To avoid both 'Riba' and 'Gharar' in the financing of a new fishing vessel, what specific, non-debt-based Islamic financial instrument structure would be most appropriately utilized?

To avoid both Riba and Gharar in financing a new fishing vessel using a non-debt-based instrument, the most appropriately utilized structure would be Mudarabah. Riba refers to the prohibition of interest, where a fixed or predetermined return is charged on a loan or capital, irrespective of the actual performance or outcome of the underlying business activity. This is forbidden in Islamic finance because it leads to unfair enrichment and does not involve shared risk. Gharar means excessive uncertainty, ambiguity, or risk in a contract that could lead to unfair outcomes or disputes, often arising from a lack of clear information or speculative elements. Islamic contracts must have clear terms, defined assets, and avoid undue speculation. Mudarabah is a profit-sharing partnership where one party, known as the Rab-ul-Mal or capital provider, contributes the entire capital for a specific venture, and the other party, known as the Mudarib or entrepreneur, contributes expertise, labor, and management skills. Profits generated from the venture are shared between the Rab-ul-Mal and the Mudarib according to a pre-agreed, fixed ratio. In the event of a loss, the financial loss is borne solely by the Rab-ul-Mal, meaning the capital provider loses their invested capital, provided the loss was not due to the Mudarib's negligence, misconduct, or breach of contract. This structure avoids Riba because the financier does not charge a fixed interest rate on the capital. Instead, the financier's return is directly tied to the actual profits of the fishing business, aligning their interests with the success of the venture and sharing in the real economic outcome. It avoids Gharar by clearly defining the roles of both parties, the purpose of the capital (purchasing the specific fishing vessel), and the transparent mechanism for profit sharing. While the future catch is uncertain, this inherent business risk is shared by both parties through the profit-sharing arrangement, rather than being offloaded onto one party through fixed payments or an ambiguous contract. For example, the financier provides the full capital to purchase the new fishing vessel, acting as the Rab-ul-Mal. The fisherman, acting as the Mudarib, then operates the vessel for fishing. Any net profits earned from the sale of fish are shared between the financier and the fisherman based on a predetermined percentage, such as 60% for the financier and 40% for the fisherman. If the fishing operation incurs a loss, the financier bears the financial loss up to the cost of the vessel, while the fisherman loses only his effort and time.