It is important that parties to a contract are aware of the period within which they are entitled to commence proceedings.
Limitation or prescription periods are an important legal device which define the period of time by when a claim must be brought. If a claim is not brought within the relevant time period, then the claim expires (or more accurately, the limitation period operates as a complete defence irrespective of the merits of the claim).
In Qatar the principal legislative instruments defining limitation periods are:
- Law No. 27 of 2006 (Commercial Code), and
- Law No. 22 of 2004 (Civil Code).
There are several different limitation periods and this article deals only with those commonly applying to construction contract disputes.
Liability periods under the Commercial Code
Most construction contracts in Qatar are for “commercial activities” between “traders”, as both terms are defined in the Commercial Code. Accordingly, Article 87 of the Commercial Code identifies that the limitation period will generally expire ten years after the breach occurred:
"Liabilities of traders towards each other in respect of their commercial activities will prescribe after ten years from the date of maturity of such liabilities, unless a shorter period is stipulated by the law”.
Further, even though “ministries and other government agencies, public corporations and establishments, associations and clubs” are not considered “traders” within the meaning of the Commercial Code, the commercial dealings in which such entities engage will be subject to the provisions of the Commercial Code (see Article 15 of the Commercial Code), so, unless another law relating to that public body provides otherwise, the ten year limitation period might also apply to contracts entered into by public bodies.
In contrast, the professional services provided by architects and engineers are specifically identified as not being commercial activities, so the Commercial Code will not apply.
The Civil Code
Where the Commercial Code does not apply the Civil Code will apply.
Article (403) of the Civil Code provides that:
“An action for a personal right will lapse by prescription after 15 years, except in those instances for which another period is prescribed by the law and such instances as are stipulated in the following articles.”
Therefore, the general contractual limitation period is 15 years, however, should claims fall within one of the categories contained in Article (405), then the limitation period is reduced to five years. Article (405) provides:
“Actions for the rights of doctors, pharmacist, lawyers, architects, expert receivers, brokers, teachers and other such practitioners of the self-employed professions will lapse by prescription after five years, provided such rights are owed to them in exchange for professional services they have rendered or expenses they have incurred”.
In the context of construction projects, this means that the five year limitation period applies to the rights of architects and engineers (the translation of the word "architect" from the original Arabic text encompasses engineering services).
Parties cannot agree shorter limitation periods in advance of the cause of action arising. Article (418) of the Civil Code provides:
“Prescription may not be renounced prior to the establishment of the right thereto. Nor may agreement be reached on prescription running for any period that is different from that specified by the law.
However, any person who has the right to dispose of his rights may, even implicitly, renounce prescription after the establishment of the right thereto, provided such renunciation is not effective in respect of the creditors, if it is prejudicial to them."
This second subsection of this Article applies where there is a defence of limitation available to a claim, but where the debtor acts in a way that shows non-reliance on this defence i.e. by admitting the debt or by making a partial payment. Such action will deprive the debtor of the technical defence and he can be pursued even after the limitation period has expired.
In summary, the table set out below identifies the likely limitation periods in several scenarios.
|Scenario||Likely limitation period|
|Claim by or against a contractor under a construction contract for commercial activities||10 years in accordance with the Commercial Code|
|Claim by or against a contractor under a construction contract with a public body which is not for a commercial activity||15 years in accordance with the Civil Code|
|Claim by an architect or engineer||5 years in accordance with the Civil Code|
|Claim against an architect or engineer||15 years in accordance with the Civil Code|