Islamic general rule of "Maisra consideration" applies to finance contracts.

Numerous businesses and camps affected financially by COVID-19 failed to pay their dues,
necessitating government intervention to alleviate the pressure as they struggle to regain their
financial footing. This exposed many global regulations to flaws that can be remedied by
making these regulations more adaptable to shocks.

Methods of reacting to Covid-19 were:

1. SAMA mandates that banks offer grace periods.

2. Courts held that Covid-19 is an event of force majeure. It means that performing
the contract is difficult, or because of frustration, it is impossible to perform the
contract based on decision no. 45/M issued by The General Committee of the
Saudi Arabian Supreme Court. Such orders are binding on the courts under the
Ministry of Justice as per Article 13 of the Law of the Judiciary. So when this
verdict was pronounced, all those contracts which were difficult to perform during
Covid-19 were protected under the Force-majeure.
3. Saudi Regulations does not apply this concept in laws such as ‫نظام التنفيذ نظام المحكمة‬
‫التجارية‬

According to the Islamic point of view, the essence of financing is that it serves an economic
function. Because of this, loans are predicated on sharing risks and the prohibition of interest.
The Islamic method of financing is more in line with the overall economic objective.

 The general Islamic principle known as "Maisra consideration" should be applied

to financial contracts.
 The courts do not consider the emergency measures, such as COVID-19, which in
this regard are the only ones that exist.
 The current legal system is not in accordance with Sharia.

The widespread implementation of this idea will not be successful in winning over the
creditors. From a business perspective, no lender will accept voluntarily including this clause
in the loan agreement. On the other hand, it will benefit economics in the long run,
particularly for financing contracts, which are characteristic of their length of time. Primarily
intended to be more exposed to such occurrences, but for pandemics like COVID-19, these
measures are essential. Because of this, we should apply this concept to balancing the
contractual relationship.

Saudi laws do not apply this concept to commercial debt. But I argue that this concept is the
general rule from sharia scholars.

I contend that sharia principles such as "maisra consideration" should be implemented and
that SAMA's standard finance contracts should be revised to include a more flexible approach
to business. According to the revised contracts, the courts should apply this concept by
determining whether or not this measure is global and unexpected, and if it is, they should
then grant the debtor the period to which he claimed he was entitled.

The Islamic financial sector in Saudi Arabia is the wealthiest in the world. The aggregate
value of the industry's primary components is projected to reach $842 billion by 2020.
Industry assets increased despite the economy collapsing and the unstable financial markets
due to the Covid-19 pandemic. An increase in Shari'ah-compliant financing contributed to
this remarkable expansion, demonstrating the robustness of the Islamic finance sector.
Examining the current setup of the various rights, obligations, and assets is essential for
determining how to reorganize them.

The Quran says to be patient with a debtor if he is having financial difficulties and to delay
collection until it is convenient for the debtor to make payment. A debtor should be given
more time to pay if he is having financial difficulties. Defaulting on a debt when the debtor
has the means to pay is forbidden in Islam (Surah 2, Verse 280). Since the debtor's needs
must be balanced with the lender's, this guidance does not mean the debtor can escape its
obligations forever. It does, however, encourage solutions that both parties can live with,
such as postponing payments in exchange for other assets that can be used to settle the debt at
some point in the future.

Since Islamic beliefs are founded on a number of crucial ideas that must be considered when
restructuring any Islamic finance deal, it also directly impacts what can be proposed.
Importantly for a reorganization, Shari'a stipulates that any return on funds provided by a
financier must come from a profit made by the financier due to a business risk taken by the
financier. The Riba prohibits interest and other "guaranteed" or "risk-free" rates of return on
loans or investments. Uncertainty in contracts (Gharar), speculative agreements (Maisir), and
unjust enrichment are also prohibited.

The Saudi Arabian Monetary Agency, also known as SAMA, is currently in the publishing
phase of model SAMA documentation finance contracts, with two already being made public.
I recommend that the contracts be revised to include a clause that gives the borrower the right
to claim a grace period if the force measures are activated. The International Chamber of
Commerce has made an effort to define "force majeure" by referring to a benchmark known
as "impracticability." This indicates that complying with the terms of the contract would be
prohibitively difficult, expensive, or even impossible.

The occurrence that brings about this circumstance must originate from a source independent
of both parties, come as a complete surprise, and be impossible to avoid. However, proving
these things can be challenging.
Resources: (more resources attached)
- https://www.sama.gov.sa/ar-sa/Documents/
Saudi_IF_Report_2021_Final_DIGITAL_v3.pdf
- https://istitlaa.ncc.gov.sa/en/Finance/SAMA/FinanceContract/Pages/default.aspx
- https://www.sama.gov.sa/ar-sa/News/Pages/news-793.aspx
- https://www.dentons.com/en/insights/articles/2022/march/7/an-update-on-force-
majeure-and-frustration-in-the-context-of-covid19
- This is very related article https://3vb.com/wp-content/uploads/old/Article_2_-
_Daskalova.pdf
- https://islamicmarkets.com/standards
- https://www.squirepattonboggs.com/-/media/files/insights/publications/2020/04/
global-impact-of-covid19-on-insolvency-laws/global-impact-of-covid19-on-
insolvency-laws.pdf
- https://iifa-aifi.org/en/33028.html
- http://www.iefpedia.com/english/wp-content/uploads/2017/12/Shariaa-Standards-
ENG.pdf
- https://dergipark.org.tr/en/download/article-file/364059
- https://sapiens.com/blog/covid-19-into-2021-and-grace-periods-or-other-relief-in-the-
insurance-market/
- https://www.lawsonlundell.com/china-blog/force-majeure-vs-frustration-of-contracts
Saudi laws:
- https://laws.boe.gov.sa/BoeLaws/Laws/LawDetails/c58ba10c-4e89-4c06-98d7-
a9a700f1c706/1
https://laws.boe.gov.sa/BoeLaws/Laws/LawDetails/c81ba2f1-1bf1-443b-9b1c-
a9a700f27110/1