala is divided into restricted and unrestricted: restricted when tied to a debt the transferor is owed by the transferee, or to a deposit or a secured object in the transferee's hands; unrestricted when tied to nothing. ^{8 9} The unrestricted form is either immediate or deferred, and a deferred one may be fixed by stipulation or by the terms of the original debt, with some rules borrowed from surety. ^{10 11} Most jurists hold that hawala cannot be made on a specific object; they require the transferred sum to be a debt. ¹² Pillars are five on the majority view (formula, transferor, transferee, transferee-debtor, the debt), while the Hanafis make the formula alone the pillar. ^{12 13} Any words conveying the sense are valid; the Malikis require the word hawala in Khalil's view, the Shafiis hesitate over the word sale. ^{14 15} The transferor's consent is required by the Malikis, Shafiis and Hanbalis, and the Hanafis require it in one report; the transferee's consent is not required by the majority but is by the Hanafis. ^{15 16 17} If the parties dispute whether the act was a hawala or an agency to collect, the Hanafis and Shafiis have set rules about who is believed, depending on the words used. ^{17 18 19} When the transferor claims the act was agency for collection and the transferee denies it, the jurists give rules on who is believed and on the money received, whether it is still held, consumed or lost. ^{20 21 22} The Malikis, Shafiis and Hanbalis have the hawala concluded by the transferor's offer and the transferee's acceptance in the session of knowledge; the Hanafis require offer and acceptance in one session. ^{22 23} A timed hawala, or one deferred to an unknown term, is invalid, while a deferred debt with a known term is valid. ²⁴ The transferor must be sane and competent; some jurists allow a man under insolvency decree to make one under two conditions; the majority require the transferor to be a debtor to the transferee. ^{24 25} The transferee must be sane; the Hanafis also require the transferee-debtor to be adult and able to pay. ^{25 26 27} On the transferee, the Hanbalis require solvency in wealth, speech and presence; the solvent man is one who can pay, does not deny and does not delay. ^{28 29} The Hanafis allow an unrestricted hawala that is not tied to a debt the transferor is owed; most others require the transferee to owe the transferor. ^{30 31} Hawala on a specific object is not allowed by most jurists; both the transferred sum and the transferee's sum must be a firm debt known in kind, amount and quality. ^{31 32 33 34} The Malikis require the transferred debt to exist before the hawala; the Hanbalis require the transferee's debt to exist before it. ^{35 36} Most jurists require the sum to be fungible, while the majority and the sounder Shafii view allow a non-fungible debt fixed by attributes. ^{37 38} The Hanafis require equality of kind, quantity and quality, and no difference in deferral; their reason is that hawala is an accommodation for paying and receiving, not for profit. ^{38 39} The Hanafis require the transferee's capital of a salam or a ribawi debt to be delivered if it matches the transferred one in the cause of usury; the Shafiis do not require delivery. ⁴⁰ The two debts may come from different contracts, the transferred debt may be borrowed through another hawala or surety, and the Shafiis allow several transferees with one transferee-debtor. ^{40 41} Where any condition of formation is missing, the hawala is void, a rule agreed by all. ⁴¹ Conditions of enforcement include the majority of the transferor, transferee and transferee-debtor by the Hanafi rule, the transferee's authority over the sum, and acceptance; the Hanafis treat a hawala on an agent or guardian as suspended on approval or tied to the ward's interest. ^{42 43 44} The hawala is binding on the majority; the Shafiis and Hanbalis reject the option of stipulation, the Hanafis allow it to be cancelled only by consent, and they treat later stipulations, valid or void, accordingly. ^{45 46 47 48} Once a hawala is valid the transferor is freed from the creditor's debt; the schools differ on whether the claim and the surety pass; the Hanafis hold that the debt passes with its defences but not with the creditor's securities. ^{49 50 51 52 53} The creditor may claim against the transferee and detain him; the transferee may detain the transferor under Hanafi conditions. ^{53 54} Under the Hanafis the transferee may recover from the transferor after paying the debt only if the transferor consented, the payment reached the creditor, and the transferee did not owe the transferor a like sum. ⁵⁵ Hawala ends by consent through performance or its equivalent, cancellation or release, and without consent by the death of the transferor or the transferee or the loss of the object; the Hanafis hold a restricted hawala is dissolved by the transferor's death while an unrestricted one is not. ^{56 57 58} It is void when the transferor is found not to owe the creditor, or the sum named perished before the debt attached; it is not void by the discovery that the transferee's property was another's in an unrestricted hawala. ^{59 60 61 62} Failure to recover (tawa) is the creditor's inability to reach his right through the transferee; the Hanafis let the creditor return on the transferor for it, the Shafiis reject return altogether, the Malikis allow it when the transferor deceived, and Ahmad in one report allows it when the transferee was insolvent and the creditor did not know. ^{63 64 65 66} On the Hanafi view the causes of failure are four: the death of the transferee insolvent before payment, his denial of the hawala without proof, the judge's declaration of his insolvency, and the loss of the trust held as surety for the hawala. ^{67 68} When failure is established the creditor returns on the transferor, and the schools differ on how the debt returns: by rescission, by automatic dissolution, or by the cause of failure. ^{68 69} The article closes at the cross-reference heading hawz (ر: أرض الحوز) on p.7413; the next headword is hawd (حوض). ⁶⁹