Kuwait Court of Cassation principle number 321

Summary: - The Capital Markets Court. Its jurisdiction. Adjudication of actions concerning civil, commercial and administrative disputes, rules and regulations, and substantive enforcement disputes relating to judgments issued, irrespective of the value of the dispute arising from the application of the provisions of Law 7 of 2010 concerning the Establishment of the Capital Markets Authority and the Regulation of Securities Activities. - Financial brokerage. Its inclusion among the securities activities regulated by Law 7 of 2010 concerning the Capital Markets Authority and the Regulation of Securities Activities. - Inclusion of the activities conducted by the licensee inside or outside Kuwait with a client in the State of Kuwait or for that client’s account. Their subjection to the provisions of the aforementioned Law and its Executive Regulations and to the subject-matter jurisdiction of the non-criminal circuit of the Capital Markets Court, because the matter concerns that brokerage activity and constitutes a commercial dispute arising from the application of this Law. Its consequence: exclusion from the jurisdiction of the ordinary courts. The challenged judgment’s departure from this and its endorsement of the court of first instance regarding jurisdiction. A violation of the law and an error in its application requiring its cassation. Rule: It is established—in the jurisprudence of this Court—that the question of jurisdiction by reason of the type of action is a matter of public policy pursuant to Article 78 of the Code of Procedure. It is therefore deemed to subsist in the litigation and to be always before the court, which shall determine it of its own motion, and any interested person may raise it at any stage of the proceedings. The criterion for determining the subject-matter jurisdiction of each judicial body is the relief sought by the plaintiff in the action. Under Article 108 of Law No. 7 of 2010 concerning the Establishment of the Capital Markets Authority and the Regulation of Securities Activities, the legislature established within the Court of First Instance a court called the “Capital Markets Court,” consisting of criminal and non-criminal circuits. The latter have exclusive jurisdiction to adjudicate non-criminal actions concerning commercial, civil and administrative disputes arising from the application of the provisions of this Law and the rules and regulations relating to the securities market, and substantive enforcement disputes relating to judgments issued by them, irrespective of the value of these disputes. These circuits are constituted of three judges, one of whom must hold at least the rank of counsellor. This indicates, as disclosed by the explanatory memorandum to the Law, that establishing a judicial body specialized in capital markets activities facilitates and eases the resolution of disputes arising in connection with the application of this Law, which was careful to repeal any provision conflicting with its provisions, wherever that provision might be located, in recognition that its provisions constitute a special law concerning capital markets that supersedes, in its application, any other special or general law. That being so, and it being established from the papers that the respondent brought his action seeking judgment against the appellant for the amount claimed on the basis that he had contracted with the appellant—Cap Kuwait Group for Financial Brokerage—for it to manage his account and trade on it with FX Blb Company, and that it breached the agreements concluded between them by failing to stop dealing on his account and notify him thereof in writing if it fell to the amount of 60000 US dollars, and that it guaranteed payment of that amount to him; and financial brokerage being one of the securities activities regulated by Law No. 7 of 2010 concerning the Capital Markets Authority and the Regulation of Securities Activities in Chapter Five, Articles 63 to 67, and in the Executive Regulations of the Law in Chapter Five, Articles 123 to 240; and the activities conducted by a licensed person inside Kuwait or conducted from outside it with a client in the State of Kuwait or for that client’s account being subject to the provisions of this Law and its Executive Regulations pursuant to Article 123 of the Regulations, jurisdiction to hear the dispute accordingly lies with the non-criminal circuit of the Capital Markets Court, as it concerns securities brokerage activity falling within the scope of the Capital Markets Authority’s work. It is a commercial dispute arising from the application of the provisions of the aforementioned Law No. 7 of 2010 and falls outside the jurisdiction of the ordinary courts. This is subject-matter jurisdiction relating to public policy. Accordingly, the first-instance judgment was issued by a court lacking subject-matter jurisdiction to hear it. Since the challenged judgment departed from this view and ruled on the merits of the dispute, endorsing the jurisdiction of the court of first instance, it violated the law and erred in its application, requiring its cassation on this ground without any need to examine the remaining grounds of appeal.