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One of the laws concerning compensation for those  who were affected by the Iraqi invasion of Kuwait is that those who were expelled from Kuwait should be given salaries for the period during which they were exiled, in addition to a lump sum to be decided by the UN – which is supervising the payment of compensation – which is a penalty on Iraq for not paying this amount all this time. Is it permissible for those who were affected by the war to take this additional amount or not?

Praise be to Allah.We put this question to Shaykh Muhammad ibn

Saalih al-‘Uthaymeen, may Allaah preserve him, who answered as follows:

He may take as much as he lost, but

it is not permissible for him to take more because this is riba.

Even if we assume that it is a penalty, it should be given to the Bayt

al-Maal (treasury) of the Muslims, he (the individual) has no right

to it.

Question: when they try to justify it,

they say: this is money which you had the right to take ten years ago.

If you had taken it ten years ago, you could have benefited from it

and invested it, so this additional sum is compensation for withholding

it all this time.

Answer: This is not permissible according

to sharee’ah, because firstly, if he had taken the money at that time

and used it, he could have lost it. Secondly, it is not permissible

to take an additional amount in return for delaying payment, as stated

above.

Question: does the fact that the additional

amount was not stipulated in advance change anything?

Answer: It does not change anything,

and it is not permissible to take the additional amount even if it was

not stipulated in advance. Moreover, it is known that the one who is

paying this amount is being forced to do so.

Source: IslamQA (Sheikh Muhammed Salih Al-Munajjid)
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