Consider this:
1. By all accounts (and it is true - I live and work in the UAE), it is ILLEGAL to hold someone's passport.

2. In spite of point 1, it is common practice for most companies here to hold employees passports. While I'm aircrew and mine is not held, it is my company's policy to hold the passports of their lower grades (according to our company policy manual). My company (you can guess) is wholly owned by the Dubai government.

As far as the rule of law goes, you can draw your own conclusions.