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Sat 25 Apr 2009 04:00 AM

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Construction disputes – the Qatari perspective – part 1

King & Spalding International Partner in London James Bremen explains how Qatari companies can protect their positions in relation to construction disputes.

Construction disputes – the Qatari perspective – part 1

Qatar is one of the few states that remains relatively insulated from the economic downturn. Its massive natural gas reserves put it in a strong position to ride out the current crisis. The result is that development continues apace in Qatar, but from this there will be inveitable construction disputes.

There are certain nuances within the Qatari civil code that all companies carrying out business in Qatar, whether it is a developer or contractor, ought to be aware of in order to protect their position.

There are certain nuances within the qatari civil code that all companies carrying out business in qatar should be aware of.

The most effective way for such companies to protect their position, in relation to disputes, is through careful drafting of the dispute resolution clause. During contract negotiations, where price and commercial risks are considered the most pressing issues, it is all too easy to give no more than a cursory glance towards the back of the agreement to the standard dispute resolution clause. However, adopting a considered approach at the drafting stage could be time well spent if a dispute occurs later in the project.

When drafting a dispute resolution clause, consideration ought to be given to the choice of dispute resolution forum. In Qatar, there are two main options: arbitration or litigation. Arbitration is a private process, so negative press can be avoided. It allows the parties to choose the arbitrators, normally with the two nominated arbitrators selecting the chairman. This has the benefit of ensuring experienced construction arbitrators, which may not be available in the local judiciary. Also, the timing of the process can be managed by the parties in order to expedite the resolution of a dispute.

Litigation in the Qatari Courts

Although the Qatari courts are generally regarded as reliable and predictable, they do not have specific expertise in construction law, and this may be considered a drawback in the context of a highly technical, multi-million dollar construction dispute.

Therefore, it may be that Qatari court judges rely on court-appointed construction specialists, which can produce an element of uncertainty where a judge may be led by a technical expert with no legal training.

Where a construction contract has a clause awarding jurisdiction to the Qatari courts, it ought always to be kept in mind that the parties may, depending upon the nature of the dispute, agree an alternative resolution process at the time a dispute arises.

In our experience it is not uncommon, particularly where claims presented are of a technical nature, for the parties to agree that arbitration ought to replace the contractual agreement to pursue a claim in the Qatari court. However, it is clearly preferable to avoid any such uncertainty by drafting the contract accordingly.

Arbitration in Qatar

The choice of arbitral rules for disputes in Qatar comes down to an internationally recognised arbitration body, such as the ICC and Uncitral, or the Qatar Chamber of Commerce and Industry (QCCI). ICC arbitrations are generally managed by the International Court of Arbitration in Paris, while Uncitral arbitrations are managed by a nominated centre; however, there is no reason why the parties could not agree to stage arbitration in Qatar, if this is considered most convenient.

Qatar is a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, so a foreign arbitral award would be enforceable in Qatar (providing it came from a country that is also a signatory to the New York Convention).

Arbitration at the QCCI is possible, however, as the QCCI Arbitration Centre is relatively new, some procedural points may be uncertain.

James Bremen is a member of the Global Transactions Practice Group. Bremen has practised exclusively in construction law for more than a decade and has significant experience in project development and dispute resolution, both in the UK and internationally. Since 2002 more than half of his practice has been in the GCC.

The opinions expressed in this column are of the author and not of the publisher.

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