19-Apr-2021
written by: Rana Moustafa
Over the past decade, the Qatar Financial Centre (the “QFC”) Court has developed a prominent figure for local and international practitioners and contractors.
The State of Qatar enhanced its judicial system and we have noticed in the past three years a major fast track changes in the structure and regulations of the Qatari system. The State of Qatar is ranked as one of the most developed countries in the Peninsula and has a score of 4.5 in the quality of judicial progress.
The Qatar Financial Centre Court is a distinctive and well known court in the State of Qatar, handling matters on its own with its proper system that differs with the other Qatari Courts. A question remained unanswered until the recent swift ruling released by the QFC Court.
We are presenting this new ruling which discusses the dilemma of whether or not the QFC Court has jurisdiction to hear cases involving non-QFC entities while such disputing parties have chosen Qatar Financial Center for arbitration.
The Court ruled on an application for an injunction as part of a dispute between two companies whereas neither of them is based in the QFC in which the court is established and normally would have jurisdiction over QFC entities; or where at least one of the involved entity is a QFC entity.
The innovation was that the Court published a separate “note on ruling” on March 17, 2021, explaining the motivations behind its judgment and clarifying that it had jurisdiction to rule on the matter per se “as the court of the seat of the arbitration, and the Competent Court under Law No. 2 of 2017 issuing the Law of Arbitration in Civil and Commercial Matters”.
Despite that the relief was declined, however, the ruling on the jurisdiction was the big pronouncement. That is significant because this will open an allowance for every party international or local to resort to QFC courts without the condition where one or both parties are established within the QFC.
The court was of the view and position that it had jurisdiction based on the foundation that the parties had agreed as such by contract. According to the Qatar Arbitration Law (the “Qatar Arbitration Law”) this court stands as the mere definition of the “competent court” even though the parties are not QFC entities.
This decision is a good guide note for members of arbitral community in Qatar for its transparency and clarity. Many practitioners views that the note on ruling will lead to a massive number of arbitration agreements targeting arbitration procedures in English language, seated in the state of Qatar whereas the QFC courts will be chosen as being the competent court applying the basic principles of many common- law system courts.
The State of Qatar is always on the verge of development when it comes to judicial progress. This ruling will significantly fortify in the future the State of Qatar as a major seat of arbitration for international disputes and international contracts.