This post is the second part of a series covering issues that frequently arise in international arbitration, each with a specific regional focus. This article examine two categories of issues that frequently arise in construction arbitrations related to Qatar:
- The enforcement of arbitral awards.
- The potential liability of arbitrators and experts practising in the region.
Construction activity in Qatar
Qatar has experienced significant activity in the construction sector in recent years, especially in light of the 2022 FIFA World Cup and the Qatar National Vision in 2030.
Generally, the GCC States saw contracts worth over $138.5 billion awarded in 2019. The construction market in the Middle East and Africa was projected to be the fastest growing construction market in the world between 2018 and 2022.
However, with the growth in projects there has also been a growth in disputes, and in the number of arbitrations used to resolve them.
Enforcement of arbitral awards
The enforcement of arbitral awards in Qatar has been marred by uncertainty caused by often inconsistent decisions of Qatari courts.
Until the recent implementation of legislative reforms in Qatar, international arbitrations were subject to the Civil and Commercial Procedure Court, which had discretion to review arbitral awards on the merits and to annul awards on procedural grounds. For example, in International Trading and Industrial Investment v DynCorp Aerospace Technology (petition 33/2008), the Qatari Court of Cassation effectively heard an appeal against the award of a Paris-seated ICC tribunal. It decided to “annul” the award rather than enforcing it, after having engaged in a full analysis of the tribunal’s findings (and those of the lower court before which the arbitral award was appealed) on the correctness of its interpretation of the contract that was the subject of the dispute.
Further, in 2013, Qatar’s Court of First Instance ruled (in case 2216/2013) that arbitral awards must be rendered in the name of the Emir of Qatar, meaning that awards found to be contrary to Qatari public policy could be set aside. Subsequent decisions of the Qatari Court of Cassation demonstrated differing approaches to what would be considered contrary to Qatari public policy (for example, see petitions 45/2014, 49/2014 and 164/2014). The willingness of the court to refuse enforcement on this basis left much uncertainty about the prospects of enforcement generally.
The Qatari Court of Cassation also introduced a distinction between the application of public policy considerations to domestic and to foreign awards, when it rejected an application to annul an ICC Paris-seated arbitral award on the basis that the award did not state it was issued in the name of the Emir (see petition164/2014).
The new Qatari Arbitration Law 2 of 2017 has clarified matters significantly, in particular by removing any need for domestic or foreign awards to be issued in the name of the Emir: article 31(3) of the Qatari Arbitration Law now sets out the information which must be contained in an arbitral award instead.
More generally, the Qatari Arbitration Law replaces the previous arbitration regime and applies to Qatar-seated arbitrations as well as foreign arbitrations when the parties have agreed to apply Qatari Arbitration Law (article 2.1). It has streamlined and provided clarity to enforcement procedures surrounding arbitral awards, and has brought it into line with international standards. For example, under the new law:
- An application for annulment of an arbitral award must be commenced no later than 30 days after the award is rendered (article 33.4), upon the lapse of which period an application for enforcement can be submitted to the competent court (article 34.3).
- Parties can no longer challenge awards on the merits.
- Arbitral awards now have a res judicata effect (articles 33 and 34.1).
- Article 35 of the Qatari Arbitration Law provides an exhaustive list of the grounds on which Qatari courts may decline to enforce or recognise arbitral awards (irrespective of the place of issuance).
Some questions may still arise around the limits of Qatari public policy and its impact on enforcement or recognition, but the Qatari Arbitration Law is a step in the right direction and appears to have heralded a change to a more arbitration-friendly approach in the Qatari courts.
Potential liability for arbitrators and experts
In recent years, attention has been drawn to a significant risk for arbitrators who accept appointments in Qatar, due to risks in facing personal liability and the possibility of criminal prosecution. Concerns have been expressed, leading to arbitrators either refusing nominations, or possibly approaching their duties and producing awards more conservatively as a result.
Qatari Arbitration Law now provides for a qualified or limited civil liability of arbitrators, as article 11(11) states:
“An arbitrator shall not be liable for exercising his/her functions as arbitrator unless exercising such functions is tainted with bad faith, collusion or gross negligence.”
However, the Qatari Arbitration Law has not addressed concerns around potential criminal liability. These concerns are based primarily upon one high-profile incident in December 2018, in which three arbitrators were convicted and sentenced to imprisonment in Qatar for what was said to be their role in issuing an award against a relative of the Qatari royal family (Qatar Court of First Instance, Case No. 1650/2018). This was based on provisions of the Qatari Penal Code (articles 3 and 160), under which arbitrators are considered public officers and so subject to penal sanctions if they “abuse” their power to damage a person or cause illegitimate gain to another.
These convictions were unprecedented, and prompted condemnation from across the international arbitration world. However, to date the convictions remain in place.
While it is hoped that such cases will be very rare occurrences, concerns remain about the potential for criminal liability of arbitrators in Qatar, and the extent to which that liability could apply to other participants in a Qatari arbitration process.
For this post, Debevoise collaborated with Zulficar & Partners LLP, a leading firm based in Cairo, Egypt.
