Overview of the Qatari Arbitration Law No. (2) of 2017

Overview of the Qatari Arbitration Law No. (2) of 2017

  1. I. Introduction

Many of arbitration practitioners and scholars were of the opinion that State of Qatar is not arbitration friendly. This opinion was prevailing due to a few reasons, one of them was the absence of an independent legislation regulates arbitration as an international alternative method to settle disputes out of normal local courts, since the only piece of legislation that was regulating arbitration was chapter 13 of the Qatari Civil and Commercial Procedures Code No. (13) of 1990.

This opinion is no longer applicable after enacting the Qatari Arbitration Law No. (2) of 2017 (“Arbitration Law”) which repealed the said chapter 13 and regulated arbitration process from the arbitration agreement, formation of arbitral tribunals, procedures, award, challenging arbitral award, enforcement and recognition of arbitral awards and arbitration institutions.

  1. II. Arbitration Law in nutshells.

  • (A) Abolishing the Old Arbitration Regime Enshrined in Chapter 13 of the Qatari Civil and Commercial Procedures Code No. (13) of 1990

Arbitration Law, ipso jure, replaces the old Articles from 190 to 210 of the Qatari Civil and Commercial Procedures Code No. (13) of 1990 which organized arbitration before the Arbitration Law comes into force.

While it is well-known to arbitration practitioners that the said old regime was inefficient and impractical to serve arbitration process as an indispensable alternative dispute resolutions mechanism, Judicial precedents set by the Qatari Court of Cassation were the only resort for practitioners to explore arbitration rules under Qatari law. Therefore, it is important that precedents rendered in the ambit of old arbitration rules of the Qatari Civil and Commercial Procedures Code No. (13) of 1990 should be reviewed in light of the new rules stipulated in the Arbitration Law.

  • (B) Prime Minister’s Approval for Arbitration in Administrative Contracts

According to Article (2/2) of Arbitration Law “Agreement to arbitration in administrative contract disputes shall be subject to the approval of the Prime Minister, or the person to whom he delegates.”

As per the said Article (2/2) Public law bodies (e.g. Ministries, Public Institutions etc.) are obliged to obtain the Prime Minister’s approval or the one whom the Prime Minister’s may delegate to agree on arbitration as a dispute resolution mechanism in administrative contracts. The aforementioned article may not apply only to new administrative contracts that are concluded after the Arbitration Law come to force, but it also apply to administrative contract concluded before Arbitration Law had come to force but is yet to be resorted to Arbitration.

It should be noted that obligation to obtain the Prime Minister’s approval lies on the side of governmental/ public body and not on the side of the other private contracting body[1]. This principle is deeply established by the neighboring jurisdictions including the Egyptian law which is of a high persuasive authority on Qatari law.

  • (C) Arbitration Agreement must be in writing

Pursuant to paras 3 and 4 of Article (7) of the Arbitration Law, Arbitration agreement must be in writing to be construed as a valid arbitration agreement otherwise it will be null and void.

The said Article (7) also adopts the principle of “party autonomy” in concluding arbitration agreements since it provided for the validity of concluding arbitration agreement through handwritten letters, electronic faxes, or by any means of communications which eases the process of proving the writing condition in arbitration agreement. Moreover, the said Article also provides that arbitration agreement would fulfill the writing condition if one of the parties to arbitration agreement claims the existence of arbitration agreement in the statement of claim or the statement of reply, provided that the other party does not deny such existence in its defence.

  • (D) Arbitration Agreement by Reference

According to para 5 of Article (7), Arbitration Law makes it clear that it is not necessary to mention the arbitration agreement/ clause in the contract to subject any controversy or dispute arises out of said contact to arbitration because it is valid to reference in the said contract to a document contains arbitration agreement provided that such reference must be clear to make such clause/agreement part of the contract.

In this respect, it is worth mentioning that the abovementioned approach included in Article (7) para 5 is not of a different nor a new approach in Qatari law because the Qatari Court of Cassation have adopted this approach in many of its decisions before the enactment of the Arbitration Law[2]. Therefore, a reference to arbitration clause that is contained in other documents must be clear and expressive of the parties’ choice to make arbitration clause specifically part of their contract. In this respect, If certain documents constitute integral part of a contract and one of these documents contains arbitration agreement, such general reference may not constitute an agreement on arbitration by reference  to other document unless there is an explicit and clear statement or reference to the enforceability of the arbitration clause contained in the external document so as to make it part of the new contract[3].

  • (E) Arbitral Tribunal

Apart from the normal rules regulating the appointment and discharge of arbitrators in the Arbitration Law which relatively mirror the rules under the UNICTRAL model law, in this article we will focus on the accountability of arbitrators as per the Arbitration Law and other relevant laws since this topic has been of a great importance to all arbitration practitioners.

According to Article (11) of the Arbitration Law, arbitrators cannot be held liable to their acts unless such acts constitute gross negligence or bad faith. Moreover, despite the Arbitration Law does not provide for criminal penalties for breaching its provisions, the Qatari Penal Code No. (11) of 2004 (“Penal Code”) treats arbitrators as public servants since Article (3) para 1 of the Penal Code provides that the definition of public servant shall include arbitrators, experts, syndic, liquidator and judicial receiver question arbitrators. Therefore, arbitrator shall be considered as a public servant as per the provisions of the Penal Code and shall be addressed by the provisions of Penal Code related to public servants including the punishments associated thereto.

Some of the Articles that should be considered in this respect are as follows:

Article (140) of the Penal Code provides “Any pubic servant who asks for or accepts, for himself or another party, money, benefit or a simple promise for something in return for undertaking any activity or abstaining from carrying out any activity under the remits of his office shall be considered a receiver of bribery; the penalty of imprisonment for a term not exceeding ten years and a fine not exceeding what he received or promised shall apply to him, provided that it shall not be less than five thousand Qatar Riyals (5000QR). The same penalty shall apply to any public servant who asks for or accepts, for himself or another party, money, benefit or a simple promise for something in return for undertaking an activity or abstaining from carrying out an activity, which is not included in the remits of his office, but who believes by error or pretends that it so . Any special benefits received by a servant or another party from the sale of a movable asset or real estate at a price higher than its true value, its purchase at a price lower than its true value, or from any contract concluded between the briber and the bribed shall be considered bribery.”

It should also be noted that the abovementioned articles might also be applied to parties to arbitration as well because Article (141) provides “The penalty stipulated in the preceding Article [Article 140] shall apply to any person who offers money, benefit or promise to a public servant in the said respect, and if the servant accepts the offer or the promise. The same penalty shall apply to the intermediary between the briber and the bribed. The briber or the intermediary shall be exempted from the penalty if he informs the relevant authority about the offence or declares it before its discovery even after its realization.”

Moreover, Article (142) stipulates “The penalty of imprisonment for a term not exceeding seven years and a fine not exceeding fifteen thousand Qatar Riyals (15.000QR) shall apply to any public servant who accepts money or benefit from a person for whom he does or abstains from doing an activity of the said office, or who after the accomplishment of the said activity or not so doing, seeks to obtain a reward for his activity or not so doing despite there being no previous agreement.”

In addition, Article (145) applies to parties to arbitration dispute if they intended to provide bribery to arbitrator, it provides “The penalty of imprisonment for a term not exceeding five years and a fine not exceeding fifteen thousand Qatari Riyals (15.000QR) shall apply to any person who offers a bribe to a public servant and he declined to receive it”.

Article (148) also provides “Whoever, being a public servant, embezzles money, papers, or others, which were in his possession in respect of his public office shall be punished with imprisonment for a term of no less than five years and not exceeding ten years. The penalty shall be imprisonment for a term of not less than seven years and not exceeding fifteen years if the perpetrator is entrusted with deposits of cash or monetary exchange, or if he is assigned to collect fines, fees, taxes or the like and the money is delivered to him in this capacity.”

  • (F) Arbitral Award

Arbitration Law in its articles from (28) to (32) set the rules regarding arbitration process and the obligation of neutralism and independency of arbitral tribunal.

As per Article (28) of the Arbitration Law, the arbitral tribunal shall determine the dispute pursuant to the legal rules agreed by the parties. If the parties agree to implement the law or the legal system of a given country, only the substantive rules of that country shall be followed, but not the rules concerning conflict of laws, unless the parties expressly agree otherwise. Moreover, The Arbitral Tribunal may not determine a dispute based on the principles of justice and fairness, without complying with the provisions of the law, unless the Parties expressly permit it to do so.  In addition, the Arbitration Law also focused on the principle of “Pacta Sunt Servanda” or “contract makes the law of the parties” as it obliged the arbitral tribunal to determine the dispute in accordance with the terms of the contract, and shall take into consideration the customs and commercial traditions followed in that type of transaction.

Article (31) of the Arbitration Law provides that arbitral award must be rendered in writing and it sets the information which shall be mentioned in the arbitral award, such information are as follows:

  • - the names and addresses of the parties
  • - the names, addresses and nationalities of the arbitrators
  • - a copy of the arbitration agreement
  • - a summary of the parties’ claims, statements and supporting documents
  • - the date of the award
  • - the place of issuance of the award
  • - the reasoning for the award

Hence, it should be understood that Arbitration Law does not provide for rendering the award under the name of His Highness the Emir of the State of Qatar as it was previously set by the Court of Cassation[4]. The Arbitration Law determined the specific and exclusive information that shall be written in the award.

It should also be mentioned that tribunal shall submit an electronic copy of their award to the Arbitration Department at the Ministry of Justice for their reference and record.

  • (G) Challenging the Arbitral Award

Annulment application is the only way to challenge arbitral award under the Arbitration Law. According to Arbitration Law, annulment application can be filed before the competent court within 30 days from issuing the award or notifying the parties of its issuance or receiving a copy thereof, as the case may be. The court’s decision on annulment application is final and cannot be challenged further before any higher court or tribunal.

Arbitral award might be annulled if a party proved that any of the following grounds of annulment have been Grounds of challenging arbitral award under Arbitration Law can be summarized as follows:

  • Any party to the arbitration agreement was, at the time of concluding it, incompetent or under some incapacity, in accordance with the law that governs its capacity, or the arbitration agreement is invalid under the law to which the parties have agreed, or under Arbitration Law if the parties did not reach such agreement;
  • The party making the application to set aside was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was unable to present its defence for any other reasons beyond its control;
  • The award has decided matters outside the scope of the arbitration agreement or in excess of the arbitration agreement. However, if it is possible to separate the parts of the award that are related to arbitration from the parts unrelated to arbitration, only the latter parts shall be set aside; or
  • The composition of the arbitral tribunal, the appointment of arbitrators or the arbitral proceedings was not in accordance with the agreement of the parties unless such agreement was in conflict with a provision of this Arbitration Law, from which the Parties cannot derogate, or failing such agreement, was not in accordance with this Arbitration Law.

In this respect, it should be mentioned that we have witnessed strict application the abovementioned grounds by the Qatari Court of Appeal in most of annulment applications brought before it since the Arbitration Law come to force.

  • (H) Enforcement of Arbitral Awards

According to Article (34) of Arbitration Law, arbitral awards are enforceable before Qatari Courts and are final in what they decide on (i.e. res judicata) regardless of the state where awards are handed down.

Unlike enforcement process under Qatari Civil and Commercial Procedures Code No. (13) of 1990, enforcement process of arbitral award has been made very simple and straightforward under Arbitration Law.

Unless parties to arbitration agreed on an alternative way to enforce the award, all what you need to do is to file an enforcement request before the competent judge (i.e. enforcement judge of the court of first instance or enforcement judge of QFC court) and pay the associated court fees after 30 days from the date on which tribunal rendered the award or when parties were notified about the arbitral tribunal as the case may be. In addition, the said request of enforcement shall be attached with a copy of the arbitration agreement, the original copy of the arbitral award or a signed true copy thereof. It should be noted that if the arbitral award is handed down in a foreign language, an Arabic translation to the arbitral award must be attached to the enforcement application.  

As stated above, Qatari court does not scrutinize nor review the award or merits of the dispute as arbitral awards have the res judicata and are final. However, Article (35) of the Arbitration Law provides for only two cases where competent judge of enforcement may refuse or decline the enforcement request. These two cases are as follows:

  1. 1. If the party against whom the enforcement is sought presents to the competent judge of enforcement proof or evidence on any of the following:

  1. 1.1 A party to the arbitration agreement was, at the time of its conclusion, under some incapacity, or the said agreement is not valid according to its governing law as per the law of the state where the award is handed down.  
    1. 1.2 The party against whom the enforcement is sought was not duly notified of appointing an arbitrator or of the arbitration proceedings or failed to submit a defence for any reasons falling beyond its control.

  1. 1.3 The arbitral awards has decided on matters not covered by, or gone beyond the limits of, arbitration agreement.

  1. 1.4 The formation of arbitral tribunal, or the appointment of arbitrators or the arbitration proceedings have violated the applicable law, agreement of the parties, or, in the absence of agreement, the law of the seat of arbitration.

  1. 1.5 The arbitral award is no longer binding on the parties, invalidated or stayed by virtue of an order by a court on the state where the seat of the arbitration is located or pursuant to the laws thereof.

  • 2. The competent judge may, acting in his own discretion, refuse to recognize or enforce an arbitral award in the following cases:

  • 2.1 If the subject matter of the dispute is not arbitrable under the laws of the State of Qatar, or

  • 2.2 If such enforcement violates the public order of the State of Qatar.

Moreover, competent judge of enforcement is entitled to hold the enforcement process if the party against whom the enforcement is sought has submitted an evidence that the arbitral award is subject to challenge/ appeal process in the State of Qatar or in the place where is award was rendered.

  • (I) Conclusion

Arbitration Law is, indeed, a remarkable and significant piece of legislation in Qatari law and indicates the right approach tackled by the Qatari legislator towards paving the way towards the establishment of a new and modernized legal environment in the State of Qatar. However, it is our opinion that achieving the target behind Arbitration Law and ensuring proper and smooth application of Arbitration Law may be hindered by a few provisions contained in other legislations such as Penal Code regarding accountability of arbitrators as this may let arbitrators feel afraid of practicing arbitration under Qatari law.

For more information on the process and mechanism of enforcement of arbitral awards in the State of Qatar please send your question to info@alansarilaw.com.

About Al-Ansari & Associates

Al-Ansari & Associates is a leading law firm based in Doha, the State of Qatar. Being the fastest growing firm in the State of Qatar, we are proud to have supported both local and international clients with multi jurisdictional qualified lawyers. The firm's practice is focused on core areas such as corporate and commercial, Banking and Finance, regulatory and compliance, Labour and Employment, TMT, Intellectual Property and Copyright, Real Estate and Contraction, Energy and Natural Resources, Transport and Infrastructure and Dispute Resolution. Al-Ansari & Associates provides its clients legal expertise with international standards.

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