Coping with Qatar’s compliance quirks

Qatar’s new arbitration law is based on international standards, but is confidence in this method of dispute resolution well placed?

Suzannah Newboult is a construction specialist at DLA Piper LLP.
Suzannah Newboult is a construction specialist at DLA Piper LLP.

In a move to enhance confidence to invest in Qatar, there is a new arbitration law based on international standards.  It demonstrates a clear intention to embrace the method of dispute resolution that international companies rely on, but it is not without a few Qatari quirks.

The new law will apply to all arbitration proceedings in Qatar, both in the future and extant at the time the law goes live. This will require a swift check of ongoing proceedings, to ensure that what has gone before complies.

Disputes between public entities are not capable of arbitration, and administrative contracts (where one party is a government entity),  cannot be arbitrated without the approval of the Prime Minister or his representatives.

This could cause concern about the validity of arbitration agreements, current arbitration proceedings, or awards that have recently been issued where a Qatari Government entity is one of the parties.

Arbitrators will be appointed from the Ministry of Justice’s register. However, in apparently conflicting provisions in the law, individuals who are not on the register, but fulfil certain criteria relating to reputation and capacity, can also act as arbitrators.

It is not clear whether the registration requirement acts as an overarching pre-requisite for a person’s appointment as an arbitrator, and whether this could ultimately undermine a party’s freedom to choose its own arbitrators.

There has been much discussion around the issue of arbitrator immunity in the region, following a recent update to criminal legislation in the UAE providing that arbitrators may be imprisoned for unfairness.

Arbitrator immunity is essential for arbitration to function effectively, and this has been recognised in the Qatar law; which limits liability for arbitrators in the course of the performance of their duties, save in circumstances of bad faith, collusion, or gross negligence.

The law also grants the arbitral tribunal the power to make interim orders or awards, such as an order to protect assets until the end of the arbitration, or to prevent documentary evidence being destroyed. These orders or awards will be enforced by the courts unless they violate the law or public policy. The court overseeing the arbitration can be either the local court (at Court of Appeal level), or the Qatar International Court (the QFC court).

In order to prevent spurious challenges to the enforcement of awards, a party is deemed to have waived its right to object to the commencement or continuation of an arbitration where it had grounds to do so, but failed to do so within a reasonable time.

The arbitrators are required to state the amount of the arbitration costs, and who is responsible for paying for them. Unfortunately, however, the law is silent as to whether they have the power to apportion the legal, expert, and sundry costs of the parties. This is not ideal, as it leaves uncertainty as to whether a party will be able to recover its costs if it wins.

Not an entirely new concept for Qatar, the tribunal is required to lodge an electronic copy of an award with the Ministry of Justice. This is a provision that could easily be missed by international arbitrators.

Unlike the old law, there is no requirement for the award to be translated into Arabic before lodging – and it no longer has to have been issued in the name of the Emir. Perhaps most importantly, the ability to appeal awards on the basis of fact or law has been removed, and an application to annul the award must be brought within a month.

However, the process of enforcing the outcome of any arbitration proceedings may still be protracted.

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