Qatar Financial Centre: Confirmation as Opt-In Arbitration Court

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A recent court case in the Qatar Financial Centre confirms the Qatar International Court's status as a court of choice for international parties, even if they are not established in the Qatar Financial Centre.

The Qatar Financial Centre ("QFC") is an onshore business and financial center in Qatar, with its own legal framework, and international companies doing business in Qatar have the choice between being established in the QFC or otherwise in the State of Qatar.

It was until recently unclear whether companies doing business in Qatar, which were not established in the QFC, could decide that the Qatar International Court at the Qatar International Court and Dispute Resolution Centre ("Qatar International Court") could act as the supervising court in international arbitrations.

However, in a Ruling of 17 March 2021, the Qatar International Court clarified its jurisdiction under Qatar's Law No. 2 of 2017 promulgating the Civil and Commercial Arbitration Law ("Qatari Arbitration Law"). It accepted jurisdiction in circumstances where the parties to an arbitration clause, which provided for Qatar as the seat, agreed to the jurisdiction of the Qatar International Court, even though neither of the parties was established in the QFC.

The Ruling followed an application to the Qatar International Court for the granting of interim relief, before the applicant party had yet started an arbitration to have the main dispute decided. The contract underlying the dispute between the parties provided for arbitration under the LCIA Rules of Arbitration and stated in the relevant terms: "The seat of the arbitration be the Qatar International Court and Dispute Resolution Centre (QICDRC) in the Qatar Financial Centre, Qatar (QFC) and the venue of the arbitration shall be Qatar".

Neither of the parties to the dispute was established in the QFC. Notwithstanding, the Qatar International Court confirmed that it had jurisdiction to issue such interim relief, based on the parties' agreement.

The Qatar International Court's Jurisdiction

The reason for the pre-existing uncertainty over the Court's jurisdiction arose from the legislation creating the Court. In this regard, Article 8(3)(c) of the Law No. 7 of 2005 promulgating the Law of the Qatar Financial Centre ("QFC Law") lists the requirements for the Qatar International Court to assume jurisdiction, but requires for each of the alternative grounds of jurisdiction that at least one of the parties is established in the QFC:

"c/1 – Civil and commercial disputes arising from transactions, contracts, arrangements or incidences taking place in or from the QFC between the entities established therein.

c/2 – Civil and commercial disputes arising between The QFC authorities or institutions and the entities established therein.

c/3 – Civil and commercial disputes arising between entities established in The QFC and contractors therewith and employees thereof, unless the parties agree otherwise.

c/4 – Civil and commercial disputes arising from transactions, contracts or arrangements taking place between entities established within The QFC and residents of The State, or entities established in the State but outside The QFC, unless the parties agree otherwise."

From the wording of the QFC Law itself, it was not clear whether the Qatar International Court would assume jurisdiction in a case whereby neither of the parties was established in the QFC, merely on the basis of the dispute resolution clause agreed by the parties.

However, in 2017, Qatar passed a new arbitration law. Article 1 of the Qatari Arbitration Law provides that the Qatar International Court can be designated as one of the courts of the seat to assist with an arbitration, by defining the "Competent Court" as: "Civil and Commercial Arbitral Disputes Circuit in the Court of Appeals, or the First Instance Circuit of the Civil and Commercial Court of the Qatar Financial Centre pursuant to the agreement of the Parties". The "Competent Court" plays a key role in an arbitration by providing judicial assistance to an arbitral tribunal and the parties, including assistance with the appointment of arbitrators, assistance with the taking of evidence, deciding challenges to arbitrators, hearing challenges to an award, or, as in the case here, granting interim relief. If parties do not opt into the jurisdiction of the Qatar International Court, the Qatar Court of Appeal would be the Competent Court, in cases where the seat of the arbitration is in Qatar.

There is therefore a potential conflict between Article 8(3)(c) of the QFC Law and Article 1 of the Qatari Arbitration Act, which was resolved in the recent Ruling. The Qatar International Court accepted the parties' designation of the Qatar International Court in their arbitration clause as an exception to the jurisdictional requirement set out in Article 8(3)(c) that one of the parties must be established within the QFC. This is in line with the parties' right under Article 1 of the Qatari Arbitration Act to designate the Qatar International Court as the Competent Court, which does not place any further restrictions on the parties' entitlement in that regard.

Conclusion

The Ruling confirms the possibility for parties to opt into the Qatar International Court's jurisdiction, even if neither of the parties is established in the QFC and if the arbitration agreement between the parties provides for a seat in Qatar. In particular, parties with an international background may prefer an international court to provide judicial assistance to the arbitration, where proceedings can be conducted in English. The Qatar International Court is an international civil and commercial court established in the QFC, that allows proceedings to be conducted in English, giving effect to Qatari and English law principles where applicable, and operating on the basis of best international practices. Although both the Qatari Courts and the Qatar International Court are considered arbitration-friendly, for many international parties, this may be an alternative to the Qatar Court of Appeal, where proceedings are conducted in Arabic. When drafting an arbitration clause with seat in Qatar, international parties should therefore consider whether they want to opt-in to the jurisdiction of the QFC Court as the court assisting with the arbitration proceedings.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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