Construction Arbitration

Last verified on Tuesday 1st June 2021

Construction Arbitration: Qatar

Hani Al Naddaf and Khushboo Shahdadpuri

Al Tamimi & Company

Legal system

1. Is your jurisdiction primarily a common law, civil law, customary law or theocratic law jurisdiction? Are the laws substantially derived from the laws of another jurisdiction and, if so, which? What instruments have legal force and effect? Who are the lawmaking bodies? How and where are new laws published? Can laws be passed with retrospective effect?

Qatar

Qatar is primarily a civil law jurisdiction. The Qatari laws are modelled on Egyptian laws, which are, in turn, derived from French laws. Where there are no specific legislative provisions on a particular point, the Qatari courts either turn to the Islamic Shairah law or make its determination in accordance with the applicable custom or the rules of equity.

The Shura Council is the chief legislative body of Qatar. The Ministerial office can propose a law to the Council of Ministries, which can in turn pass it to the Shura Council. Draft laws that have passed through and are approved by the Shura Council, are referred to the Emir (head of state) for ratification. If an exceptional matter arises that urgently requires a special law and the Shura Council is not in session, the Emir may issue a decree that will have legal power pursuant to article 70 of the Constitution. Such decree-laws are reviewed by the Shura Council once it has resumed sitting.

New laws are published monthly in the Official Gazette, which is run by the Ministry of Justice. The Official Gazette is published in Arabic on the website of the Ministry of Justice. These laws take effect 60 days from the date of its publication in the Gazette, unless otherwise stated. Generally, laws cannot take effect retrospectively unless the provisions of the laws are related to public order.

The Qatar Financial Centre (QFC) is a separate legal jurisdiction within Qatar that is based on the common law system. The QFC has its own courts, the Qatar International Court and Dispute Resolution Centre (QICDRC), which deals with civil and commercial disputes arising in connection with contracts concluded under QFC legislation and businesses established within the QFC. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Contract formation

2. What are the requirements for a construction contract to be formed? When is a "letter of intent" from an employer to a contractor given contractual effect?

Qatar

Article 64 of the Civil Code provides that a contract is formed once there has been an offer and an acceptance of the offer, provided that the subject matter of the contract is not considered unlawful, and any additional legal requirements that are required for the validity of some specific contracts have been met. There is no requirement for a contract to be in writing, except in circumstances where the law imposes such prerequisites for the validity of a contract, such as the requirement for written contracts in cases where mortgages are created over real estate.

A letter of intent from an employer to a contractor would be considered as an acceptance of an offer that is made by way of the contractor’s bid to the tender. As such, the contract would be deemed to have been entered into from the date the letter of intent is received by the contractor as long as the letter of intent contains the terms that are deemed to be the essential or material issues to the parties' agreement. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Choice of laws, seat, arbitrator and language

3. Are parties free to choose: (a) the governing law of their contract; (b) the law of the arbitration agreement; (c) the seat of the arbitration; (d) any arbitral rules; (e) anyone to act as arbitrator; and (f) the language of the contract and the arbitration? If not, what are the limitations on choice and what happens if the parties act contrary to them?

Qatar

The parties are generally free to choose all of the above.

Further to the above, article 11(1) of the Law Promulgating the Civil and Commercial Arbitration Law of Qatar (the Qatar Arbitration Law) allows for an arbitrator to be chosen from the list of approved arbitrators registered at the Arbitrators Registry at the Ministry of Justice, who is of full legal eligibility and capacity, has not been convicted of a felony or a misdemeanour relating to honesty and character even if such person’s name is cleared later, and is of good reputation and conduct.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Implied terms

4. How might terms be implied into construction contracts? What terms might be implied?

Qatar

Under Qatari law any terms may be implied if it is established that the parties had the intention to agree on such terms even though they did not expressly include them in their contract. 

Article 169(2) of the Civil Code provides that where the express provisions are vague and there is room for interpretation, the court may look past the literal meeting of the words in the contract and consider the mutual intention of the parties in certain circumstances, taking into account, the nature of the transaction, the common practice and the trust and confidence between the parties.

All mandatory provisions of the Civil Code may also be implied into construction contracts. Some of these provisions are discussed below.

However, the law requires that some provisions need to be evidenced in writing to be valid, such as arbitration agreements under article 7(3) of the Qatar Arbitration Law or guarantees under article 809 of the Civil Code.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Certifiers

5. When must a certifier under a construction contract act impartially, fairly and honestly? To what extent are the parties bound by certificates (where the contract does not expressly empower a court or arbitral tribunal to open up, review and revise certificates)? Can the contractor bring proceedings directly against the certifier?

Qatar

The Civil Code does not specifically deal with the obligations of certifiers. The contract may oblige the employer to ensure a certifier acts impartially, fairly and honestly. While the parties would be bound by the certificates for any terms agreed contractually, nothing will prevent an aggrieved party from having recourse to the competent court or arbitral tribunal for challenging the findings of the certifier if it has valid grounds to do so, such as possible fraud or criminal conduct.  

A contractor cannot bring proceedings directly against the certifier in the absence of a contractual relationship between them, unless the certifier is liable to the contractor in tort and the contractor suffered damage as a direct result of the certifier’s breach of its duty in tort.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Competing causes of delay

6. If an employer would cause (eg, by variation) a two-week critical delay to the completion of the works (which by itself would justify an extension of time under the construction contract) but, independently, culpable delay by the contractor (eg, defective work) would cause the same delay, is the contractor entitled to an extension?

Qatar

Qatari laws have no specific provision on concurrent delays. Where there are concurrent delays to the works, the competent court or arbitral tribunal would look to identify the party that is responsible for the dominant cause of the delay (ie, whether one breach is of sufficient magnitude that it can absorb the latter). If that is the case, the party responsible for the dominant cause will likely bear responsibility for the delay. Where neither cause is determined to be dominant, the court typically apportions liability between the parties proportionally or offsets them against one another. The contractor’s entitlement to an extension is determined on a case-by-case basis.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Disruption

7. How does the law view "disruption" to the contractor (as distinct from delay or prolongation to the completion of the works) caused by the employer’s breaches of contract and acts of prevention? What must the contractor show for a disruption claim to succeed? If an entitlement in principle can be shown (eg, that a loss has been caused by a breach of contract) must the court or arbitral tribunal do its best to quantify that loss (even if proof of the quantum is lacking or uncertain)?

Qatar

There is no distinct concept of disruption under Qatari law and they are viewed as compensation claims. To succeed in such a claim, the contractor must bring an ordinary breach of contract claim and establish: (i) breach on the part of the employer (ie, for causing the events that led to the disruption); (ii) damages incurred by the contractor (ie, costs incurred for the disruption); and (iii) a causal link between the two (ie, that the contractor incurred costs because of the employer’s breach).

Article 172(1) of the Civil Code provides that the contract must be performed in accordance with the principles of good faith. Therefore, if the employer acted unreasonably or in bad faith, this would support the contractor’s claim.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Acceleration

8. How does the law view "constructive acceleration" (where the contractor incurs costs accelerating its works because an extension of time has not been granted that should have been)? What must the contractor show for such a claim to succeed? Does your answer differ if the employer acted unreasonably or in bad faith?

Qatar

There is no recognised concept of "constructive acceleration" under Qatari law. The contractor would, therefore, need to try to establish a breach of contract claim on the basis that: (i) the employer breached its contractual obligations by not granting the contractor an extension of time, (ii) the contractor suffered damages (ie, additional costs incurred due to accelerating the works), and (iii) the damage to the contractor was caused by the employer's breach. It is unlikely that the mere lack of an extension of time would be sufficient grounds for the contractor to succeed, especially as extensions of time are not specifically provided for under Qatari law. If the employer acted unreasonably or in bad faith, this would support the contractor's claim as article 172(1) of the Civil Code provides that a contract must be performed in accordance with its provisions and in a manner consistent with the requirements of good faith. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Force majeure and hardship

9. What events of force majeure give rise to relief? Must they be unforeseeable and to whom? How far does the express or implied allocation of risk under the contract affect whether an event qualifies? Must the event have a permanent effect? Is impossibility in performing required or does a degree of difficulty suffice? Is relief available where only some obligations (eg, to make a single payment or carry out one aspect of the works) are affected or is a greater impact required? What relief is available and does it apply automatically? Can the rules be excluded by agreement?

Qatar

Article 188(1) of the Civil Code provides that where the performance of the obligation becomes impossible due to any reason that is beyond the party’s control, such obligation, including all associated obligations, shall cease to exist and the contract will automatically terminate. Further, article 188(2) of the Civil Code provides that in the event of partial impossibility (or where the event did not have permanent effect), the obligor may request for the performance of the residual obligations that remain possible to perform, or request for the dissolution of the contract. Events that are considered to be force majeure must be unforeseeable and not capable of being avoided by the party seeking to be excused from performance.

Article 258 of the Civil Code provides that the parties may agree for the obligor to assume the risk of a force majeure event.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

10. When is a contractor entitled to relief against a construction contract becoming unduly expensive or otherwise hard to perform and what relief is available? Can the rules be excluded by agreement?

Qatar

Article 171(2) of the Civil Code provides that where, as a result of exceptional and unforeseeable events, the fulfilment of the contractual obligation becomes excessively onerous, though not impossible, in such a way as to threaten the obligor with exorbitant loss, the court may, according to the circumstances and after taking into consideration the interests of both the parties, reduce the excessive obligation to a reasonable level. This is a mandatory provision under Qatari law that the parties cannot contractually exclude.  

Article 700 of the Civil Code provides that an increase in the price of raw materials, labour or other expenditure shall not vary the original obligations imposed by the construction contract, except where the price escalation came about as a result of the occurrence of an ‘exceptional incident’ under article 171(2) of the Civil Code.  

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Impossibility

11. When is a contractor entitled to relief if after the contract is concluded it transpires (but not due to external events) that it is impossible for the contractor to achieve a particular aspect of the contractual specification? What relief is available?

Qatar

In the absence of any events of force majeure, exceptional incidents, acts/omissions of the employer, the contractor is likely to be responsible for performing its obligations in full, even where doing so is burdensome or onerous, in order to prevent being in breach of the contract. However, article 148 of the Civil Code provides that if the subject matter of the obligation is impossible, the contract will become null and void. As such, if it transpires that the performance of certain obligations has become impossible, because of the nature of these obligations, then the contractor may be entitled to relief on the basis that the part of the contract related to these obligations has become void unless this part was crucial for the formation of the contract in which case the entire contract will be void.  

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Clauses that seek to pass risks to the contractor for matters it cannot foresee or control

12. How effective are contractual provisions that seek to pass risks to the contractor for matters it cannot foresee or control, for example, making the contractor liable for: (a) a specified event of force majeure; (b) ground conditions that no reasonably diligent contractor could have foreseen; or (c) errors in documents provided by the employer, such as employer's requirements in design and build forms?

Qatar

Article 258 of the Civil Code permits the contractual allocation of risk to the contractor for force majeure or any unforeseeable incident, apart from any exceptional incidents that are contemplated by article 171(2) of the Civil Code. Further, nothing prevents the parties to allocate the risk of ground condition to the contractor.

As to the errors committed by the employer, article 259(1) of the Civil Code provides that a party may agree to discharge the other from liability arising from its failure or delay to perform a contractual obligation, except in cases of fraud or gross negligence.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Duty to warn

13. When must the contractor warn the employer of an error in a design provided by the employer?

Qatar

If the contract contains an express obligation for the contractor to notify the employer of an error in a design within a certain time period, the contractor is required to comply with this time period.

Article 686(1) of the Civil Code provides a general obligation for the contractor to notify the employer of any factors that may obstruct the performance of the work. Article 686(2) of the Civil Code provides that the contractor is liable for the consequences of failing to notify the employer.

The Civil Code also imposes a strict liability on the contractor and the engineer with respect to any collapse or defect related to the integrity of the building. This liability lasts for 10 years from the date of the handover and is known as decennial liability, as provided under article 711 of the Civil Code. Article 713 of the Civil Code provides that the contractor will be liable for defects related to workmanship but not for the defective design unless the same should have been discovered by contractor in accordance with professional practices. Given this, the contractor has the obligation to refuse the execution and to warn the employer about the defective design, otherwise the contractor will be jointly liable with the engineer for any damage claimed.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Good faith

14. Is there a general duty of good faith? If so, how does it impact upon the following (where they are otherwise permitted under the construction contract): (a) the level of intervention in the works that is allowed by the employer; (b) a party’s discretion whether to terminate or suspend the contract; or (c) the employer’s discretion to claim pre-agreed sums under the contract, such as liquidated damages for delay?

Qatar

Article 172(1) of the Civil Code provides that a contract must be performed in accordance with its provisions and in a manner consistent with the requirements of good faith. Acting in fraud, misrepresentation or other types of dishonesty will likely constitute bad faith.

If the exercise of a right is considered against the principle of good faith, the contractor may have recourse under article 63 of the Civil Code for an abuse of right claim.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Time bars

15. How do contractual provisions that bar claims if they are not validly notified within a certain period operate (including limitation or prescription laws that cannot be contracted out of, interpretation rules, any good faith principles and laws on unfair contract terms)? What is the scope for bringing claims outside the written terms of the contract under provisions such as sub-clause 20.1 of the FIDIC Red Book 1999 ("otherwise in connection with the contract")? Is there any difference in approach to claims based on matters that the employer caused and matters it did not, such as weather or ground conditions? Is there any difference in approach to claims for (a) extensions of time and relief from liquidated damages for delay and (b) monetary sums?

Qatar

Generally, provisions that serve to bar claims not validly notified within a certain period can be argued to be void on the basis that they contravene the mandatory provisions of the respective prescription period or to be valid on the basis that they operate as condition precedents.

Article 418(1) of the Civil Code stipulates that the contracting parties may not agree on a different prescription period other than that prescribed by law. Therefore, if viewed as prescription period, contractual provisions that bar claims could be argued to contravene the mandatory provisions of article 418 and unenforceable on account of denying the access of justice under Qatari law.  

If viewed as condition precedents, contractual provisions that bar claims are argued to be binding on the basis that an entitlement to a claim only arises on the condition of it being satisfied by timely notice. They can also be argued to be distinguished from prescription period on the basis that by agreeing to such a provision, a party is waiving the underlying right itself, rather than its entitlement to claim that right. The Qatari courts have not opined on this particular point.

If the contractual terms are silent, claims may be brought based on the applicable legal provisions. Claims for extensions of time are not pursued to vindicate a standalone substantive right, rather they aim to achieve one or both of two principal objectives: (i) to counter or minimise a demand for payment of compensation in the form of liquidated damages; or (ii) to claim for prolongation costs, or both.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Suspension

16. What rights does the employer have to suspend paying the contractor or performing other duties under the contract due to the contractor’s (non-)performance, or the contractor have to suspend carrying out the works (or part of the works) due to the employer’s (non-) performance?

Qatar

An employer wanting to suspend payment due to the contractor's non-performance may be able to do so under article 191 of the Civil Code. The provision allows either party to refrain from performing its obligations if the other party has failed to perform its corresponding obligations, unless it has been agreed to the contrary or custom dictates otherwise. For the employer to rely successfully on this provision, it must ensure that the obligation of the defaulting party has already crystallised (ie, is due immediately) and that it is not acting in bad faith (eg, if the default is relatively minor to the performance of the contract as a whole). Article 191 is not a mandatory provision and can be contractually excluded by the parties.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Omissions and termination for convenience

17. May the employer exercise an express power to omit work, or terminate the contract at will or for convenience, so as to give work to another contractor or to carry out the work itself?

Qatar

Termination for convenience may be expressly provided for under the parties' contract, in which case it is likely to be applied according to its terms. Separately, an employer is entitled to terminate a contract for convenience under article 707(1) of the Civil Code, as long as it compensates the contractor for all of the works completed, any profit that the contractor would have made had the work been completed and any expenses incurred.

Article 707(2) of the Civil Code allows the court, at its discretion, to reduce the compensation payable to the contractor should the circumstances give grounds for such a reduction. It is likely that the court would reduce the compensation amount to reflect the costs saved by the contractor by not having to perform the remainder of the work, where the contractor had in fact benefitted from the employer’s decision to terminate and/or where the contractor had made a profit by engaging in other works for the remainder of the original programme. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Termination

18. What termination rights exist? Can a construction contract be terminated in part? What are the practical and financial consequences?

Qatar

There are several termination rights available under Qatari law: termination for convenience under article 707 of the Civil Code, termination for breach of contract under articles 183 and 184 of the Civil Code, termination by force of law such as in the event of force majeure under article 188 of the Civil Code and termination by agreement.

A construction contract can be terminated in part in all of the above rights of termination. 

The financial consequences of termination differ in all the above termination scenarios. In the event of termination for convenience, the contractor has the right to claim its cost until the time of termination as well as any loss of profit. In the case of termination for breach, the financial consequences include actual loss and loss of profit. In relation to termination by force of law, no compensation can be claimed. Where there has been a termination by agreement, the parties' agreement will apply. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

19. If the construction contract provides for the circumstances in which each party may terminate the contract but does not expressly or impliedly state that those rights are exhaustive, are other rights to terminate available? If so, what are they and what are the practical and financial consequences?

Qatar

Either party can rely on provisions of the law, typically contained in the Civil Code, in addition to the contractual provisions, to terminate the contract. There are numerous circumstances where the Civil Code provides for termination of contract, namely termination for convenience, termination for breach of contract, termination by agreement between the parties and termination by force of law, as well as their respective consequences thereof. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

20. What limits apply to exercising termination rights?

Qatar

Unless expressly stated otherwise in the contract, a court order is required to terminate a contract for breach under article 183 of the Civil Code. If a court order for termination is requested under article 183, the court may decide to award the party additional time to cure its breach or refuse the request for termination if the breach is considered to be relatively minor. Termination rights may be subject to any notice obligations being fulfilled in accordance with the contract and they must be exercised in good faith. If a party terminates a contract without first obtaining a court order, the termination may be deemed invalid and of no legal effect.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Completion

21. Does the law of your jurisdiction deem the works to be completed (irrespective of what the contract says) if, say, the employer takes beneficial possession of the works and starts using them?

Qatar

By taking beneficial possession of the works, the works are not necessarily deemed to be completed. The legal consequences of the employer taking beneficial possession of the works would depend on the contractual provisions and the relevant claims related to the possession of the works. For instance, the employer may not be able to impose liquidated damages from the point that it took beneficial possession of the works. However, the maintenance period may not commence from the point of beneficial possession if the other contractual conditions have not been satisfied.  

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

22. Does approval or acceptance of work by or on behalf of the employer bar a subsequent complaint? What constitutes acceptance? Does taking over the work by the employer constitute acceptance? Does this bar subsequent complaint?

Qatar

The approval or acceptance of work by or on behalf of the employer does not necessarily bar a subsequent complain, which can be brought based on the relevant contractual provisions in play. Under article 696(1) of the Civil Code, the contractor may not be liable for any apparent defect in the works or non-conformance with requirements of the contract, once the work has been handed over or deemed to have been handed over.

Taking over of the works may be deemed acceptance of the works in certain circumstance. This is typically examined on a case-by-case basis depending on the contractual obligation in play.

In cases where the defect or breach is latent and the employer only detects the defect or breach after taking over the work, article 696(2) of the Civil Code provides that the employer may notify the contractor of this and require the contractor to perform remedial works, where this is in line with the industry norms. Silence on the part of the employer in such circumstances will be deemed to constitute acceptance of the defects, subject to the express terms of the parties’ contract. However, this would not affect the provisions relating to decennial liability provided for under article 711 of the Civil Code, which is a mandatory provision that would be applicable between the parties regardless.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Liquidated damages and similar pre-agreed sums ('liquidated damages')

23. To what extent are liquidated damages for delay to the completion of the works treated as an exhaustive remedy for all of the employer’s losses due to (a) delay to the completion of the works by the contractual completion date; and (b) delays prior to the contractual completion date (in the absence of, say, interim milestone dates with liquidated damages for delay attaching to them)? What difference does it make if any critical delay is caused by the contractor’s fraud, wilful misconduct, recklessness or gross negligence? If so, what constitutes such behaviour and can it be excluded by agreement?

Qatar

Article 267 of the Civil Code provides that where the damages suffered by the employer as a result of delay to the works exceed the amount of liquidated damages agreed by the parties, the employer may only claim the amount of the liquidated damages that is agreed unless there is fraud or gross mistake committed by the contractor. In the case of fraud or gross mistake, the employer would be able to claim a higher amount than what was contractually agreed.

For public works contracts covered by the Tender Law (Law No. 26 of 2005), government employers may impose a penalty on contractors for the delay without having regard to actual loss. The Tender Law applies to all ministries, government bodies, public institutions and authorities in Qatar, with the exception of Qatar Petroleum. The Tender Law imposes its own delay damages, irrespective of the liquidated damages that may be agreed by the parties.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

24. If the employer causes critical delay to the completion of the works and the construction contract does not provide for an extension of time to the contractual completion date (there being no "sweep up" provision such as that in sub-clause 8.4(c) of the FIDIC Silver Book 1999) is the employer still entitled to liquidated damages due to the late completion of works provided for under the contract?

Qatar

Article 257 of the Civil Code allows the court to reduce the amount of liquidated damages, if applicable, or not order any liquidated damages to the employer where the employer has contributed to or aggravated the occurrence of the damage (ie, by causing critical delay).

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

25. When might a court or arbitral tribunal award less than the liquidated damages specified in the contract for delay or other matters (eg, substandard work)? What factors are taken into account?

Qatar

Under article 266 of the Civil Code, the court may award less than the liquidated damages agreed between the parties if it can be established that no damages were suffered, the claimed amount of liquidated damages is exaggerated or when the obligor has partially performed the obligation in question. This is a mandatory provision which the parties cannot contract out of.  

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

26. When might a court or arbitral tribunal award more than the liquidated damages specified in the contract for delay or other matters (eg, work that does not achieve a specified standard)? What factors are taken into account?

Qatar

As provided under article 267 of the Civil Code, the court or arbitral tribunal cannot award more than the liquidated damages specified in the contract unless there is fraud or gross negligence on the part of the contractor, in which case a higher amount can be claimed and hence awarded. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Assessing damages and limitations and exclusions of liability

27. How is monetary compensation for breach of contract assessed? For instance, if the contractor is liable for a defect in its works is the employer entitled to its lost profits? What if the lost profits are exceptionally high?

Qatar

Article 263(2) of the Civil Code stipulates that the compensation that can be recovered includes actual loss that is incurred and loss of profit provided that such loss and damage are a natural consequence of the breach. The employer's entitlement to its lost profits is dependent on establishing the same. Article 263(3) provides that, absent fraud or gross negligence, a party may only be liable to pay compensation for damage that was foreseeable at the time of entering into the contract. Even if the lost profits are exceptionally high, they would be recoverable insofar as they are foreseeable and direct.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

28. If the contractor’s work is technically non-compliant, is the contractor liable for remedying it if the rectification cost is disproportionate to the benefit of the remedy? Can the parties agree on a regime that is stricter for the contractor than under the law of your jurisdiction?

Qatar

In principle, the contractor is liable to rectify the defective works based on the concept of specific performance. However, article 245(2) of the Civil Code states that if the specific performance to remedy the defect is onerous on the contractor (ie, where rectification costs are disproportionate to the benefit of the remedy), the court can replace this duty to rectify with monetary compensation. Pertinently, article 63(3) of the Civil Code states that the employer would be abusing its right if the benefit that the employer would gain by the remedy would be disproportion to the rectification cost incurred by the contractor.   

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

29. If there is a defects notification period (DNP) during which the contractor must or may remedy any defect in its works that appears during a certain period after their completion, if the construction contract is otherwise silent, does it affect the employer’s rights to claim for any defects appearing after the DNP expires?

Qatar

If the contract contains a provision on a timeline to notify and/or address defects in a project, such a provision will likely be binding. If the contract is otherwise silent, there is no mandatory timeline by the contractor apart from the mandatory decennial liability provisions of 10 years set out under article 711 of the Civil Code. Further, under article 696(1) of the Civil Code, the contractor may not be liable for any apparent defects in the works or non-conformance with requirements of the contract, once the works have been handed over or deemed to have been handed over.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

30. What is the effect of a construction contract excluding liability for “indirect or consequential loss”?

Qatar

Indirect or consequential losses are not recoverable under Qatari law and such an exclusion is in compliance with the law. Article 263(2) of the Civil Code states that the losses that are recoverable are those that have actually been incurred by the party, as well as loss of profit, provided that such losses are a natural consequence of the other party's breach. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

31. Are contractually agreed limits on – or exclusions of – liability effective and how readily do claims in tort or delict avoid them? Do they not apply if there is fraud, wilful misconduct, recklessness or gross negligence: (a) if the contract is silent as to such behaviour; or (b) if the contract states that they apply notwithstanding such behaviour? If so, what causation is required between the behaviour and the loss?

Qatar

Contractually agreed limits or exclusions of liability are effective in Qatar, except in cases of fraud or gross negligence as provided under article 259(1) of the Civil Code. However, any exclusion of liability regarding tortious acts cannot be contractually excluded pursuant to article 259(3) of the Civil Code.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Liens

32. What right does a contractor have to claim a lien (or similar) in the works it has carried out? If so, what are the limits of the right if, for example, the employer has no interest in the site for the permanent works? How is the right recognised and enforced?

Qatar

Article 1185(1) of the Civil Code provides that where the contractor’s work in constructing, reconstructing, repairing or maintaining has increased the value of the property, the contractor will have a lien on the property, to the extent that of the increase in value, on account of the employer. The lien may be repaid from the proceeds generated by the sale of the property in preference over other unsecured debts. This applies regardless of whether the employer has any interest in the property in question.   

To pursue its rights under article 1185(1), a contractor must file a substantive case before the competent court or arbitral tribunal, obtain a judgment or award in its favour, file a petition to Qatar’s enforcement court to attach the property, and await settlement of its debt from the monies collected from the sale of the property at the public auction.

A lien is not possible over state assets, as stipulated under article 57(2) of the Civil Code.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Subcontractors

33. How do conditional payment (such as pay-when-paid) provisions operate under the law of your jurisdiction (including interpretation rules, any good faith principles and laws on unfair contract terms)?

Qatar

Condition payment provisions are common in Qatar and are generally upheld by the Qatari courts on the basis that the sub-contractor assumes the risk of the delayed payment.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

34. May a subcontractor claim against the employer for sums due to the subcontractor from the contractor? How are difficulties with the merits and proof of the subcontractor’s claim addressed, including any rights the contractor has to withhold payment? What if aspects of the project suggest that the law of your jurisdiction should not apply (eg, the parties to both the main contract and the subcontract have chosen a foreign law as the governing law)?

Qatar

Yes. Article 702(1) of the Civil Code allows a subcontractor to claim sums owed to it directly from the employer, to the extent that the claimed amount does not exceed the amount owed by the employer to the contractor at the time (in respect of the main contract works).

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

35. May an employer hold its contractor to their arbitration agreement if their dispute concerns a subcontractor (there being no arbitration agreement between the contractor and the subcontractor or no scope for joining two sets of arbitral proceedings) or can the contractor, for example, require litigation between itself, the employer and the subcontractor? Does it matter if the arbitration agreement does not have its seat in your jurisdiction?

Qatar

The employer would likely be able to hold its contractor to the arbitration agreement in this case.  Typically, a main contractor will have single point of responsibility for all works within its scope, including all sub-contracted works and any claim that the employer has in relation to the subcontract works would generally need to be brought against the contractor, who in turn, may issue proceedings against the relevant subcontractor.

The fact that the dispute between an employer and a contractor concerns a subcontractor will not invalidate the arbitration agreement and will not allow the subcontractor to join the proceedings. This is regardless of whether the seat of the arbitration agreement is in Qatar or not.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Third parties

36. May third parties obtain rights under construction contracts? How readily can those connected with the employer (such as future or ultimate owners) bring claims against the contractor in respect of (a) delays and (b) defects? To what extent are exclusions and limitations of liability in the construction contract relevant?

Qatar

Article 177 of the Civil Code provides that third parties may be granted rights under a contract but cannot assume obligations. As such, the contractor cannot be liable towards any third parties as a result of its breach of contract with the employer, unless this right is expressly provided for under the contract, which may include delays, defects and any other claims that the third party may have under the contract.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

37. How readily (absent fraud, wilful misconduct, recklessness or gross negligence) can those connected with the contractor (such as affiliates, directors or employees) face claims in respect of (a) delays (b) defects and (c) payment? To what extent are exclusions and limitations of liability in the construction contract relevant?

Qatar

Qatari law recognises the concept of separate legal identities. In the context of a construction contract, the employer’s contractual nexus is with the contractor; assuming that the contractor is an entity with its own legal personality, its affiliates, directors or employees will – absent fraud or gross negligence on their part – have no exposure whatsoever to liability under the contract, irrespective of whether any such potential liability is excluded or limited by the contract itself.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Limitation and prescription periods

38. What are the key limitation or prescription rules for claims for money and defects (and insofar as you have a mandatory decennial liability (or similar) regime, what is its scope)? What stops time running for the purposes of these rules (assuming the arbitral rules are silent)? Are the rules substantive or procedural law? May parties agree different limitation or prescription rules?

Qatar

Claims for money are subject to the general prescription period. For contractual claims, this is 15 years from the date where the right to claim crystallises, as stipulated under article 403 of the Civil Code. Where both the parties are commercial entities, the period is reduced to 10 years. Once the period has elapsed, there is no legal right to file a claim.

Where latent defects threaten to compromise the structural integrity of a building or fixed installation, or result in the total or partial collapse thereof, article 711 of the Civil Code (decennial liability) imposes strict liability on the contractor for a period of 10 years from the date that the works are handed over to the employer. Article 711 is of mandatory application and its provisions cannot be varied or excluded by contract. As it operates on a strict liability basis, the contractor and the engineer may be held jointly liable regardless of whether they were at fault . Pursuant to article 714 of the Civil Code, the employer has three years from the discovery of the defects or from the collapse of the structure to bring a claim for decennial liability against the contractor or the engineer, or both.

Article 413 of the Civil Code stipulates that the filing of a judicial claim shall stop time running for the purposes of the prescription period, even where the case is filed in an incorrect forum. Article 414(1) also provides for the prescription period to be suspended if the debtor expressly or implicitly admits the creditor’s right. 

Where the prescription period is interrupted, a new prescription period equivalent in length to the original shall commence from the date of expiry of the effect causing the interruption under article 415(1) of the Civil Code. 

Article 418 unambiguously confirms that the parties may not agree on limitation or prescription periods different from those prescribed by law.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Other key laws

39. What laws apply that cannot be excluded or modified by agreement where the law of your jurisdiction is the governing law of a construction contract? What are the key aspects of, say, the FIDIC Silver Book 1999 that would not operate as its plain words suggest?

Qatar

Article 171(1) of the Civil Code provides that the contract is the law of the parties. Notwithstanding this, article 154 of the Civil Code provides that contractual terms that are deemed to contradict public order or the mandatory provisions cannot be excluded or modified even by agreement. There are numerous mandatory provisions under Qatari law that the parties cannot contract out of. For example, contractual clauses that serve to exclude the effect of article 171(2) of the Civil Code; article 171(2) stipulates that the court or arbitral tribunal may adjust the obligation to a reasonable limit in the event of exceptional circumstances that could not have been reasonably foreseen, which cause the obligation in question to become excessively onerous though not impossible, in such a manner as to threaten the obligor with serious losses. 

Similarly, the provisions of decennial liability under article 711 of the Civil Code, which cannot be excluded by agreement of the parties, provides that the contractor is liable for any collapse or defects of any building or fixed structure, even if such collapse or defects arise from a defect in the land itself, for a period of 10 years after the employer has taken over the works.

Further, article 418 of the Civil Code prohibits the parties to alter the prescription period (the time period within which a party may bring a claim) stipulated under Qatari law. 

Article 266 of the Civil Code, which allows the court or arbitral tribunal to reduce the amount of damages agreed between the parties if it can be established that these damages were not actually incurred or that the party has partially performed the obligation in question, is another mandatory provision that cannot be excluded by agreement.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

40. What laws of your jurisdiction apply anyway where a foreign law governs a construction contract? What are the key aspects of, say, the FIDIC Silver Book 1999 that would not operate as its plain words suggest?

Qatar

The laws relating to the public order, such as the Tender Law, would apply in government contracts even where a foreign law governs the contract. The Qatar Arbitration Law would also apply. Pertinently, article 2(2) of the Qatar Arbitration Law stipulates that arbitration agreements in administrative contracts are subject to the approval of the Prime Minister, or any persons to whom it delegates. Further, the Law Concerning Public and Private Properties Owned by the state (Law No. of 1987) would also apply to a contract governed by foreign law. This law prohibits attachment on state assets during the enforcement stage.

The mandatory provisions of the Civil Code would also apply to contracts governed under foreign law, such as article 702 of the Civil Code, and the provisions that have been discussed above.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Enforcement of binding (but not finally binding) dispute adjudication board (DAB) decisions

41. For a DAB decision awarding a sum to a contractor under, say, sub-clause 20.4 of the FIDIC Red Book 1999 for which the employer has given a timely notice of dissatisfaction, in an arbitration with its seat in your jurisdiction, might the contractor obtain: a partial or interim award requiring payment of the sum awarded by the DAB pending any final award that would be enforceable in your jurisdiction (assuming the arbitral rules are silent); or interim relief from a court in your jurisdiction requiring payment of the sum awarded by the DAB pending any award?

Qatar

DAB decisions are not per se enforceable under the law. The party seeking the enforcement of a DAB decision should obtain an order from the arbitral tribunal to be able to enforce it in Qatar. The Qatari courts having jurisdiction to issue interim relief do not have jurisdiction to rule over any substantive dispute such as payments due to the contractor. Such a decision can only be issued by the Qatari courts hearing the merits of the dispute.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Courts and arbitral tribunals

42. Does your jurisdiction have courts or judges specialising in construction and arbitration?

Qatar

There are no courts (or judges) that specialise in construction disputes in the Qatari court system. The Qatar Arbitration Law stipulates that the Qatari Court of Appeal as well as the QICDRC, have jurisdiction to hear arbitration related matters. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

43. What are the relevant levels of court for construction and arbitration matters? Are their decisions published? Is there a doctrine of binding precedent?

Qatar

Disputes arising out of construction contracts may be dealt with by the following levels of court in Qatar: the Court of First Instance, the Court of Appeal and the Court of Cassation. The Court of Appeal is the only court with jurisdiction to hear arbitration related matters such as setting aside of arbitral awards, orders compelling a party to appear before arbitration proceedings as a witness or for the appointment of arbitrators where the arbitration agreement does not stipulate an appointment authority and there is no agreement between the parties. The decision of the Court of Appeal is considered final. The Qatari Enforcement Court hears the enforcement of judgments, orders and arbitral awards and the Qatari Urgent Court hears applications for interim relief such as the attachment of assets and the imposition of travel bans.

Some of the decisions of the court are published in Arabic, without the parties’ names.

There is no doctrine of binding precedent in Qatar. Therefore, decisions made by higher courts are persuasive, but not binding on the lower courts.

Where the parties subject their dispute to the jurisdiction of the QFC and/or expressly opt for them in Qatari seated arbitrations, the QICDRC will be the relevant courts for the arbitration-related matters.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

44. In your jurisdiction, if a judge or arbitrator (specialist or otherwise) has views on the issues as they see them that are not put to them by the parties, can they raise them with the parties? Is the court or arbitral tribunal permitted or expected to give preliminary indications as to how it views the merits of the dispute?

Qatar

Courts and tribunals can only consider the issues that were raised by the parties.

Further, under article 213 of the Qatari Civil and Commercial Procedure Law (Law No. 13 of 1990) (CCPL), a judge is prohibited from basing its decision on personal knowledge that was acquired outside of the court.

Courts and tribunals are also not expected to give preliminary indications as to how they view the merits of the dispute.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

45. If a contractor, say, wishes to arbitrate pursuant to an arbitration agreement, what parallel proceedings might the employer bring in your jurisdiction? Does it make any difference if the dispute has yet to pass through preconditions to arbitration (such as those in clause 20 of the FIDIC Red Book 1999) or if one of the parties shows no regard for the preconditions (such as a DAB or amicable settlement process)?

Qatar

Article 8 of the Qatar Arbitration Law provides that if litigation is commenced with regard to a dispute in respect of which a valid arbitration agreement exists, the respondent can seek an order that the proceedings be dismissed. In other words, if the employer files a substantive case before the Qatari courts, which is subject to an arbitration agreement, this case is susceptible to being challenged by the contractor on the basis of the existence of the arbitration agreement. In this regard, article 70 of the CCPL provides that any assertion that a claim is inadmissible must be raised in the first written submission to the court, and should be raised during the first hearing as a matter of practice. Further, article 8 of the Qatar Arbitration Law provides that any challenge to the jurisdiction of the courts must be made before the defence is filed or any motions are passed on the merits of the case. A party who fails to raise the arbitration agreement in accordance with article 8 will be deemed to have waived its right to insist on arbitration.  

Having said this, article 9 of the Qatar Arbitration Law provides that if issues arise that are outside the authority of the arbitrators, the court may, upon the request of a party, grant interim or precautionary measures, including those set out in article 17 of the Qatar Arbitration Law either before or during the arbitral proceedings.

Although arbitration agreements will ordinarily be respected by a Qatari court, the court will not of its own motion refuse to hear a dispute that ought properly to be referred to arbitration, if this is not raised by a party. This is regardless of whether any preconditions to arbitration have been met or respected by the parties.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

46. If the seat of the arbitration is in your jurisdiction, might a contractor lose its right to arbitrate if it applied to a foreign court for interim or provisional relief?

Qatar

Article 9 of the Qatar Arbitration Law provides that where a contractor applies for interim or provisional relief to a foreign court, this would not be considered a waiver of the parties’ right to arbitrate their dispute.  

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Expert witnesses

47. In your jurisdiction, are tribunal- or party-appointed experts used? To whom do party-appointed experts owe their duties?

Qatar

Both tribunal and party appointed experts are used.

In proceedings before the Qatari courts, experts are typically court-appointed. Occasionally, and where the cases are complex, the Qatari courts invite each party to appoint their own expert. 

In arbitration proceedings, article 24 of the Qatar Arbitration Law provides that the parties can submit expert evidence through party-appointed experts. Article 26 of the Qatar Arbitration Law provides that, unless the parties agree otherwise, the tribunal may also appoint one or more experts to report to it on specific issues. The parties are required to submit to the expert any information related to the dispute or to produce any relevant documents goods or property for the expert’s inspection. 

Party-appointed experts owe their duty to the court or arbitral tribunals.

 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

State entities

48. Summarise any specific limitations or requirements that apply when the employer is a state entity or public authority (including, for example, public procurement rules, limits on rights to suspend or terminate, excluded lien rights and arbitrating – as well as enforcing an award – against such an employer).

Qatar

Article 2(2) of the Qatar Arbitration Law provides that an agreement arbitrate, as the dispute resolution mechanism, in administrative contracts is subject to the approval of the Prime Minister or the person to whom it delegates.

When the employer is a state entity or public authority, the provisions of the Tender Law may apply. Article 10 of the Tender Law requires the approval of the Minister of Finance before a state entity can enter into an arbitration agreement.

Attachment of state assets is prohibited pursuant to article 57(2) of the Civil Code, and the provisions of Law Concerning Public and Private Properties Owned by the State (Law No. of 1987), and a lien over such assets may not be allowed unless a waiver is obtained from the relevant Ministry.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Settlement offers

49. If the seat of the arbitration is in your jurisdiction, on what basis can a party make a settlement offer that may not be put before the arbitral tribunal until costs fall to be decided?

Qatar

The concept of ‘without prejudice’ is not recognised under Qatari law. In principle, a party in an arbitration will not be prohibited from putting a settlement offer or any other evidence relating to any settlement negotiations before the arbitral tribunal at any stage during the proceedings.

While the parties may agree beforehand that settlement negotiations are confidential and without prejudice, in practice whether the court or arbitral tribunal admit such evidence and/or the weight to be given to such evidence, is at the discretion of the court or arbitral tribunal.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Privilege

50. Does the law of your jurisdiction recognise "without prejudice" privilege (such that "without privilege" communications are privileged from disclosure)? If not, may it be agreed that a sum is payable if communications to try to achieve a settlement are disclosed to a court or arbitral tribunal?

Qatar

The concept of ‘without prejudice’ privilege is not recognised under Qatari law.

Nonetheless, the parties can agree beforehand on the confidentiality of settlement negotiations and agree on the damages for any breach of confidentiality by a party. 

Article 266 of the Civil Code is relevant as it provides that the court or arbitral tribunal is empowered to reduce the agreed amount of damages if the debtor proves that the pre-agreed amount greatly exceeds the quantum of the damages actually incurred, or that it has partially performed the obligation in question. This is a mandatory provision that the parties cannot contractually exclude. 

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

51. Is the advice of in-house counsel privileged from disclosure under the law of your jurisdiction? Is the relevant law characterised as substantive or procedural law?

Qatar

Articles 51 and 57 of the Advocacy Law (Law No. 23 of 2006) stipulates that lawyers have a duty to keep confidential all of the information and documents received from a client. Therefore, it is likely that the advice of an in-house counsel is considered confidential and hence, privileged. It is not settled as to whether this is characterised as a substantive or a procedural law and there is a case that can be made for either.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Guarantees

52. What are the requirements for a guarantee under the law of your jurisdiction? Are oral guarantees effective?

Qatar

Article 809 of the Civil Code provides that guarantees must be made in writing, even if the original obligation can be otherwise established by evidence. Article 814 of the Civil Code provides that a guarantee cannot be for an amount higher than the underlying debt, and the terms of the guarantee cannot be more rigorous than the conditions under the underlying debt. Further, article 812(1) of the Civil Code provides that the extent of any future obligation to be guaranteed must be defined.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

53. Under the law of your jurisdiction, will the guarantor’s liability be limited to that of the party to the underlying construction contract, if the guarantee is silent? Can the guarantee’s wording affect the position?

Qatar

As discussed above, the guarantee amount cannot be higher than the underlying debt. It is likely that the guarantor’s liability will be limited to that of the party of the underlying construction contract as long as that party’s debt is not higher than the guaranteed amount.   

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

54. Under the law of your jurisdiction, in what circumstances will a guarantor be released from liability under a guarantee, if the guarantee is silent? Can the guarantee’s wording affect the position?

Qatar

Article 817 of the Civil Code provides that a guarantor will be released from liability under a guarantee if the original debtor has been released from the underlying grantee obligation.  

If the security of the debt is lost by the creditor’s own negligence or error, under article 820 of the Civil Code, the guarantor will also be released from liability under the guarantee.

Under article 822 of the Civil Code, should the debtor become bankrupt and the creditor fail to claim its debt in the bankruptcy proceedings, the guarantor will be released to the extent that the creditor could have recovered its debt had it participated in the bankruptcy proceedings.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

On-demand bonds

55. If an on-demand bond is governed by the law of your jurisdiction on what basis might a call be challenged in your courts as a matter of jurisdiction as well as substantive law? Assume the underlying contract is silent on when calls may be made.

Qatar

A party seeking to resist a call on an on-demand bond may make an ex parte application to the Qatari Urgent Court for an injunction to prevent the bank from honouring the call, on the basis that the call is unjustified or unlawful in the circumstances. These include situations such as the expiry of the bond or that the conditions of the bond have not been satisfied.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

56. If an on-demand bond is governed by the law of your jurisdiction and the underlying contract restrains calls except for amounts that the employer is entitled to (such as sub-clause 4.2 of the FIDIC Red Book 1999), when would a court or arbitral tribunal applying your jurisdiction’s law restrain a call if the contractor contended that: (i) the employer does not have an entitlement in principle; or (ii) the employer has an entitlement in principle but not for the amount of the call?

Qatar

Restraining a call on a bond can only be made by the Qatari Urgent Court or the arbitral tribunal. The Qatari Urgent Court may grant injunctive relief to an applicant if it is evident from the documents put before it that the call (for any amount) is potentially unjustified, and there is a likelihood that the applicant will experience great difficulty in recovering this sum in the event that the call is later determined to be unlawful. The court will not concern itself with the merits of the underlying dispute between the parties. Nothing prevents the court from restraining either the partial or total call on the bond depending on the circumstance. The arbitral tribunal would have jurisdiction to restrain the call as well. In such a case, it will apply the Qatar Arbitration Law.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

Further considerations

57. Are there any other material aspects of the law of your jurisdiction concerning construction projects not covered above?

Qatar

No.

Answer contributed by Hani Al Naddaf and Khushboo Shahdadpuri

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