Alternatives to court or arbitration in Qatar

Construction companies can avoid damage to commercial relationships by exploring ADR in Qatar, which offers scope to resolve disputes faster and cheaper than by going to court or arbitration. 

The disputes risk

The reduced pipeline of infrastructure opportunities in Qatar following the FIFA World Cup, together with significant unresolved claims that were generated as a result of Covid, minimum wage, price escalation, variations and acceleration, have caused challenging commercial conditions for the Qatari supply chain. These factors are increasingly giving rise to disputes being escalated.

Where subcontractors are left without any alternative but to formally escalate claims through court or arbitration, the prime contractor market is both defending them, and looking for solutions upstream against developers.

Whilst construction contracts in Qatar ultimately require disputes to be resolved by litigation or arbitration, there are alternatives available.

Step 1: know your claim

Before any form of ADR is considered, parties should obtain an assessment from an independent legal adviser, on the merits of the claim and the potential counterarguments. This is because ADR is fast, and identifying a legal strategy early will be advantageous when under the pressure of a tight timetable.

A detailed analysis should be conducted to understand both the contractual and Qatar law arguments available to support the claims being advanced. 

Consultants specialising in quantification and delay analysis, with experience of the Qatari market, should be engaged to ensure the technical analysis is rigorous.

This early assessment will generate reports which will become the compass during amicable discussions and the ADR process. 

Step 2: amicable discussions

Consistently in all construction contracts in Qatar, the dispute escalation clause contains a requirement for the parties to engage in amicable discussions to resolve the dispute without resort to third party intervention.

These discussions often end up taking different forms, depending on the relationship and the senior managers involved.

The process needs careful management to avoid confidential information or documents being disclosed which could subsequently be used against a party if settlement is not achieved amicably. In Qatar, where common law concepts of ‘privilege’ do not exist, protection of confidential information is done using non-disclosure agreements (NDAs).

Subject to confidentiality measures being taken, amicable discussions should be extensive, such that all possible avenues of avoiding escalation are exhausted before engaging further in a formal process. Some principles to increase the likelihood of settlement being achieved during these discussions are:

• identify the legal basis and foundations of entitlement – these anchor the claim and need to be simply presented;
• disentangle weaker claims from stronger ones and focus on stronger claims first;
• identify a core timeline of events which the claims turn on – this can be graphically visualised and presented in a way which is simple, persuasive, and capable of being quickly relayed to more senior decisions makers;  
• be pragmatic – whilst the contract might prescribe a certain approach to, for example, delay analysis (TIA), once the project is complete, it is possible to do something more robust based on as-built drawings. An as-planned versus as-built analysis is more persuasive and helpful in explaining what actually happened as compared to a theoretical prospective analysis; 
• consider proposing an ADR method even if it is not contained in the contract, if it is a better alternative – ADR is consensual and there is nothing to stop parties executing a supplemental agreement adjusting the contract, so that a mediation or expert determination for example can be used.

The Claims and Compensation Committee

The Claims and Compensation Committee (CCC) was established under Resolution No. 38 of 2009 and is an arm of the Qatar Ministry of Finance. Its main purpose is to review claims against public entities by private parties. This covers most construction contracts in Qatar, which are publicly funded.

The legislation does not contain the procedure that is followed and engaging in the process at all is entirely optional. If a party submits its claim to the committee, the application itself is in Arabic language, but the supporting documents can be in either Arabic or English. There is then usually a series of review meetings involving the committee members and the parties. A recommendation is then made by the committee which the minister of finance reviews and either approves or rejects.

If approved, the committee serves an official letter to the claimant containing the decision. The claimant can either accept it or continue to pursue its claims using the mechanism contained in the contract, which are unaffected by a party’s engagement in this process. 

Mediation

Mediation is a voluntary and confidential process whereby parties appoint a neutral third party to facilitate a negotiation. With the right mediator, this approach can be a highly effective method of resolving disputes. 

Unless the parties invite them to do so, mediators do not provide their opinion on the issues in dispute or impose any ‘ruling’. If agreement cannot be reached, the claiming party is entitled to pursue its claim in court or arbitration, depending on what the contract permits.

A mediation can take place at any time, including during project execution, and can be very fast. Often, where parties have properly consolidated position papers, it can be conducted over just one day.  

Mediation only works where the parties both approach the process with a willingness to resolve the dispute without further escalation. It is not unheard of for a respondent to engage in mediation without good intentions, as a means of prolonging the release of compensation, and to tactically identify the claimant’s legal strategy such that the claimant loses the element of surprise in formal proceedings.

The United Nations Convention on International Settlement Agreements Resulting from Mediation was ratified by Qatar under Emiri Decree N. 79 of 2020 on 7 October 2020. This enables parties in Qatar to enforce settlement agreements in any signatory country without the need to launch substantive proceedings on the underlying merits in dispute.  

Subsequently, Qatar released Law No. 20/2021 on the Issuance of the Law on Mediation in the Settlement of Civil and Commercial Disputes (the Mediation Law) on 4 November 2021. This governs and regulates mediations, both in terms of the agreement to mediate, and the proceedings and process itself.

Expert determination

One particularly effective means of resolving technical disputes is for parties to jointly instruct a third-party expert to decide the matter. Expert determination is usually cheaper, quicker and less formal than arbitration or litigation.

This contractual process enables parties to choose an expert in an applicable field to review the issue in dispute by reviewing parties’ submissions and engaging in targeted fact-finding exercise.

It is important that provision is made in the expert determination agreement for recourse to a nominating body if the parties cannot agree on the identity of a suitable expert. 

The timeframe over which the process can take place is within the parties’ control, though discretion is usually given to the expert to spend longer analysing the issues if necessary.  Typically, the process takes a matter of weeks, which means the commercial resources that are needed to assist with the process are not overburdened, and as a result, this particular form of ADR often takes place midway through project execution.

The main downside to expert determination is that, unlike arbitration or litigation, there is no statutory mechanism in place for enforcement of a decision rendered by an expert and so if one party decides not to pay following the expert’s decision, there is limited legislative support for enforcement other than the Civil Code which applies to contracts generally.

Unlike other countries such as England and Australia where expert determination is well established and experts’ decisions are rarely interfered with, other than where the contractually agreed process has not been followed, Qatari courts have less experience of the process and as such, this introduces a risk that if court intervention was needed to enforce, the Qatari courts may look to re-open the underlying merits of the dispute itself.

It is important to decide whether the expert’s decision will be binding, on a temporary or final basis. Even if parties decide not to be bound by the expert’s decision, it can be a helpful tool to generate more meaningful settlement discussions.