Access to Qatar Financial Centre court system limited, court confirms

The decision means organisations cannot merely agree in their contracts that their disputes should be resolved before the QFC courts.

Doha-based litigation and arbitration expert Richard Ashmore of Pinsent Masons said the decision of the QFC Appellate Court provides helpful guidance on the limit of the QFC court’s jurisdiction.

Ashmore said: “The decision of the Appellate Court clarifies the hierarchy of laws within Qatar and the boundaries of the jurisdiction of the QFC court. The court has clearly ruled that parties not established in the QFC cannot ‘opt in’ to its jurisdiction. This is the case even where the dispute is closely concerned with business or transactions in the QFC.”

“The Appellate Court directly addressed three types of agreement which, even if they contained a jurisdiction clause in favour of the court, would not give the QFC court jurisdiction: first, where shareholders not established in the QFC were engaged in a shareholders’ dispute in a QFC company; second, where entities not established in the QFC were engaged in a dispute over the sale of shares in a QFC company; and third, where there was a dispute between two entities not established in the QFC about setting up a company in the QFC,” he said.

“A jurisdiction clause in a contract between non-QFC established entities which purports to ‘opt in’ to the court’s jurisdiction will therefore not be effective and the parties will need to take their dispute to a different forum for resolution. Depending on the relevant facts and circumstances, this might be another court in the state of Qatar or a foreign court. Alternatively, the parties might agree to resolve their disputes in arbitration. What is clear after this decision of the Appellate Court is that they cannot use the QFC court,” Ashmore said.

Ashmore explained that the decision has no impact on arbitration clauses between non-QFC entities that have selected the QFC as the supervisory court for the arbitration. 

“The court’s power to act as a supervisory court in arbitration proceedings is provided for by a separate piece of primary legislation – the QFC’s 2017 Arbitration Law – and as such the QFC court’s jurisdiction in those circumstances is not dependent on one party to the arbitration agreement being a QFC entity,” Ashmore said.

The decision arose from a claim advanced in the QFC courts by the University of Cambridge against a company called The Holding WLL (Holding).

Holding had provided the university with a first demand guarantee and indemnity agreement (the guarantee) for sums acknowledged to be due and owing to the university under a services agreement between the university and Holding’s subsidiary company, Technolab.

The wording of the guarantee recorded that it was subject to the law and regulations of the state of Qatar and included a jurisdiction clause submitting disputes to the “Court of the Qatar Financial Centre”.

The university pursued a claim under the guarantee in the QFC Courts. Holding did not submit a defence and the university applied for summary judgment on the claim.

Before ruling on the summary judgment application, the QFC Court of First Instance had to decide whether it had jurisdiction to hear the dispute. To do this, the court looked at previous QFC case law and the provisions in the QFC court’s regulations and procedural rules (the QFC court rules) concerning jurisdiction.

Having done that, the Court of First Instance determined that article 9.2 of the QFC court rules gave the court jurisdiction to hear the dispute. Article 9.2 states that, “consistently and in accordance with fundamental international principles and international best practice, the Court will take into account the expressed accord of the parties that the Court shall have jurisdiction”.

The court noted that its jurisdiction under article 9.2 was subject to a general discretion of the court under article 9.4 of the QFC court rules, under which the court could decline jurisdiction if it considered it “desirable or appropriate” to do so.

On the facts before it, the Court of First Instance exercised its discretion to decline jurisdiction. A relevant consideration in exercising that discretion was that neither party to the dispute was a QFC entity.

The University of Cambridge appealed the decision on jurisdiction to the Appellate Court of the QFC.

The specific issue before the Appellate Court was whether Article 9.2 of the QFC court rules conferred jurisdiction on the QFC courts in circumstances where non-QFC entities had “opted in” to their jurisdiction by agreement, and, if so, the principles under which the discretion under Article 9.4 should be exercised.

Before deciding this specific issue, the Appellate Court considered the wider issue of the jurisdiction of the QFC courts.

It described the “hierarchy of laws” in Qatar as being: first, the fundamental law set out in the Qatari Constitution; second, primary legislation; and third, secondary legislation, made under delegated powers provided for in the primary legislation.

It concluded that, as a matter of the Constitution, a court in Qatar only has jurisdiction when it is conferred by primary legislation.

The Appellate Court then looked at the primary legislation establishing the QFC courts, namely the QFC Law (Law No. 7 of 2005). The Appellate Court said: “It is clear that the intention of the legislative power was to establish the Court to further the overall objectives of the QFC by providing for an international court for activities relating to the financial institutions and businesses established in the QFC.”

It also noted that, as originally drafted, the QFC Law set out four heads of jurisdiction for the QFC court, each of which had a common requirement that “one of the parties is established in the QFC”.

The Appellate Court concluded that none of the four heads gave the QFC courts jurisdiction in the dispute between the University of Cambridge and Holding because neither was established in the QFC.

It then addressed the university’s argument that Article 9.2 of the QFC court rules gave the QFC courts jurisdiction where the parties to an agreement – in this case the guarantee – had expressly submitted to the jurisdiction of the court, even if the dispute did not involve a QFC party.

In that regard the university relied on an amendment to the QFC Law in 2021 which gave the QFC Court jurisdiction over disputes where “… jurisdiction is granted pursuant to a law”.

The court rejected the university’s argument. It said that the QFC Law did not give the QFC courts the power to use the QFC court rules to widen its own jurisdiction: that, it considered, would require primary legislation.

The Appellate Court therefore concluded that article 9.2 of the QFC court rules could not have the effect of extending jurisdiction to enable the QFC courts to accept a general opt-in to their jurisdiction beyond the heads of jurisdiction set out in primary legislation, each of which had a common requirement that “one of the parties is established in the QFC”. Where that condition is not met, the court will not have jurisdiction, it ruled.