Arbitration is a dispute resolution procedure in which a dispute is submitted by agreement of the parties, to one or more arbitrators who make a binding decision in respect of the dispute. In choosing arbitration, the parties opt for private proceedings instead of, as is the case in many jurisdictions, the public court forum. Broadly, there are two types of arbitration, those with institutional rules, such as the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), International Centre for Dispute Resolution (ICDR) or the Qatar International Arbitration Centre (QIAC) and adhoc arbitrations. Adhoc arbitrations are those which are not administered by an institution and, therefore, the parties are required to determine all aspects of the arbitration such as the number of arbitrators, the manner of appointment of the arbitrators and the procedure.
The principle characteristics of arbitration are as follows:
1 Arbitration is consensual
Arbitration can only take place if both parties have agreed to it. In the case of future disputes arising under a contract, the parties insert an arbitration clause into a relevant agreement. Where there is no arbitration clause in an agreement, parties are able to agree, upon the occurrence of a dispute, to refer such a dispute to arbitration and will enter into an Arbitration Agreement.
2 The Arbitrators are chosen by the parties
The parties choose the arbitrator or arbitrators. Commonly, parties either elect to appoint a sole arbitrator or a three-member arbitral tribunal. In the latter case, each party will appoint one of the arbitrators and those appointed arbitrators will appoint a presiding arbitrator or chair. Where agreement is not forthcoming on the identity of a sole arbitrator or presiding arbitrator or chair, an institution or court is often involved in the appointment of this individual.
3 Arbitration is neutral
In addition to the selection of an arbitrator(s) of appropriate skill and experience, parties are able to choose important elements such as the applicable law, language or seat of arbitration. This allows them to ensure that no party enjoys a home advantage.
4 Arbitration is confidential
Most institutional rules specifically protect the confidentiality of the existence of the arbitration, and any disclosures made during that procedure and the award.
5 The decision of the arbitral tribunal is final
Valid awards issued by an arbitral tribunal in compliance with the institutional rules and the local law governing the procedure of the arbitration, are final and binding. There are limited rights of appeal. In many jurisdictions including Qatar, ratification by the local courts is required in order to enforce the award against assets located in that jurisdiction. A number of conventions including the Convention on the Recognition of Enforcement of Foreign Arbitral Awards, dated June 1958 (the "New York Convention") and the Riyadh Convention (1983) are particularly important in respect of the enforcement of foreign arbitral awards in Qatar.
Requirements for Arbitration in Qatar
Arbitration is codified in Qatar's legislation within Law No (13) of 1990 The Civil and Commercial Code of Procedure (the "Civil Procedure Code") at Articles 190 – 210.
The provisions deal with:
- The formalities required for a binding arbitration agreement;
- The appointment & dismissal of arbitrators;
- The right of a party to apply for a stay of court proceedings given the existence of an arbitration clause;
- The granting of an award;
- Challenge of the award; and
- Arbitrator's costs.
Significantly, Article 190 states:
"The agreement upon arbitration shall be verified in writing".
This means that any agreement to refer issues to arbitration must be in writing. Arguments in respect of this formality often arise where the agreement or contract containing an arbitration clause has not been property executed, where the arbitration provision is incorporated by reference or where the provision does not mention the word "arbitration". In Qatar it is critical that the parties agreeing to arbitration are properly authorised to do so. Such authorisation must expressly refer to the right to agree to arbitration. It is not sufficient to rely upon a power of attorney that authorises a person to settle all disputes or consent to court proceedings.
Stay of court proceedings
Article 192 states:
"The condition of arbitration is that the litigants waive their rights to have recourse to the court having initially the competent jurisdiction to examine the dispute.
If a dispute had arisen in respect of the execution of a contact that included the condition of arbitration, and one of its parties had brought an action before the competent court, the other party may hold to the condition of arbitration as an objection to the non-acceptance of the action"
Essentially, this means that where there is an arbitration clause in any agreement and a party to that agreement has, mistakenly or otherwise, commenced substantive proceedings in the court, the other party may seek a stay of the proceeding on the basis of the arbitration clause.
In practice, the courts will generally stay proceedings on a valid application pursuant to this provision. It should be noted however, that such an application should be made at the first hearing, otherwise the right to object to the court hearing the dispute on the basis of an agreement to arbitrate is likely to be lost.
Time for arbitration
Article 197 states that:
"The arbitrators shall arbitrate within the time set in the arbitration document unless the litigants agree on its extension. If the litigants, in the arbitration documents have not imposed a term for the arbitration award, the arbitrators shall issue an award within 3 months starting from the date of their admissibility for arbitration.
If the arbitrators did not issue their award within the time stipulated in the arbitration document or during the time determined in the aforementioned paragraph, or if they failed to do so for a coercive reason, any litigant may submit the issue to the court initially competent to examine the dispute in order to add a new period or to settle the dispute or to appoint other arbitrators.
In the event of the decease of a litigant, dismissal of an arbitrator or submission of recusation plea against him, the time set for issuing the award shall be extended to the periods during which this obstacle should cease to exist".
The local court has very wide powers under this provision. Where an arbitration award has not been issued in accordance to the timing agreed by the parties, set out in the arbitration agreement or pursuant to the law (i.e. 3 months from the "admissibility for arbitration" of the arbitrators) the court is able to intervene to extend the period for rendering the arbitration award, settle the dispute or appoint another arbitral tribunal.
Please note the wording of Article 198 i.e."Their award shall be pursuant to the rules of the law unless if they were delegated by conciliation, provided that they will not contravene the rules of the public order and the good manners" is akin to the General Principle enunciated under Law No (22) of 2004 (the "Civil Code") which allows parties to agree the terms of their contract provided that such terms are not contrary to public order or morals.
Making of award
Article 202 states:
"The arbitration award shall be issued after deliberation by the majority of the opinions. The award shall be in writing and shall include in particular, a copy of the arbitration document, a brief of the statements of the litigants and their documents, the reasons for the award, the text of the award, the place and date of its issue and the signatures of the arbitrators.
If one arbitrator or more refuse to sign the award, this refusal shall then be mentioned. The award shall be valid if signed by the majority of arbitrators.
The award shall be considered as issued as from the date of signature of the arbitrators after the writing thereof even if before its pronouncement or deposition."
Therefore, a majority decision of the tribunal creates a binding award.
Execution of an award
Article 204 states:
"The award of the arbitrators shall not be executable unless by virtue of an order issued by the judge of the court where the original copy of the award was deposited, pursuant to the demand of the interested party.
The judge shall issue the writ of execution after inspecting the award and the arbitration document and after making sure that, nothing should prevent the execution thereof. The writ of execution shall be in an appendix to the original award arbitrament. The judge ordering the execution shall have the competent jurisdiction over all the matters related to the execution of the award".
As mentioned above, in Qatar the local courts are required to ratify any foreign or domestic arbitral award for the purpose of execution against assets.
Challenging an award
Article 207 deals with challenge to the award and states:
"Every interested party may move for the nullity of the award of the arbitrators in the following cases:
"1 If it was issued without an arbitration deed, or pursuant to a null document or extinguished
by prescription, or if the award went beyond the limits of the document, or contravened a
rule of public order or good manners.
2. If the third, fourth or fifth paragraph of article (190) or the first paragraph of article (193) were
contravened" [Article (190) is stated above and article 193(1)) states that the arbitrator shall
not be under age or convicted of a crime or bankrupt unless he has been "rehabilitated"]
3. If the award was issued by arbitrators who had not been appointed pursuant to the law, or
issued by some arbitrators where they are not authorised to arbitrate in the absence of the
4. If a nullity occurring in the award or in the procedures had affected the award".
Article 207, therefore, sets out the limited grounds for challenging the arbitration award and includes the expiry of a limitation period, lack of capacity or lack of good standing of the arbitrators or a procedural error in their appointment.
One of the major differences to an arbitration pursuant to the procedural laws of Qatar and common law jurisdictions (for example the UK) is the requirement to have an arbitration deed as referred to at Article 207(1) which is often incorrectly taken to be the arbitration agreement . While akin to terms of reference in an ICC arbitration, the arbitration deed is a formal document signed by the parties and the arbitral tribunal. It generally summarises the claim and defence and may deal with the powers of the tribunal generally, and more particularly cover areas in which the rules selected may be silent, for example costs and interest. The deed of arbitration must be filed with the award on the ratification application before the court.
Further, a number of court decisions in the GCC (which are not binding in Qatar but may be persuasive) have seemingly put form over substance in nullifying awards at the ratification stage. These have included decisions nullifying an award on the basis a witness was not properly sworn, and in a more recent decision, on the basis that the arbitrators did not sign each page of their reasons for the award.
Article 210 states:
" The remunerations of the arbitrators shall be specified by an agreement between the litigants in an arbitration document or in a subsequent agreement, or otherwise they shall be specified by the court initially competent to examine the dispute, pursuant to the demand of one of the interested parties in the presence or absence of the remaining ones after having been summoned; and its decision shall be final".
Thus, the parties are able to agree on the arbitrators' costs but where there is no agreement, the court is able to determine such costs.
Whilst the Civil Procedure Code is silent in respect of the inter relationship between its provisions and institutional rules, it is common that arbitration clauses in contracts in Qatar contain institutional rules and the agreement to use these rules would likely be upheld by the local courts. Whether parties have an ad hoc arbitration agreement or an agreement referring to the use of institutional rules, the provisions of the Civil Procedure Code should be considered and applied.
Should you have any questions in respect of this article or legal issues generally, please contact Laura Warren of Clyde & Co LLP at firstname.lastname@example.org