<p><strong>Preamble:<br /><br /></strong>Arbitration in civil and commercial matters  is an alternative method of dispute resolution that may be agreed upon by the  parties &ndash;Article 203 of the Civil Procedure Law.<br /><br />Certain laws exist which  contain special provisions requiring certain disputes to be settled through  arbitration. This is known as mandatory arbitration.<br /><br />One example is  Article 118 of Federal Law No. 28 of 2005 (Personal Status Law) which deals with  the role of arbitration in cases of marital discord.<br /><br />Another example is  Article 160 of Federal Law No. 8 of 1980 (Labour Law) which deals with  collective labour disputes.<br /><br />In addition to those listed above, a number  of comparative laws contain provisions relating to agricultural, water, property  and other disputes exist.<br /><br />In all cases where the legislator requires  disputes to be referred to arbitration, this may only take place pursuant to a  legislative provision enacted by the competent authority.<br /><br />The rule is  that courts have jurisdiction over disputes with the exception being that  parties may agree to submit their dispute to arbitration. When deciding that  certain disputes should only be settled through arbitration, the legislator must  enact appropriate legislation.<br /><br />The above considerations and the  importance of securities, bonds and shares trading in the UAE led to the  enactment of Federal Law No. 4 of 2000 establishing the Securities &amp;  Commodities Market &amp; Authority. The Law generally provides for arbitration  as follows:<br /><br />1)&nbsp;Federal Law No. 4 of 2000 concerning the Emirates  Securities &amp; Commodities Authority<br /><br />1-&nbsp;Article (2) of the Law states:  &ldquo;A public authority with the name of the "Securities &amp; Commodities  Authority" shall be established in the State's capital. It shall enjoy legal  personality and financial and administrative independence, and shall have the  supervisory and executive powers necessary to perform its functions according to  the provisions of this Law and the regulations issued in implementation  thereof<br /><br />2-&nbsp;Article 4 of the Law sets out the powers of the Authority and  states at Paragraph 2 that the Authority may issue regulations in consultation  and coordination with the Markets licensed in the State,  including:<br /><br />[Regulations on the arbitration of disputes arising from  securities and commodities transactions]<br /><br />3-&nbsp;Article 47 of the Law  states:<br /><br />The Board (Board of Directors of the Authority) shall issue the  resolutions necessary for the implementation of this Law<br /><br />4-&nbsp;Further, on  05 February 2001, the Chairman of the Board of Directors of the Securities &amp;  Commodities Authority issued Resolution No. 1 of 2001 concerning the regulation  on the arbitration of disputes arising from securities and commodities  transactions pursuant to a resolution of the Board of Directors of the Authority  and following consultations with the authorities concerned with the setting up  of markets in the UAE<br /><br />Article (2) of the Regulation  provides:<br /><br />&ldquo;Disputes arising from the application of the Law(1) between  parties involved in the securities and commodities industry shall be resolved  solely through arbitration. The provisions of this Regulation shall apply in  this regard.&rdquo;&nbsp;<br /><br />&ldquo;Market dealing signifies one&rsquo;s agreement to arbitration  and to be bound by the decision of the arbitrators and one&rsquo;s waiver of the right  to appeal the decision save as provided in this Regulation.&rdquo;&nbsp;<br /><br />"Article 30  of Resolution No. 1 of 2000, issued by the Chairman of the Board of Directors of  the Securities Authority concerns the regulation of brokers. It  provides:<br /><br />&nbsp;&ldquo;All disputes relating to securities and commodities  transactions and brokers shall be subject to such arbitration regulations as the  Authority shall lay down in consultation and conjunction with the licenced  markets of the State.&rdquo;&nbsp;&nbsp;<br /><br />5-&nbsp;On 1 September 2008 the Chairman of the Board  of Directors of the Authority issued Resolution No. 35/T of 2008 amending  certain arbitration provisions of the Authority&rsquo;s regulations.<br /><br />The  Resolution makes several amendments to the brokers&rsquo; regulations, which are  contained in Article 9 of the regulations dealing with market operation. Also  amended are Article 2 of the regulations on the arbitration of disputes arising  from securities and commodities transactions, and Article 25-2 of the regulation  on commodity listing and trading and commodity contracts.&nbsp;<br /><br />Article 2, as  amended, of the regulation on the arbitration of disputes arising from  securities and commodities transactions states: &ldquo;Disputes arising from  securities and commodities transactions shall be settled through arbitration  when the parties at their discretion agree to arbitration. The provisions of  this Regulation shall apply in this regard.&rdquo;<br /><br />The same provision appears  in the regulation on brokers and the regulation on commodity listing and trading  with the following additional phrase:<br /><br />&ldquo;The provisions of the regulation  on the arbitration of disputes arising from securities and commodities  transactions shall apply in this regard.&rdquo;<br /><br />It is thus clear that Federal  Law No. 4 of 2000 concerning the Securities Authority and Market grants the  Authority the power to issue the regulations necessary to implement its  provisions and to issue arbitration regulations for disputes arising from  securities and commodities transactions.<br /><br />Pursuant to this legal  authority, the Chairman of the Authority&rsquo;s administration issued Resolution No.  1 of 2001 concerning the regulation on the arbitration of disputes arising from  securities and commodities transactions which provides that disputes arising  from the application of the law establishing the Authority shall be settled  solely through arbitration (Article 2)<br /><br />This provision was amended by  Resolution No. 35/T of 2008 which makes arbitration optional such that it does  not take place before the Authority unless the parties so agree.<br /><br />In the  view of the writer, Resolution No. 35/T of 2008 was enacted in response to the  many objections raised over the legality or constitutionality of Article 2 of  the regulation on the arbitration of disputes arising from securities and  commodities transactions.<br /><br />The question is: Can the Board of Directors  impose a legal obligation to pursue arbitration as the only recourse for  settlement of disputes arising from securities and commodities  transactions?&nbsp;<br /><br />The author&rsquo;s position is that Law No. 4 of 2000 grants the  Authority the power to issue the regulations necessary to implement its  provisions and to issue regulations on the arbitration of disputes arising from  securities and commodities transactions<br /><br />In legislative jurisdiction,  where the legislator grants power to any authority to issue rules, regulations  and decisions implementing the law, the role of the authority, be it the  Cabinet, a minister, department head, or board of directors, is limited to  adopting and issuing the law&rsquo;s implementing rules and regulations without  introducing legislative provisions that are not found anywhere in the  law.<br /><br />I&nbsp;consider that the provision in Resolution No. 1 of 2001 concerning  arbitration regulations referring to arbitration as the only recourse is a  legislative provision that should have appeared in the law. Since the law does  not deal with the matter and only authorises the Authority&rsquo;s Board of Directors  to issue arbitration regulations, the introduction of such provision is an  encroachment upon the legislator&rsquo;s chief function, which is to enact  laws.&nbsp;<br /><br />While the Dubai Courts have consistently regarded that provision  of Resolution No. 1 of 2001 as correct, the Securities Authority saw fit to  amend that provision in Resolution No. 35T of 2008 by providing optional  recourse to arbitration where arbitration would take place before the Authority  only if the parties so agree.<br /><br />Resolution No. 1 of 2001 applies to all  disputes that were not referred to arbitration before the Authority and were not  reserved for judgment prior to its issue (see Article (1) of the Civil Procedure  Law in this regard).<br /><br />However, on 20 January 2011, the Abu Dhabi Judicial  Department Supreme Court ruled differently based on other reasons in Commercial  Appeals No.&rsquo;s 809, 841, 848, 867-2010. In the case before the Court, a decision  had been rendered declaring the court to be without jurisdiction and conferring  jurisdiction upon the Authority to which the matter was referred in order to be  heard by an arbitration tribunal appointed pursuant to Resolution No. 1 of 2001  (in its pre-amended form). Since that decision had been issued prior to the  coming into force of Resolution No. 35T of 2008, the Court applied res judicata  as the overriding principle above any public policy considerations and ruled  that based on the principle of res judicata, the subject matter of the dispute  would be referred to the Authority for arbitration as the only recourse for  settlement of the parties&rsquo; dispute.<br /><br /><strong>Concluding  Comments<br /><br /></strong>1)&nbsp;The Securities &amp; Commodities Authority was set  up in the UAE under Federal Law No. 4 of 2000. The Law grants the Authority,  represented by its Board of Directors, the power to issue regulations on the  arbitration of disputes arising from securities and commodities  transactions.&nbsp;<br /><br />2)&nbsp;Pursuant to a Board of Directors resolution, the  Chairman of the Board of Directors of the Authority issued Resolution No. 1 of  2001 concerning the regulation on the arbitration of disputes arising from  securities and commodities transactions which provides that such disputes shall  be settled solely through arbitration (Article 2).&nbsp;<br /><br />3)&nbsp;In Civil Appeal  No. 50-2007, on 17 April 2007, the Dubai Court of Cassation confirmed this  provision, holding that the courts had no jurisdiction over matters involving a  dispute over securities transactions.&nbsp;<br /><br />4)&nbsp;On 01 September 2007 the  Chairman of the Board of Directors of the Authority issued Resolution No. 35/1  of 2008 amending Article 2 of the regulation on the arbitration of disputes  arising from securities and commodities transactions such that the Authority  could only arbitrate a matter when parties have agreed to refer their matter to  it.<br /><br />5)&nbsp;On 20 January 2011, the Abu Dhabi Judicial Department Supreme  Court, in Appeals No.&rsquo;s 809, 841, 848, 867-2010, confirmed that a ruling was res  judicata and accordingly declared the Court of First Instance to be without  jurisdiction to hear a matter involving securities and shares transactions  because the ruling had acquired the force of res judicata prior to the issue of  Resolution No. 35T of 2008 and res judicata overrode any public policy  concerns<br /><br />6)&nbsp;The question of the constitutionality of the old resolution  imposing a mandatory arbitration provision has been resolved by Authority  Resolution No. 35/1 of 2008 which makes recourse to arbitration optional on the  basis that the parties to the dispute must agree to arbitration.</p>