Topic: Law of pre-emption

Introduction:

The right of pre-emption, also known as the right of first refusal, has a long and complex history dating
back centuries. The concept refers to a legal right that gives a person or group of individuals the option
to purchase property before it can be sold to another party.The law of preemption in Islam refers to the
right of a co-owner of a property to preempt the sale of the property to a third party. This right is based
on the principle of ensuring equity and fairness in the distribution of property among co-owners.

History:

History of pre-emption laws can be traced back to the period of Greeks and Roman Empire; even these
concepts were prevalent in Arabia before the advent of Islam. However, Islam adopted these laws with
some modifications and refinements.

One of the earliest recorded uses of pre-emption rights was during the Middle Ages, when feudal lords
often exercised the right to buy back property that was being sold by their vassals. This was seen as a
way of ensuring that the land remained in the hands of the ruling class and that the hierarchy of the
feudal system remained intact. It is pertinent to mention that same sort of rules were also implemented
in Sub-Continent before the coming into being of Pakistan and can be traced back to the old Hindu
scriptures. The pre-emption laws as applicable in Pakistan are applied in certain areas, governed under
Muslim Personal Law with the name of ‘shuffa’.

Today, pre-emption rights are still used in many different contexts. For example, in the business world,
shareholders may be given pre-emption rights to prevent a hostile takeover of the company. In real
estate transactions, property owners may be given the option to purchase adjacent land before it is
offered for sale to others.

According to the above given example,the objects of pre-emption laws are many folds, including but not
limited to:

•Exclude the stranger from a particular vicinity;

•Preserve the honor and homogeneity of a particular community;

•Promote familial comfort;

•Protect the native feelings as regard to elitism and privacy of private life; and

•Avoid disintegration of holdings.

Under islamic law:

Pre-emption is a legal right recognized under Islamic law that allows a co-owner of a property to
purchase the share of another co-owner who is willing to sell his share to a third party. In simpler terms,
it means that a co-owner has the first right to purchase the share of the other co-owner if it is being sold
to a third party.
Pre-emption is derived from the Arabic word "shuf'a," which means "the right of the co-sharer." This
concept is based on the idea of maintaining a harmonious relationship between co-owners of property
and to avoid disputes and conflicts.

The parties that are allowed to acquire such a right are called:

Shafi-e-Sharik (co-owner of the property sold)

Shafi-e-Khalit (participator in easement rights over the property sold)

Shafi-e-Jar (neighbor, owner of immovable property adjacent to the sold property).

The right of preemption in Islamic law is recognized in the Qur'an and the Sunnah of the Prophet
Muhammad (peace be upon him). In the Qur'an, it is stated: "O you who have believed, do not consume
one another's wealth unjustly but only [in lawful] business by mutual consent. And do not kill yourselves
[or one another]. Indeed, Allah is to you ever Merciful" (4:29). This verse emphasizes the importance of
conducting business transactions in a just and fair manner, and preemption is seen as one way to ensure
that property is distributed equitably among co-owners.

The Sunnah of the Prophet Muhammad (peace be upon him) also provides guidance on the right of
preemption. In one hadith, the Prophet said, "Whoever buys a house in which there is a partner without
the consent of the partner, then he has nothing but a place to live in and the partner has the right to
prevent him from living in it" (Sahih Bukhari).

Pre-emption also serves as a protection to the co-owners against exploitation by third parties. For
instance, if a third party is interested in purchasing the share of one of the co-owners, they might try to
take advantage of the situation and offer a price much lower than the market value of the property. In
such cases, pre-emption provides the co-owner with an opportunity to purchase the share of the
property at a fair price, which is determined based on the market value.

Conditions of Right of preemption in Islamic law:

The following are the conditions for the right of pre-emption in Islamic law.

Firstly, the right of pre-emption is only applicable to immovable properties such as lands and buildings. It
does not apply to movable properties like cars or furniture.

Secondly, the right of pre-emption can only be exercised when the owner decides to sell the property. If
the property is gifted, inherited or transferred by any other means, the right of pre-emption does not
apply.

Thirdly, the right of pre-emption only applies to co-owners or neighbors. In the case of co-owners, the
right of pre-emption is given to other co-owners in proportion to their shares. In the case of neighbors,
the right of pre-emption is given to the closest neighbor first, followed by the next closest, and so on.

Fourthly, the price of the property to be sold should be agreed upon by the seller and the pre-emption
holder, or by a court of law if there is a dispute.
Fifthly, the pre-emption holder should notify the owner of their intention to exercise their right within a
reasonable time. The time period for notification may vary depending on the location and customs of
the area.

Sixthly, the pre-emption holder should be capable of paying the agreed price in full at the time of the
purchase. If they are unable to pay the full amount, the right of pre-emption will pass on to the next
eligible holder.

Seventhly, the right of pre-emption can be waived or transferred by the pre-emption holder to someone
else, provided that it is done in writing and with the agreement of the seller.

Exceptions to rule of preemption:

There are certain exceptions to this rule.

One exception is when the property being sold is used for public interest. For example, if the
government wants to build a road or a hospital on the land, the right of pre-emption does not apply.
This is because the public interest takes priority over the interests of the co-owners.

Another exception is when the co-owner who wishes to sell their share is in debt and needs to pay off
their creditors. In this case, the other co-owners do not have the right of pre-emption, as it would be
unfair to prevent the seller from paying off their debts.

Furthermore, if the property is part of a business or trade, and the sale of the share would result in the
termination of the business or trade, the right of pre-emption does not apply. This is because it would
be unfair to force the seller to remain in the business or trade against their will.

Lastly, if the property is inherited, and one of the heirs wishes to sell their share, the right of pre-
emption may be waived if the other heirs agree to it. This is to avoid disputes between the heirs and
ensure a fair distribution of the inheritance.

Overall, the concept of preemption in Islamic law is based on the principle of fairness and equity in the
distribution of property among co-owners.

It's practicality in Pakistan:

In Pakistan, law of pre-emption is dealt according to provincial statues and is not applicable throughout
the state. In Khaiber Pakhtoonkhawa, it is enacted in the shape of N.W.F.P Pre-emption Act, 1987. In
Punjab, it is enacted in Punjab Pre-emption Act, 1991 with minor changes. There is no codified law of
pre-emption in Sind and Baluchistan and in these provinces this subject is administered according to
personal law of the parties.In Pakistan, the right of pre-emption is applicable to both urban and rural
areas, and is regulated by the Pre-Emption Act 1991. The purpose of this act is to regulate the transfer of
immovable property and to protect the rights of existing owners.
The practicality of this act can be evaluated in terms of its advantages and disadvantages. One of the
main advantages of the right of pre-emption is that it protects the rights of existing owners by giving
them the first right to purchase a property. This helps to prevent third parties from acquiring properties
that could potentially disrupt the social and economic stability of the community.

Another advantage of the right of pre-emption is that it can be used to maintain family landholdings. In
rural areas of Pakistan, it is common for families to own large plots of land that are passed down
through generations. The right of pre-emption ensures that family members can maintain control of
these properties by purchasing them if they are ever put up for sale.

However, there are also several disadvantages to the right of pre-emption. One of the main concerns is
that it can restrict the market for property. For example, if an existing owner chooses not to exercise
their right of pre-emption, it could limit the number of potential buyers and prevent the property from
being sold at market value.

Another concern is that the right of pre-emption can lead to corruption and favoritism. In some cases,
existing owners may abuse their power and use the right of pre-emption to acquire properties at lower
prices than market value, leading to unfair business practices.

In conclusion, the practicality of the right of pre-emption in Pakistan is a complex issue with both
advantages and disadvantages. While it can help to protect the rights of existing owners and maintain
family landholdings, it can also restrict the market for property and lead to corruption. Therefore, it is
important for the government to carefully regulate the use of the right of pre-emption to ensure that it
is used for the benefit of the community as a whole.