IICRA CASE MODEL
• The Respondent (the client) submits to the Claimant (an Islamic financial institution) a request that guarantees his desire to sell the warehouses, offices and housing of the workers (the original or the property) he owns, and undertakes to lease the same asset from the Claimant fora lease period of 7 years.
• The Claimant agrees to purchase the property from the Respondent and to lease the asset to the Respondent as well, provided that the period of the lease is 7 years.
• The Respondent sold the property and collected the whole amount to the Claimant. After having acquired the asset legally, the Claimant contracted the same property to the Respondent for 7 years and to pay the fixed amount and the variable amount every six months in accordance with the terms of the lease.
• In order to transfer the ownership of the property from the Respondent to the Claimant at the end of the lease, the parties have signed a suspended grant contract on the condition that the Respondent should comply with all his contractual obligations.
• A week after signing the contracts, the Respondent signed a proxy in favor of the Claimant.
The arbitration case have 4 contracts, which include the total product of Ijara Muntahia Bittamleek and practices as well the Islamic financial institutions as a legitimate form of finance. The contracts include the following;
• Purchase and Sale Agreement: Under this agreement the Claimant bought the property of the Respondent. The contract included the acknowledgment that the Claimant became legal and legitimate owner of the property and the parties agreed to postpone the registration of transfer of ownership only to the official authorities on the date specified by the Claimant. Moreover, the obligation of the Respondent to prove the asset in favor of the official authorities. The Respondent undertakes no third party exposure or entitlement to the sold asset. In the event of any dispute, breach or claim regarding this contract shall be referred to the competent court for consideration in accordance with the laws enforced in the United Arab Emirates.
• Lease Contract of (Finished Leasing) Ijara Muntahia Bittamleek: Under it the Respondent leased the same asset from the Claimant for a period of 7 years. The contract included the division of the amount into fixed amount and variable amount. The fixed amount is paid on 14 semi-annual installments. The variable amount is determined by the 6 month index + 3.5% with a minimum of 9.5% of the remaining amount as the total fixed rental value for the remaining total period of this lease. The Claimant has committed to delivering the leased asset to the Respondent on the dates specified in the lease. And the confirmation of the Respondent by inspecting and receiving the leased asset, and that it is in the excellent condition to be used and to be fulfilled the intended benefits of the lease. The Respondent was allowed to rent the leased property to any third party, provided that he remains responsible for fulfilling his contractual obligations towards the Claimant. The contract includes an article stipulating in the event that the Respondent is late in paying two installments. The rest of the premiums were paid after he was warned to pay within 15 days. The Respondent is legally required to make a payment to the Claimant. The Claimant has also made guarantees against the implementation of his obligations – Mortgage, Insurance, Check Guarantee, and Property Management. The arbitration clause of the Islamic International Center for Reconciliation and Arbitration was inserted in the terms of this contract.
• Grant of Contract: The Claimant shall submit to the Respondent – provided that the party (Respondent) should fulfill all his contractual obligations and the contract contains a payment pending on the condition that the Respondent complies with all his obligations under the lease. The payment shall be valid at the end of the term of the lease and upon the fulfillment of the obligations by the Respondent arising from the lease in due dates. The jurisdiction of the payment contract has been referred to the competent court in accordance with the laws enforced in the United Arab Emirates.
• Power of Attorney: The document contains the power of attorney against the Claimant to do whatever he deems to be appropriate according to his absolute discretion to administer and supervise the real estate and collect the rents, revenues, maintenance of the property and insurance and the implementation of all what is stated in this agency and such case, this agency is absolutely unconditional and continuous for its opinions, words and deeds. The Respondent as a creditor also commits to the Claimant not to take any action that cancels, breaches or diminishes the rights of the occupier.