ENGLISH-BEYOND FORMAL COMPLIANCE: EVALUATING SALAM AND ISTISNA THROUGH MAQAṢID AL-SHARIAH

Abstract

Salam and Istisna occupy a central position in Islamic commercial law as carefully regulated exceptions to the general prohibition of forward sales. Their classical permissibility was grounded in considerations of necessity (ḥājah), public interest (maṣlaḥah), and the ethical objectives of justice, transparency, and equitable risk allocation. These contracts were historically intended to support producers, facilitate manufacturing, and ensure that financial activity remained closely linked to real economic transactions. In contemporary Islamic finance, Salam and Istisna have been extensively institutionalized through standardized Shariah governance frameworks, particularly those developed by AAOIFI. While such standardization has enhanced legal certainty and operational efficiency, it has also generated growing concern regarding an overemphasis on formal Shariah compliance. This article evaluates the modern application of Salam and Istisnaʿ through the analytical framework of Maqaṣid al-Shariah, moving beyond contractual form to assess substantive ethical and socio-economic outcomes. By examining their classical juristic foundations alongside contemporary financial practices, the study demonstrates how the widespread use of parallel contracts, binding unilateral promises, and risk neutralizing mechanisms has diluted genuine risk sharing and weakened the connection between finance and productive economic activity. The article argues that a maqaṣid-oriented approach is essential for restoring the moral integrity and developmental role of Islamic finance and offers policy-relevant insights for Shariah governance and institutional practice.