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Sat 2 May 2009 04:00 AM

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Construction disputes – the Qatari perspective – part 2

King & Spalding International Partner in london, James Bremen, outlines four english law concepts which are relevant to construction disputes.

Construction disputes – the Qatari perspective – part 2

In addition to the choice of dispute resolution forum we outline below the Qatari law position regarding four specific English law concepts which are relevant to construction disputes.

Prevention principle

The prevention principle is a well established doctrine in English law, which explains that a party who has prevented performance of an obligation by another party may not insist on the performance of that obligation. The principle has developed to have a wider application to construction cases and can result in liquidated damages provisions becoming unenforceable and completion deadlines falling away, leaving the court with the task of determining a reasonable time for completion.

Parties involved in disputes in Qatar ought to bear the lack of “without prejudice” privilege in mind when conducting settlement negotiations.

The position under Qatari law operates in much the same way. For example, where one party has prevented another from performing and seeks to claim liquidated damages as a result, civil jurisdictions may uphold a liquidated damages provision but allow tribunals a wide discretion to reduce the value of an award to the extent a party has contributed to its own losses.

The result is the claimant is in a similar position to the party having to demonstrate general damages where liquidated damages are unenforceable. The Qatari law approach may, however, result in a simpler mechanism for quantifying damages than under English law, as there is no requirement to prove general damages.

Rule against penalties

Under English law, for liquidated damages to be enforceable, they must represent a genuine pre-estimate of losses resulting from the events to which they apply.

The reason for this is the English law rule against penalties, which prohibits the imposition of punitive damages by one party in the event of a failure by the other to perform. Qatar, like many other civil law jurisdictions has no concept of a rule against penalties. However, the court does have a discretion to reduce liquidated damages payable based on considerations of fairness if it considers liquidated damages excessive in comparison to the actual damages sustained.

Contra proferentem rule

Under English law, a general rule applicable in resolving ambiguity in contracts is that where no other rule of construction can resolve the ambiguity, the provision will be interpreted against the drafter.

This is known as the contra proferentem rule. In Qatar a similar principle exists with one important difference, ambiguity will be construed in favour of the obligor. The distinction with the position under English law, where ambiguity will always be construed against the drafter, is that in Qatar, ambiguity can be construed against either party, dependant on which party owes the obligation under the relevant provision. See Article 170 of the Qatari civil code in this respect.

Without prejudice

An important difference between English and Qatari law is that the English law "without prejudice" privilege afforded to parties, disclosing commercially sensitive information in a genuine effort to settle a dispute does not apply in Qatar. This means that correspondence, negotiations and disclosure made to resolve disputes can be disclosed in later proceedings.

This has important consequences for mediation as a dispute resolution mechanism.

Parties involved in disputes in Qatar or subject to Qatari law ought to bear the lack of "without prejudice" privilege in mind when conducting settlement negotiations to avoid making damaging admissions or disclosure.

James 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. He has been involved in some of the largest and most complex international construction projects in the world. 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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