1) Will an animal be halal if it is stunned before being slaughtered? That will depend on whether the stunning caused the animal to die before it was actually slaughtered. If the stunning did cause the animal to die before it was slaughtered, it will be haram (prohibited) to eat the animal. On the other hand, if the stunning did not cause the animal to die before it was slaughtered, it will be permissible to eat the animal.
Therefore, if there is a doubt as to whether the stunning will kill the animal, the animal must not be stunned.
Also, it is sinful to cause unnecessary pain to an animal, even when slaughtering it. Therefore, if stunning an animal in a particular way will cause it pain, it will be sinful to employ that stunning method (although eating that animal will be permissible if the stunning did not cause the animal to die).
2) If an animal is mechanically slaughtered, it will not be permissible to eat it. The reason is that for an animal to be halal, (among other conditions) it is a condition that the one (i.e. a Muslim) slaughtering it takes the name of Allah at the time of slaughtering it. In a mechanical slaughter, this condition cannot be fulfilled (as the slaughterer is a machine, not a human); therefore a mechanically slaughtered animal is not halal for eating.
Even if a person stands next to the blade that automatically cuts the throat of the animal and takes the name of Allah on each animal, the animal will still not be halal. The reason is that, as was mentioned above, the condition is that the person slaughtering the animal must take the name of Allah. If someone other than the slaughterer – such as a person standing next to the slaughterer – takes the name of Allah, the animal will not be halal. In the case of mechanical slaughter, it is the machine that slaughters the animal; therefore if the person standing next to the mechanical blade takes the name of Allah, the animal will not be halal.
In a chicken slaughterhouse, an alternative to using automatic blades for cutting the throat of the chickens would be to replace the automatic blades with a few people (i.e. Muslims). These people should, in turns, take the name of Allah and cut the throat of the chickens as the chickens come on the hanging rack. This method has been successfully tried and implemented in many chicken slaughterhouses without reducing the production rate.
(See: Buhooth fi Qadaya Fiqhiyya Mu’asara: 2/41-51)
Mufti Faizal Riza