New Qatar law encourages amicable settlement of state claims

Pamela McDonald of Pinsent Masons was commenting after Qatar’s cabinet published its Decision of the Council of Ministers on Regulating Procedures for Filing Lawsuits Related to Government Entities, which requires public authorities in Qatar to take active steps to settle disputes before formally requesting to initiate a lawsuit.

The decision, published on 2 February in the Official Gazette, states that any “government entity must, before requesting to initiate a Lawsuit, take initiatives for reconciliation and settlement”. The decision defines a “lawsuit” as “a dispute or claim brought by or against the government entity”. 

The law imposes a statutory obligation on all government entities and public bodies to make and document settlement efforts prior to escalation. They will be required to provide all necessary documents, records, information or data in order to obtain approval from the Department of State Affairs at the Ministry of Justice to initiate the lawsuit.

Where settlement is achieved, the ministerial department will ensure parties fulfil their obligations in accordance with the agreed terms.

The law also states that, if settlement efforts are unsuccessful, the public authority must refer the request to initiate the lawsuit and also provide documents and records, including an explanation for why reconciliation and settlement was not possible.

Article 3 of the decision sets out that, after obtaining the relevant approval, the minister, head of the relevant government body or authority may initiate settlement efforts at any stage of a claim process.

There are two limitations on permission for lawsuits outlined in article 5. These state that permission will not be given if the value of the claim does not exceed QAR 50,000, or if there is insufficient documentation and evidence necessary to support the lawsuit.

McDonald, a specialist in international arbitration, said the new law was a “helpful development” in Qatar’s dispute resolution landscape and “will be attractive to prospective and current foreign investors in Qatar’s economy.”

The law is particularly crucial because government entities in Qatar often play an important role in initiating a lawsuit even where they are the defendant or respondent party. This is a result of article 2.2 of Qatar’s Arbitration Law of 2017, which requires arbitration agreements in contracts with a public entity to be approved by the prime minister to be deemed valid. 

This can result in the authority requesting the prime minister’s office for approval to arbitrate claims being advanced against it. Read in this context, McDonald says the decision’s reference to the government entity “requesting to initiate a Lawsuit” can refer to claims that a public authority wishes either to prosecute or defend.

She also said the decision is yet another demonstration of Qatar’s ongoing commitment to supporting alternative dispute resolution methods since the introduction of a dedicated mediation law in November 2021. “Helpfully, article 4 of the decision references both general reconciliation efforts as well as the use of mediation,” she added. “This further underlines Qatar’s emphasis on the importance of mediation as an alternative dispute resolution method.”