Qatari court affirms enforceability of mediation clause

The Investment and Trade Court judgement is “a significant development and parties with mediation clauses in their contracts should now assume that unless they have attempted mediation of disputes, they cannot commence litigation proceedings,” international arbitration expert Pamela McDonald said.

In its judgment, as reported by Chambers & Partners, the court dismissed the case on the basis that the contract in question contained a requirement to mediate, and no mediation had yet taken place. The mediation clause within the contact stated: “Any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be referred to mediation to be finally settled.”

The court considered the issue under Article 18 of the Qatar Mediation Law No.20/2021 (‘the law’), which states that if a case submitted to the court already has a mediation clause, the court should dismiss the case and impose a fine on the claiming party equal to or double the court fees. The court held that the provision meant that a mediation clause should be treated in the same way as circumstances where an arbitration clause exists in a contract and therefore held it did not have authority to act in disputes where a contractual mediation clause exists.  

This decision is an example of Qatar’s commitment to foster a robust and modern legal framework that supports alternative dispute resolution methods, as set out in the law introduced in November 2021, McDonald said.

“This is a positive development for the Qatari judicial system, and for parties wishing to avoid the need for litigation which has the potential to damage commercial relationships,” she added.

Mediation takes various forms, and can offer an alternative, and often more efficient, way to resolve disputes. However, the use of a hybrid mediation-arbitration process can also be considered if the parties do not want to risk a mediation not resulting in a binding outcome.

Businesses may want to take note of the decision, reflecting upon existing contracts with attention given to whether or not a mediation clause can or should be incorporated, McDonald said.