Concession Contracts — practice questions

Correct answer: B. Clause 5/3: Utilization of minerals, water and the like cannot take place without exploration, which entails an unknown amount of effort, whereas the licensee’s remuneration is usually a defined lump sum or a percentage share of output. The Shari’ah therefore classifies such contracts as a form of Ju’alah, where the State is the Ja’il, the licensee Institution is the ’Amil, and its entitlement is the Ju’l (see Shari’ah Standard No. (15)). Clause 5/2/6 separately treats a body engaged by the State to survey or explore on its behalf under Ijarah or Ju’alah.

Correct answer: D. Clauses 5/2/1 to 5/2/5: A survey licence neither makes its holder the sole surveyor nor permits extraction works. An exploration licence may give the holder the sole right to explore, and a licensee who discovers the minerals or water becomes eligible for the exclusive right to the utilization concession in the licensed area, unless the licence provides otherwise. A licensee who discovers nothing by the end of the exploration period is not entitled to the concession. The State may also grant exploration or utilization concessions directly, without following these procedures.

Correct answer: A. Clauses 5/4/1 and 5/4/2: Where the view adopted is that minerals are State property, whether extracted from State-owned or privately-owned land, concessions may apply to all lands. Where the view adopted gives the right of utilization to the owner of the land or its usufruct against a fee to the State, the following may not be subject to concession: privately-owned lands, whether vacant or built on; wastelands contracted for development; and lands allotted by the State to persons, whether by transfer of title or for temporary use.