Focus on: Dispute Resolution in Qatar
Hamad Al Yafei Law FirmView Firm Profile
Here, you will find focused information and practical guidance on the legal regime and market of dispute resolution in Qatar. Firstly, this article will provide a general overview of the legal system and courts in Qatar. Then, the article will guide the reader through the legal framework and the market of litigation, arbitration and mediation in Qatar.
General Overview on:
The Qatari Legal System:
The Qatari legal system is based on the civil-law legal system, substantively and procedurally. Besides adoption of civil-law principles, Qatari commercial and civil legislations are harmonized with the principles of Islamic Sharia to a certain extent. Although Islamic Sharia is a source of law and an essential part of the legal and legislative culture, the primary source of law in commercial matters is the codified legislations, as enacted and published in the Official Gazette. Primarily, commercial matters are governed by the Commercial Code and the Civil Code, with a secondary power to customary practices and Sharia principles, in the absence of provisions in the codes.
Normally, following enactment of any commercial law in Qatar by the legislative authority, there is an executive list or regulation that is passed and published by the respective executive authority, and it normally contains particular provisions that are read with the law. Lawyers and legal practitioners must always observe whether a law refers to an executive list and observe its issuance, and they must always consider the list along with the law.
Finally, any legal practitioner in Qatar can tell you that there is a change in the underlying theme of the civil and commercial legislations passed in the past 10 years, as a result of the increasing international exposure and the diversification of investments. A number of model laws in commercial matters have been adopted, such as e-commerce law, arbitration law and mediation law which are adopted from UNCITRAL model laws. It seems that the Qatari legislator is observing a level of alignment with the international and regional legislative approaches.
Courts and Court Judgments in Qatar:
Based on the prevailing legal system, Qatari courts do not apply stare decisis doctrine, and therefore, judgments passed by higher courts are not binding and are not considered a primary source of law. However, for moral reasons, lower courts tend to adopt and follow the approaches and decisions of higher courts, especially the decisions of the Court of Cassation.
Unlike the First Instance Court and the Court of Appeal that concentrate on questions of facts, the Qatari Court of Cassation hears cases that involve questions of law. Based on this authority, the Court of Cassation has the right to pass judicial principles, which are highly respected and complied with by lower courts and legal practitioners. The Supreme Judicial Council, which is the governmental body that monitors the function of courts, publishes a volume of key judicial principles passed by the Court of Cassation, annually.
These judicial principles are objective to some extent, as they serve as explanations, confirmations, interpretations and clarifications to the legislations as applied to real life scenarios.
It is remarkable to note that the Court of Cassation may sometimes change its approaches and established principles. Thus, it is advisable for lawyers and practitioners to always be aware of the judgments that establish new judicial principles and how they may impact their clients or businesses.
Commercial Litigation before Courts in Qatar:
The function of ordinary civil courts in Qatar is governed by Law No. 13 of 1990 on the Civil and Commercial Procedures as Amended. Civil and commercial matters are both heard before the same ordinary courts.
However, Law No. 21 of 2021 on Issuance of the Law for Establishment of Investment and Commerce Court was passed recently, thereby establishing the first specialized commercial court in Qatar. Although the law was published in the Official Gazette in November 2021, the new Court has not started to function fully yet. Nevertheless, judges who will sit in the new Court have been chosen, and the Court is expected to begin working fully this year. The commercial matters which will fall within the sole jurisdiction of the Investment and Commerce Court are as follows:
- Disputes related to commercial contracts, including commercial representations and commercial agencies;
- Cases arising between traders in relation to their commercial activities;
- Disputes arising between partners or shareholders, or between any of them and the company, as the case may be, in commercial companies, including listed public shareholding companies;
- Disputes related to commercial assets;
- Disputes related to investing foreign capital in economic activities;
- Disputes related to maritime sales;
- Disputes related to banking transactions, commercial papers, insurance companies and investment and financing companies;
- Disputes related to bankruptcy and preventive reconciliation in the context of bankruptcy.
- Disputes related to patent, trademarks, industrial designs, commercial secrets and other intellectual properties rights;
- Disputes related to protecting fair competition, preventing monopolizing practices and combatting practices that harm national products in international trading;
- Disputes related to e-commerce and e-transactions; and
- Disputes related to contracts of partnership between public and private sectors.
The new Court is formed of first instance circuits and appeal circuits that will hear the merits of commercial disputes. For further challenges, a circuit or more will be established in the existing Court of Cassation, named ‘Circuit for Investment and Commercial Disputes’. This circuit will hear all cassation appeals filed against judgments issued from the appeal circuits at the Court of Investment and Commerce.
It is noteworthy that the appeal time-limits have been shortened, which is a very positive change that is aimed at limiting the length of the proceedings. The time limit for filing appeals is fifteen 15 days as of the date of notification of the concerned party. In the ordinary courts, the appeal time limit is 30 days. In the Court of Investment and Commerce, the time limit for filing a cassation appeal is thirty 30 days. In the ordinary courts, such time limit is 60 days.
The number of pending commercial litigations before the ordinary courts is already great, but not all the pending commercial cases will be automatically transferred to the new Court once it starts full function. Once the new Court is fully set up, new commercial cases can be filed before it. As to the pending matters, the below rules will apply:
- Ordinary Court of First Instance shall continue to hear the pending cases and disputes which were already filed prior to the date of effectiveness of the law establishing the new Court.
- The Court of Appeal and the appeal circuits in the ordinary Court of First Instance shall continue to hear the pending appeals already filed prior to the effectiveness of the law establishing the new Court, in respect of judgments issued in matters which are within the jurisdiction of the new Court of Investment and Commerce.
- The Court of Appeal and the appeal circuits in the ordinary Court of First Instance shall hear appeals filed against judgments issued in cases and disputes which were filed at the ordinary Court of First Instance prior to the effectiveness of the law establishing the new Court.
We cannot predict much about the level of efficiency in the new Court. However, we expect a higher level of specialization in judges hearing the cases at the Court of Investment and Commerce and a better quality of judgments. Finally, it must be said that the procedural rules stated in the law establishing the new Court are improved, compared to the rules governing the function of ordinary courts. The Law on Establishment of the Court of Investment and Commerce provides for particular provisions and a specific online and on-site system for the hearings and applications, and it contains provisions clearly intended to shorten the length of proceedings and to lessen the procedural hurdles regularly faced in ordinary courts.
Litigation before Qatar Financial Center Courts:
The Qatari legislator has extended the scope of the jurisdiction of the Civil and Commercial Court of Qatar Financial Centre.
The matters over which the Civil and Commercial Court of Qatar Financial Centre has jurisdiction were limited. As per Law No. 7 of 2005 of Qatar Financial Centre, the aforementioned Court has jurisdiction to hear the below disputes:
- Civil and commercial disputes arising from transactions, contracts, arrangements or incidences taking place in or from the QFC between the entities established therein.
- Civil and commercial disputes arising between The QFC authorities or institutions and the entities established therein.
- Civil and commercial disputes arising between entities established in The QFC and contractors therewith and employees thereof, unless the parties agree otherwise.
- Civil and commercial disputes arising from transactions, contracts or arrangements taking place between entities established within The QFC and residents of The State, or entities established in the State but outside the QFC, unless the parties agree otherwise.
However, recently, Law No. 14 of 2021 for Amending some Provisions of Qatar Financial Centre Law extended the scope of jurisdiction of this Court to cover civil and commercial disputes related to other entities, where the jurisdiction is granted to the Court, pursuant to a law.
This amendment coincided with issuance of Law No. 15 of 2021 for Amendment of some Provisions of Law No. 34 of 2005 regarding Free Zones, which stated in Article 44 that:
“The Civil and Commercial Court, established at Qatar Financial Centre pursuant to the aforementioned Law of Qatar Financial Centre, shall have jurisdiction over all civil and commercial disputes and cases between companies registered in the Free Zones, between the Authority, individuals and companies registered with the Free Zones, between the companies registered with the Free Zones at one hand and individuals residing in the State, companies and entities established outside the Free Zones at another hand, whatever the nature of the legal relationship may be, unless the parties agree to settle the dispute through alternative mechanisms.”
Arbitration Legislation in Qatar:
Qatar has a full-fledged legislation for arbitration, Law No. 2 of 2017 on Arbitration of Civil and Commercial Matters. The law is adopted from the UNCITRAL model law, with some limited adjustments. Qatar is also a signatory of the Convention on Recognition and Enforcement of Foreign Arbitral Awards (New York Convention 1958) which was ratified by Emiri Decree No. 20 of 2003.
Prior to the enactment of the Arbitration Law, arbitration was governed by a few provisions in the Civil and Commercial Procedures Law, and the courts’ approach towards enforcement and annulment of arbitral awards was not very friendly. However, a lot changed over the past four years.
The scope of application of Qatar Arbitration Law covers (i) arbitrations that take place in Qatar; and (ii) international commercial arbitrations seated outside Qatar, if the parties agree to Qatar Arbitration Law as the governing procedural law.
Generally, there is more freedom in terms of agreeing on arbitration under Qatar Arbitration Law, with some restrictions. For example, agreeing on arbitration in administrative contracts related to public projects, requires approval from the President of the Council of Ministers or his delegates.
Arbitration and Public Policy:
If parties agree to apply Qatar Arbitration Law to the arbitral proceedings, they and their lawyers must be mindful of some public policy requirements. Under Qatar Arbitration Law, awards may be denied recognition and/or enforcement, and they may be set aside, if they are in conflict with the Qatari public policy. Public policy is a wide and vague concept, and a lot can fall under its umbrella.
There has been a long debate and conflicting judgments on whether arbitral awards in Qatar must be rendered in the name of the Emir of the State of Qatar. Although there is no express provision that obliges arbitrators to embody the phrase “issued in the Name of the Emir of the State of Qatar” in awards, some parties challenge awards that are issued without such phrase, on grounds of public policy violation. Therefore, for avoidance of such challenges, it is advised that arbitral awards, issued in proceedings governed by Qatar Arbitration Law, are issued in the Name of the Emir.
Another trending issue of public policy violation is the issue of whether parties in arbitrations governed by Qatar Arbitration Law must be represented by Qatari licensed lawyers/law firms. It is common for losing parties to challenge awards on this ground and allege that foreign lawyers are not authorized to represent parties in arbitral proceedings governed by Qatari procedural law. This argument is based on Qatar Advocacy Law. Nevertheless, in a number of recent judgments issued in annulment cases, courts did not consider it a valid ground for annulling awards.
Courts’ Approach in Annulment Cases:
Under Qatar Arbitration Law, applications for setting aside arbitral awards (annulment cases) must be filed directly before the Qatari Court of Appeal, in the circuit of civil and commercial arbitration disputes. Alternatively, parties can agree on the Civil and Commercial Court of Qatar Financial Center, the first instance circuit, to be the competent court to hear the annulment case.
Any decision on annulment cases can be deliberated in one level of litigation only, and it cannot be subject to appeal before any higher court in Qatar.
The exclusive grounds for annulment are listed in Article 33(2) (3) of Qatar Arbitration Law, and they are not very different from the annulment grounds in the UNCITRAL model law. Nevertheless, interestingly, if the Court hearing an annulment case finds that there is a reason for annulment that can be rectified, it has the authority, based on a party’s request, to allow the arbitrators to fix the procedure thereby eliminating any invalidity that may lead to annulment of the award, unless the parties agree otherwise (Article 33(5)).
It must be noted that the Qatari Court of Appeal tends to dismiss annulment cases without considering the annulment grounds if: (i) the applicant for annulment does not submit the original award, if the opposing party challenges the accuracy of the photocopies; and (ii) if the applicant does not submit certified Arabic translation of the award. The requirement of submitting original documents if the photocopies are challenged, and the requirement of submitting certified Arabic translation of documents in foreign language, are procedural requirements which are not provided for expressly in the Arbitration Law.
Since the enactment of Qatar Arbitration Law, we have not seen a single award being annulled. As observed from the judgments, the Qatari Court tend to narrow the interpretation of the annulment grounds, and they seem to be less likely to annul awards without a blatant reason for that. That is a good approach indeed. Generally, courts are showing a more friendly treatment to arbitration in this context.
Recognition and Enforcement of Arbitral Awards:
Applications for recognition and/or enforcement of arbitral awards are heard before the competent judge being the Enforcement Judge at the Qatari Court of Execution, or if the parties agree, the Enforcement Judge at the Civil and Commercial Court of Qatar Financial Center can review such applications.
The parties have the right, though, to agree on any alternative enforcement method, away from courtrooms.
For a domestic award, an applicant can submit a simple request for recognition accompanied with a copy of the arbitration clause in the respective contract and the original award or a signed copy thereof along with certified Arabic translation.
It is important to note that, although submitting the terms of reference may be sufficient to show the arbitration clause, some enforcement judges may request a copy of the arbitration clause in the contract.
Such applications may not be entertained prior to the lapse of the time-limit prescribed for annulment cases. If an annulment case is already pending before Qatari courts, the recognition or enforcement application may be filed after the end of the annulment proceedings.
Applications for recognition of foreign arbitral awards are initiated through filing a fresh recognition case before the Qatari Court of First Instance, in accordance with Qatar Civil and Commercial Procedures Law. Also, New York Convention applies in this context, of course.
It is significant for clients to seek guidance and advice as to whether their award may be categorized as domestic or foreign award, as the recognition procedure vary depending on this distinction.
Civil and Criminal Liability of Arbitrators:
There is a register for arbitrators with the Ministry of Justice. Nevertheless, any person can be appointed as an arbitrator under Qatar Arbitration Law, even if he/she is not registered, if such person: (i) acquires the full legal capacity; (ii) has not been convicted of a crime or felony related to honor and/or integrity through a final court judgment; and (iii) has a good reputation and good attitude.
There are no nationality restrictions, unless the parties agree otherwise or a law prescribes any such restriction.
Under Qatar Arbitration Law, an arbitrator shall not be held liable for exercising their duties as arbitrator, unless he/she exercises the arbitration duties with bad faith, collusion, or gross negligence (Article 11(11)). Good faith and good conduct are presumed, and the party claiming bad faith, collusion, or gross negligence on arbitrators must prove that.
There is no definitive rule as to what the threshold required to hold an arbitrator liable is. However, our reading to Article 11(11) is that holding arbitrators liable in the context of performing arbitration duties is exceptional and cannot be easily established.
As to the criminal liability of arbitrators, under Qatar Penal Code, arbitrators are deemed public officers pursuant to Article 3. That said, any crime that may apply to public officers may apply to arbitrators.
There was actually one judgment that was issued in absentia by the Criminal Court of First Instance in Qatar, holding three international Arab arbitrators criminally liable for the crime of using their authority in harming others and obtaining illegitimate benefit. (Case number 1650/2018, 31 October 2018). The decision was unfortunate and invited a discussion as to the scope of criminal liability of arbitrators and its impact on the future of Qatar as an arbitration-friendly jurisdiction. However, international arbitrators continue to sit in tribunals of arbitrations seated in Qatar. The decision did not seem to have severely impacted the arbitration market in Qatar.
New Legislations on Mediation and the Enforcement of Resulting Settlement Agreements:
Over the past few years, mediation started to gain popularity as an alternative dispute resolution mechanism in international commercial transactions. In response to that, Decree No. 79 of 2020 for Ratification of United Nations Convention on International Settlement Agreements Resulting from Mediation was issued (Singapore Convention). By virtue of this Decree, the Singapore Convention was ratified and granted the power of law in Qatar. A year later, Law No. 20 of 2021 on Issuance of Law of Mediation for Settlement of Civil and Commercial Disputes was issued.
Qatar Mediation Law covers all the procedural and substantive details of the process of mediation, including a smooth and straightforward enforcement procedure. Furthermore, the law covers the requirements and conditions related to who can sit as a mediator.
In accordance with Qatar Mediation Law, settlement agreements resulting from a mediation process may be enforced directly before Qatari courts, following specific procedures. In this regard, Article 25 of Qatar Mediation Law states that:
“The mediator, within a period not exceeding seven days as of the date of the parties’ signing of the settlement agreement, shall deposit an original copy of the settlement agreement, the agreement for the appointment of the mediator and his/her acceptance of the assignment, with the Registrar of the Court.
Applications for attestation of the settlement agreement shall be filed with the Court, either by one of the parties, the parties together or by the mediator, and the Court shall issue its decision for the attestation of the settlement agreement within seven days as of the date of the application. The settlement agreement, after attestation, shall have the power of a writ of execution and it shall not be appealed through any means of challenge.”
The aforementioned provision grants settlement agreements resulting from mediation an executive power in a manner that was not available prior to the issuance of this law. The aforesaid provision does not allow filing an appeal or challenge against a settlement agreement after the court recognizes the agreement.
Additionally, for invoking settlement agreements to stop continuation of a case related to a mediated and settled dispute, Article 27 of Qatar Mediation Law states that:
“If any of the parties to the settlement agreement attested by the Court, files a case regarding the merits of the same settlement agreement, the Court shall issue a decision to the effect that hearing the case is impermissible, on account of previous conclusion of the dispute. The Court may impose a penalty on the claimant equivalent to ten times the amount of the case filing fees, but it shall not be less than QAR 10,000 and not more that QAR 50,000. If the claimants are many, the penalty shall be shared by them equally.”
It must be noted that the scope of application of the recognition and enforcement process must be taken into account. It is not clear to what extent the process applies to settlement agreements resulting from international mediation, as opposed to domestic mediation. Article 2 of Qatar Mediation Law states that: “Without prejudice to the provisions of international conventions in force in the State, the provisions of this law shall apply to any mediation agreement in any of the below cases:
- the mediation process is conducted in full or in part in the State, unless the parties agree otherwise;
- parties agree that the provisions of this law shall apply to their dispute, or if the court directs parties to resolve their dispute through mediation.
- the contract or agreement subject matter of the parties’ dispute provides for the applicability of the laws applicable in the State.”
Besides that, the Singapore Convention covers the requirements for enforcing and recognizing international settlement agreements resulting from mediation. It establishes a harmonized legal framework for (i) the right to invoke settlement agreements (Shield function); and (ii) for their enforcement (Sword function).
It must be noted that even with international settlement agreements, Qatar procedural laws, including Qatar Mediation Law, may apply along with Singapore Convention on Mediation. To clarify, according to Article 3 (General Principles) of Singapore Convention on Mediation, a settlement agreement resulting from international mediation must be enforced or invoked in accordance with the rules of procedure of the relevant country, under the conditions laid down in the Convention.
On a side note, Qatar International Centre for Conciliation and Arbitration of Qatar Chamber of Commerce and Industry (QICCA) and Qatar International Court and Dispute Resolution Centre, provide administration and other services related to mediation, and they do have mediation rules.
There is now a legal regime for the mediation process covering all its stages including the recognition and enforcement of the resulting settlement agreements.
Clients may consider mediation as a pre-arbitration mechanism with more ease and less concerns about the enforceability of the outcome of mediation. However, the legislations on mediation are new and have not been tested or applied yet. We cannot predict how the courts will apply these legislations. Guidance must always be sought from local lawyers as to the likely approach and interpretation of new legislations, for the sake of observing due following of the legal procedures to the best extent possible.
About Hamad AlYafei Law Firm
Hamad AlYafei Law Firm is a law firm based in Qatar, founded in 2016 by Lawyer Hamad Fadhl AlYafei, who gathered his efforts to set up a firm that has been effectively responsive to the demands of civil and commercial law experts in Qatar.
Since its establishment, the Firm has been growing in exposure to dispute resolution matters and corporate/advisory work in the legal market in Qatar, especially for international clients. The Firm has also been engaged in collaborative assignments with international law firms, as the Qatari co-counsel or legal expert, in pre-litigation advisory work and in arbitration matters.
Currently, the firm, is composed of over twenty (20) lawyers (including 3 bilingual seniors), 4 paralegals and 2 trainees, under the direct management and supervision of its founder along with its head of office Mustafa Basyoni.
More than a half of the associates and paralegals have a very good command and fluency in English and Arabic. In addition, two (2) associates are fluent in French, Spanish, and Portuguese. The Firm has been diversifying its staff for the sake of providing convenient services to clients from various backgrounds.