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Sar-qoflī in the Customs and Laws of Modern Iran: The Emergence of Haqq-e Kasb o Pīshe o Tejārat and the Evolution of the Shop-lease Contract System

Published online by Cambridge University Press:  01 January 2022

Yoko Iwasaki
Yoko Iwasaki*
Affiliation:
Institute of Developing Economies, Japan (and current Visiting Researcher at University of Tehran)
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Abstract

In the shop-lease contract with sar-qoflī, which is a widely practiced form of lease contract in today's Iran, a lessor of a shop sells to a hirer a right called sar-qoflī which amounts to almost as much as the entire value of the shop's ownership, while obtaining a monthly rent of only small value. This peculiar form of contract was brought into existence based on a new right called “haqq-e kasb o pīshe o tejārat,” that emerged as a result of the blending of traditional customary practice relating to real estate leasing with Anglo-American value concepts. The adoption of this right, causing as it did the lessor's responsibility for compensation for the value of the usufructuary right, drastically changed the relationship between lessors and hirers in Iran.

Type
Articles
Information
Iranian Studies , Volume 44 , Issue 2 , March 2011 , pp. 147 - 174
Copyright
Copyright © The International Society for Iranian Studies 2011

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Footnotes

This article is a part of my dissertation in economics dealing with historical development of “the shop-lease contract with sar-qoflī” system. All public documents that are used in this article are in the possession of Ketāb-khāne-ye Majles-e Shourā-ye Eslāmī and I am very indebted to Mr. Majīd Sā'elī Kordehdeh for generous assistance in searching for the materials in the library. I am also deeply grateful to Mr. Bahman Keshāvarz, attorney at law, for beneficial advice for interpretation of legal texts.

References

1 For a discussion of the concept of traditional property rights in the Middle East, see Iwasaki, Yoko, “Tokushū ni Atatte (Introduction to the Special Issue: Law and Real Estate in the Middle East),” Ajia Keizai (Asian Economy), 48, no. 6 (2007): 2–8Google Scholar.

2 Keshāvarz, Bahman, Sar-qoflī va Haqq-e Kasb o Pīshe o Tejārat dar Hoqūq-e Īrān va Feqh-e Eslām (Tehran, 2003)Google Scholar. Some contributors to the literature, including Seger, Kano and Bonine, mention the existence of sar-qoflī. Few of them, however, present a rounded picture of sar-qoflī, nor do they analyze its functional characteristics. Seger, although presenting some thought-provoking research results that demonstrate the correlation of Ablösepreis (the price of deposit: he never calls it sar-qoflī) and traffic density in some places of the Tehran Bazaar, offers no further analytical argument relating to sar-qoflī. Perhaps because he himself was not very interested in real estate contracts as an aspect of Iranian civil law, Bonine made inaccurate references to sar-qoflī. He claimed, for example, that no one, and not even the landlord, can dispossess the hirer of the right of sar-qoflī. See Seger, Martin, Teheran: Eine stadtgeographische Studie (Wien and New York, 1978)CrossRefGoogle Scholar; Kano, Hiromasa, “Teheran no Hatten to Shakai-henka” [Development and Social Change in Tehran], Ajia Keizai [Asian Economy], 20, no. 1 (1979): 36–65Google Scholar; and Bonine, Michael E., “Islam and Commerce: Waqf and the Bazaar of Yazd, Iran,” Erdkunde, 41(1987): 182–196CrossRefGoogle Scholar.

3 To overcome the technical difficulty of a quantitative paucity of statistical and numerical data relevant to sar-qoflī, this paper employs a methodology that combines the use of qualitative data collected by interviews and related historical sources such as statute books and the Iranian parliamentary proceedings.

4 The Civil Law Act of Iran was enacted, being divided into three parts, from 1928 to 1935. It has been partially amended several times so far.

5 Mellī, Majles-e Shourā-ye, Majmū‘e-ye Qavānīn va Mosavvabāt-e Doure-ye Nūzdahom-e Qānūn-gozārī (Tehran, 1964), 2379–2393Google Scholar. The term mālek most often means “possessor.” More generally it indicates the owner of real estate such as land and buildings.

6 Mellī, Majles-e Shourā-ye, Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 318 (Tehran, 1959), 2Google Scholar.

7 The chapter headings of the 1960 Law are as follows. Chapter one: real estate under the application of this law; Chapter two: rent (ejāre-bahā) and means of payment; Chapter three: preparing the contract form; Chapter four: invalidity and cancellation of lease and eviction; Chapter five: haqq-e kasb o pīshe va-yā tejārat; Chapter six: trial procedures; Chapter seven: various articles.

8 The chapter headings of the 1977 Law are as follows. Chapter one: general provisions; Chapter two: amount of rent (ejāre-bahā) and means of payment; Chapter three: preparing the contract form; Chapter four: cancellation of lease and eviction; Chapter five: haqq-e kasb yā pīshe yā tejārat; Chapter six: repair. Mellī, Majles-e Shourā-ye, Mozākerāt-e Majles-e Shourā-ye Mellī : Jalase113 (Tehran, 1977), 2–8Google Scholar.

9 Amendments carried out in 1983 had little effect on the “shop-lease contract with sar-qoflī,” since these amendments in fact related only to the provisions as applied to residential buildings. As for commercial buildings, excepted from the new provisions, the provisions of the 1977 Law continued to be applied. At the time, Iran was in the midst of the Iran–Iraq war, which began after the 1979 Revolution. The amendment of the Law of Lessors–Hirers Relationships was carried out at a time during which an influx of refugees from the areas affected by the fighting was causing a severe housing shortage in the cities. Amongst other things, the amendments of the law in 1983 aimed at the protection of hirers in residential buildings during the war, the provision of an extension of the eviction free period in the case of war refugees, and the setting of an upper limit on the amount of rent payable.

10 Eslāmī, Majles-e Shourā-ye, Majmū‘e-ye Qavānīn:Panjomīn Doure-ye Majles-e Shourā-ye Eslāmī (1375–1379) Jeld-e Dovvom (Tehran, 2001), 650–652Google Scholar.

11 In this case the hirer purchases both the ownership of melk and sar-qoflī together, and does business in the shop on his own account. Iwasaki, Yoko, “Sarugofurī Hōshiki Chintai Keiyaku: Iran Shōgyō-chi no Chika Kettei ni tsuite no Ichi Kōsatsu (Shop-lease Contract of sar-qoflī: An Opinion concerning the Formation of Land Prices in Commercial Districts in Iran),” Ajia Keizai (Asian Economy), 47, no. 5 (2006): 19Google Scholar. In Iran, land and the buildings on it are called melk collectively, since in most cases ownership of the two belong to the same person.

12 “Ejāre-ye khālī” means “empty lease,” that is lease without sar-qoflī. The hirer does business in the shop, paying monthly rent based on a lease contract. Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 19.

13 Both melkī and ejāre-ye khālī account for only a small proportion in the whole, and the latter of the two is hardly ever employed. Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 20.

14 Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku.”

15 At the time of survey (April 2002), the exchange rate was approximately 800 tūmān to one US dollar.

16 Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 30–31.

17 Majles-e Shourā-ye Mellī, Majmū‘e-ye Qavānīn-e Mouzū ‘e va Masā’el-e Mosavvabe-ye Doure-ye Nohom-e Taqnīnīye (24 Farvardīn māh 1312–24 Farvardīn māh 1314) (Tehran, n.d.), 155.

18 This right is also given to hirers of residential buildings, although with some conditions attached.

19 Payment of “reward for approval (rezāyat)” is not a legal obligation for hirers. According to interviews conducted by the author, some mālek might not require payment, and others might require only a very small amount. In general, the “reward for approval (rezāyat)” during the period of the author's field work (2001–04) was around 10 percent of the sar-qoflī price. The rate seemed to depend very much on the place and on the mālek's intention. Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 22–23.

20 Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 26–28.

21 Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 24–27.

22 The price of sar-qoflī is considered to be the discounted value of the expected earning from the melk, based on the shop's net sales profit subtracting its rent. In essence, much the same can be said of the land price in, for example, business quarters in Japan. For a detailed discussion, see Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku.”

23 In theory, it is possible for the price of sar-qoflī to fall as a result of a decline in the shop's (or the area's) ability to attract customers either because the hirer's business performance has been inadequate, or because adverse changes have occurred in the neighboring environment. But in contemporary Tehran, which constitutes Iran's main concentration of population and economic activity, except for some very particular cases, the market price of sar-qoflī hardly ever falls in any part of the city, Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 27.

24 Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 28.

25 It stipulates that every two years, persons qualified in real estate appraisal are to be appointed in respective districts under the jurisdiction of the Ministry of Justice.

26 According to interviews with the appraisers, the sar-qoflī price is composed of “haqq-e kasb o pīshe o tejārat” and a remainder. “Haqq-e kasb o pīshe o tejārat,” strictly speaking, is established only when the hirer gains a comparatively high income due to his achieving a high reputation during his period in business, and moreover it belongs only to the hirer, who runs the shop on his own account. The remainder of the price includes valuation of the location, and takes into account factors such as the number of customers, local transportation facilities, and the concentration of shops in the neighborhood. The appraised value of real estate, known as the sar-qoflī price in general, is essentially the aggregated price of these elements. Even the courts, however, call this aggregated price “haqq-e kasb o pīshe o tejārat,” a social misconception that has already been accepted in court trials. The appraisers remarked that the amount of payment by the lessor which they appraise should not be very different from the market price of sar-qoflī, that is the actual price in the sar-qoflī trade. Interviews were with informants T (13 September 2005) and E (17 September 2005), both of whom are official appraisers with the Iranian Association of Official Experts (kānūn-e kār-shenāsān-e rasmī-ye dād-gostarī).

27 In most cases, the monthly rent fixed in this way is extremely small compared to the monthly rent for shops rented by ejāre-ye khālī.

28 Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 33.

29 Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 33.

30 Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 34.

31 It may be remarked that even in the case of a shop that is mouqūfe, the way of implementing a “shop-lease contract with sar-qoflī” is principally as described in this paper. In the case of mouqūfe properties, however, the first seller of sar-qoflī may be different from the lessor (receiver of monthly rent), depending on who plays the role of motavallī, an appointed individual or a Sāzmān-e Ouqāf. Either way, the hirer of a shop that is once rented by a “shop-lease contract with sar-qoflī” certainly secures a high degree of jurisdiction over the shop. Incidentally, there is no official indication of the proportion of today's commercial properties in Iran that are registered as mouqūfe. It is thought that in Tehran Bazaar, an old-established business quarter, there is a higher proportion of mouqūfe than elsewhere. Nevertheless, Kondo points out that the mouqūfe ratio of Tehran Bazaar was about 11 percent in 1853, and 9 percent in 1900. According to Shāhhoseinī, the properties registered as mouqūfe in Tehran during the Pahlavi period declined in number by 26 percent compared to the Qajar period, and were scattered in areas other than Tehran Bazaar. In view of these observations, it seems very unlikely that the mouqūfe ratio in Tehran Bazaar increased substantially by the end of Pahlavi period. Nobuaki, Kondo, “Jūkyū Seiki Teheran no Dai Bāzāru: Hatten, Kōsei, Shoyū-Kankei” [The Bazaar of Tehran during the Nineteenth Century: Expansion, Organization and Ownership], The Journal of Sophia Asian Studies, no. 25 (2007): 161–195Google Scholar; Parvāne, Shāhhoseinī, “Waqf-shenāsī-ye Joghrāfiyā'ī-ye Shahr-e Tehrān: Doure-hā-ye Qājār va Pahlavī,” Fasl-nāme-ye Tahqīqāt-e Joghrāfiā'ī, 11, no. 3 (1996): 117–133Google Scholar.

32 Mellī, Majles-e Shourā-ye, Mozākerāt-e Majles: Jalase 155 (Tehran, 1943), 2595(20)Google Scholar.

33 It was intended that the law should remain “in force until 6 months after the termination of the present war” (Article 8 of Dr. Millspaugh's Powers Law).

34 Article 1 of the law states that “Dr. Millspaugh, the present Administrator General of Finances, is authorized to control the procuring of non-food commodities, all raw materials and finished goods, and the importation and exportation of goods, and transportation, stocking and distribution thereof. He is also authorized to control rents of real estates and charges for other services and wages.” Also note 1 of Article 1 stipulates that “the determination and fixing of rents of real estates shall take place according to regulations drawn up by the Minister of Justice and the Administrator General of the Finances.”

35 Keshāvarz, Sar-qoflī va Haqq-e Kasb o Pīshe o Tejārat, 46.

36 Rūz-nāme-ye Rasmī-ye Keshvar-e Shāhan-shāhī-ye Īrān, Majmū‘e-ye Qavānīn-e Sāl-e 1322 Moshtamel bar Qavānīn, Tasvīb-nāme-hā, Āyīn-nāme-hā va Bakhsh-nāme-hā-ye chāp shode dar Majalle-ye Rasmī (Tehran, 1959), 194–200.

37 Keshāvarz, Sar-qoflī va Haqq-e Kasb o Pīshe o Tejārat, 46.

38 However, the executive regulations were amended in October 1944 and October 1945 respectively. While Dr. Millspaugh's Powers Law expired in January 1945, its executive regulations remained in force thereafter. Although the amended executive regulations preserved most of the original contents intact, it is noteworthy that the provision whereby the lessor was obliged to pay the hirer an amount of money in return for the value of the hirer's credit and reputation was omitted from the 1945 revisions. Chāp-khāne-ye Majles, Majmū‘e-ye Sāliyāne-ye 1324 (n.p. and n.d.), 375–399.

39 “Goodwill” was never acknowledged as a formal right by the Anglo-American legal systems. It was rather considered a concept in the accounting system for firms and companies which indicated “a company's excessive earning power which doesn't belong to the category of a certain legal right.” Shimizu, Yasuhiro, Amerika no Noren Kaikei: Riron, Seido, Jitsumu [Good-will Accounting in America: Theory, Institution and Practices] (Tokyo, 2003), 4Google Scholar. Keshāvarz suggests that these days, some of the various elements included in “goodwill” might be regarded as “intellectual property rights” and as such might qualify for legal protection. Keshāvarz, Sar-qoflī va Haqq-e Kasb o Pīshe o Tejārat, 253.

40 Keshāvarz, Sar-qoflī va Haqq-e Kasb o Pīshe o Tejārat, 47–48.

41 Keshāvarz, Sar-qoflī va Haqq-e Kasb o Pīshe o Tejārat, 34.

42 Rūz-nāme-ye Rasmī-ye Keshvar-e Shāhan-shāhī-ye Īrān, Majmū‘e-ye Qavānīn-e Sāl-e 1317 Moshtamel bar Qavānīn, Tasvīb-nāme-hā, āyīn-nāme-hā va Bakhsh-nāme-hā-ye chāp shode dar shomāre-hā-ye Majalle-ye Rasmī dar sāl-e 1317 (Tehran, 1958), 242.

43 Keshāvarz has not succeeded in finding any convincing proof, although he ventures on some conjectures concerning sar-qoflī in the past, referring to definitions of the term sar-qoflī offered by well-known jurists. Keshāvarz, Sar-qoflī va Haqq-e Kasb o Pīshe o Tejārat, 25–38.

44 Keshāvarz, Sar-qoflī va Haqq-e Kasb o Pīshe o Tejārat, 45.

45 Mellī, Majles-e Shourā-ye, Mozākerāt-e Majles: Jalase 68 (Tehran, 1938), 614–615Google Scholar.

46 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles: Jalase 68, 616.

47 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles: Jalase 68, 616.

48 Mellī, Majles-e Shourā-ye, Mozākerāt-e Majles: Jalase 69 (Tehran, 1938), 622–623Google Scholar.

49 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles: Jalase 69, 623.

50 Article 4 of the bill restricted the rate by which the monthly rent could be raised, but allowed rent increases of up to 25 percent in respect of buildings that were bought or built after 1935 (15th Āzar 1314) and buildings whose rents had not been increased since 1933. As regards property belonging to these categories, monthly rent increases of up to 25 percent were allowable, according to Article 4, as of Mehr 1315 (September/October 1936). Mellī, Majles-e Shourā-ye, Mozākerāt-e Majles: Jalase 67 (Tehran, 1938), 611Google Scholar.

51 “Haqq-e āb o gel” means literally the “right for water and mud,” that is the “right for land and building.” “Haqq-e ādres” means the “right for address,” which has probably the same meaning as “haqq-e āb o gel.”

52 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles: Jalase 68, 617.

53 Mellī, Majles-e Shourā-ye, Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 318 (Tehran, 1959), 3Google Scholar.

54 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 318, 4.

55 Mellī, Majles-e Shourā-ye, Rūz-nāme-ye Rasmī-ye Keshvar-e Shāhan-shāhī-ye Īrān: Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 364 (Tehran, 1959), 3Google Scholar.

56 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 364, 10.

57 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles: Jalase 318, 3.

58 In a “shop-lease contract with sar-qoflī,” ownership of melk remains in the hands of the lessor. The price of this residual ownership is called the price of melk (land and buildings). In Iran's real estate market, the price of melk never runs parallel with the price of sar-qoflī, and in fact it is usually the case that the greater the increase in the price of sar-qoflī, the wider becomes the gap between the two. Iwasaki, “Sarugofurī Hōshiki Chintai Keiyaku,” 30–31.

59 Mellī, Majles-e Shourā-ye, Rūz-nāme-ye Rasmī-ye Keshvar-e Shāhan-shāhī-ye Īrān: Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 365 (Tehran, 1959), 5–6Google Scholar.

60 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 365, 5.

61 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 365, 5.

62 Dr. ‘Āmelī's statement does not correctly repeat the remarks of representative Sadrzāde who intended to say “the lessor transfers ‘haqq-e kasb o pīshe o tejārat’ to another while himself uses the shop.” But both of them assume a situation in which the person who has “haqq-e kasb o pīshe o tejārat” is not the same person who uses the shop.

63 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 365, 5.

64 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 365, 6.

65 Majles-e Shourā-ye Mellī, Mozākerāt-e Majles-e Shourā-ye Mellī: Jalase 365, 8.

66 It is thought that after the 1960s the earning power of business quarters increased quite steeply in Iran, reflecting rapid urbanization.

67 We should note, however, that stipulation of “haqq-e kasb o pīshe o tejārat” was not merely the restoration of a provision of the executive regulations of Dr. Millspaugh's Powers Law, but was an approach towards restricting the lessor's ownership, a concept that social trends had made more acceptable since it was widely known that a rise in the market price of sar-qoflī had strengthened the hirer's interests to some degree.

68 It perhaps goes without saying that the inconsistency that existed between the old sar-qoflī custom and the value concept of “haqq-e kasb o pīshe o tejārat” introduced by Dr. Millspaugh's Powers Law originated in the inconsistency between property rights in Modern Western Law and those in Islamic Law. In Modern Western Law, property rights are recognized as “rights of direct and perfect control over the objects,” and consist of three clearly distinguished functions, namely use, profit and disposal. In Islamic Law on the other hand, property rights become effective towards both ‘ain and manfa‘, where ‘ain is the object itself and manfa‘ is the temporary profit brought out by its usage, and each of these is considered to be an independent object of possessing. The range of ownership of manfa‘, that is the usufructuary right in Islamic Law, is basically ambiguous, and comes into existence only as a certain contractual right. The lessors who used to be excluded from the custom of sar-qoflī transfer were nominally the owners of the ‘ain of shops, while the hirers who used to trade freely in sar-qoflī were the owners of manfa‘. It is presumed that the relationship between lessors and hirers that characterized the old custom of sar-qoflī transfer derived from above-mentioned extreme flexibility of usufructuary right in Iran. Ono, Noriaki, Bukken-hō [The Laws of jus in rem] (Tokyo, 2004)Google Scholar; Yanagihashi, Hiroyuki, Isuramu Zaisan-hō no Seiritsu to Hen'yō [Appearance and Change of Islamic Property Law] (Tokyo, 1998)Google Scholar; Horii, Satoe, Isuramu Hō Tsūshi [A Concise History of Islamic Law] (Tokyo, 2004)Google Scholar.

69 Yoko, Iwasaki, “Iran Isuram Kakumei-go no Sarugofurī Hōshiki Chintai Keiyaku : Chintai-nin Chinshaku-nin Kankei Hō kara no Eigyō-ken Sakujo o Megutte” [“Shop-lease Contract with Sar-qoflī” after the Islamic Revolution in Iran: Deletion of Haqq-e Kasb o Pīshe o Tejārat in the Law of Lessors-Hirers Relationships], Ajia Keizai [Asian Economy], 50, no. 1 (2009): 2–25Google Scholar.