The public auction is one of the oldest and most important forms of sale recognized in Islamic jurisprudence, practiced even before Islam and continuing through the time of the Prophet Muhammad (peace be upon him).
Public auctions, or sales by auction, are viewed as effective mechanisms for ensuring fairness in the distribution of assets and guaranteeing creditors’ rights.
This article will examine public auction in detail as a means of acquiring ownership under Qatari civil law.
Definition and Legal Status of Public Auction in Islamic Jurisprudence
A public auction is defined as a type of sale conducted by the seller calling for bids on the item, with buyers competing by offering the highest price for the purchase.
In Islamic jurisprudence, auction sales are permitted, with scholars concurring on their permissibility based on the consensus of Muslims.
However, auctions must be conducted transparently, with sincere intent to purchase the item, not with the aim of manipulating or harming others’ interests.
Essential Elements and Basic Conditions of Public Auction
A public auction comprises several essential elements, including:
- The Item on Sale: The item must be eligible for sale and legally permissible.
- The Seller: The person with the right to sell the item.
- The Bidders: Individuals or entities interested in purchasing the item.
- ● The Auctioneer: The person responsible for announcing the item and receiving bids.
Basic conditions include that the sale must be fair, reflecting the item’s true value, and that collusion among bidders to lower prices unlawfully is prohibited.
Procedures for Auction Sale under Qatari Civil Law
Under Qatari civil law, public auction, or forced sale, is one of the means that lead to ownership acquisition. This process is overseen by judicial authorities to ensure that the sale complies with applicable laws and is conducted against the debtor for the benefit of creditors.
Conditions of Debt Subject to Public Auction or Forced Execution
Certain conditions must be met for the debt subject to forced execution by public auction:
1. Confirmation of Debt Existence:
The debt must be confirmed in existence, meaning it must be present at the time of execution and undisputed, and it should not be contingent on a suspensive condition.
This implies the existence of an enforceable instrument that conclusively proves the debt.
2. Determination of Debt Amount:
The debt amount must be specified clearly.
This condition is particularly important if the execution will be through attachment and sale.
3. Due Date for Payment:
The debt must be due for payment, meaning it must be payable at the commencement of execution.
Forced execution measures cannot be used to recover debts that have not yet matured, whether the maturity date is set by agreement or by law.
Forced Execution Procedures: Essential Steps to Secure Creditors’ Rights
When the aforementioned conditions are met, the creditor may initiate forced execution procedures to recover their entitlements. These procedures include:
1. Submission of Execution Petition to the Competent Court:
The creditor must submit an execution petition for the judgment or enforceable instrument to the competent court. This step constitutes the formal commencement of the execution process.
2. Issuance of the Enforceable Instrument Notice:
After registering the petition, the court issues a notice to the judgment debtor known as the “Enforceable Instrument Notice,” summoning the debtor to pay the due amount within a specified period.
3. Obliging the Debtor to Settle the Debt:
If the debtor fails to pay within the specified period, the creditor may proceed with execution measures, including attachment and sale of the debtor’s assets.
Right of Pursuit: Securing Creditors’ Rights in Case of Property Sale
The right of pursuit is a legal tool that allows creditors to trace mortgaged properties even after their ownership has transferred to another party.
This right ensures that creditors can fulfill their claims from the property even if it has been sold to a new owner.
If the property is not requested for sale within the prescribed period, or if a higher price than that offered by the holder is not presented at auction, the property’s ownership settles permanently with the holder after payment of the appraised amount.
Vacating Mortgaged Property and Related Legal Procedures
If the holder opts to relinquish the mortgaged property, they must submit an official report to the competent court.
They are also required to notify the direct creditor of this relinquishment procedure.
Any interested party may request the summary judge to appoint a custodian to carry out the procedures.
This step is necessary to avoid conflicts of interest and to protect the rights of all concerned parties.
Public Auction: An Effective Means of Acquiring Ownership
When conducted under legal conditions, public auctions can be an effective means of acquiring ownership, whether for creditors or holders.
If the holder wins the auction, they are deemed the property owner by virtue of their original title deed, and the property is freed from all encumbrances upon their payment of the auctioned price or its deposit with the court treasury.
Financial Rights of the Holder Post-Auction Sale
Following the completion of the sale, the holder retains the right to recover any excess amounts paid to settle debts.
The holder may also file a warranty claim against the former owner to recoup any additional sums they may have paid, in addition to their right to pursue a claim to recover the funds expended.
Risks of Resorting to Public Auction
The risk of opting for a public auction lies in the potential failure to sell the item or property at the auction session due to a lack of bidders or bids below the appraised price.
This results in the postponement of the auction session, with a subsequent announcement and a reduction of the property’s value by 5% from its market price. This process may repeat until the reduction reaches 35% of the property’s actual value, after which it can be sold to any bidder at any value offered during the session.
This situation poses a risk to the property owner or the item intended for auction sale.
Thus, while public auction has advantages, it also has disadvantages and risks that cannot be overlooked.
Conclusion: Public Auction as a Tool for Justice
Public auctions, whether voluntary or forced, serve as a powerful tool for achieving justice and securing creditors’ rights. This process allows for the lawful and orderly transfer of ownership while protecting the rights of all concerned parties. Understanding the legal conditions and procedures surrounding auctions is crucial to ensure their proper and effective use.