The new Qatar Arbitration Law which came into force on 16 February 2017, supersedes equivalent provisions in the Qatar Civil and Commercial Procedure Code and significantly reforms Qatar arbitration law.
Law No (2) of 2017 (Civil and Commercial Arbitration Law) (the New Law) states that it will come into force on 16 February 2017. The New Law will apply to all arbitrations in Qatar which are currently ongoing or are yet to begin. It supersedes equivalent provisions in the Qatar Civil Code, Law no (22) of 2004 (the Old Law). In this briefing we address some of the salient features of the New Law and explain how it might affect arbitration in Qatar going forward.
Key Objectives of the New Law
The New Law achieves important reforms in a number of areas, including:
- New rules regarding the enforceability of agreements to arbitrate;
- Clarity in relation to the nullification and enforcement of arbitral awards;
- Empowerment of Qatar-seated arbitral tribunals (Tribunals) to grant interim relief;
- Authorising the Qatar Court of Appeal or Qatar Financial Centre Court of First instance to address all issues under the New Law requiring the assistance of the Qatar Courts;
- Establishment of a new ad-hoc Qatari arbitration procedure while preserving the option to refer arbitrations to international institutions such as the International Chamber of Commerce (ICC); and
- Ensures that Qatar Arbitration Law aligns with the United Nations Commission on International Trade Law's Model Law on International Commercial Arbitration (UNCITRAL Model Law);
Enforceability of Agreements to Arbitrate
A key question at the outset of any arbitration is whether the parties have validly agreed to arbitrate (Agreement). Different jurisdictions impose varying rules as to whether an Agreement is valid. An invalid Agreement could require the parties to litigate their dispute through the domestic courts.
The position in Qatar is clarified by the New Law. Three requirements must be satisfied:
- The Agreement must be in writing. This can include electronic writings and correspondence, provided there is a record of transmission;
- The Agreement can be included in a separate agreement or as a stipulation of the parties Contract; and
- The parties to the Agreement must have had the legal capacity to enter into it.
We note that the legal capacity or authority of the signatory to the Agreement frequently raised questions under the Old Law. Persons entering into agreements containing arbitration clauses should still ensure that they, and their counter-signatory, have sufficient authority to bind the parties to arbitration.
Nullification and Enforcement of Arbitral Awards
The New Law states that an arbitral award (Award) may not be appealed except for an application to nullify it. The New Law strictly limits the grounds for nullification. These include grounds that the Agreement was invalid, that a party to the arbitral proceedings was not given proper notice of the same, or that the Award is contrary to the public policy of Qatar.
In relation to recognition and enforcement of arbitral awards, the New Law permits refusal of the same only in specified situations. These correspond to the grounds for nullity, above. Importantly, the rules in relation to recognition and enforcement are applicable to an award regardless of where it was issued.
The New Law empowers Tribunals to make interim orders consistent with the "nature of the dispute" or for the "prevention of irreparable harm". The New Law specifies examples of the various aims which the interim measures could seek to achieve but does not otherwise limit the type of relief a Tribunal can order. These include orders in relation to the preservation of assets and evidence.
In addition, the New Law requires the Qatar Courts to enforce interim measures ordered by a Tribunal, unless they violate Qatar Law or public policy.
Qatar Court of Appeal or Qatar Financial Centre
The New Law permits the parties to choose either the Qatar Court of Appeal or the Qatar Financial Centre Court of First Instance (QFC Court) to act as the 'Competent Court' in relation to the arbitral proceedings. The 'Competent Court' is a widely used term in the New Law and has jurisdiction in relation to everything from interim measures, supervisory (curial) powers (e.g. the replacement of incapacitated arbitrators) to enforcement and recognition of awards.
One the one hand, this is an important development as it allow the parties to utilise the English common-law based QFC Court in relation to the arbitral proceedings. However the New Law does not specify the default position in cases where the parties have not elected to utilise either the QFC Court or the Qatar Court of Appeal. It would therefore be advisable for parties entering into new arbitral agreements to ensure that such an election is made prior to signing.
Ad-Hoc Qatar Arbitration Procedure or Arbitration under International Rules
At present, most arbitration in Qatar is conducted under the rules of an international institution such as the ICC. Importantly, the ability of parties to elect to conduct their arbitrations under these rules is preserved in the New Law and ongoing arbitrations under these rules will remain unaffected.
However the New Law also reforms the rules for the conduct of an ad hoc arbitration under Qatar Law. This includes:
- New rules as to the number and appointment of arbitrators;
- The creation of an 'Arbitrators Register' with the Qatar Ministry of Justice from which arbitrators must be chosen (the requirements for inclusion on the register are not onerous); and
- Procedures for the recusal or replacement of arbitrators.
Convergence with UNCITRAL Model Law
The New Law aligns Qatar with the UNCITRAL Model Law. The UNCITRAL Model Law is a pro forma commercial arbitration law that can be implemented by countries into their domestic law. At present, 74 countries have enacted arbitration legislation based on this standard.
The New Law has not completely implemented the UNCITRAL standard however. Important changes include:
- Introduction of more stringent requirements under the New Law in relation to the validity of agreements to arbitrate, as discussed above;
- In ad-hoc arbitrations under the New Law (i.e. not utilising the rules of an external body such as the ICC), only arbitrators registered with the Qatar Ministry of Justice can be appointed, as set out above. Under the UNCITRAL Model law, there are no pre-conditions in respect of the appointment of an arbitrator.
- A simplified interim measures and preliminary orders mechanism in which UNCITRAL provisions in relation to security and disclosure are omitted;
- In relation to the requirements of the Arbitral Award, reasons do not need to be given for the decision, in contrast to the UNCITRAL Model Law where reasons are required;
- A copy of the award must be sent to the Qatar Ministry of Justice. Under the UNCITRAL Law, only the parties need be sent a copy of the award.
Perhaps the most important distinction between the New Law and the UNCITRAL Model Law is that the UNCITRAL Model Law only applies to international commercial arbitrations. Commonly, this equates to each party having their place of business in different countries but also includes situations where the obligations under the contract are to be performed in a different country to the parties. By contrast, the New Law applies to all arbitrations taking place ('seated') in Qatar (international or not) or, international commercial arbitrations in which the parties have chosen to adopt the provisions of the New Law. In relation to the second category, the New Law defines 'international commercial arbitrations' similarly to the UNCITRAL Model Law. On this basis therefore, the New Law is of much broader application than the UNCITRAL Model Law in that it applies to both 'domestic' and 'international' arbitrations.
Aside from these points of difference, it is worth emphasising that the provisions for recognition, enforcement and annulment under the New Law are substantively identical to those under the UNCITRAL Model Law. While there are some differences, these generally relate to ancillary matters such as the procedural requirements in relation to an application for nullification before the Qatar Courts.
The New Law significantly reforms Qatar arbitration law and clarifies a number of areas. While this briefing has identified some of the salient changes, it is not comprehensive. Any entities contemplating contracts containing an agreement to arbitrate would be well advised to thoroughly consider the impact of the New Law prior to signing.