Prospects of Islamic Banking

Texts Articles Cases Internet References 3 Acknowledgment I would like to forward my utmost gratitude to a number of people, for their generous co-operation and assistance, in the course of preparing this monograph. Mr Howard Johnson for reviewing my thesis plan, Professor Bob Lee for his invaluable insight on Chapters 1-5 and finally Dr PaulBridges and Dr Simon Norton for their enlightening views on several issues. I dedicate my efforts to ‘Bhaijan’, who has always been the inspiration and my guide throughout my life. 4 Preface At present times, it would not be inappropriate to state that Muslims the world over face the dilemma that their religion, Islam, prohibits interest in stringent terms and aims at establishing an economy that is not only free from all forms and kinds of interest, but also from anything that bears any resemblance to it.The modern economy is heavily based and reliant on interest and it is hard to envisage any set of economic relations where interes t does not play a part, whether directly or indirectly. Resolving the above-mentioned contradiction seems to be a challenge that Muslim intellectuals, bankers, industrialists, businessmen, policy-makers and ordinary consumers face. In a nutshell, this monograph seeks to provide an analysis of the workings and practices of Islamic banking industry and the products it offers; covering legal, political, social and economic issues as they relate to it.Chapter 1 commences by providing a rationale to the Islamic banking and outlining its historical journey, and ends with a discussion on the riba and its prohibition in Islam. Chapter 2 deals with the modes of Islamic finance, which certainly requires a detailed study, as it is these products that form the cornerstone of the entire Islamic banking industry. Shariah precepts are also introduced at this stage (and are discussed throughout this monograph), as they aid the process of comprehension. This chapter would also serve to introduce a d iscussion on Islamic Project Finance, dealt within the following chapter.Chapter 3 deals with Islamic Project Finance in practice, focussing on the legal and other economic issues as they relate to Shariah-Related Documentation, Construction and Lease Financing and Islamic Bonds. Chapter 4 consists of two case-studies, highlighting the Common law developments in Shariah law, as it relates to the Islamic banking industry. Two recent judgments (one from UK and another from Pakistan) are specifically perused, reflecting the stance that the judiciary in the two countries have adopted towards Islamic precepts, its interpretation and application.Chapter 5 raises issues relating to structuring and offering of Shariah-Compliant investment products. In particular, focussing on the role of financial institutions, fund promoters and Shariah advisors. The chapter concludes by providing a comparative analysis on the legal issues linked to the marketing of Islamic investment products in different jurisdictions. Chapter 6 provides an insight to the regulatory and supervisory practices of Islamic banking in various countries.Obstacles faced by the Islamic banking industry in their progress as regards their set up in interest-based banking jurisdictions is further addressed, which is supplemented by a case study on the regulatory issues of Islamic banks in India. 5 Chapter 7 is meant to be general, and briefly discusses the lessons that Conventional and Islamic banks can learn from each other, addressing issues such as the effect of technology transfer and the Bank-Client relationship, which would ultimately lead to the progress of one another. Chapter 8 concludes this monograph. It ascertains the merits of introducing Islamic banking globally.Reforms and suggestions for the Islamic banks are also appended to this chapter, together with a few conclusive remarks on the subject. It is aspired that this work will be a positive contribution on the subject of Islamic banking and it s practices. Suggestions and criticisms are solely intended to enhance the progress of this relatively nascent banking industry, which has undoubtedly shown major signs of progress. 6 Glossary of Arabic Terms This section explains some of the Arabic words and terms, most of them appearing in this study, whereas others might relate to them and would thus be of interest to the reader.Allah is Arabic for God. Fatawa (singular. Fatwa) are legal decisions or opinions rendered by a qualified religious leader (mufti). Fiqh is Islamic Jurisprudence, the science of religious law, which is the interpretation of the sacred Law, Shariah. Gharar is uncertainty, speculation. Hadith (plural. ahadith) is the technical term for the source related to the Sunna; the sayings- and doings- of the Prophet Mohammed (pbuh), his traditions. Halal means permitted according to the Shariah. Haram means forbidden according to the Shariah. Jualah is the stipulated price (commission) for performing any service.May sir mean gambling, from a pre-Islamic game of hazard. Muslim is on who professes the faith of Islam or is born to a Muslim family. Qard Hasan is a benevolent loan (interest-free). Qiyas means analogical deduction. Quran is the Holy book, the revealed word of God, followed by all Muslims. Riba is literally excess or increase, and covers both interest and usury. Shariah is Islamic religious law derived from the Holy Quran and the Sunna Shirka (or Sharika) is a society or partnership. Surah is a chapter of the Holy Quran. Takaful refers to mutual support, which is the basis of the concept of insurance or solidarity among Muslims.Umma means the community; the body of Muslims. Waqf is a trust or pious foundation. Zakat is a religious levy or almsgiving as required in the Holy Quran and is one of the Islam’s five pillars. (Courtesy: Lewis & Algaoud, Islamic Banking, Edward Elgar, 2001, Glossary, x, xi. ) 7 Chapter 1 Introduction and the Basis of Islamic Banking A. Rationale from an Islamic perspective It is argued by proponents of the Islamic banking that in today’s world, the economic system that is based on interest has resulted in concentrating the wealth in the hands of selected few, creating monopolies and further widening the gap between the affluent and the poor.Islamic finance operates in compliance with the Shariah law. Islam is not anti-commerce (the Prophet Mohammad was himself a merchant). In contrast to the modern Western principles and philosophy, Islam encourages circulation of wealth and considers its role as vital to an economy. As Dr Usmani notes in his book, â€Å"just as clotting of blood paralyzes human body, concentration of wealth paralyzes economy. The fact that, today ten richest men in the world have more wealth than forty-eight poorest countries of the world is relied by the supporters of the Islamic banking as a testament to the fact that the current economical set up is unjust and has failed to distribute the wealth propor tionately, thus leading to the downfall of humanity. 1 On considering the injunctions of the Holy Quran, it is apparent that the system of distribution of wealth laid down by Islam envisages three objects, namely: (a) The establishment of a practicable system of economy. (b) Enabling every one to obtain, what is rightfully due to them. c) Eradicating the concentration of wealth. The traditional concept of Muslims that Islam is a unique way of life distinct from all other isms and ideologies extends to the economic life of the Muslims (Umma). In the process of reshaping the economy, the areas of money, banking and investment are regarded as extremely vital to the process of Islamisation of the economy. The Islamic emphasis on co-operation as the key concept in economic life has led to reliance on profit-sharing and participation as the alternative bases for banking and investments in the Islamic framework. The concept of Islamic banking is regarded as one of the few original and crea tive Islamic ideas that have been successfully tried in recent times. In the not too distant past, the entire banking system in all Muslim countries was designed on the Western banking model; the latter being inconsistent with Islamic law primarily due to the disapproval of Riba (i. e. interest) in Islam. In other words, the elimination of Riba 1 Meezan Bank’s Guide to Islamic Banking by Dr Muhammad Imran Ashraf Usmani, Preface, page 7, Darul-Ishaat, 2002. 2Issues in Islamic Banking, Selected Papers by M. N. Siddiqi, page 9, Preface, 1983. 8 from financial transactions is the raison d’etre of Islamic Banking3. Attempts to avoid dealing in interest led to the introduction of a non-interest based banking system, commonly termed as â€Å"Islamic banking†. McDowall notes that Islamic banking not only provides services that are compliant in terms of the Muslim faith, but through the fundamental concept of profit and loss sharing with their customers, deliver a highly ethical proposition to Conventional banking. As Islamic banking offers services to its customers free from interest, any dealing or transaction that involves interest is seen as erroneous and thus forbidden. Technically, riba refers to the addition in the principal amount of a loan, which the lender receives from the borrower. This deliberately simplified picture of the true complex state of affairs is something I shall return to in the following chapter in detail. B. History The Islamic financial system has a centuries-old history, as noted by Chapra and Khan (2000): From the very early stage in Islamic history, Muslims were able to establish a financial system without interest for mobilising resources to finance productive activities and consumer needs. The system worked quite effectively during the heyday of Islamic civilisation and for centuries thereafter. † However, over the centuries, the centre of economic gravity inclined towards the Western world, and the Western fi nancial institutions (including banks) became dominant and the Islamic tradition remained dormant. 5 The Muslim society never approbated interest; throughout the thirteen enturies of its history prior to domination by imperialist powers, it managed its economy and carried on domestic and international trade without any involvement of interest. Profit – sharing and different kinds of participation arrangements served as adequate basis for savings and investment and considerable capital was mobilised for mining, shipbuilding, marine trade, textiles and other industries. 6 The issue of interest free banking regained the attention of Muslim intellectuals in the 1940’s and 1950’s. By this time, numerous local and national banks were established along the lines of interest-based foreign banks.By this time, the government of Muslim countries, in particular, those who gained political independence, found themselves compelled to engage in international financial transact ions using banking systems. The necessity for commercial banking was realised. The challenge was to 3 Profit and Loss Sharing, An Islamic Experiment In Finance and Banking by Shahrukh Rafi Khan, Introduction and Overview, page 1, OUP, 1987. 4 Islamic Banking: A Brief Historical Perspective by Bob McDowall, Business and Finance, 27th May 2004. 5 Islamic Banking and Finance by Munawar Iqbal and David T.Llewellyn, Introduction, page 1, para 1, 2002. 6 Ibid at 1, page 9, para 2. 9 avoid the concept of interest within commercial banking. The path to this was the development of the concept of profit and loss sharing (Mudarabah), the key concept from which the structure of most Islamic banking products and services are derived. 7 C. Current Status All over the world, Muslim bankers and economists are faced with the question as to how they should eliminate interest and evolve new institutions and practices, which would enable economic activities to flourish without resorting to Riba in any form? In recent years, there has been a revival of interest in formulating a modern version of the historic Islamic financial system, as many Muslims’ are endeavouring to avoid interest-based practices and transactions. Islamic banking was virtually an unknown concept thirty odd years ago. Now, fifty-five developing and emerging market countries have some nexus with Islamic banking and finance and â€Å"Riba free† has become the buzzword for financial institutions that wish to attract the large and attractive customer base in the form of Muslims all over the world who are looking for Shariah-Compliant modes of investments and financings.In addition, there are Islamic financial institutions operating in 13 other locations. 9 In Pakistan, Iran and Sudan, all banks must operate under Islamic financing principles. As noted by Justice Mufti Usmani, there were 200 Islamic banks and financial institutions in forty-three countries of the world, controlling a financial pool of US$ 100 billion,10 increasing at an annual rate of 10-15 percent. The Islamic financial industry is already one of the fastest growing industries and has tremendous potential as observed by academics in general.The unorthodoxy of Islamic banking model is apparent from the fact that those who argue in favour of Islamic banking are often regarded as ‘utopians’ and ‘romanticists’, but they claim that the best form of realism could be achieved by challenging all those systems that are based on the exploitation of man in one form or the other and in seeking to set up a just socio-economic order. Dr Siddiqi argues that an Islamic economy is capable of freeing modern man from the debt-ridden economy in which he survives, and of guiding him towards a society based on justice and equity, and ultimately leading to the path of growth and stability. 1 D. Riba and its Prohibition in Islam As observed by Lewis, in order to conform to Islamic norms, five religious feature s are well established in the literature, and must be adhered to in investment behaviour. They are as follows: 7 Islamic Banking by Mervin K. Lewis & Latifa M. Algaoud, Chapter 2, Islamic Law, pages 4 & 5, Brief History, 2001. 8 Banking Without Interest by Muhammad Nejatullah Siddiqi, Foreword, para 1 &2, 1983. 9 Australia, Bahamas, Canada, Cayman Islands, Denmark, Guernsey, Jersey, Ireland, Luxembourg, Switzerland, United Kingdom, United States and the Virgin Islands. 0 New Horizon, No. 82, December 1998, p. 17. He is the Chairman of Centre for Islamic Economics, Pakistan, and a judge of the Islamic Shariah Court. 11 Ibid at 1, page 7 & 8. 10 (a) the absence of interest-based (riba) financial transactions; (b) the introduction of a religious levy or almsgiving, (zakat); (c) the prohibition of the production of goods and services that contradict the value pattern of Islam (haram); (d) the avoidance of economic activities involving gambling (maysir) and uncertainty (gharar); (e) the provision of Islamic Insurance (Takaful).These five elements give Islamic banking and finance its distinctive religious identity. 12 For the purposes of our present chapter, we need to focus briefly on element (a), i. e. absence of interest-based transactions, which is indeed the central element among the latter. Islamic finance, like Islamic commercial law in general, is dominated by the doctrine of riba, and it is imperative that we discuss this in some detail, as to its nature and prohibition. The literal meaning of the Arabic word riba is ‘increase’, ‘excess’, ‘growth’ or ‘additional’.According to Sahacht (1964), riba is simply a special case of unjustified enrichment or, in the terms of the Holy Quran, consuming (i. e. appropriating for one’s own use) the property of other for no good reason, which is prohibited. Prohibition of interest is ordained in Islam in all its forms. The latter prohibition is strict, absolute an d certain. The whole concept of interest is fundamentally repugnant to the spirit of Islam, as could be observed from the following verses of the Holy Quran: â€Å"O, believers, fear Allah, and give up what is still due to you from the interest (usury), if you are true believers. (Surah 2: Aayat 278) And: â€Å"If you do not do so, then take notice of war from Allah and His Messenger. But, if you repent, you can have your principal. Neither should you commit injustice nor should you be subjected to it. † (Surah 2 : Aayat 279) 12 Ibid at 7, page 28, para 2, 2001. 11 Chapter 2 Islamic Modes of Financing Introduction One can vividly perceive the transition in the global banking sector, from core/retail banking, to the complex and detailed role of financing, which clearly depicts sophistication and organisation of international banking community.With the passage of time, the banks have undoubtedly become multifunctional bodies, performing various roles and providing their client s with numerous desired products. Speaking of the international banking community, Islamic banking is undoubtedly a part of it. To keep up with this modernised community and to compete with their fellow-competitors, Islamic banking has introduced and refined some alternative Islamic financing products, to the ones available in the Conventional markets, in order to cater for the Muslim community around the globe.Having said that, it is open to anyone, whether a Muslim or a non-Muslim, to take advantage of these products, as long as they comply with the requirements and precepts of Islamic Shariah. At this instance, it helps to add that the prohibition of interest in Islam does not imply that the capital is not to be rewarded, nor that risk is not be priced. The Islamic system has both fixed and variable return modes to price the capital and add ‘risk premia’ in relation to the degree of risk involved.Islamic banks provide financing using two methods. The first is based o n profit-sharing and the second one deals with modes, which rely on fixed return (mark up) and often conclude in creating indebtedness of the party seeking finance. The Islamic modes of finance are unique as the debt related with financing using mark-up modes results from real commodity sale/purchase operations, rather than the exchange of money for interest-bearing debt. Furthermore, unlike the Conventional debt, such debt is not marketable except at its normal value. 3 The whole idea behind the Profit and Loss Sharing (PLS) is seen as an innovation, a modern trend if you like, and it is aspired that it will bring several merits to the industry of investment and finance, thus benefiting the community at large. It must be borne in mind that the Islamic Shariah does not prohibit Islamic banks from issuing guarantees. However, the question of the legality of the commissions and charges received by banks in issuing the guarantees has been a subject of much debate and discourse.Several banks in the Middle East have sought to tackle the latter issue by agreeing to issue guarantees at no charge, while simultaneously asking for cash collateral of a specific percentage (30 %) of the guaranteed amount, which is then invested by the bank for its own account and benefit for the duration of the guarantee. 14 13 Progress and Challenges of Islamic Banking by Abbas Mirakhor, Review of Islamic Economics 4 (2) 1997. 14 Demand Guarantee in the Arab Middle East, J. I. B. L, 7, page 271, 1997. 12In order to circumvent the ambiguities raised, a group of Muslim scholars gave their opinion on the legality of Islamic banking practices as regards guarantees. Their opinion is summarised in two segments and is as follows. 1. The legality of the issuance of a bank guarantee relies on the legality of Shariah principles of the contract in question, in respect of which the guarantee was issued. It is evident that no Islamic bank should issue guarantees in relation to items that are prohibit ed under the Shariah, including guarantees for the payment of usurious interest, the sale of alcohol, drugs, the construction of gaming places, etc.The latter may seem to be an obstacle towards an entirely independent guarantee, but its scope should not be overstated. As long as the contract in question is considered lawful by the standards of Shariah precepts, a guarantee stipulated to be unconditional and payable on first demand would be deemed valid and in force under Shariah, notwithstanding the performance or termination of the underlying contract. . Banks are entitled to receive remuneration for the issue of a guarantee. Having said that, the amount of remuneration, to be in accordance with the Islamic Shariah, ought not be fixed in accordance with the amount of the issued guarantee, but should instead be calculated to provide a reasonable compensation to the issuing bank for the time and effort that the latter spent to issue and manage the guarantee. 5 This chapter will focus on the Islamic modes of finance, other than guarantees, namely Musharakah, Mudarabah, Murabaha, Bai’ Muajjal, Ijaraha, Ijaraha Wa Iqtina, Salam, Istisna’ and Istijrar, which are available in the global financial market today, whilst providing a comparison with the Conventional finance products, wherever possible. A(i). Musharakah The literal meaning of the Arabic word Musharakah is sharing, or Shirkah, which means being a partner.There are several kinds of partnership, and they all come under the heading of Shirkah. Musharakah is perceived as an ideal alternative for the interest based financing with far reaching effects on both production and distribution. 16 The term Musharakah as used in the modern terminology, has been recently introduced by Islamic Scholars writing on the subject and is normally restricted to a particular type of Shirkah, which is Shirkat-ul-Amwal, where two or more persons invest some of their capital in a joint commercial venture.However, at ti mes it could also include Shirkat-al-Aamal, where partnership takes place in the business of services, whereby all the partners jointly undertake to render some services for their customers, and a fee is charged from the latter and is distributed among the partners as per an agreed ratio. 17 15 Shariah Related Documentary Issues in Islamic Project Finance Transactions, J. I. B. L. R 2003, page 272, para(s) 2, 3 & 4. 16 Meezan Bank’s Guide to Islamic Banking by Dr Muhammad Imran Ashraf Usmani, 2002, page 87, Chapter 13 (Definition and Classification of Musharakah). 7 Ibid at 11, page 90. 13 Musharakah is a mutual contract between the parties, and thus all the mandatory ingredients of a valid contract must be present. Furthermore, the capital in Musharakah agreement should be quantified, specified, but not necessarily merged or in liquid form. If all the partners agree to work for the joint venture, each one of them shall be treated as the agent of the other, in all matters con cerning the business. Any act carried out by a single partner, in the normal course of business, shall be deemed as authorised by all other partners. 18All scholars are unanimous on the principle of loss sharing in Shariah, which is based on the saying of Syedna Ali ibn Talib, which is as follows: â€Å"Loss is distributed exactly according to the ratio of investment and the profit is divided according to the agreement of the partners. †19 Termination of the Musharakah agreement: Musharakah agreement will be terminated in the following circumstances. 1. If the purpose of forming the ‘Shirkah’ has been achieved. 2. Every partner can exercise his/her right to terminate Musharkah at any time after giving his partner a reasonable notice. . In the case of a demise of any one of the partners or any partner becoming insane or incapable of effecting the commercial transaction. 4. In the case of damage to the share capital of one partner before mixing the same in the tota l investment and before affecting the purchase, the partner will stand terminated and the loss will be borne by that particular partner. However, if the share capital of all the partners has been mixed and could not be identified singly, then the loss will be shared by all and the partnership will not be terminated. 0 Termination of Musharakah without the closure of the business: If one of the partners intends to terminate the Musharakah, in disagreement with the other partners, the latter issue could be resolved by mutual consent. The partners intending to run the business may purchase the share of the partner who wants to terminate his partnership, as the termination of Musharkah with one partner does not affect the Musharkah between the other partners.The latter seems to be a just and a viable approach, especially in the modern situations, where the success of a particular business is conditional upon its continuity, and the liquidation or separation at the instance of a single p artner may only cause irreparable damage to the other partners. 21 18 Ibid at 11, page 91 & 92. Ibid at 11, page 94 (Rules of Distribution). 20 Ibid at 11, page 95 (Termination of Musharakah). 21 Ibid at 11, page 96. 19 14 Security in Musharakah:As regards a Musharakah agreement between the bank and the client, the bank should in its own right and discretion, obtain adequate security to ensure that the capital invested/financed and the profit that may be earned are safe. As part of the usual practice, the securities obtained by the bank, are kept comprehensively insured at the party’s cost and expenses, till the Islamic mode of insurance (Takaful) becomes operational. It is understood that the purpose of the latter security is a precautionary measure to cover for damage(s) or loss of the principal amount due to the client’s negligence. 2 Differences between interest-based financing and Musharakah: 1. As regards interest-based financing, a fixed rate of return on a loan , advanced by the financier is predetermined, irrespective of the profit earned or loss suffered by the debtor. Mushrakah agreement does not envisage a fixed rate of return, it is in fact based on the actual profit earned by the ‘joint venture’. 2. The financier cannot suffer loss in an interest-based financing. The financier under a Musharakah agreement can, possibly suffer a loss, if the joint venture fails. 3.It is argued by Islamic scholars and other academics that the interest-based financing results in injustice, either to the creditor or the debtor. If the debtor suffers a loss, it is unjust on the creditor’s part, to claim a fixed rate of profit. And, if the debtor earns a high rate of profit, it is injustice to the creditor to provide him with only a small proportion of the profit, while the debtor taking the chunk of it. As regards a Musharkah agreement, the returns of the creditor are tied up with the actual profits earned through the enterprise, which he/she financed.The greater the profits of the enterprise, the higher the rate of return to the creditor. If the enterprise earns ‘substantial’ profits, the creditor cannot acquire all of it, but has to share it with the common people, e. g. depositors in the bank. 23 Tenure of Musharakah: As regards the determination of the period of the Musharakah agreement, the following conditions operate. (a) The partnership is fixed for such a duration that at the end of the tenure, no other business can be conducted. 2 23 Ibid at 11, page 97 (Security in Musharakah). Ibid at 11, page 98. 15 (b) The partnership can be for a very short term, during which neither partner can dissolve the partnership. 24 A(ii). Diminishing Musharakah Another form of Musharakah, which has developed in the recent years, is known as Diminishing Musharakah. It involves the participation of a financier and his client, either in the joint ownership of a property/equipment, or in a joint commercial enterpr ise.The financier’s share is further divided into several units, and it is intended that the client will purchase the financier’s units of the share, one at a time, periodically, increasing his own share, until all the units of the financier are purchased by him, so as to make him the sole owner of the property or the commercial enterprise, whichever be the case. 25 B. Mudarabah This is also a kind of partnership, whereby one partner provides finance to the other for investing in a commercial enterprise.The investment is provided by the first partner called the ‘Rab-ul-Maal’, while the entire responsibility for the management and work falls upon the other partner, who is called the ‘Mudarib’. The profits generated, are shared in a predetermined ratio. There are two kinds of Mudarabah – restricted and unrestricted. Rab-ul-Maal may specify a particular business for the Mudarib, in which case he shall invest the money in that specified bus iness only. This is known as ‘Al-Mudarabah-alMuqayyadah’ (restricted Mudarabah).But if he leaves it open for the Mudarib to undertake whatever business he wishes, the Mudarib shall be authorised to invest the money in any business he wishes. This type of Mudarabah is called ‘Al-Mudarabah-al-Mutlaqh’ (unrestricted Mudarabah). A Mudarib cannot forward the money lent to him, or carry out any activity that is beyond the course of his business, without the Rab-ul-Maal’s express permission or consent. Rab-ul-Maal is entitled to oversee the activities carried out by the Mudarib. The former can also work with the Mudarib, provided the latter gives his consent.A Rab-ul-Maal can contract Mudarabah with more than one person through a single transaction, for instance, he can offer financial assistance to X and Y both so that each of them becomes a Mudarib, and the capital of the Mudarabah transaction shall be utilized by both of them, jointly. 26 It is imperativ e that both the parties should decide in advance, on the proportion of profit that each one of them should receive. However, the parties cannot suggest a lump sum amount of profit, nor can they determine the share of any party ‘at a 24 Ibid at 11, page 102 (Tenure of Musharakah).An Introduction to Islamic Finance by Muhammad Taqi Usmani, Chapter 2, page 82, para 1 (Diminishing Musharakah). 26 Ibid at 11, pages 105-108. 25 16 specific rate tied up with the capital’. If the business has suffered loss in a few transactions and made profit in some others, then the profit should be used to offset the loss/losses incurred, and whatever remains, shall be a distributed between the parties according to the agreed ratio. 27 Roles of Mudarib: He is an Ameen (trustee), who is responsible to look after the investment, with an exception of natural calamities.He is a Wakeel (agent), as he makes the purchases from the funds provided. He is also a Shareek (partner), thus sharing the pro fits with Rab-ul-Maal. He can also possibly be a Zamin (liable), and thus will have to compensate for any loss suffered during the course of Mudarabah, due to any erroneous act on his part. 28 Termination of Mudarabah: The Mudarabah will come to an end when the specified period in the contract expires. It can also be terminated by either of the two parties, at any time, by giving notice.Furthermore, in case Rab-ul-Maal has terminated the services of Mudarib, the latter will continue to perform his acts under the contract, until he is informed about the termination. 29 C. Murabaha In this particular kind of sale, the seller clearly mentions the cost of the sold commodity, and then sells it to the buyer by keeping a profit margin. Thus, Murabaha should not be seen as a loan given on interest, it is rather a sale of a commodity for cash/deferred price. As regards Bai Murabaha, the bank purchases a commodity, on a client’s behalf, and then resells it to the latter, on the basis o f plus-profit.Under this kind of agreement, the bank discloses its cost and profit margins to the client. Thus, unlike Conventional banks (which advance money to a borrower), the bank will buy the goods from a third party and sell it onwards to a customer for a pre-agreed price, thus abstaining from interest. The growing use and vitality of Murabaha agreement is proven by the fact that in Islamic banks world over, 66% of all investment transactions are through Murabaha. 30 It is argued by critics of Islamic banking that Murabaha agreements are in reality interest-based contracts, under the garb of a notional sale and buy ack transaction, profit being synonymous to interest in this case. Islamic scholars have reverted to this argument by stressing that a ‘true’ Murabaha financing structure is quite different 27 Ibid at 11, 109-111. Ibid at 11, page 111, para 5. 29 Ibid at 11, page 112, para 2 (Termination of Mudarabah). 30 Ibid at 11, page 125, Chapter 16 (Murabaha). 28 17 from an overdraft provided by Conventional banks and the former offers various benefits to the bank and its customers, namely that depositors have a share in the bank’s profits.Furthermore, the basic difference is the Aqd (contract), which specifies the Islamic conditions, as against the interest element in Conventional banking transactions. 31 Basic Rules for a Murabaha transaction: 1. The subject of sale must be in existence at the time of the sale. 2. The seller must have the ownership of the commodity in question. 3. The subject of sale must be in physical or ‘constructive possession’32 of the seller while he is selling it. 4. The sale must be instant and absolute; no provisions for contingencies should be made part of the contract. . The goods/commodity to be sold, must reflect a value and must be specified to the buyer, leaving no room for ambiguities or confusion as between the parties. 6. The sale must be unconditional and the price of the commodity sh ould be certain. 33 If a client defaults on any payment(s) by the due date, the price cannot be changed nor can the penalty fees be charged, as against him. Nevertheless, as regards dishonest clients, who knowingly and deliberately default, they should be made liable to compensate the bank, subject to the following two conditions. a) The defaulter must be given a grace period of at least a month. (b) It must be proved beyond reasonable doubt that the client is a defaulter, and he has no justifications for his latter behaviour. 34 Murabaha can only be used when a commodity is to be purchased by a customer/client. It is highly pertinent to peruse the subject matter of the Murabaha, as the documents must be signed for obtaining funds for a specified purpose only. It needs to be stressed that the Murabaha consists of several different contracts and they all play their part one after another, in respective stages. 5 31 Ibid at 11, page 126, para 2 (Arguments against Murabaha). It refers to a situation where the possessor has not yet taken the physical delivery of the commodity, yet all rights and liabilities of the commodity are passed on to him including the risk of its destruction. 33 Ibid at 11, page 126-127 (Murabaha Rules). 34 Ibid at 11, page 129, para 1 (Penalty for Default). 35 Ibid at 11, page 130-131 (Basic Mistakes in Murabaha Financing). 32 18 D. Bai’ Muajjal This is basically a sale on deferred payment.The deferred payment becomes a loan, which the buyer pays in a lump sum or instalment (as agreed between the parties). In Bai’ Muajjal all those items/commodities can be sold on a deferred payment, which come under the heading of capital, where quality does not make a difference but the natural or intrinsic value does. The price to be paid must be agreed and fixed at the time of sale. The buyer must be given complete possession of the commodity in question, whilst the seller is free to ask the buyer to provide him with guarantee in the form of a mortgage or any other item. 6 E. Ijaraha In an Islamic leasing (Ijaraha), the owner of the asset, while retaining the corpus of the asset, transfers its usufruct to another person for an agreed period, at an agreed consideration. All the liabilities arising from the ownership must be endured by the lessor. The period of lease must be determined in clear terms and the asset must be clearly identified as between the parties. 37 The lessee is liable to compensate the lessor for all the damage(s) caused to the leased asset by any misuse or negligence on his part.The rental should be determined at the time of the contract for the whole duration of the lease. The lessor cannot increase the rental unilaterally, and must consult the lessee in that regard. 38 Lease was not originally a mode of financing, however, certain financial institutions have adopted leasing as a mode of finance instead of a long term lending arrangement, which is based on interest. The transaction of ‘fina ncial lease’ may be used for Islamic financing, subject to certain conditions. It does not suffice for the latter purpose to interchange the term ‘interest’ by ‘rent’ and ‘mortgage’ by ‘leased asset’.It must be emphasised that there is a difference between leasing and an interest-bearing loan, as regards Islamic Shariah. 39 Unlike the contract of sale, an Ijaraha agreement can be based on a future date, thus it is different from a Murabaha agreement in that respect. In majority of the cases concerning ‘financial lease’, the lessor (financial institution) will purchase the asset through the lessee himself. The lessee makes the purchase on behalf of the lessor who then pays the price to the supplier, either directly or through the lessee. 0 The lessor, being the owner of the asset, and having purchased it through his agent (lessee), is liable to bear all the expenses incurred in the process of its purchase and its import to the country of the lessor (if that is the circumstance), e. g. expenses of freight and customs duty etc. 41 36 Ibid at 21, pages 102-103 (Bai’ Muajjal). Ibid at 21, pages 158-160. 38 Ibid at 11, pages 148-149. 39 Ibid at 11, page 149 (Lease as a Mode of Finance). 40 Ibid at 11, page 150 (The Commencement of Lease). 41 Ibid at 11, page 152, para 3 (Expenses Consequent to Ownership). 37 19 Variable Rentals in Long Term Leases:Several Islamic banks use the rate of interest as a benchmark to calculate the rental amounts, e. g. London Interbank Offered Rates (LIBOR), which is the rate of interest at which Conventional banks borrow funds from other banks, in marketable size, in the London interbank market. The idea is to earn the same amount of profit through the mode of leasing, as earned by the Conventional banks by advancing loans on interest. Instead of fixing a definite amount of rental, the Islamic banks calculate the cost of purchasing the asset that is to be leas ed and intend to earn an amount equal to the rate of interest.Thus, the agreement between the parties provides that the rental will be equal to the rate of interest or to the rate of interest in addition to something. Since the rate of interest is variable, it cannot be set for the whole duration of the lease. The latter arrangement has been objected to on the following two grounds:42 (a) By subjecting the rental payments to the rate of interest , the transaction is made to resemble an interest-based financing. The modern Islamic scholars have denied that argument and have stressed that the rate of interest is only used as a benchmark.As far as the requirements of Shariah are concerned, they must be fulfilled for a valid lease to be executed, and it is the latter that counts, as regards the legality of the Islamic financial lease. The vital difference between an interest-based financing and a valid Islamic lease does not lie in the amount that has to be paid to the financier or the lessor. However, it is recommended that the use of rate of interest as a benchmark must be avoided at times, where possible, so as to distinguish it with the non-Islamic transaction. 3 (b) The second criticism relates to the situation that the variations of the rate of interest are not determined and the tying up of rental with that rate of interest implies Jahalah and Gharar (uncertainty, especially in a contract that may lead to disputes later on), which are not permissible by Shariah precepts. It is one of the basic tenets of Islamic Shariah that the parties must be well aware of the consideration in every transaction they enter into.This objection has been responded by looking at the reasons of prohibition for Jahalah, namely that Jahalah may lead to disputes between the parties and it might render the parties susceptible to an unforeseen loss. As regards the first objection, both parties make their decisions with mutual consent upon a welldefined benchmark serving as a criterio n for determining rent, thus no question of dispute arises. Relating to the second objection, several contemporary scholars suggest that the relation between rent and the rate of interest is subjected to a limit.E. g. the base contract may provide that the rental amount given after a specified period will be altered according to the change in the rate of interest, but in no instance, it will be higher than 15% or lower than 5 % of the previous monthly rent. The latter implies that if the increase in the rate of interest is more than 15%, the rent will be increased only up to 15%, and if it decreases by more than 5%, the rent shall not be decreased to more than 5%. 44 42 Ibid at 11, page 154 para 1. Ibid at 11, page 155. 44 Ibid at 11, pages 155 & 156. 43 20 F.Ijaraha Wa Iqtina It is permissible in Islamic Shariah that instead of there being a sale, that the lessor signs a separate agreement, making a promise to gift the leased asset to the lessee at the end of the lease period, on c ondition that the lessee makes all the payments due for his/her rent. The latter arrangement is known as Ijaraha Wa Iqtina. It has been affirmed by a large number of contemporary Islamic scholars and is widely practised by the Islamic banks and financial institutions. Although, the validity of this arrangement is subject to two conditions.They are: (a) The agreement of Ijaraha itself should not be subjected to signing of sale or gift. The promise should be made in a separate document. (b) The promise must be unilateral and binding on the promisor only. If the leased asset is used by numerous users, the lessee cannot sub-let the asset, except with the express permission of the lessor. The lessor can sell the leased property to a third party, whereby the lessor is replaced by the new owner, and the lease agreement would then be between the new owner and the lessee. 5 This form of financial leasing has been subjected to criticism as it is not compatible with the modern financing agreem ents, as a non-binding promise cannot be enforced before courts and is thus not a legally satisfactory solution. In an attempt to reconcile Ijaraha Wa Iqtina with the modern financial structure, it is suggested that the lessor’s failure to honour his non-binding promise should be subjected to a pre-contractual liability, or culpa in contrahendo.In civil law jurisdictions, this concept of pre-contractual liability contemplates that the contracting parties will conduct their pre-contractual dealings in good faith and also points to any relevant facts, which are within the commercially usual limits, to the other party. If a party is unsuccessful in carrying out its duties, and thus in breach of contract, then it will have to pay the damages to the other party for not fulfilling the agreement. By adopting this suggestion, the promisor in breach, is made liable for the promisee’s costs, in finding another similar object to purchase. 6 G. Salam This mode of financing can be used by modern banks and financial institutions, especially in order to finance the agricultural sector. In Salam, the seller undertakes to supply specific goods to the buyer at a future date, in exchange of an advanced price fully paid at the spot. The payment is made in cash, and the supply of purchased goods is deferred. 45 Ibid at 11, pages 161-162 (Ijaraha Wa Iqtina). Construction and Lease Financing in Islamic Project Finance by Klarmann, J. I. B. L. R, page 65 (Lease Financing: Ijaraha Wa Iqtina). 6 21 Purpose of Salam Contracts: The purpose is to meet the need of farmers, who operate on a small scale, and thus need the finance for farming purposes, so that they can carry out their day-to-day activities. Moreover, it is designed to assist the traders, in their export/import transactions. Salam proves beneficial to the seller, as he receives the price in advance, and at the same time, advantageous to the buyer, as the price under the Salam arrangement is normally lower than th e price in spot sales. 7 The permissibility of Salam is seen as an exception to the general rule that prohibits forward sale and thus it is subject to certain stringent conditions, which are as follows: Conditions of Salam: 1. The buyer must pay the full price to the seller at the time of effecting the sale. The basic idea behind the Salam agreement, is to satisfy the ‘instant need’ of the seller. If it is not paid in full, the latter purpose is not achieved. 2. The quantity and the quality of the goods must be specified. 3. Salam cannot be effected on a particular commodity or on a roduct of a particular field or farm. 4. The contract must expressly state the quality of goods, thus leaving no room for ambiguities, which might lead to disputes later on. Same is the case as regards the quantity; it must be agreed upon in absolute terms. 5. The exact date and place of the delivery must be specified. 6. Salam cannot be effected in respect of things, which require them to b e delivered at the spot. 7. Since the price in Salam agreements is generally lower than the price in spot sales, the difference between the two prices may be a valid profit for the bank. . A security in the form of a guarantee, mortgage or hypothecation may be required in order to ensure the delivery from the seller. 9. The seller must deliver to the buyer, the commodity, and not the money at the time of the delivery. 48 H. Istisna’ Istisna’ is a sale transaction whereby a commodity is transacted before it comes into existence. It is an order for a manufacturer to manufacture a certain kind of commodity, to be used by the purchaser. The manufacturer uses his own material to 47 48 Ibid at 11, page 133 (Purpose of Use).Ibid at 11, pages 134-135 (Conditions of Salam). 22 manufacture the required goods. The price must be fixed with consent of all the parties involved. All other vital specifications of the commodity must also be fully settled. Subject to the acknowledgment or receipt of prior notice, either party can cancel the contract before the manufacturing party has begun the work. The time of delivery need not be fixed, however a time limit may be imposed as between the parties. 49 I. Istijrar Istijrar means purchasing the goods from time to time, in different quantities.It is an agreement, whereby the purchaser buys something at regular intervals, without any formal offer or acceptance mode or bargaining. There exists one master agreement, which contains all the terms and conditions of the purchases in a finalised form. There are two kinds of Istijrar: (a) where the price is determined after all the transactions/purchases are completed; (b) where the price is determined in advance, but the purchase payment is made from time to time. As regards the Islamic mode of financing, only (a) is relevant. Istijrar can be adopted as a viable mechanism, in the case of suppliers of the borrower.In the latter case, the bank enters into a Murabaha agreement ( Agreement to Purchase) with the suppliers (mainly trading companies), that it will purchase the assets from them at a market price or at a pre-determined discount from the market price. Whenever the customers demand, the bank can purchase that particular asset from the suppliers on the basis of Istijrar, and sell it onwards to the customer, on the basis of Murabaha. 50 49 50 Ibid at 11, pages 139-142. Ibid at 11, page 143-145 (Istijrar). 23 Chapter 3 Application of the Islamic Modes of Finance: A Research on Islamic Project Finance A. Shariah-Related Documentary and Other IssuesIn recent years, Islamic financial institutions have actively started to structure and participate in transactions, which are associated with long-term trade, as opposed to the short term trade related transactions (e. g. Murabaha). This transition has given rise to a number of important Shariah and documentary issues. The prevalent backdrop is that the Islamic bankers and their advisers now face even more st ringency, regarding the setting up of Shariah-compliant structures that are accepted commercially and are also in conformity with the existing governing law of that particular jurisdiction where they operate. 1 As noted earlier, one of the basic principles of Islamic finance is that at a particular stage in the transaction, the financial institution will be the owner of all or part of the asset that is being financed, and under Shariah precepts, several forms of risk related with being an owner cannot possibly be passed on to the customer or a third party. The latter is the most defining difference between an Islamic financial system and a Conventional one. These additional ownership risks become more serious when the transaction involves complex capital assets, e. . a power plant or an aircraft, as the potential exposure faced by the Islamic financier as an owner can be very critical and significant. It is expected that since the Islamic financial institutions are willing to take g reater risks as compared to their Conventional counterparts, this should result in greater rewards for the former. It is submitted by the academics that this is not necessarily the case. 52 In several countries, e. g. the idea of interest is sanctioned by an Act of Parliament, and the latter being affirmed by the courts.Having said that, it is imperative to notice that laws of several states are embedded in Shariah law and concepts, if not in whole then in part. It is observed that a proposed Islamic structure that has the approval of a Shariah board must be examined against the local statutes of that particular state to check whether the structure raises any adverse issues under those laws, and if so, then the proposed structure will surely need amendment and another approval from the Shariah Board.For example, under the Shariah precepts, a transfer of an interest in real estate is effective upon an agreement, signed between the buyer and seller. However, such an agreement may not be recognised by the local laws (at least as regards the bona fide third parties) until and unless the transfer is recorded in the concerned land registry. Sometimes, the problem might be such that a person to whom a real estate interest has been validly transferred under Shariah principles, would not necessarily be recognised as the legal owner under the local municipal 51 2 Ibid at 14, page 317. Ibid at 39, page 317 (Risk Reward Issues). 24 laws. In such situations, the legal and financial consultants, giving their expert advice on such structures, are required to strike a balance, so that the Shariah conditions and requirements are satisfied and are also accepted and applicable under the governing law. 53 There are certain issues relating to the nature of Islamic financing that come up too often and thus need to be discussed. Some of these are discussed below but the list is not intended to be exhaustive. Indemnities:The Shariah principle governing the operation and conditions of Islamic financing expressly prohibits indemnity for a loss or damage that is not caused by the customer’s default. Shariah sees the whole idea of seeking indemnity from the customer as unfair, notwithstanding the fact that the particular asset may have been chosen by the customer. Matters relating to the title to the asset, its fitness for its intended purpose and taxes that are imposed on ownership raise some serious and significant credit issues when one is dealing with a major capital asset, e. . aircraft or a vessel. Having said that, there must be some alternate basis for an Islamic financier to claim indemnity. Suggestions have been forthcoming in the form of seeking indemnities based on the concept of public need or necessity or by other methods, to cover the risks. E. g. such methods could include obtaining the benefit of warranties from the supplier or the manufacturer of the asset and assurances that the asset(s) are in perfect condition and have been validly perfe cted for the intended use.The financial position of the assignor (and any available insurance protection relating to the assignor) would also have to be assessed. 54 In contrast, in the case of Conventional financing, the customer often provides wideranging indemnities in order to protect the bank from any risks related with the ownership or use of the asset. The banks are not concerned with the issue of fault and are more keen to ensure that they are insulated from credit risks, arising from the ownership, use or operation of the asset. 55Warranties: As the owner of the asset, the Islamic financier may not be able to exclude the benefit of some warranties to its customer under the Shariah principles. In few instances, the Islamic financier has the benefit of the warranty from a third party that can be assigned to the customer (i. e. from a manufacturer). It has been permitted that the Islamic financier could expressly exclude any warranty from the Islamic financial institution in t he customer’s favour to the extent that it is covered by the assigned warranty.This does not seem to be an adequate solution in that it is often impossible to describe with accuracy the extent of the warranty being assigned. Inevitably, some of the warranties may not be covered by a third party assignment and thus the Islamic financier will still be providing the benefit of some warranties to the customer. In a Ijaraha (leasing) transaction the balance of such warranties, which cannot be excluded under Islamic principles may possibly be covered by insurance. 3 Ibid at 39, page 318, para 2 & 3. Ibid at 39, page 319 (Indemnities). 55 Ibid at 39, page 319. 54 25 Thus, if warranties will raise Shariah related issues, the Islamic financier must immediately try to identify those residuary warranties that cannot be covered to decide whether or not this renders the transaction commercially unacceptable, particularly, if its financial return will not reflect these additional risks. 56 Compensation and Liquidated damages:In Conventional financing, if the borrower defaults on any payment due on him, default interest is charged as against him, thus compensating the banks. This approach is unacceptable as regards Islamic financing, due to the obvious reason of any such compensation/liquidated damages tantamount to charging interest. Unfortunately, the experience of Islamic financiers in trusting their customers, that they would pay on time, has not really been successful, and there is a general agreement that there must be some form of penalty if a customer does not pay on time.The Islamic financier can only claim compensation if it suffers loss or damage due to the true fault of the customer. The compensation must reflect the actual loss of the financier. Most Islamic financings have a compensation provision dealing with failure to pay on a due date and which uses a benchmark linked to LIBOR, as discussed above. The entire purpose of such provisions is not to compe nsate the financier, but to treat it as an incentive to the customer to make payments by the due date. 57 Events of default:In a Conventional financing, there will be a progression of events of default, which will give rise to rights in the favour of the banks, and in particular, the right to demand the repayment of outstanding debts. As a general principle, the latter view is accepted by the Shariah law, as long as the customer is at fault. In a Conventional financing, there will be events of default that are not within the customer’s control. It is considered as unviable to include such events of default in an Islamic financing, and each event must be diligently drafted to take account of the latter. 8 This, however, raises credit risks, which if not compensated for by the customer in the form of an increased return to the Islamic financier, may force the latter to take on extra risk, which will be without any reward. This issue becomes even more vital in the case of a co-f inancing that involves both Islamic and Conventional financing. The Conventional banks will surely not like the idea of Islamic facility not going into default at the same time as them, and this could possibly have adverse effects on the security sharing under inter-creditor arrangements.It has been argued that in these circumstances the Conventional banks should accept the position of Islamic financiers, however, the prevailing position is that the Conventional financing is the controlling financial force in the world and thus it is often arduous for Islamic financial institutions to have their views stand in a co-financing. Examples of events of default that can potentially cause dispute between Conventional and Islamic financiers would be nationalisation, requisition, loss of air traffic rights and force majeure. If there is disagreement as regards any of the above mentioned events of 56Ibid at 39, page 320, para(s) 2 & 3. Ibid at 39, page 321, para 1. 58 Ibid at 39, page 321, (E vents of Default) para 1. 57 26 default, then it is advised that they must be put into a separate category of events called by some other name, such as events of ‘mandatory prepayment’. 59 If there is an event of default the customer may be obliged to purchase the asset, at a predetermined price. That obligation must not be listed in the same document (i. e. the lease) to avoid concerns regarding conditionality but should be contained in a separate document, e. g. an option or a deed of covenant.If the event of mandatory prepayment arises, the customer will not be in default but the happening of such an event will enable the financier to exercise a right or option granted to it by the customer in a separate document requiring the customer to purchase the asset. The conclusion to this whole procedure being that, on the face of the document, the events of default will be Shariah-compliant and for events of mandatory prepayment, there will be a Shariah-compliant system tha t results in the asset being purchased, thus clearing the amount that the customer owed the Islamic financier. 0 Set-off: It has often been disputed that the grant of set-off rights that are solely in favour of the Islamic financier, is against the Shariah precepts, which require an Islamic finance transaction to be fair and reasonable when taken in the context of the customer. The aforementioned issue has been resolved in various transactions by providing that there are statutory set-off rights that cannot be waived and which keep an acceptable balance as regards favouring the financier and the customer. 61 B. Construction and Lease FinancingSpecific Issues in Relation to Ijaraha (Leasing) Transactions Insurance and Maintenance Obligations: As per the Shariah principles, the lessor must remain liable for several insurance and major maintenance obligations. Obligation and the financial consequences cannot be transferred on to the lessee, pursuant to the terms of the lease. The insur ance obligations relate to the structural or property insurance. However, the lessee can be held responsible and liable for the cost of operational insurance, such as the business interruption insurance and third party insurance (to the extent that it relates to operational risks).The latter mentioned principles can possibly have serious implications for an Islamic financier. The direct costs involved in, e. g. maintaining an aircraft and the indirect costs and liability resulting from the failure to perform such maintenance can prove to be very significant. 62 There must be some mechanism to transfer some risk on to the lessee, or sharing of risk if you like, which, on the face of the document is Shariah-compliant. 59 Ibid at 39, page 321, para 3. Ibid at 39, page 321, para(s) 4 & 5. 61 Ibid at 39, page 321, (Set-off), para 1. 62Ibid at 39, page 322, (Insurance and Maintenance Obligations). 60 27 The most obvious approach is to appoint the lessee as the ‘service agent’ of the lessor (Islamic financier) in order to perform these activities, which would include paying the insurance premiums and the maintenance costs. The service agency agreement must specify that the service agent will indemnify the lessor for any default on his part, in the performance of these obligations. However, on the basis of general precepts, an agent must be compensated for any costs properly incurred on behalf of its principal.Usually, a nominal fee is paid to the se

Building systems integration for enhanced environmental performance Essay

        Culture & Technology            Architecture is considered as the art that involves designing and the construction of buildings and since Antiquity, the art of architecture has been known to be closely related and associated with history of art (Jaradat, 2012). The reasons why architecture has been closely related to art is that a lot of the public works, such as the religious buildings were constructed with aesthetics in mind in addition to the functionality of the buildings (Jaradat, 2012). The buildings were built with a primary aim of inspiring people and also perfume the function of serving the public. For this reason, the buildings involved the service of various people in the society which included the craftsmen and various artists in the society.             Furthermore, labourers were also part of the teams that took part in the construction of the buildings ensuring that the artistic features and the functionality of the buildings were brought out as required. The interior of the buildings as well as the exteriors of the buildings were used as showcase for the various fine arts paintings, relief sculptures, frieze, and stained glass (Demkin, & American Institute of Architects, 2008). Furthermore, the decorations included various works of art such as the metalwork and the mosaic. It is also to be noted that the development of public buildings also involved visual arts. From the many centuries that have passed, the primary functions of early architecture were to have a consolidation of security and power within the buildings. Furthermore, the aim of the works of architecture was also to make the gods happy (Jaradat, 2012). It was observed that as the society became richer, the functions that were performed by early ar chitecture also became more important in the society.             According to Emmitt, (2013), there have been a lot of technological developments that have taken place over the past years which have led to the transformation of how buildings are constructed. The development in technology has changed the way buildings are designed and the types of buildings that are being constructed across the world. There has been great change in the materials that are being used by the process engineers in the construction of buildings (Emmitt, 2013). The materials being used in construction of buildings have made the work of the process engineers easier than it was before the developments in technology. It has become possible for the process engineers to construct any type of building that they want, primarily because of the type of materials that are currently being used.          While architectures have continued to adopt the ancient designs and styles of buildings, process engineers have been busy embracing changes that have been brought up by developments in technology, as observed by Quatman, & Dhar, (2003). It is observed that over the centuries, what architectures have been doing in the society is relying on the past ancient designs as guidance. A lot of the architectural works have been influenced by ancient designs meaning that architectures have been slow in embracing changes brought about by technological developments. Compared to architectures, process engineers have been in the forefront in embracing technological advancements (Vough, et al., 2013). Process engineers have been able to embrace technological developments through the materials that they use and the equipment used in carrying out the construction works.             Furthermore, Vassigh, & Chandler, (2011) has observed that architecture has continued to remain immune to the forces of transformation as well as progress over the centuries primarily because the profession has not fully embraced the changes and developments in technology. Architectures have continued to make use of the past designs of buildings to gain inspiration for their work (Vassigh, & Chandler, 2011). It has been observed that architects have been slow in embracing the changes brought by developments in technology compared to the master builders who have been able to make use of technology for new development in building and construction. Furthermore, research has shown that master builders have continued to rise up today in ranks from that of being process engineers to being the primary players in construction of buildings (Marsh, 2000). The master builders have taken the duty of identifying the suitable materials for constructions and the suitable design that can match certain materials. Architects have continued to be reserved in developing new models in construction.                A lot of reservation has been made by architects for the purpose of maintaining the ancient culture in construction of buildings. On the other hand, master builders have taken the challenges of experimenting with new ideas on building materials and types of designs in construction (Marcus, 1989). The developments in technology have made it easy for the master builders to become more innovative in designing of buildings and the construction of buildings. The use f technology has enabled master builders to construct buildings that were never there in the past centuries through the use of material that is more durable. The lack of change in the culture of architects of getting inspiration from ancient buildings from time to time has been a contributor to the view that master builders have risen in ranks more than the architects (Chappell, & Willis, 2013).             It has been observed that both in the private and the public sector, the owners and investors in buildings like to ensure that there is accountability in the buildings that they construct. The accountability that is needed is with regard to the materials being used and the quality of building that is being constructed (Jaradat, 2012). To ensure that there is no confusion and that there is total accountability, the process engineers are the ones that take the whole responsibility. The process engineers are tasked with the issue of designing the buildings, allocating the costs and the types of materials that are supposed to be used. Furthermore, the process engineers are the ones that are in the forefront in determining the type of human resource that is need for the completion of the buildings as per the needs of the owners (Jaradat, 2012).                  Therefore, considering that architects are only concerned with the designing, it becomes impossible for the owners of the buildings to hold the architects accountable in case of anything (Vough, et al., 2013). The lack of accountability on the side of the architects has left6 room for the process engineers to take up the responsibility of being accountable. Therefore, the owners of buildings tend to employ the services of the process engineers in terms of the design and the construction of their buildings, leaving the architects out of the loop (Jaradat, 2012). From the perspective of accountability, it can be noted that process engineers are the ones that rise up to the ranks of master builders as compared to the architects who are left to continue undertaking their role of designing (Chappell, & Willis, 2013).                According to Marsh, (2000), over the years, research has shown that there has been great change in terms of leadership in construction projects. It has been observed that owners of constructions, private and public, both have been observed to employ the services of contractors. The use of contractors to take care of the construction project has led to what is referred to as contractor-led construction, an observati0o made by Rajpatty, (2008). Under the contractor-led construction system, the contractor is at the helm of the construction project and is the one that hires the architects to design the buildings. According to research done, the owners of construction projects feel safe with this type of arrangement where the contractor is at the helm. It provides some form of convenience to the client and offers a one-stop-shop where the client can be able to get everything that is needed to complete their project without having to engage the services of differen t people. Rajpatty, (2008) observes that the contractor-led projects create a single point of control and responsibility within a project in terms of designing o9f the buildings and the construction of the buildings.                  Furthermore, it has been identified that the system whereby the contractor or the process engineer is at the helm, of a construction projects enhances control over costs and the schedule of the project (Chappell, & Willis, 2013). The client is able to monitor the progress of their buildings as it is being constructed and can be able to trace how the costs are incurred in the project. It has also been noted that clients prefer the contractor-led system in building and construction because it is believed to foster some form of collaboration between the contractor and the client (Marcus, 1989). The end result of the collaboration that is fostered Through the use of the contractor-led system is that there is a process that is less adversarial and the construction of very high quality buildings (Marsh, 2000).               It can be noted that indeed the roles of that the architects play has changed a lot and the role that process engineers play. The process engineers have continued to rise in ranks due to the accountability that clients require, and which the architects find difficult to provide (Vough, et al., 2013). Furthermore, it has been noted above that the aspect of control over costs and ensuring collaboration has also been part of the contributing factors that have led to the rise in the ranks of process engineers as compared to the architects who seem to be immune to change.             Furthermore, it has been noted that technology has been a major booster to the rise in ranks of the process engineers in terms of the materials for construction and the equipment used in the construction projects (Chappell, & Willis, 2013). Therefore, the rise in ranks of the process engineers compared to the architects leads to some questions that need to be answered. Are there any impacts that architects bring in the construction of buildings? Is the role of architects becoming obsolete? What need to be done to improve the role played by architects in the construction industry? These are some of the questions that need to be researched to help understand why process engineers have risen in ranks compared to architect. References Chappell, D., & Willis, A. (2013). The Architect in Practice. Chicester: Wiley. Demkin, J. A., & American Institute of Architects. (2008). The architect’s handbook of professional practice. Hoboken: Wiley. Emmitt, S. (2013). Architectural Technology: Research and Practice. New York: Wiley. Jaradat, S. (2012). The Architect’s Role and Interactions in BIM-enabled Projects.Marcus, P. (1989). Building a Construction Contract That Works: The Owner’s Role. Arbitration Journal, 44(1), 3-14. Marsh, P. D. V. (2000). Contracting for engineering and construction projects. Burlington, VT: Gower. Quatman, G. W., & Dhar, R. R. (2003). The Architect’s Guide to Design-Build Services. Hoboken, NJ: John Wiley & Sons. Rajpatty, S. J. (2008). The Role of the Estimator in Today’s Construction Industry. AACE International Transactions, 1-9. Vassigh, S., & Chandler, J. R. (2011). Building systems integration for enhanced environmental performance. Ft. Lauderdale, FL: J. Ross Pub. Vough, H. C., Teresa Cardador, M. M., Bednar, J. S., Dane, E., & Pratt, M. G. (2013). What clients don’t get about my profession: a model of perceived role-based image discrepancies. Academy Of Management Journal, 56(4), 1050-1080. doi:10.5465/amj.2011.0490 Source document

Object Relations Case Formulation

1. Identifying details Name: Katrina Katryn Age: 20 Gender: Female Marital status: Single Dependents: N/A Highest level of education: Matric Present occupation: Student (Psychology 1st year) Reason for referral: Self exploration, dealing with the past, improving interpersonal experiences. Referral source: Self-referred 2. Presenting problem She experiences considerable anxiety in interpersonal situations. In addition she has feelings of inadequacy, worthlessness and hopelessness. These difficulties lead to academic concerns and relational problems in her current situation.Her self-esteem is extremely low and she expressed that she hates doubting herself constantly. 3. History of presenting problem. She was sexually abused when she was between 6 and 9 years old. The rest of the time she was emotionally and physically abused. She has always felt inferior and had low self-esteem as long as she can remember. She was diagnosed with depression at age 15 and was put on medication. She canno t remember the name of the anti-depressants and did not remember the exact diagnoses. The feelings of hopelessness and her academic problems has started relatively recently according to her. 4.Past illnesses Psychiatric Mood disorder (She cannot remember the exact diagnoses. ) Medical Nothing significant Anti-depressants (unknown) Adaptive features and Strengths She is intelligent and ambitious. She has shown courage in confronting her father about the abuse and her decision to mend their relationship show courage. She seems to have insight into her difficulties and the processes that keep them alive. She seems to be willing to change and to explore these difficulties in depth. The fact that she removed herself from her deleterious environment in adolescences is indicative of her self-preservative abilities.She is currently in therapy on a self-referral which again points out these abilities. She has taken responsibility of protecting her siblings in the past and the present which i ndicate her compassion for others. She seems to trust me and it is likely that we will form a therapeutic alliance. 5. Personal history I. Birth and early development As far as Katrinais concerned she was a wanted and welcomed baby although the pregnancy was not planned. The pregnancy was normal at 40 weeks without any complications. She did not experience any serious illnesses and was not involved in any accidents.She reached all her developmental milestones within the average intervals. This thus indicates a normal developmental trajectory throughout infancy. Katrina’s socio-emotional history was significantly compromised by physical, emotional and sexual abuse. She had an extremely wounding relationship with her father who mistreated her and then after the mistreatment behaved alluring towards her. She mentioned this several times during most of our sessions. She also had an ambivalent relationship with her mother during this time.Her mother would at times be very loving, caring and supportive, yet at other times ignore her cries for help and her need for her affection. She did not enjoy any close knit friendships and it seems that the only person she shared a healthy relationship with was her grandmother. This relationship however was constantly under attack from her parents. She described herself as an obedient and shy girl who felt lonely and different. II. Childhood During her childhood Katrina lived in a very traumatic family situation full of psychological, sexual and physical abuse.She mentioned that everything from her childhood was connected to a bitter feeling. She lived with her mother, father and younger sister. Her father was unhappy, aggressive, insecure, but in her childhood she experienced him as a powerful and great authority. Her father was sexually abused as a child. He was very strict and required discipline from his two children, especially from Katrina. He set strict rules and if these were broken, he beat Katrina. If she oppose d him and objected to what he said, he hit her. When she was seven years old she was sexually molested by him on a regular basis.This continued until she was 9 years old and then her father stopped the sexual abuse. The emotional and physical abuse nevertheless continued throughout her childhood until she emancipated herself from her parents. Katrina’s socio-emotional history was significantly compromised by physical, emotional and sexual abuse and by the response of her mother during this time. On the one hand her mother was a warmer person than her father but she was subordinated to Katrina's father. Her mother's attitude towards her was very variable.Sometimes she was kind and interested in her, yet in cases when she did not like something she scolded, even hit her, which Katrina understood as the end of their relationship and love. But when her mother showed her compassion again, Katrina immediately forgave her. Her mother would at times be very loving, caring and support ive, yet at other times ignore her cries for help and her need for her affection. She did not enjoy any close knit friendships and it seems that the only person she shared a healthy relationship with was her grandmother.This relationship however was constantly under attack from her parents. She described herself as an obedient and shy girl who felt lonely and different. Katrina's parents often quarrelled with each other, although father was less often physically aggressive towards the mother than towards Katrina. Katrina blamed herself for being the cause of disagreements, e. g. when she wanted something, parents quarrelled, because her father prohibited it while her mother allowed. So Katrina preferred to suppress her wishes and remained quiet to avoid quarrels.According to her conclusion there would be peace at home if she was a good girl. Even at her young age, Katrina had to assume responsibility for her younger sister. She was like her shadow and prevented her (Katrina) from re laxing completely. As mentioned earlier, Katrina’s only solace in her childhood years was her maternal grandmother. According to Katrina she was the only person she felt completely safe with. When Katrina was 9 the sexual abuse from her father stopped, Katrina told her grandmother about it and the father admitted to it and entered rehabilitation.Her mother nevertheless stayed married to him for the meanwhile and Katrina was expected to share a life with him despite the abuses he committed against her. She expressed the wished to stay with her grandmother, who at that time stayed quite close to them. It was however her mother and father’s (I suspect her father’s) decision to move away. Katrina remembered feeling like her world fell into pieces when this event occurred. Katrina and her younger sister were informed that another sister is on the way during this time.Katrina remembered that she was a shy little girl who found it difficult to make new friends. She rem embered how difficult the move was for her leaving her friends and grandmother behind. III. Adolescence A stated previously although the sexual abused stopped her father continuously physically abused her until the age of 16 until she emancipated herself and went to live with her grandmother. Katrina explained that this was done despite protests from her mother and father. She went to visit her grandmother one holiday and never returned home.She felt extremely guilty leaving her 2 sisters behind but felt that this was the only way she could fled from the abuse of her father. She is not sure whether or not her father had abused her little sisters sexually but stated that he never physically abused them. Her parents divorced after this and her mother moved to Botswana where she still lives today. Katrina stayed with her Grandmother until she finished school. She did however not speak about her grandmother a lot in our sessions and only mentioned a few superficial accounts. She express ed that she was ordinary in high school and could not remember anything that stands out.She did however comment on the fact that she had a couple of boyfriends she referred to as â€Å"dominating idiots which she could not leave at will although she hated the relationships. She did have 1 or two close friendships. Her father remarried and Katrina has an ambivalent relationship with her stepmom who she describes as manipulating, controlling and mean. IV. Family data Katrina is the first born daughter of her biological parent’s first marriage. She has two younger sisters, X who is 16 and Y who is 13. Her parents divorced when she was a teenager. Her father remarried and has two boys with her stepmom.Her mother and biological sisters stays in Botswana. Katrina sees them at least twice a month when she and her boyfriend go to visit them. Her mother had a boyfriend but they broke up recently when she was in therapy with me. V. Cultural features Katrina is a 20 year old Caucasian woman of the Christian religion. She is English speaking. VI. Social condition She is currently staying in the residence at the University she studies. She seems well looked after. She comes from a typical suburban middleclass background. She is dating a 20 year old guy, who I met.Other than this she has not mentioned other friends. It seems that her boyfriend and her family is her only support system at the moment. 6. Personality Katrina is somewhat introverted and extremely dependent. She seems to be submissive and self-criticizing. She is shy, withdrawn and apologetic. Although she at times seemed optimistic it was clear that this is a mask for her underlying pessimism and distrust in people in general. 7. Mental status examination Katrina was orientated to time space and place. She did not exhibit delusions, hallucinations or cognitive disturbances.She was dressed in line with the latest trends. Her appearance did not seem extravagant yet it was nevertheless neat. Her affect was a bit blunted initially and she did seem a little blocked off. This however changed throughout our sessions. 8. Diagnosis Axis I. Major depressive disorder, Recurrent, Moderate Axis II. Dependent Personality Disorder Axis III. None Axis IV: Problems with primary support group (victim of physical and emotional abuse in childhood; Disruption of family due to parents' divorce). Problems related to the social environment (inadequate social support).Axis V GAF: 55 :Moderate symptoms and moderate difficulty in social and occupational functioning. Comments: At termination GAF = 80 Good improvements in self-evaluation, self-esteem and assertiveness. Good reality testing and a sense of independence in her relationship with her father. 9. Prognosis Currently it seems that Katrina has dealt with a large part of her experience with the sexual abuse. She has gained some insight on the reasons she is overly dependent on people to make decisions for her and why she feels like she will lose relati onships or love when she assert herself in interpersonal situations.Although she will benefit to long term therapy I feel that we have dealt with key aspects in our 7 months together. 10. Case formulation The so called schizoid ego splitting can be noticed in Katrina. In her early relationships Katrina did not have safe attachments. She lived through mistreatment and lack of support, the consequence of which is that children hide their feelings and relational needs. This stops or slows down the process of integration and the ego gets fragmented (Klein, 1987, in Little, 2001).This gives rise to the first degree of a split or withdrawal as described by Fairbairn (1952, in Little, 2001), where the ego splits into coping/every day self (central ego), which maintains the relation with the outer world, and the withdrawn/vulnerable self (libidinal ego), which hides itself. At an early stage of development Katrina could not display some parts of herself, like feelings of vulnerability, ange r, playfulness, her own interests, the part connected with relaxation and enjoyment, because for all these she was punished with physical violence and emotional rejection.She most probably hid and suppressed this part of herself and thus the withdrawn/vulnerable self-formed. Outwardly Katrina showed her coping/every day self, which listened to the parents, was good at school and at home, who did not object and had no interests of her own, while being active all the time. During the psychotherapy Katrina mentioned several times that she did not know at all who she was, that she did not know herself and that in interpersonal situations that provoked any form of anxiety she felt like she was falling to bits.She described herself as an abused person and that that is all she is and nothing else. This might be because till then she mostly defined herself through others and through those specific experiences. This particularly describes the process of splitting into both previously mention ed selves, where the authentic self (vulnerable self) hid, while Katrina identified herself with the coping/every day self, which was more social self and represented her adjustments to the wishes of other people around her, like her mother and father. Simultaneously the splitting of external objects, i. . people who were important for her, occurred. The coping/every day self has to maintain a connection with important objects, otherwise the child could not survive on his/her own. This gives the child a sense of security (Little, 2001), which represents a very important need for Katrina, as will be further described in the following section. For Katrina to be able to keep a tolerably good connection with her mother, she had to separate bad experiences and internalize them, which suppressed her withdrawn/vulnerable self even more.In this way the coping/every day self is connected with the idealized object (Little, 2001), which also holds true in Katrina's case. At the beginning of ps ychotherapy Katrina strongly idealized her mother; she spoke only of good experiences with her, not remembering unlikable experiences, since these were split off. Only with on-going therapy was she gradually able to integrate these experiences. She was also very loyal to her mother, defending her all the time, not being angry with her, which all shows a strong tie between the coping self and the idealized object.An example of this the following : Katrina has received various complaints from her sisters and has experienced it for herself that her mother has sex with her boyfriend in the house where everybody in the house can hear everything. According to Katrina these events are quite explicit and make everyone extremely anxious and uncomfortable. She however defended her mother by saying that her mother deserves the happiness and pleasure and that Katrina wants her mother to be happy. â€Å"We can look past this because my mom deserves to be happy†. On the other hand Katrina had isagreeable memories of her father from the very beginning. She mainly blamed him for her ugly childhood, so that Katrina probably formed a split also between both parents (father thus representing the bad object, and mother the good one). Th e vulnerable self is in relation to the exciting/disappointing object (Little, 2001) and this represents the developmentally needed relationship between her mother and Katrina. Their relationship was very variable, i. e. her mother was warm and kind to Katrina some of the time. Katrina hoped that mother would satisfy her needs, but was later disappointed and rejected by her.I n my judgment Katrina's mother had great difficulties in getting attuned to Katrina. This resulted in the exciting/disappointing object to be experienced as painful and dangerous by Katrina, which meant that she suppressed this aspect into her unconscious as the disappointment. The withdrawn self, splits further to create the internal saboteur (Fairbairn, 1952, in Litt le, 2001), which serves to keep the vulnerable self, hidden and repressed. The saboteur's function is to precede criticism of other important persons and thus regulates a child's behaviour (Erskine, 2007).It is that is to say easier to bear inner criticism than criticism by important other persons, because this would signify an end of a vital relationship. Katrina on several occasions mentioned that she was afraid to speak her mind in her significant relational circumstances because she feared that it would mean the end of that relationship. It is also too painful to incessantly repeat disappointments due to unmet needs; therefore the inner saboteur blocks these needs and even denies their existence. In Katrina the inner saboteur (anti-libidinal ego) formed, manifesting itself in Katrina's excessive self-criticism.As early as primary school she criticised herself for her looks, clothes and shoes, her behaviour and her inferior abilities, and she worried that other children might not like her. Through her inner saboteur Katrina constantly controlled herself, her vulnerable self, e. g. , she forced herself to be strong, not to show emotions and to be well-behaved. She kept convincing herself that she didn't lack anything. Therefore Katrina created an inner saboteur to be able to survive with a violent father and aloof mother.The inner saboteur is in relation with the rejecting/attacking object, which attacks the vulnerable self so that the latter would remain suppressed (Little, 2001). Rejecting/attacking object in Katrina was formed by aggressive reactions of her mother and father, the violence (physical, sexual and emotional blackmail), daily criticism, humiliations etc. This part contains numerous contents, so the inner saboteur is very powerful. In my judgement then her dependent personality developed as a result of the above dynamics and within her early relational experiences described above.Her dependent tendency creates significant anxiety and difficulty in her current relations with people, especially in her relationship with her father from which she cannot separate completely. 11. Management plans The first few sessions were focussed on normalizing her feelings of ambivalence in relationships and her over dependence on other people’s decisions. I also highlighted her strengths for her in our early session. For instance the fact that she took the initiative to emancipate her from her parents at age 16 and that she entered counselling out of her own accord showed resilience and strength and would be useful in our sessions.Key aspects to work on and therapeutic goals (a) Help Katrina to talk about the abuse; (b) validate the Katrina's experience and feelings; (d) help to correct misperceptions of blame and responsibility for the abuse; (e) encourage Katrina to formulate and reach goals for personal coping and healing The first phase focused on stabilization and mastery: building the therapeutic relationship; reduction and co ntainment of stress-related symptoms; establishing safety; and coping with current life problems. The second phase we dealt with integration of traumatic memories.The final phase was concerned with self-development, relational development, and adaptation to daily life. PHASE 1: THE THERAPEUTIC ALLIANCE Katrina was hesitant about returning to counselling. She was sceptical about her safety in a therapeutic environment as a result of her previous experience in therapy. I was aware that Katrina had been dealing well with the impact of the sexual abuse, but her adult desire for stable relationships and being able to assert herself in these relationships called for therapy from a mature perspective.I worked to establish positive rapport. Employing a person-centred approach throughout the first few sessions established a safe environment. Katrina chose the topics for the initial sessions. I used open-ended questions to avoid leading her, and helped her determine which difficulties were of primary importance. Treatment had to deal with both the underlying history of trauma and the current symptoms. Once rapport was firmly established, Katrina felt she was safe and her feelings were understood. PHASE 2: ADDRESSING PAST TRAUMA SYMPTOMSExamples of associated problems that need to be understood within a diagnostic and treatment approach for childhood abuse are a pattern of disrupted development, loss of self-sustaining identity. In this phase we explored her ambivalent feelings toward her parents and her ambivalent self-concept or self-experience. We also explored ways she has come to understand her childhood abuse. I was aware of transference and my own counter transference in our sessions. I interpreted the transference for her and we worked on integrating her identity.For example she felt like an abused person and it was so strongly related to her self-concept that it took over her life. We worked on redefining herself as someone who just happened to be the victim of abuse. Example of countertransference: I had a feeling that I wanted to give Katrina advice and wanted to give her solutions. I also had the feeling like I have to protect her in some way. I tried to meet Katrina’s need for security by setting clear limits of therapy, by concluding a therapeutic agreement with her, by informing her of the characteristics of the therapy and by telling her that there are no right and wrong answers.I accepted her in her wholeness, including her depressive, gloomier part and her history of abuse. I did not denounce her when she thought I would. All this contributed to creation of a sense of safety in the therapy; she felt that she could show herself such as she was, without causing my respect towards her to diminish or without my criticizing or rejecting her. All this helped her to be less reluctant to continue with psychotherapy. During that phase of therapy Katrina gradually expressed her anger better, particularly in her relation to father.It was a great achievement also that she expressed anger to her mother to whom she previously never set limits. Katrina found out that each expression of anger does not necessarily provoke conflict, violence and termination of a relationship. Katrina still finds it hard to experience anger with parents, as feelings of guilt and self-blame appear. What follows are examples of our sessions: Session 6 Katrina surprised me by bringing her boyfriend with into our session. It was noteworthy as the supposed reason for our sessions has nothing to do with him.She did not involve him in the session and he was more like an observer. I commented on his presence and asked if he will join us each time. They both said no. This is something I would like to explore further in our future sessions. We explored strategies to deal with her insecurity in interpersonal situations. I asked her to name 5 rules she lives by relating to her relations with people. Most of them seemed to point to a certain notion that there is condition upon if other people would accept her contributions to any interaction.She does this in our sessions as well, for example: she would say something like the following: I want to ask you something but I am afraid that you would think I am crazy and stupid for asking it. I know it’s not the right thing for me to be thinking of and I am afraid you will think less of me. I asked her to think of other relationships in which she engages with this thinking in. She identified that this is why she came for counselling. That she feels that if she is not perfect and always the way other people would like her to be they (everyone) would not accept her.She went as far that she fears that people would totally reject her and banish her from their lives permanently. I ended the session by giving her homework. She had to identify some of her rules that she feels is operating in her relationships with others. I then asked her to write them down and next to each one write down an alternative to this rule one that is in essence contradictory. . Session 7 We discussed her homework and I commented on her resourcefulness in coming up with good alternatives. It made her feel empowered. I thought to try and relate what we have discussed in our previous session to her bringing her boyfriend to therapy.I asked Katrina on the incidence of bringing her boyfriend with. She said that she felt safer when he is around. I hypothesised that our previous session made her feel vulnerable as we explored where her interpersonal mistrust and anxiety could’ve emerged and she related this to her relationships with both her parents. I asked if that she felt exposing these quite personal details at me she felt that I would reject her and related it to the rules that we discussed in session 4. It was in this session that she cried and really showed strong emotion when she spoke about her father and even more so her mother.A definite area to explore more!!!!! PHASE 3: Self-development, relational development, and adaptation to daily life. Session 6 Having not seen each other for over a month as a result of exams and the holiday and we did some catching up. She said that she felt better and feels that she can handle the interpersonal insecurities she felt better. In session 4 we spoke about being aware when these feelings, which we agreed to, call uncertainty, emerges. Then immediately challenging them with something like there are no conditions of people’s acceptance of me. They will accept me and my decisions and contributions for who I am and for what it is.She asked my advice on a decision she had to make after a disagreement with her father over the weekend about her 21st birthday party. I asked her if it would make a difference if I told her what to do. We went back and forth on this and I asked her if it is important for her for me to think that she is making the right decision. She said that she thinks that I am â€Å"clever† and educated and that if I agree with her she would know it is the right decision. I asked her if she always feel the necessity to check in with other people before she makes decisions.She said that she always feels uncertain, especially when it comes to her father as he is manipulating and knows how to make her feel guilty about her decisions. She said that this has always been the case. I told her that my advice would be irrelevant and asked her to give me the options and the outcomes of decisions regarding this situation. This opened up a space in which we could discuss her relationship with her father and her story about this relationship in depth. She told a story of her father being a loving and caring father if she was exactly the way he wanted her to be and did what he expected of her.If she disagreed with him he would tell her that she has to choose between his view points or she could pack her stuff and leave his home. This is still the case and it is a huge fear of Katri na that when she shows any disagreement with her father’s wishes he would completely reject her and shut her out of his life permanently. I asked her the following questions to confirm my hypothesis that she might fit into the dependent personality diagnosis. †¢Some people enjoy making decisions. Others prefer to have someone they trust guide them. Which do you prefer? Her response : I would prefer someone guiding me. Do you seek advice for everyday decisions? Her response : Always †¢Do you find yourself in situations where other people have made decisions about important areas in your life, e. g. what to wear, where to go out to, what to study ect.? Her response : All the time. †¢Is it hard for you to express a different opinion with someone you are close to? What do you think might happen if you did? Her response. Our relationship will end†¦. Ummm well maybe not end but they will leave me and I’ll have to beg them to stay. †¢Do you often pret end to agree with others even if you do not? Why?Do you think it could get you into trouble if you disagree? I always agree, especially with my mom and dad. I don’t want them to leave me because they think I am a rebel or something. †¢Do you often need help to get started on a project? No †¢Do you ever volunteer to do unpleasant things for others so they will take care of you when you need it? If I think about it I have done it often in the past. †¢Are you uncomfortable when you are alone? Are you afraid you will not be able to take care of yourself? I have to be around at least one other person. I am terrified of being alone. Have you found that you are desperate to get into another relationship right away when a close relationship ends? Even if the new relationship might not be the best person for you? I had boyfriends who abused me, just like my father did but I stayed with them for a long time. I have never been single not once since high school, since I st arted dating no matter how bad the relationship was before the new one I always quickly found a new boyfriend. The one that I have now is the best thing that ever happened to me. †¢Do you worry about important people in your life leaving you?I am very anxious that they will especially my boyfriend, my father and my mother After these sessions we began to set real life goals like for example. Asking her dad for coffee in a public place and talking to him about what concerns her. She was very scared to do this but she did it and disconfirmed her beliefs regarding him leaving her if she speaks her mind. He actually embraced it and their relationship has become more realistic and reciprocal. He now phones her and she could decide what she wanted to do with her 21st birth day party something he had took over from her.She has also confronted her mother about her concerns about the example her mother sets for her sisters when her boyfriend stays over and they get, well a little loud i n the bedroom. She spoke to her lecturers regarding her bad marks and attempted to rectify her poor academic performance. Although she still fails the subject she feels good about trying to do something about it and having the courage to face the lecturer. We discussed termination and I suggested that we see each other on a bi-weekly basis. I did not want her to become dependent on me and on the therapy.She then suggested that we terminate in our next session as she felt â€Å"ready to take on her responsibilities and face the music†. I suggested that we see each other for two more sessions just to reflect back on our journey and top identify the resources she is now able to utilise. 12. Issues for discussion Did I follow a suitable therapy journey with her. References Erskine, R. G. (2007). Unconscious process, transference and therapeutic awareness. Workshop on Institute IPSA. Ljubljana, Slovenia. Little, R. (2001). Schizoid Processes: Working with the defences of the withd rawn child ego state. Transactional Analysis Journal, 31 (1), 33-43.