The highly anticipated new Arbitration Law in Civil and Commercial Matters (Law No. 2 of 2017) finally came to force recently, and was welcomed by both the business and legal community of Qatar. The new Law is expected to come into force on 14 April 2017, 30 days after publication in the Official Gazette. The new law will undoubtedly aid in solving commercial and civil disputes, especially those that may involve international parties.
The Law organizes and highlights all the needed and detailed procedures relating to dispute resolution by arbitration in a separate and independent law and replaces articles 190 to 210 of the Civil and Commercial Procedure Law (13) of 1990, which previously governed arbitration proceedings in Qatar.
The new arbitration law consists of 38 Articles divided into 8 chapters describing arbitration agreements, the arbitral tribunal, the arbitration procedures, the arbitral award, appeal, annulment, enforcement and finally the arbitration centers and registration of arbitrators. The new law will apply to all pending matters subject to arbitration, as well as all matters that will be subject to arbitration in the future. As an introduction, the law states that arbitration shall be considered commercial in nature if the dispute arose out of a legal relation of an economic nature, which would include commercial, investment, financial, banking, industrial, insurance, or tourism, to name only a few. Another important prelude to the arbitration procedure is that the said law will apply to arbitration proceedings if such proceedings are conducted in the state of Qatar, or arbitration conducted abroad and the parties agree to subject the proceedings to the arbitration law of Qatar. A very important highlight is that an arbitration agreement, first and foremost, should be in writing without which any recourse to arbitration would be considered void.
With regard to the arbitration agreement, there should be an express agreement (in writing) to resort to arbitration in relation to disputes that may arise between the parties in the course of their contract or legal relationship. However, arbitration may not be demanded in matters that are specifically prohibited by law. If there is an arbitration agreement and the matter was already brought to court without making use of arbitration, the court shall dismiss the case if failure to arbitrate was pleaded before raising any defense or petitions. In any event, institution of the case before a court does not prevent the commencement or continuation of arbitration procedures. The arbitration agreement may be part of the main agreement, in the form of an arbitration clause, or may be contained in a separate agreement. The arbitration agreement does not expire by the death of any party to the agreement, unless the parties agree otherwise and also subject to the provisions of the law that require rights and obligations to be extinguished because of death.
An important section to note is the appointment of the arbitral tribunal. In appointing an arbitral tribunal, the agreement of the parties will govern. However, in case there is no agreement, there shall be three arbitrators. If the parties wish to appoint more, the arbitrators should always remain an odd number, otherwise the arbitration will be considered void. Moreover, the arbitrators may be any person, subject to the following conditions: a) that he has full capacity, b) that he is not convicted by final judgement in libel, misdemeanor, or dishonesty, c) that he enjoys good reputation. The parties may agree to additional qualifications in the arbitration agreement. The arbitrator may only be recused if he does not perform his duties with neutrality or independence, or if he does not satisfy the specific qualifications agreed upon by the parties. The procedures for recusal may be agreed upon by the parties, and in the absence of such, the parties may request recusal of the arbitrator to the arbitral tribunal. Such request must be in writing and must indicate the causes of recusal within 15 days of having come to know the creation of the tribunal or the circumstances that justify recusal. It is important to note that if the arbitrator to be recused refuses to step down, or if the parties do not agree on the request of recusal, the petition for recusal may be brought to the courts of jurisdiction.
The arbitral tribunal has the authority to decide on issues including lack of jurisdiction or any type of defenses which question the nullity or invalidity of the arbitration agreement. In relation to this, the arbitration clause contained in any contract remains independent of the contract. Thus, nullity or termination of the contract will not affect the validity of the arbitration clause. This principle of severability is important as it allows the arbitral agreement to survive despite the nullity or invalidity of the main agreement. The arbitral tribunal possesses the authority to render temporary measures, including ordering the parties to retain the condition until the dispute is adjudicated, as well as preventing any imminent damage or prejudice to any party. After obtaining written permission from the arbitral tribunal, any party may then bring the arbitral judgment or measure to court and ask the judge to order enforcement of the said judgment or measure.
The parties to the arbitration agreement have the independence and freedom to agree on the arbitration procedures, which include the rules of proof, subject only to the provisions of the arbitration law. Thus, parties may choose to have the location of the arbitration in a state other than Qatar.
Finally, the arbitral award is to be rendered according to the procedures agreed to between the parties and the provisions of the arbitration law. If there is an agreement about the application of law of a certain country, the said rules will apply and not the rules on conflict of laws. This is important because it highlights the freedom of the parties to decide what rules and laws would govern their arbitration proceeding. The decision of the arbitral tribunal with more than one arbitrator shall be arrived at through a majority. The arbitral award should be in writing and signed by the arbitrators, and should contain the reasoning and the legal rules applied to the dispute. It should also include a summary of the petitions, the names and addresses of the parties, the arbitrators, and the place and date of judgment. The costs of the arbitration and the party bound to pay them should also be specified. The arbitral award should be rendered within the timeframe agreed upon by the parties, and in the absence of such timeframe, the judgment should be rendered within one month from the date of closure of pleading. If during the course of the proceedings criminal proceedings or matters outside the jurisdiction of the tribunal are presented, the proceeding may be suspended until final judgment. However, the arbitration may continue if the matter does not affect or is unrelated to the subject of dispute in the arbitration proceeding. The arbitral award should be given to the parties within fifteen days of rendering the judgement.
The arbitral award may not be contested by any means of appeal except through cassation of nullification, and must be based on the grounds specified in the new arbitration law. Cases of nullity should be instituted before the courts within one month from the date the arbitral award is issued. Further, arbitral awards are void at its initiation if the matter under dispute is a matter which is prohibited to be arbitrated under the laws of Qatar or if the arbitral award violates the public order of the state of Qatar. Naturally, all arbitral awards have the effect of res judicata and are enforceable regardless of the state where they were rendered. Petition for the enforcement of the judgment should be submitted in writing to a competent judge with the copy of the arbitration agreement, original award and certified translation of the award.
The new Law is conferring more freedom to the contracting parties and is expected to make a good impact on business life in the country and may help in overcoming the related difficulties.
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