08 August 2010
Cassation Court accepts stocks case even after lower courts refused following DFM ruling
However, the stock market arbitration should abide by the law and hear only the types of disputes determined by the law, according to the legal principle. On the other hand, having an arbitration system is an exception from the rule of the court being the supreme authority of solving all types of disputes, according to the legal principle. As per the principle, the dealer is the one who opens a trading account via a broker registered in the market and the broker and his operation directors, registered in the market, issues buying or selling orders.
The court stressed that the arbitration system can hear only disputes related to dealing in securities and commodities including orders of selling and buying stocks issued by investors to brokers and orders of selling and buying stocks issued by brokers to the market.
The Cassation Court made this principle on the wake of a case filed by an individual against a brokerage company claiming that it has sold and purchased stocks in his name without his knowledge nor did the company have an authorisation from him. The complainant asked for Dh15 million as compensation.
The complainant had submitted a complaint to the Dubai Financial Market, which investigated the case and found the company was at fault and subsequently penalised it in addition to not making the complainant bear any losses resulting from the deals. As the complainant was not satisfied with that, he filed a case with the Dubai Courts asking for compensation.
The First Instance Court and then the Appeals Court had both turned down the case as the dispute was related to securities and commodities dealings and was subject to the authority's arbitration system. The complainant appealed to the Cassation Court, which accepted the case based on the fact that he was not a 'dealer' and the brokerage company did not have any authorisation from him.
Cassation Court accepts stocks case even after lower courts refused following DFM ruling
The Dubai Cassation Court accepted a stock market-related case that was turned down twice before - by the Court of First Instance and the Appeals Court.
After studying the case, the Dubai Cassation Court reached a principle, stating that although the dispute was related to stock market dealings - which is subject to the market's arbitration system - it can be heard by the court whenit does not arise from legal stock market dealings. As per the Federal Law No 4 of 2000 concerning the Emirates Securities and Commodities Authorities and rules applied by the stock markets, dealers are subject to the internal arbitration system in case of a dispute and their registration implies their acceptance.However, the stock market arbitration should abide by the law and hear only the types of disputes determined by the law, according to the legal principle. On the other hand, having an arbitration system is an exception from the rule of the court being the supreme authority of solving all types of disputes, according to the legal principle. As per the principle, the dealer is the one who opens a trading account via a broker registered in the market and the broker and his operation directors, registered in the market, issues buying or selling orders.
The court stressed that the arbitration system can hear only disputes related to dealing in securities and commodities including orders of selling and buying stocks issued by investors to brokers and orders of selling and buying stocks issued by brokers to the market.
The Cassation Court made this principle on the wake of a case filed by an individual against a brokerage company claiming that it has sold and purchased stocks in his name without his knowledge nor did the company have an authorisation from him. The complainant asked for Dh15 million as compensation.
The complainant had submitted a complaint to the Dubai Financial Market, which investigated the case and found the company was at fault and subsequently penalised it in addition to not making the complainant bear any losses resulting from the deals. As the complainant was not satisfied with that, he filed a case with the Dubai Courts asking for compensation.
The First Instance Court and then the Appeals Court had both turned down the case as the dispute was related to securities and commodities dealings and was subject to the authority's arbitration system. The complainant appealed to the Cassation Court, which accepted the case based on the fact that he was not a 'dealer' and the brokerage company did not have any authorisation from him.
Mohammed Elsidafy
Emirates Business 24/7 2010
