The Faisal Case: Findings and Implications

However, an unexpected confluence of factors propelled the riba issue to center-stage in Pakistan’s judicial system within the next year. First, Benazir’s government neglected to extend the date banning FSC consideration of fiscal law, found in Article 203-B, beyond 25 June 1990. Second, President Ghulam Ishaq Khan, citing widespread corruption, among other reasons, dismissed the 20-month old government of Benazir Bhutto in August 1990. Third, Ghulam Ishaq Khan called Justice Tanzil-ur- Rehman out of retirement (from his professorial assignment at the International Islamic University, Malaysia) and appointed him as Chief Justice of the FSC on 15 November 1990.

One of the first acts of the newly appointed Chief Justice was to announce, through a decision rendered on 13 January 1991, that the FSC was now in a position to entertain Shariat petitions challenging fiscal legislation. The court was swamped with such petitions. A total of 115 Shariat petitions were filed between 30 June 1990, and 24 October 1991, challenging 20 separate laws as repugnant to Islam on the grounds that such laws countenanced riba. The overwhelming majority of such petitions relied upon the Qur’an (esp., 2:275-78) to substantiate their arguments.33 Such petitions found a sympathetic ear in Tanzil-ur-Rehman and among a majority of other judges of the FSC.

Accordingly, in November 1991, the FSC completed a monumental decision, authored by Chief Justice Tanzil-ur-Rehman, that totalled 564 pages including appendices. The decision, Mahmood-ur-Rehman Faisal vs. Secretary, Ministry of law and Parliamentary Affairs, granted relief to the overwhelming majority of the petitioners by declaring provisions of 20 federal and provincial laws dealing with riba as repugnant to Islam, and ordered their revision by 1 July 1992. The main findings of the decision are summarized below:

1. Riba means “any addition, however slight, over and above the principal,” and includes both usury and interest.
2. No legal distinction can be made between “productive loans” and “consumption loans.” Both are riba.

The prohibition against riba is absolute, there are no exceptions.

1. Qur’anic decrees regarding riba are not allegorical (mutashabahat) but constitute part of the clear text (nass) of the Qur’an.
2. The prohibition of riba does not counter the public good (maslaha). Ijtihad (independent reasoning) regarding the public good is only applicable when there is no textual precedent (nass) found in the Qur’an.
3. The indexation of loans in order to control for the effects of inflation is prohibited by Islam. In the Qur’an money is treated like a commodity, it must be exchanged in kind, not value.
4. Any system of mark-up is repugnant to Islam because it is tantamount to interest..

Throughout, the Faisal decision relies heavily on the Council of Islamic Ideology’s views on riba as expressed in the CII’s 1980 and 1983 reports. Both the latter reports were written by Tanzil- ur-Rehman when he was chairman of the Council. Curiously, therefore, it is often the case that the primary justification of arguments expressed by the FSC in the Faisal decision are the author’s own words. That is, Justice Tanzil-ur-Rehman quotes himself extensively in the Faisal decision.

The government of Nawaz Sharif has been shaken seriously .by the implications of the FSC’s decision. First, Nawaz Sharifs major domestic policy initiative since assuming office in late 1990 has been the liberalization of Pakistan’s economy; an initiative which is clearly threatened by the Faisal decision. Second, the government has publicly committed itself to pursuing the goal of Islamization. Nawaz Sharif personally shepherded the Shari'ah bill through the Majlis-i-Shura, and the major base of his government’s support has remained the IJI, a party that is ideologically committed to Islamization. Therefore, the government finds itself caught between a rock and a hard place. If the government appeals the Faisal decision (a policy favored by a majority of the Cabinet) it opens itself to the charge that it is being hypocritical relevant to the Islamization process; if it does not appeal the decision Nawaz Sharifs economic policy is likely to fail. Faced with such a difficult decision, the government chose the path of least resistance. It encouraged a semi- government entity, the Agricultural Development Bank, to file an appeal before the Shariat Appellate Bench of the Supreme Court (SAB) challenging the Faisal decision. As of June 1992, the appeal remains pending.

Of course, it is speculative to predict the outcome of the appeal before the SAB. However, it is the considered opinion of this author that the appeal is likely to fail for two reasons. First, the Faisal decision is very tightly argued and it contains direct rebuttals of the arguments that are most likely to be presented by the advocates of the Agricultural Development Bank. Indeed, the Faisal decision rejected the well-prepared plaints of the National Bank of Pakistan, the State Life Insurance Company, and the Banking Council of Pakistan. Second, the current membership of the SAB is very unlikely to overturn the Faisal decision on philosophical grounds. The court is composed of five judges of the Supreme Court, three of whom (a majority) are well-known for supporting an Islamic activist interpretation of the role of Pakistan’ superior courts.

If this prediction proves correct then Nawaz Sharif’s government not only faces a dilemma, but Pakistan is rapidly approaching a constitutional crisis as well. Given the Majlis-i-Shura’s inability to reach any decision on controversial Islamic matters (1985-), it is highly unlikely that Pakistan’s legislative institutions will be able to draft laws that will meet the objections of the courts, let alone to amend the Constitution, in a timely fashion. Alternatively, the Ministry of Justice and Parliamentary Affairs is loathe to craft and.to promulgate laws through presidential ordinance that would respond to the FSC’s order. Therefore, a confrontation looms between the courts and the government. If neither abandons their respective positions, then the only remedies are extra-constitutional (to dismiss the government, or to suspend the operation of the courts). Obviously, neither outcome would be congenial to the further growth of democracy in the state.

Source: Islamization of Laws and Economy: Case Studies on Pakistan, Charles Kennedy. Republished with permission.