Qatar Financial Centre: Court Clarifies its Jurisdiction in relation to Arbitrations seated in Qatar
5 min read
A recent court case by the Civil and Commercial Court of the Qatar Financial Centre clarified the Court's jurisdiction to support arbitrations seated in Qatar. Parties not established in the Qatar Financial Centre must agree to the Court's jurisdiction, failing which only the Court of Appeal of the State of Qatar is competent to assist with the arbitration.
Introduction
The Qatar Financial Centre ("QFC") is a business and financial centre in Qatar with its own legal framework and court. Parties to an arbitration agreement have the option to agree to either Qatar or the QFC as the seat of arbitration. If Qatar is the seat, the arbitration will be governed by Law No. 2 of 2017 Promulgating the Civil and Commercial Arbitration Law ("Qatar Arbitration Act"); whereas if the QFC is the seat, the law governing the arbitration is the QFC Regulation No. 8 of 2005 ("QFC Arbitration Regulations").
The Qatar Arbitration Act empowers the "Competent Court" to assist with arbitrations seated in Qatar. Article 1 of the Qatar Arbitration Act defines "Competent Court" as one of either the Qatar Court of Appeals (the "Court of Appeals"), or the Civil and Commercial Court of the Qatar Financial Centre (the "QFC Court").
The QFC Court in a recent ruling dated 1 May 2023 clarified under what circumstances it could exercise jurisdiction to supervise arbitrations seated in Qatar. The ruling followed an application to the QFC Court for the appointment of an arbitrator in an arbitration where neither party was established in the QFC and the arbitration was governed by the Qatar Arbitration Act. The QFC Court decided that it did not have jurisdiction to assist with arbitrations seated in Qatar under these circumstances; rather, the parties must apply to the Court of Appeals to act as "Competent Court" to assist with the arbitration.
The QFC Court's Decision on Jurisdiction
The applicant argued that if the parties to an arbitration agreement have not specified the Competent Court, the parties are free to apply either to the QFC Court or the Court of Appeals to assist with the arbitration. The dispute is related to a discrepancy between the Arabic and English definitions of the "Competent Court" in Article 1 of the Qatar Arbitration Act. An English translation of the provision defines "Competent Court" as follows:
"The Civil and Commercial Arbitration Disputes Division of the Court of Appeals, or the First Instance Chamber Circuit of the Civil and Commercial Court of the Qatar Financial Centre, based on the agreement of the parties."
The first comma only appears in the English translation, but not in the Arabic original version of the Qatar Arbitration Act. The applicant argued that, based on the Arabic text, the reference to the "agreement of the parties" applied to both courts, so that neither court was the default Competent Court; therefore, a party could choose to apply either to the Court of Appeals or to the QFC Court.
The QFC Court did not accept this position and declined jurisdiction. It confirmed that the original and official Arabic text prevails and that the wording "based on the agreement of the parties" applies, by default, only to the QFC Court. The QFC Court also argued that, as a general matter, Qatar courts are the default courts in Qatar, and the QFC Court only has jurisdiction by virtue of specific provisions to that effect.
The QFC Court further pointed out that the definition of "Competent Judge" (the judge primarily entrusted with enforcement) in Article 1 of the Qatar Arbitration Act is similar to that of the "Competent Court". "Competent Judge" is defined as:
"The enforcement judge in the First Instance Circuit, or the enforcement judge in the Civil and Commercial Court of the Qatar Financial Centre, pursuant to the agreement of the Parties."
The QFC Court noted that if the applicant's view was correct, the phrase "based on the agreement of the parties" would apply to both courts. Following the applicant's logic, in the absence of an agreement on jurisdiction, a party would be free to apply to the QFC Court as the "Competent Court" for some matters (such as the appointment of an arbitrator) but apply to the Qatar courts for other matters (such as enforcement). In the QFC Court's view, it would not be able to function effectively if that was the case.
Implications for Drafting Arbitration Agreements
Considering the above decision, parties doing business in Qatar have the following options when drafting arbitration clauses:
Parties can designate Qatar as seat of the arbitration. Absent an agreement to the contrary, the Court of Appeals will carry out any supervisory function in relation to the arbitration. The parties do not have the choice to apply to the QFC Court for assistance, except for the measures listed under Article 6(2) of the QFC Arbitration Regulations.
Parties can designate the QFC as seat of the arbitration, in which case the QFC Arbitration Regulations will apply and the QFC Court will carry out any supervisory function in relation to the arbitration. While the Qatar Arbitration Act and the QFC Arbitration Regulations are similar in many respects, there are some differences which may prompt parties to choose the QFC as seat. For example, parties have three months to challenge an award under the QFC Arbitration Regulations, but only one month under the Qatar Arbitration Act. It is also worth pointing out that in a previous Ruling of 17 March 2021, the QFC Court accepted jurisdiction under circumstances where parties had agreed to the QFC as seat, even though neither of the parties was established in the QFC.
Finally, parties can choose Qatar as seat of the arbitration (in which case the arbitration is governed by the Qatar Arbitration Act) but agree that the supervisory court should be the QFC Court. Parties may have different reasons for doing so, for example, because the proceedings may be conducted in English (as opposed to only in Arabic). As follows from the above decisions, parties may agree to do so, even if neither party is established in the QFC.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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