Financial Disputes Resolution Commission

Introduction to:

FDRC

• Preamble
• Introduction to Financial Dispute Resolution Commission
• Organizational Structure
• Powers of FDRC as a Judicial Commission (FDRC)

Preamble:

The Financial Dispute Resolution Commission (FDRC) was established as a quasi-judicial institution in Afghanistan to provide justice in light of the accepted experiences of the world's legal systems. This Commission was formed in the framework of the government's supervisory department (Da Afghanistan Bank), which is responsible for ensuring justice and fairness in technical fields by the law in an immediate, easy, and cheap way for the people. Financial disputes resolution commission from its establishment until today as a quasi-judicial institution carried out its functions in a transparent, clear, purposeful, and comprehensive manner with rulings and guidelines of the country's laws and regulations, to observe the highest standards of justice and transparency in the conflict resolution process.

The Financial dispute resolution commission's identification, organizational structure, and qualifications are presented as follows:

A.  Introduction to FDRC

The Financial Dispute Resolution Commission as a semi-judicial institution is a new experience in Afghanistan, which according to the provision of Article 106 of the Da Afghanistan Bank Law, is an office that settles the disputes contained in this law and other laws in a conciliatory manner before judicial proceedings.

B.  Organizational structure

The Commission (FDRC) consists of professional and administrative employees, its professional employees, as defined in Article 108 of Da Afghanistan Bank Law, are:

     1- Three lawyers designated by the governor of Da Afghanistan Bank and approved by the president of Afghanistan

     2- Three are accounting specialists with experience in finance who are designated by the minister of finance and approved by the President.

The chairman of the commission is picked out from among lawyers by the governor of Da Afghanistan Bank and then introduced to the president’s office for approval. The commission is authorized to employ administrative staff as per its operating need.

The professional members of the commission, including the chairman, have the following qualifications:

1.  Have citizenship in Afghanistan.
2.  Have a good reputation and have not been convicted of breach of trust.
3.  They have not been sentenced to deprivation of political and civil rights.
4.  Do not engage in other official duties while on duty.
5.  Neither be a member of the Supreme Council and the Board of Directors in the banks nor act as a supervisor or employee of Da Afghanistan Bank.
6.  The age of the professional members of the commission at the time of appointment should not be less than 35 years.

According to the provision of paragraph (3) of Article 108 of Da Afghanistan Bank Law, the professional members of the commission after being appointed, cannot be dismissed unless they meet one of the above-mentioned six conditions, resign, die, or be sentenced by a competent court to dismissal, deprivation, or exclusion from the mission.

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1- Article 106 of Da Afghanistan Bank Law: To resolve the financial disputes mentioned in this law, a commission will be established in Da Afghanistan Bank, which will resolve the disputed financial issues in a conciliation manner before judicial proceedings.

According to the provision of paragraph (4) of this article, a professional member is retired upon reaching the age of 70, and before that, he can resign from his duty with a written request for personal reasons. Professional members' salaries, pensions, and other financial privileges are determined by Da Afghanistan Bank's proposal and approved by the Council of Ministers.

 

C.  Power of FDRC as a Judicial Commission (FDRC)

1)  Commission can revise the following decisions and rulings of Da Afghanistan Bank²:

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2-Article 107 of Da Afghanistan Bank law:

Commission can revise the following decisions and rulings of  Da Afghanistan Bank

1.  The decision to reject the application for a bank license, bank permit, or registration of the applicant
2.  The decision to impose restrictions or limitations on a banking license, banking permit, or registration
3.  The decision to cancel the registration of bank license, and bank permit.
4.  The decision that is issued regarding compensation for loss or financial penalty.
5.  Orders are issued against a person who engages in an activity without having a bank license or permit or registering it with Da Afghanistan Bank, which is required to obtain a license or permit or registration according to the provisions of the law.
6.  The decision to appoint or extend the time duration of the trustee.
7. Other related cases are assigned to the commission according to the provisions of the law.

    1- The decision to reject the application for a bank license, bank permit, or registration of the applicant

     2- The decision to impose restrictions or limitations on a banking license, banking permit, or registration

     3- The decision to cancel the registration of bank license, and bank permit.

     4- The decision that is issued regarding compensation for loss or financial penalty.

     5- Orders are issued against a person who engages in an activity without having a bank license or permit or registering it with Da Afghanistan Bank, which is  required to obtain a license or permit or registration according to the provisions of the law.

     6- The decision to appoint or extend the time duration of the trustee.

2) The commission can examine and resolve financial disputes between financial departments, provided that it has been explicitly assigned to it based on the previous agreement to resolve disputes.

3) Also, according to the provisions of paragraphs (2) and (3) of the fifth article, and clause (4) of the sixth article of the Afghanistan Banking Law, the commission can revise the regulations of Da Afghanistan Bank and either cancel it, limit it or to suspend.

    2 The commission can revise and supervise the requests that are submitted against the bank for opening or bankruptcy {this part of the        article of Da Afghanistan Bank Law is repealed according to Banking Law serial number

      (1197) which was ratified and enforced by Decree No. (56) Dated 5/26/1394 of the President of the Islamic Republic of Afghanistan.}

³-Paragraphs (2) and (3) of Article 5 of the Banking Law:

(2) The person or company under the control of the addressee of the order mentioned in paragraph (1) of the article can submit an appeal to the Financial Disputes Resolution Commission, which is referred to as the commission in this law, within a period of (10) working days. Submitting the request does not prevent the implementation of the mentioned order.

(3) Commission can cancel, limit or suspend the order issued by Da Afghanistan Bank if one of the following situations is detected.

Paragraph (4) of Article six of banking law: If the objection mentioned in paragraph (3) of this article is rejected by Da Afghanistan Bank, the person can submit an appeal to the commission within ten (10) working days from the date of issuing the notice.

⁴-Paragraph (3) of article 7 of banking law:
1- If a claim for compensation is mad against Da Afghanistan Bank or one of the persons listed in paragraph (1) of this article.

5) According to the provision of paragraph (5) of article 25 of the banking law, the commission determines the qualified person with the same qualifications as the suspended person has, as a result of the request of Da Afghanistan Bank in the case of paragraph (4) of this article.

6) According to paragraph (4) of article 44 of banking law, the commission will consider the objection of the foreign bank branch against the decision of Da Afghanistan Bank.

7) According to paragraph (4) of article 74 of the Afghanistan Banking Law, the commission resolves disputes between domestic banks and domestic clients and all claims of domestic clients against non-resident banks about their domestic branch representative activities.

8) When the liquidation manager of a bankrupt bank issues the temporary orders mentioned in paragraph (4) of this article regarding the annulment of the transactions listed in Article 149 of the Banking Law, the affected person can within (10) working days after receiving the order to appeal to the commission (FDRC).

9) Disputes to arise from the liquidator manager’s decision to announce the cancellation of the transactions listed in Article 149  and by the ruling listed in paragraph (1) of this article are resolved by the commission (FDRC).

2- If the claim for compensation is caused by the action or lack of action or delay in the action of Da Afghanistan Bank or one of the persons mentioned in this law or the law of Da Afghanistan Bank in the course of performance of duty.

 

5-Paragraph(4) of article 44 of Banking law: Da Afghanistan Bank is obliged to notify the foreign bank in letter at least within (15) days before the cancellation of the branch license according to the provisions of paragraph (4) of Article 33 of this law. In case of dissatisfaction with the decision of Da Afghanistan Bank, the representative of the foreign bank can submit its objection to the commission according to the relevant regulations.

6-Paragraph (4) of article 74 of Afghanistan banking law: Disputes between domestic banks and domestic customers and all claims of domestic customers against non-resident banks in relation to the activities of their domestic representative offices are resolved through the commission, and if one of the parties is not satisfied, the mentioned disputes are resolved in the Afghanistan judicial court.

7-Paragraph (6) and (7) of article 149 of banking law:

6.The person stated in the temporary order may request an appeal from the commission within (10) days after receiving the order. The ruling contained in Article 115 of this law is also applicable to this appeal.

       7.Disputes to arise from the liquidator's decision to announce the cancellation of the transaction according to the ruling in paragraph (1) of this article will be resolved by the commission (FDRC).

article one hundred and Fifty-fifth of the banking law, the affected person can submit an appeal to the commission (FDRC) within (10) days.

11) The disputes resulting from the issuance of the suspension order contained in Article 155 of the Banking Law between the depositor and the liquidator are resolved by the commission (FDRC).

8- Article 156 of banking law:

1. Creditors are obliged to register their claims from the bank under liquidation with the liquidator manager within (60) days from the date of publication of the decision to appoint the liquidator manager.Da Afghanistan Bank can extend the mentioned period for another period of (30) days. If the creditor requests, a receipt will be registered for him. The rulings contained in paragraphs (1) and (2) of Article 157 of this law are excluded from this ruling.
2. The claim or demand is registered according to its positive documents and the following information.
   1-Creditors name and address.
   2-Interest and other costs, fines, and claims accrued to the principal of the pretender.
   3-Detailed information regarding the mortgage, right of ownership, or other guarantees related to the said demand or claim, mentioning the guarantor's name and address.
3. With the bank's liquidation manager's appointment, the demand or claim for accounts and deposits registered in the bank's books or documents will be postponed. Other types of claims are deferred to the liquidator after their registration.

Paragraphs (7)- (13) of banking law:

(7) The commission is obliged to determine the date of hearing the objection mentioned in paragraph (6) of the article in such a way that the objecting creditor can submit documents and documents to the liquidator and the commission (FDRC) to register the request, provided that the said meeting take place within a period of more than (60) days after the date of submission of the list of protesting applicants to the commission (FDRC).
(8) The liquidator manager is obliged to inform the creditors about the proceedings at least once by mail, including electronic mail, or by publishing a notice.

(9) If the creditors do not appear for the consideration of the requests related to the commission (FDRC) that has been notified by post, their requests will be considered rejected.

(10) The commission is obliged to notify the rejected appeals in writing to the relevant creditor and transfer them to the liquidator manager.
(11) The decision of the commission (FDRC) regarding the objection mentioned in paragraph (6) of this article is considered final and is notified to the liquidator manager and recorded in the list kept by the liquidator manager.
(12) If the creditor's appeal is approved by the commission (FDRC), the issue will be informed by the

13) The commission (FDRC) resolves the dispute between the liquidator and the creditor regarding the value of the assets listed in paragraph (4) of Article 161 of the Banking Law⁹.

14) According to the provision of paragraph (3) of Article 10 of the Telecommunication Services Regulation Law, persons who are affected by the decisions of the (ATRA) office can refer to the commission (FDRC) for consideration within (30) days after the decision of the (ATRA) office10.

commission in writing to said creditors, and a copy of it will be submitted to the liquidator manager.
(13) The liquidator manager cannot pay the claims that are rejected by the commission (FDRC).

The creditors whose request is rejected based on the decision of the commission (FDRC) can appeal within (15) days from the date of receiving the notification.

9-Article 121 of banking law:

(1) The liquidator is obliged to sell the assets that guarantee creditors’ claims against the bank or the bank's claims against others through a public auction. The following are excluded from this:

1. Selling securities, currencies and other assets that can be easily sold in the market in the specific markets of these documents.
2. The sale of securities, currencies, and other bank assets that guarantee its debts and can be easily sold in the market, by the creditors who own these assets.

(2) If the liquidator determines that the appropriate price for the assets listed in paragraph (1) of this article cannot be obtained in the public auction, can sell the assets privately at the appropriate price that he determines.
(3) All assets of the bank under liquidation, with the exception of the assets listed in part (2) of paragraph (1) of this article, will be placed at the liquidator's access upon request.
(4)The dispute between the liquidator and the creditor, regarding the value of the property secured by a claim, will be resolved by the Financial Disputes Resolution Commission. When the mentioned property is sold in the market or public auction, the sale price obtained from the market or public auction is considered final regarding the property value.

10- Paragraph 3 of Article 10 of the Telecommunication Services Regulation Law:

A person affected by the decision of the administration has the right to refer to the Financial Disputes Resolution Commission stipulated in the Da Afghanistan Bank Law within (30) days after the notification of the decision of the competent supervisory body regarding financial issues except for the monetary fine specified in this law.

11 - Paragraph of Article twenty-four of the Law on Prevention of Money Laundering and Proceeds of Crime:
If the reporting authority is not satisfied with the order issued by Da Afghanistan Bank or the competent supervisory authority, it can submit its objection to the Financial Disputes Resolution Commission (FDRC) within (30) days of receiving the order.

16) The Financial Disputes Resolution Commission (FDRC) can appoint a competent officer according to the ruling of Part 25 of Article 3 of the Law of Negotiable Instruments .

For more information on the competencies of the Financial Dispute Resolution Commission, can refer to the referred laws.