ADR in Qatar - A New Law, A New Regional Seat of Choice, and a New Era ADR in Qatar - A New Law, A New Regional Seat of Choice, and a New Era LNB News 06/02/2018 13 Published Date 5 February 2018 Jurisdiction Qatar Related Legislation Qatar Law No. 13/1990; Saudi Arabia Royal Decree No. M/34/2012; Kuwait Law No. 102/2013; Federal Law No. 11/1992; Oman Sultani Decree No. 47/1997; Bahrain Arbitration Law No. 9/2016; Kuwait Law No. 38/1980; Kuwait Law No. 11/1995; Relevant Companies K&L Gates LLP Abstract New Arbitration Law in Qatar Analysis The Qatar legal landscape has recently enjoyed a welcome development with the introduction of Qatar Law No. 2/2017 Promulgating the Civil and Commercial Arbitration Law (the “New Arbitration Law”). The New Arbitration Law was issued on 16 February 2017 and published in the Official Gazette on 13 March 2017. It repealed Articles 190-210 of the Civil and Commercial Code of Procedure Law [Qatar Law No. 13/1990] (CCPC), which addressed the formation of an arbitration agreement, appointment and dismissal of arbitrators, anti-suit injunctions, granting and challenging the award, and costs. This article will first set out the relevance of the seat of arbitration, then look into the most important differences between the old arbitration law and the New Arbitration Law, will examine regional differences and, last but not least, discuss why Qatar is a good arbitral seat. Page 1
What is an Arbitral Seat? Apart from choosing the governing law clause, one of the most important decisions for parties to an arbitration agreement is the choice of the seat of the arbitration. Generally, the seat (i.e., the legal place) of arbitration will determine the legal framework that governs the arbitration and will influence the way in which a national court will be able to rule on matters such as recognition and enforcement of the arbitral award. It is therefore a very important aspect for parties to consider before entering into an arbitration agreement. An arbitral seat is not merely to the physical place or venue where the evidentiary hearing will take place. It can also have important consequences for the recognition and enforcement of arbitral awards, it may determine the procedural law or rules that will apply to the arbitration, and govern the extent to which the local courts will intervene in the proceedings. Although we often see in arbitration agreements that the seat and the venue are the same location, they do not have to be the same. The place or seat of an arbitration generally determines the nationality of the arbitral award. The nationality of an award is an important consideration when it comes to the recognition and enforcement of arbitral awards. Article I(3) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New York Convention") provides for the principle of reciprocity: meaning that in many Contracting States, the courts will only enforce arbitral awards that are issued in the territory of another Contracting State. It is therefore always recommended that parties who plan on entering into an arbitration agreement check whether the country in which their arbitration will take place (in other words, the seat or place of the arbitration) is a Contracting State of the New York Convention. If it is not a Contracting State, there is a risk that the courts will refuse to enforce the arbitral award. Moreover, Article V(1)(a) of the New York Convention provides that recognition and enforcement of an arbitral award may be refused if the agreement is not valid under the law of the country where the award was made. Further, Article V(2)(b) states that recognition and enforcement of the arbitral award may be refused if the award would be contrary to the public policy of that country. Parties should therefore take extra care - when selecting a seat of arbitration - to ensure that their arbitration agreement complies with the law of the seat and that they are familiar with the policy framework of that seat. Second, the seat of an arbitration may also have significant implications on the procedural law or rules that apply to the arbitration. For example, where there are challenges relating to the appointment of an arbitrator, the local courts of the seat of arbitration will deal with the dispute in accordance with the domestic procedural laws. Another example is where the parties have chosen a specific set of rules that applies to their arbitration (i.e., the ICC Rules) but those rules are silent on a particular point, the law of the seat will be used to fill in the gap. Some arbitral rules are silent on the issue of legal costs or interest and in those particular instances, the procedural law of the seat will influence how awards as to costs or interest should be dealt with. Third, the seat of arbitration will also govern the extent to which the local courts will intervene or get involved in the proceedings. Certain countries’ laws are considered “arbitration-friendly”, meaning that they support the concept of party autonomy, and the domestic courts Page 2
will only interfere in the proceedings when requested to do so, or where the tribunal is unable to decide on a particular procedural aspect. Other countries have legislation limiting the parties’ autonomy by, for example, permitting the domestic courts to get involved in the arbitration process when disputes concerning the process arise. The New Arbitration Law vs. the Old Arbitration Law The enactment of the New Arbitration Law was taken because of a desire within the Government to update Qatar’s arbitration legislation to bring it in line with modern-day practices. The New Arbitration Law is largely based on the UNCITRAL Model Law (the “Model Law”), which covers all stages of the arbitral process, from the arbitration agreement through to the recognition and enforcement of the arbitral award, and reflects a worldwide consensus on the principles and important issues of international arbitration practice. The New Arbitration Law applies to all existing and new Qatar-seated arbitration proceedings - both domestic and international. This means that arbitrations that commenced before the enactment of the law will also be conducted in accordance with the New Arbitration Law. Scope of the New Arbitration Law The scope of the New Arbitration Law as set out in Article 2 is very broad and includes essentially all matters of a commercial nature, whether contractual or non-contractual. It also provides that in respect of administrative contracts, the approval of the Prime Minister (or the Prime Minister’s delegate) is required before the parties can agree to settle their disputes through arbitration. Although the New Arbitration Law does not define the term “administrative contract”, references to administrative contracts appear in other Qatari legislation (such as the public procurement legislation), and is a well-understood concept to lawyers and students from civil code jurisdictions, who will be familiar with the French law concept of droit administratif , on which this provision is based. The New Arbitration Law also provides that disputes between public entities are non-arbitrable. It also gives guidance on when an arbitration will be considered “international”: (a) where the principal place of business of the parties is located within different countries; (b) where the place of arbitration, the place where a substantial part of the obligation is performed, or the place with which the subject-matter is most closely connected is located outside the country where the parties’ principal place of business is; (c) if the subject matter of the dispute is related to more than one country; or (d) if the main office of the arbitration institution to which the parties have agreed is located inside or outside the country. It remains to be seen how this last provision is intended to operate in practice, since the New Arbitration Law does not distinguish between domestic and international arbitration. Nevertheless, this is likely to be an important - and unusual - provision that may for example, result in all ICC arbitrations being Page 3
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