Shuluh Contract: A Solution to Mitigate Conflict in Muamalah
Humans require social life to fulfil their innate nature as beings who constantly interact with others. In the course of social interaction, differences in character, interests, and perspectives often cause friction that can escalate into larger conflicts if not promptly resolved. Islam views every problem as something that must be settled wisely to maintain societal harmony. Therefore, Sharia provides various dispute resolution mechanisms, including in the field of muamalah or economic activity, known as shuluh.
Islam defines shuluh as a contract aimed at ending discord and achieving peace between conflicting parties. Linguistically, shuluh means to reconcile or eliminate quarrels, while in terminology it refers to an agreement reached to bring about reconciliation between two disputing parties. The legitimacy of this contract is derived from a hadith of the Prophet ﷺ stating that peace among Muslims is permissible, so long as it does not make the lawful unlawful or the unlawful lawful. In its implementation, the shuluh contract involves several essential elements: the disputing parties, the contract formula, the act of reconciliation, and the object that is the subject of the peace.
Scholars explain that the core substance of the shuluh contract lies in the existence of a conflict that the parties wish to resolve through mutual agreement. Without a dispute, there is no basis for this contract. In the realm of muamalah, shuluh functions as a more flexible means of resolution compared to litigation, as the resulting agreement is often better able to satisfy the interests of both parties. Based on the condition of the parties, this contract is divided into two main forms: shuluh ma’al-iqrar, which is based on acknowledgment, and shuluh ma’al-inkar, which is based on denial.
The defendant who carries out shuluh ma’al-iqrar acknowledges the truth of the claim made by the plaintiff. This form of settlement can be applied to the resolution of disputes over goods or debts and is divided into two models: shuluh hatithah and shuluh mu’awadhah.
In shuluh hatithah, the plaintiff accepts part of their right and relinquishes the remainder for the sake of achieving peace. If the object is a physical good, the contract resembles a grant (hibah), whereas if the object is a debt, the contract’s substance is akin to a debt release (ibra’). Consequently, all provisions related to hibah or ibra’ apply according to the character of the disputed object.
The parties use shuluh mu’awadhah when the entire right claimed by the plaintiff is replaced with another compensation agreed upon by both sides. This compensation can be in the form of goods or services. If the substitute provided is a good, the contract’s substance resembles a sale, and thus it must satisfy the requirements of a sale contract. Conversely, if the substitute is a service or benefit, the contract takes on the essence of a lease (ijarah) and follows the rules applicable to lease contracts. This diversity of forms demonstrates that the legal rulings in shuluh can differ according to the underlying contract’s substance.
Scholars differ regarding the validity of shuluh ma’al-inkar, which is a settlement where the defendant denies or does not acknowledge the plaintiff’s claim. The Shafi’i school considers this contract invalid because it potentially permits the taking of property that is not rightfully one’s own or prohibits someone from their own property. Meanwhile, Imam Abu Hanifah, Imam Malik, and Imam Ahmad view the contract as valid because it is based on the mutual consent and agreement of both parties. From this explanation, it can be concluded that shuluh is an important instrument in Islamic economic dispute resolution aimed at creating peace and public benefit. The diversity of its forms and legal consequences makes the shuluh contract one of the contracts with the broadest legal scope in muamalah jurisprudence.