Limited Liability in Islamic Jurisprudence: The Case of Authorized Slave

Abstract

The landscape of modern business and finance is evolving fast. Consequently,
commercial law, be it Islamic or secular, is also adapting itself according to
these changes. One example where many changes have and are still taking
place is the notion of a legal person with the feature of limited liability. A legal
person is a non-human entity which is treated as a natural person in the eyes
of law; a good example of the modern legal entities is corporations /
companies which have the feature of limited liability. As the liability of these
entities is limited, their shareholders are not liable for losses beyond their
capital contribution in case they go bankrupt. As far as Islamic law is
concerned, legal persons in their present forms are not found in this law. Same
is the case with the liability of the business owners which is treated unlimited
in case of bankruptcy. But the debate is still going on and it seems that it will
continue so in the near future. In this connection, some jurists have drawn
attention to the concept of authorized slave which carry many features of the
modern day limited liability corporations. In this research, we briefly trace the
features of limited liability vis-à-vis authorized slave from the perspective of
Islamic law in the light of the opinions of both modern and classical Muslim
scholars. The research finds that according to some contemporary Muslim
jurists, authorized slave has some features which are similar to the concept of
limited liability companies of the modern era.