Financial Disputes Resolution Commission
About Financial Disputes Resolution Commission
The Financial Disputes Resolution Commission (FDRC) was established as a quasi-judicial institution in Afghanistan to ensure justice in line with the recognized experiences of global legal systems. Operating under the government’s supervisory authority – Da Afghanistan Bank – the Commission is mandated to deliver justice and fairness in technical and financial matters in a prompt, simple, and affordable manner in accordance with the provisions of law.
Since its establishment, the commission, as a quasi-judicial institution, has operated with transparency, clarity, purposefulness, and comprehensiveness in accordance with the country’s laws and regulations. The Commission continuously strives to uphold the highest standards of justice and transparency in the dispute resolution process.
For broader public awareness, the following provides an overview of the definition, organizational structure, and powers of the commission:
A. Definition of Commission
As a quasi-judicial institution, the commission introduces a new experience in Afghanistan. Under Article 106 of the DAB law, it is mandated to resolve financial disputes outlined in this and related laws through reconciliation before judicial proceedings.
B. Organizational Structure of Commission
The Commission consists of professional and administrative staff. Its professional members, as defined in Article 108 of the DAB Law, include:
- Three lawyers nominated by the Governor of DAB and approved by the state leader;
- Three professional accountants with experience in finance, nominated by the Minister of Finance and approved by the state leader;
The Chairman of the Commission is selected from the legal members upon the proposal of the DAB governor and approved by the state leader. The commission may recruit administrative staff as needed.
The professional members of the commission, including the chairman (a total of six members), must meet the following qualifications:
- Must be a citizen of Afghanistan;
- Must have a good reputation and not have been convicted of breach of trust;
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Article 106 of DAB Law:
To resolve the financial disputes stipulated in this law, a commission shall be established within DAB to settle disputed financial cases through reconciliation before referring to judicial proceedings.
- Must not have been convicted of deprivation of civil or political rights;
- Must not hold any other official position during tenure;
- Must not serve as a member of the Supreme Council or Board of Directors of any bank, nor act as an inspector or employee of DAB;
- Must be at least 35 years old at the time of appointment.
According to the provision of paragraph (3) of Article 108 of the DAB law, the professional members of the commission, once appointed, may not be relieved of their duties unless they lose one of the six aforementioned qualifications, resign, pass away, or are dismissed, deprived, or removed from their position by a competent court.
Furthermore, under paragraph 4 of the same Article, a professional member shall retire upon reaching the age of 70, but may resign earlier by submitting a written request for personal reasons. Salaries, pensions, and other financial entitlements of the professional members shall be determined by the proposal of DAB and approved by the Council of Ministers.
C. Jurisdiction of Commission
The commission may review the following decisions and provisions of DAB:
- A decision made regarding the rejection of an application for a banking license, authorization, or registration;
- A decision imposing restrictions or limitations on a banking license, authorization, or registration;
- A decision made concerning the revocation of a banking license, authorization, or registration;
- An order issued concerning compensation for losses or the imposition of a financial penalty;
- Orders issued against a person who engages in an activity that, under the provisions of the law, requires a license, authorization, or registration with DAB without having obtained such;
- Any other matters referred to the Commission in accordance with the provisions of the law.
(2) The Commission may examine and resolve financial disputes between financial institutions, provided that, by prior agreement, the resolution of such disputes has been expressly referred to it.
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2- Article 107 of the Law of DAB:
(1) The Commission may review the following decisions and orders of Da Afghanistan Bank:
- A decision made regarding the rejection of an application for a banking license, authorization, or registration;
- A decision imposing restrictions or limitations on a banking license, authorization, or registration;
- A decision made concerning the revocation of a banking license, authorization, or registration;
- A decision or order issued concerning compensation for losses or the imposition of a financial penalty;
- Orders issued against any person who engages in an activity that, under the provisions of the law, requires a license, authorization, or registration with Da Afghanistan Bank without having obtained such license, approval, or registration;
- A decision made regarding the appointment or extension of the term of a trustee;
- Any other matters referred to the Commission in accordance with the provisions of the law.
(2) The Commission may review and supervise applications submitted for the opening or bankruptcy of a bank.
{This part of the Law of Da Afghanistan Bank has been repealed pursuant to the Banking Law, No. 1197, which was endorsed and enforced by Presidential Decree No. 56 dated 26/5/1394 of the President of the Islamic Republic of Afghanistan}.
(2) The Commission may review and settle financial disputes between financial institutions, provided that it has been expressly authorized to do so under a prior agreement.
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(3) In accordance with paragraphs 2 and 3 of Article 5 and paragraph 4 of Article 6 of the Banking Law of Afghanistan, the Commission may review, revoke, restrict, or suspend directives issued by DAB.
(4) The Commission shall also examine civil compensation claims related to the cases specified in paragraph 3 of Article 7 of the Banking Law.
(5) In accordance with paragraph 5 of Article 25 of the Banking Law, the Commission shall, upon the request of DAB and under the condition outlined in paragraph 4 of this Article, appoint a qualified person with the same authorities as the suspended individual.
(6) Pursuant to paragraph 4 of Article 44 of the Banking Law, the Commission shall review an appeal filed by a representative office of a foreign bank against a decision of DAB.
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Paragraphs 2 and 3 of Article 6 of the Banking Law:
(2) A person or company under the control of the recipient of the order mentioned in paragraph 1 of this Article may, within 10 working days, submit an appeal to the Financial Disputes Resolution Commission, hereinafter referred to as “the Commission.” The submission of an appeal shall not suspend the enforcement of the mentioned order.
(3) The Commission may annul, limit, or suspend the order issued by DAB if any of the following circumstances are confirmed.
Paragraph 4 of Article 6 of the Banking Law:
(4) The concerned person may submit an appeal to the Commission within 10 working days from the date of issuance of the notification if the objection mentioned in paragraph 3 of this Article is rejected by DAB.
Paragraph (3) of Article 7 of the Banking Law:
(3) The Commission shall examine civil compensation claims in the following cases:
1. When a compensation claim is filed against DAB or any of the persons referred to in paragraph 1 of this Article.
2. When a claim for compensation arises from an act, omission, or delay in the performance of duties by DAB or any of the persons referred to in this Law or in the DAB Law.
Paragraph 4 of Article 44 of the Banking Law:
(4) The DAB shall notify the foreign bank in writing at least 15 days before the revocation of the branch license, in accordance with the provisions of paragraph 4 of Article 33 of this Law. Suppose the branch of the foreign bank is not satisfied with DAB’s decision. In that case, it may submit an appeal to the Commission in accordance with the relevant regulations.
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(7) In accordance with paragraph 4 of Article 74 of the Banking Law of Afghanistan, disputes between domestic banks and domestic customers, as well as any claims by domestic customers against a non-resident bank related to the activities of its domestic branch, shall be resolved by the Commission.
(8) If the liquidator of a bankrupt bank issues temporary orders under paragraph 4 of Article 149 of the Banking Law regarding the annulment of transactions, the aggrieved party may request a review from the Commission within 10 working days after receiving the order.
(9) Disputes arising from the liquidator’s decision to declare the annulment of transactions referred to in Article 149, in accordance with the provision of paragraph (1) of this Article, shall be resolved by the Commission.
(10) If the bank liquidator, given the availability of reasonable reasons, issues an order to partially or fully suspend the bank’s liabilities concerning unsecured deposits or investment accounts of the bank’s depositors, the aggrieved party may, in accordance with paragraph 5 of Article 155 of the Banking Law, submit a request for review of the mentioned order to the Commission within 10 days.
(11) Disputes arising from the issuance of the suspension order referred to in Article 155 of the Banking Law between a depositor and the liquidator shall be resolved by the Commission.
(12) Pursuant to the provision of paragraph 1 of Article 156 of the Banking Law, a creditor is required to register their claim with the liquidator of the bank under liquidation within 60 days from the date of publication of the decision appointing the liquidator. If the creditor objects to the liquidator’s decision, they may submit their objection for review to the Commission within 30 days from the date of the decision.
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6 – Paragraph 4, Article 74 of the Banking Law of Afghanistan:
Disputes between domestic banks and domestic customers, as well as all claims of domestic customers against non-resident banks in connection with the activities of their domestic branches, shall be resolved through the Commission. The disputes shall be resolved by the competent court of Afghanistan if either party is not satisfied with the Commission’s decision.
7 – Paragraphs 6 and 7, Article 149 of the Banking Law:
(6) A person subject to the temporary order may submit a request for review to the Commission within 10 days after receiving the order. The provision outlined in Article 115 of this Law shall also apply to such review.
(7) Disputes arising from the decision of the liquidation manager regarding the declaration of annulment of a transaction in accordance with paragraph 1 of this Article shall be resolved by the Commission.
(13) The dispute between the liquidation manager and the creditor regarding the value of the asset referred to in paragraph 4 of Article 161 of the Banking Law shall be resolved by the Commission.
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(1) Creditors shall register their claims against the bank under liquidation within 60 days from the date of publication of the decision on the appointment of the liquidation officer.
The Da Afghanistan Bank may extend the mentioned period for an additional 30 days. Upon the creditor’s request, a receipt of registration shall be issued.
The provisions outlined in paragraphs 1 and 2 of Article 157 of this Law shall be exempted from this provision.
(2) The claim shall be registered based on supporting documents and the following information:
- Name and address of the creditor;
- Interest, other charges, penalties, and claims accrued on the principal amount of the debt;
- 3)Detailed information regarding any collateral, right of retention, or other guarantees related to the mentioned claim, including the name and address of the guarantor.
(3) Upon the appointment of the liquidation officer of the bank, claims concerning accounts and deposits recorded in the books or documents of the bank shall be suspended. Other types of claims shall be suspended after their registration with the liquidation officer.
Paragraphs 7-13 of Article 107 of the Banking Law:
(7) The Commission shall determine the date for the hearing and determination of the objection referred to in paragraph 6 of this Article in such a manner that the objecting creditor may submit the relevant documents and evidence to both the liquidator and the Commission for the registration of his/her claim, provided that such hearing and determination shall be held within no more than 60 days from the date the list of disputed claims is submitted to the Commission.
(8) The liquidator shall notify the creditors only once of the hearing and determination by post, including email, or by publishing a notice.
(9) If the creditors who have been notified by post fail to attend the hearing of their claims before the Commission, their claims shall be deemed rejected.
(10) The Commission shall notify the creditors in writing of the rejection of their appeal applications and shall provide a copy of such notification to the liquidator.
(11) The decision of the Commission regarding the objection referred to in paragraph 6 of this Article shall be deemed final, and the liquidator shall be informed accordingly. The decision shall also be recorded in the list maintained by the liquidator.
(12) The Commission shall notify the concerned creditors in writing and provide a copy of such notification to the liquidator if the Commission approves the appeal application of the creditors.
(13) The liquidator shall not make any payment in respect of the claims rejected by the Commission.
Creditors whose applications have been rejected by the decision of the Commission may file an appeal within 15 days from the date of receipt of the notification.
Article 161 of the Banking Law:
(1) The liquidator shall sell, through an auction, the assets that secure the approved claims of creditors against the bank or the claims of the bank against others. The following are exempt from this requirement:
- The sale of securities, currencies, and other assets that can be easily sold in the market, in the specialized markets for such securities.
- 2)The sale of securities, currencies, and other bank assets that secure its debts and can be easily sold in the market, by the creditors who hold these assets.
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(14) Pursuant to paragraph 3 of Article 10 of the Telecommunications Services Regulation Law, any person who incurs losses as a result of decisions of the Afghanistan Telecom Regulatory Authority (ATRA) may, within 30 days from the decision of ATRA, apply to the Commission for review.
(15) Pursuant to paragraph 5 of Article 24 of the Law on Prevention of Money Laundering and Proceeds of Crime, if the directive of Da Afghanistan Bank is not accepted, the reporting party may submit its objection to the Commission for appeal within 30 days.
(16) The Financial Disputes Resolution Commission may, pursuant to provisions of clause 25 of Article 3 of the Negotiable Instruments Law, assign the competent officer.
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(2) If the liquidator determines that a reasonable price for the assets referred to in paragraph 1 of this Article may not be obtained through an auction, he/she may sell the assets privately at a reasonable price determined by him/her.
(3) All assets of the bank under liquidation, except for the assets referred to in clause 2 of paragraph 1 of this Article, shall, upon the request of the liquidator, be placed at his disposal.
(4) Any dispute between the liquidator and a creditor regarding the value of an asset securing a claim shall be resolved by the Financial Disputes Resolution Commission. If the asset has been sold in the market or through an auction, the sale price obtained from the market or auction shall be deemed final with respect to the value of the asset.
10 – Paragraph 3 of Article 10 of the Telecommunications Services Regulation Law:
Any person who incurs losses as a result of a decision of the Authority has the right, regarding financial matters (excluding monetary fines under this Law), to apply to the Financial Disputes Resolution Commission established under the Da Afghanistan Bank Law within 30 days from the date of notification of the Board’s decision of the Authority, and request a review.
11 – Paragraph 5 of Article 24 of the Law on Prevention of Money Laundering and Proceeds of Crime:
The reporting party may, if not satisfied with the directive issued by Da Afghanistan Bank or the competent supervisory authority of the relevant sector, submit its objection to the Financial Disputes Resolution Commission within 30 days from the date of receipt of the directive.
12 – Clause 35 of Article 3 of the Transactions Documents Law:
Competent officer: a person assigned by the Financial Disputes Resolution Commission of Da Afghanistan Bank to verify signatures, certify documents, and perform other functions provided under this Law.