Arbitration boon to Qatar build

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Developing and strengthening commercial partnerships is a priority for hundreds of Asian companies that look forward to entering into new markets, notably in the Arab countries. Statistics indicate clearly a regular increase in the volume of commercial exchanges between Far East countries and the Arab world. Furthermore, Singapore has concluded a free trade agreement with the Gulf Co-operation Council (GCC) countries, which represents a very attractive and lucrative market for exports.

The GCC represents a regional union of six Arab states (Bahrain, Kuwait, Oman Qatar, Saudi Arabia and the United Arab Emirates). The high revenues of these countries, generated principally from natural resources such as oil and gas, have been invested in large infrastructure projects to modernize in a record time. Such projects are realised with the participation of hundreds of international companies and materialized by thousands of contracts and agreements which may last for many years.

For example, the State of Qatar, which will host the FIFA World Cup in 2022, has undertaken a comprehensive programme to build a subway, several new stadiums, expressways and roads, hotels, shopping malls, bridges, etc.

Such construction contracts, concluded with Asian groups of companies for example, include necessarily the provision of a multi-tiered mechanism for resolving disputes between parties. A detailed clause opts usually for out-of-court solutions, using firstly amicable negotiations between the management bodies of the contracting parties, followed secondly by mediation with the assistance of a mediator, and finally, in case the previous means fail, to resolve the dispute through arbitration.

In this context, Qatar promulgated in February a new Arbitration Law in Civil and Commercial Matters (Law No. 2/2017, or the Arbitration Law). The new law is largely inspired from the UNCITRAL Model Arbitration Law of 1980 (revised in 2006), and has replaced some obsolete rules found in the Qatari procedural law of 1990.

The need to issue a modern and up to date arbitration law was more than urgent in light of the multiplicity of transactions and agreements where parties have agreed on using arbitration.

The Arbitration Law covers all stages of the arbitral process, from the arbitration agreement to the enforcement of the arbitral award, and reflects a worldwide consensus on the principles of international arbitration practice.

The arbitration agreement

The arbitration agreement should be in writing, whether included in the agreement as an arbitration clause or in the form of a separate agreement. The Arbitration Law considers that any form of writing is valid, such as an electronic document signed by the parties, an exchange of statements of claim and defence, or by reference to a document containing an arbitration clause, provided the reference is such as to make the clause part of the contract.

The Arbitration Law has also paved the way for the possibility of using arbitration in administrative contracts (i.e., where one of the contracting parties is a ministry, public entity, state agency, etc.). However, to be considered as valid, a specific authorization from Qatar’s prime minister or his delegate, such as the minister of finance, is required.

The arbitral tribunal

The Arbitration Law places no restrictions on who may serve as an arbitrator. No person can be precluded by reason of his/her nationality from acting as an arbitrator, unless otherwise agreed by the parties. The default position under the Arbitration Law is that the arbitral tribunal must be composed of three arbitrators, unless the parties agree for a sole arbitrator or another number of arbitrators.

Whether institutional or ad hoc arbitrations, national courts and arbitration centres may assist the parties in the procedure of appointing arbitrators. This is a new mechanism established by the Arbitration Law, where the Qatar Civil and Commercial Court (known as the Qatar International Court), part of the Qatar Financial Centre (QFC), is competent to play a supportive role to arbitration.

The Arbitration Law also allows the challenge of an arbitrator if circumstances exist that are likely to give rise to justifiable doubts as to impartiality or independence, or if the arbitrator does not possess the qualifications agreed to by the parties. The party challenging an arbitrator must send a written statement of the grounds for challenge to the arbitral tribunal within 15 days of becoming aware of the constitution of the arbitral tribunal, or of the grounds for challenge. Unless the challenged arbitrator withdraws, or the other party agrees to the challenge, the arbitration institution or the competent court must decide on the challenge. Such decision is final and not subject to review or appeal.

The tribunal enjoys extensive authorities, pursuant to the common will of the parties. Such authorities include the power to issue interim orders, preliminary awards on jurisdiction, partial and final awards. The tribunal may appoint experts and hear witnesses during the proceedings.

The arbitral award

The arbitral tribunal must issue the award ending the dispute within the time limit agreed by the parties. Otherwise, it must be issued within one month following the conclusion of proceedings.

The award can be issued in any language agreed upon by the parties or decided by the tribunal. It must be rendered in the name of his highness, the Emir of Qatar, and contain a copy of the arbitration agreement. It must be motivated stating the reasons upon which it is based, as well as the date and place of arbitration, the names and addresses of the parties and of the arbitrators. An electronic copy of the award must dispatched to the arbitration department at the Ministry of Justice.

Either party may request from the arbitral tribunal to make a correction of a typographical error, or for the interpretation of any ambiguous part of the award.

Challenge to the award

Pursuant to the new Arbitration Law, the only means of recourse against an arbitral award is by application for the setting aside of the award to the competent court within 30 days from the issuance of the award. This is a relatively short period in comparison with the 90 days provided for by the Model Law, or in comparative jurisdictions. Two different and concurrent jurisdictions are nominated by the new law to be in charge of reviewing the actions for the nullity of awards: either the arbitration disputes circuit at the Qatari Court of Appeal, or the Court of First Instance at the QFC International Court. The grounds for challenging an award are exactly the same as the ones brought by the UNCITRAL Model Arbitration Law.

Enforcement of the award

Applications for the enforcement of an award cannot be made before the expiry of the time limit to raise the action for nullity (30 days). The Qatari legislator states that all arbitral awards, whether domestic or foreign, have res judicata effect and are enforceable among the parties.

Any application for the enforcement of arbitral awards in Qatar must be examined and ordered by the competent court unless the court is satisfied that any of the grounds for rejecting such application exist. These grounds emulate those contained in article V of the New York Convention. They include the lack of capacity of any of the parties, the non-respect of due process, the irregular composition of the arbitral tribunal, the ultra or extra petita, the inarbitrability of the subject matter of the dispute, and the violation of public policy.

New regulation

Finally, under the Arbitration Law some new provisions regulate the licensing of existing arbitration centres – the Qatar International Centre for Conciliation and Arbitration (QICCA) and the Qatar International Court and Dispute Resolution Centre (QICDRC) – or of any branch of an international arbitration institution in Qatar. It also provides for the establishment of a list of candidates accredited by the Ministry of Justice to act as arbitrators. However, the parties are free to choose any person to act as an arbitrator, on the list or not.

This long-awaited piece of legislation is a positive development for Qatar and is far more comprehensive than the old rules. This should certainly encourage parties to resolve their disputes out of court and increase the attractiveness of Qatar as a place to conduct arbitration in the GCC region. Asian companies should feel confident if the arbitration clause contained in their commercial agreements with Qatari counterparts refers to an arbitration seated in Qatar and governed by the Qatari Law.

Minas Khatchadourian is an international arbitrator and general counsel at the Qatar International Centre for Conciliation and Arbitration