As far as Islamic Shari`ah is concerned, surrogate motherhood or what is called “hiring a womb” is not allowed since it involves introducing the sperm of a male into the uterus of a woman to whom he is not married and, thus, it clearly falls under the specific category of transgressing the bounds of Allah.
Answering your question, Sheikh Ahmad Kutty, a senior lecturer and Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, states:
Surrogate motherhood is often euphemistically referred to as “hiring a womb.” The procedure involves using the service of another woman to serve as a carrier for the fertilized ovum of a couple. The woman makes herself available to inject the fertilized ovum into her own womb and then carries the child to its full term on behalf of the other couple. It is often done in lieu of a specified remuneration or free of charge. People resort to this procedure either because a married woman who desires to have a child has problems in carrying her child to its full term or because of her desire to simply forgo the “trouble” of conception and labor.
According to the rules of Shari`ah, surrogate motherhood as described above is not allowed, since it involves introducing the sperm of a male into the uterus of a woman to whom he is not married and, thus, it clearly falls under the specific category of transgressing the bounds of Allah as stated in the Qur’an:(Those who guard their private parts except from their spouses…)(Al-Mu’minun: 5).“Whosoever goes beyond that are indeed transgressors”(Al-Mu’minun 23: 7).
By introducing a third party into the family equation, this procedure throws into confusion the issue of the identity of the child. In Islam, every child has a right to a definite parentage, namely, that of a father and mother. In the case of surrogate motherhood, the question arises as to the identity of the real mother of the child thus conceived. Is she the genetic mother who provides the egg from which the child is born, or is she the woman whose womb serves as a carrier for the child? Such confusion is bound to affect the child emotionally as he will be torn between two mothers. Further, it may also lead to legal fights over the parentage of the child, as happened in the United States in the case of a child thus conceived in 1987.
Finally, the entire procedure amounts to dehumanizing the process of human procreation by reducing womb down to the level of a commodity that can be bought or rented for service. Ultimately, such a process, yet again, violates the dignity and honor that Allah Almighty has bestowed on man and woman.
source: islamonline : Ahmad Kutty