With arbitration becoming the most widely-used out-of-court dispute resolution mechanism, especially in construction sector, it is crucial to have clear understanding of the remedies available to a party in case an arbitral award is issued against it.
Under Qatar Law No. 2 of 2017 Promulgating the Civil and Commercial Arbitration Law (the “Arbitration Law”), an arbitral award can only be challenged in two ways: by applying for annulment of arbitral award pursuant to Article 33 of the Arbitration Law; or by challenging the award before the Court of Enforcement, once the winning party files an application for recognition and enforcement of the arbitral award, as per Article 35 of the law.
Annulment of Arbitral Award under Article 33
Article 33 of the Arbitration Law allows a party to file for an application for annulment of arbitral award based on the following grounds:
* If any party to the arbitration agreement is proven to be incompetent or incapacitated at the time of the conclusion of said agreement, or if the arbitration agreement is invalid;
* The party seeking the annulment or contesting the arbitral award has not been duly notified of the appointment of the arbitrator or the arbitral proceedings, or was unable to present its defence for any reason beyond its control;
* The award decided on matters which are beyond the scope of the arbitration agreement; or
* The composition of the tribunal, appointment of arbitrator/s, or the arbitral proceedings were made in contradiction of the law or agreement of the parties, or if it was not agreed upon, were in contradiction of the law of the place where the arbitration took place.
The law also allows the competent Qatar court to annul an arbitral award, on its own motion, if the court finds that the subject matter of the dispute is not capable of being resolved by arbitration under Qatar laws, or if the arbitral award is in conflict with Qatar’s public policy.
Any application for annulment must be filed before the competent court within one month from the date on which the Parties have received the arbitral award, from the date when the contesting party is notified of the award, or from the date of issuing any correction, interpretation or additional award. Parties may agree in writing to extend this time limit. The decision of the competent court on the application for annulment shall be final and binding and cannot be subject to any further appeal.
Challenging the Arbitral Award before Court of Enforcement under Article 35
On the other hand, the grounds for annulment in Article 33, as discussed above, are the same grounds for filing a request under Article 35. There is only one additional basis provided as per Article 35, and that is if the arbitral award is no longer binding to the parties or it has been set aside, or if the enforcement of the award has been stayed by a foreign court in which the award was issued or in accordance with the law of that country.
Article 33 also permits the competent court, on its own motion, to refuse the recognition or enforcement of the arbitral award, if it finds that the subject matter of the dispute is not capable of being settled by arbitration under Qatar laws, or if the arbitral award is in conflict with Qatar’s public policy.
The significant difference of the remedy under Article 35 from Article 33, is that this is an application that is filed by the contesting party before the competent court where the winning party has submitted an application for recognition or enforcement of the arbitral award. Thus, while Article 33 allows a party to file an application for annulment of arbitral award, Article 35 provides for the losing party’s remedy to contest the arbitral award once it is submitted to the competent court for recognition or enforcement.
Furthermore, Article 35 allows for an appeal from a decision refusing or enforcing an arbitral award. This should be brought before a competent court within thirty days from the date of the issuance of such decision.
Exclusivity of the Grounds for Challenging an Arbitral Award
As discussed above, the Arbitration Law provides for specific grounds to challenge an arbitral award, which raises a question as to whether these grounds are exclusive in nature or can a party contest an award that is not within any of these basis.
In a recent decision issued by Qatar Court of Appeals (Appeal No. 2186 of 2019 issued on 06 July 2020), it has been ruled that challenges to arbitral awards can only be made based on the limited grounds provided for in the law and no other. In this case, the award was contested for various reasons, including, that one of the arbitrators lacked impartiality and that the award did not indicate that it was issued in the name of His Highness The Emir of Qatar.
With regard to impartiality argument, the court stated that although this is one of the grounds for an arbitrator challenge under the ICC Rules, lack of impartiality is not one of the grounds specified under the Arbitration Law on which an arbitral award may be set aside. The court also noted that violation of law regulating the legal procedures cannot be a ground to set aside an arbitral award.
In relation to the lack of the statement “Issued in the Name of HH The Emir” in the award, the contesting party argued that without this statement, the award was in effect, issued against Qatar’s public policy. However, the court clarified that the lack of said statement would not undermine the legality of the award. The Constitution itself provides that judgments shall be issued and enforced in the name of the supreme authority of the State, thus, an award is presumed to be issued in the name of HH The Emir pursuant to the Constitution, regardless of whether this is expressly stated in the preamble of the award.
The foregoing Court of Appeals decision demonstrates the exclusive nature of the grounds for setting aside or contesting an arbitral award as per Articles 33 and 35 of the Arbitration Law. Accordingly, outside of these grounds, there can be no valid basis to challenge an arbitral award before competent local courts.
Availability of Remedies for Foreign Arbitral Award
Finally, one important issue to consider is whether the remedies provided in the Arbitration Law can be relied upon in case the foreign-seated arbitration.
Article 2 (1) of the Arbitration Law stipulates that without prejudice to provisions of international conventions in force in the State of Qatar, its provisions should be applied to arbitration between the parties, regardless of whether the arbitration proceedings take place in Qatar or pursuant to international arbitration conducted outside of Qatar, provided that the parties agree that the arbitration shall be subject to the provisions of the Arbitration Law. On the other hand, Article 33 of the expressly provides that recognition or enforcement may not be refused regardless of the jurisdiction in which the arbitral award was issued.
Following these provisions, it would seem that the remedies provided in the Arbitration Law can only be availed of if the arbitration agreement specifically stipulates for the application of the Arbitration Law. However, we have seen Qatar local courts accept jurisdictions over matters relating to challenges and/or enforcement of arbitral awards which are issued in foreign jurisdictions, in instances where such foreign-seated arbitral awards are in fact sought to be enforced in the State.
For example, if the losing party against whom the award is sought to be enforced is locally incorporated and domiciled in Qatar, local courts would most likely assume jurisdiction even if the agreed governing procedures law is not Arbitration Law. Another instance when local courts would assume jurisdiction is in a case where the application for annulment (Article 33) is based on the ground that the arbitral award itself is invalid in accordance with the law as agreed by the parties or as per the Arbitration Law if there is a failure to agree. Considering that the basis for the challenge is the invalidity of the arbitral award, the local court would most likely assume jurisdiction even if the arbitration is seated outside of Qatar.
Therefore, in our view, although there is no express provision to this effect, we cannot look at the Arbitration Law as if its application is strictly limited to arbitrations where the relevant arbitration agreement specifically refers to said law as the applicable procedures law. There are other factors which Qatar local courts would consider in determining whether to apply the Arbitration Law and/or whether they have jurisdiction over any application to contest an arbitral award or to have it recognized or enforced.
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