01-May-2025
written by: Jean-Pierre Frangieh
In February 2017 his Highness Sheikh Tamim Bin Hamad Al Thani the Emir of the State of Qatar enacted Law n°2 of 2017 Arbitration Law.
Law 2 of 2017 is based on the UNCITRAL Model Law on International Commercial Arbitration (1). Qatar acceded to the New York Convention on 30 December 2002.The Convention entered into force on 15 March 2003 via Emiri Decree n˚29 of 2003.
Reference to art 2 of arbitration law, the provisions of this Law shall apply to all Arbitrations among Parties, whether public law or private law persons, regardless of the nature of the legal relationship which is the subject of the dispute, whether the Arbitration takes place in the State of Qatar or whether it is an international commercial Arbitration taking place abroad, and the Parties agree that it shall be subject to the provisions of this Law. Articles 2(3) and 2(4) of the Arbitration Law stipulate when an arbitration is deemed ‘commercial’ and ‘international.
The Qatar Financial Centre (QFC) Arbitration Regulations 2005 apply where the seat of arbitration is the QFC. To the fullest extent permitted by the QFC Law, the laws, rules and regulations of the State of Qatar concerning arbitration shall not apply in the QFC.
This article will discuss The Arbitration Agreement in Qatari law n˚2 of 2017.
An arbitration agreement is the raison d’être of an arbitration proceeding. It is only through an arbitration agreement that parties can submit their issues to be adjudicated by the arbitral tribunal. An arbitration agreement not only engenders an arbitral tribunal but also gives shape to it.
In short, an arbitration agreement is formed when two parties enter into a contract and agree in writing that any disputes arising between them out of that contract will have to be resolved without going to the courts and with the assistance of a neutral person: a third party appointed by both of the parties, known as the Arbitrator, who would act as a judge and whose decision will be binding upon the parties. (2)
The Art 7 of Law n˚ 2 of 2017 states:
1. The Arbitration Agreement is the agreement of the Parties, whether they are legal persons or natural persons having the legal capacity to enter into contracts, to refer to Arbitration, to decide on all or some disputes that have arisen or that might arise between them in respect of a defined legal relationship, whether contractual or non-contractual. The Arbitration Agreement maybe a separate agreement or in the form of an arbitration clause in a contract.
2. Arbitration is not permitted in matters in which conciliation is not permitted.
3. The Arbitration Agreement shall be in writing otherwise it shall be invalid. The Arbitration Agreement shall be considered in writing if it is contained in a document signed by the Parties, or it is in the form of paper or electronic correspondence, or by any other means of communication which allows for written proof of receipt.
4. The Arbitration Agreement is considered to fulfil the requirement of being in writing if one of the Parties claims that such Agreement exists in the statement of claim or the statement of defense, provided that the other Party does not deny such existence in its defense.
5. A reference in a contract to a document that contains an arbitration clause is considered to be an Arbitration Agreement, provided that the said reference shall clearly make that clause part of the contract.
6. Without prejudice to any legislative provision stipulating the termination of the substantive rights or obligations as a result of death, and unless otherwise agreed by the Parties, the Arbitration Agreement shall not expire with the death of one of the Parties, and may continue to be implemented by or against the persons who represent the said Party, as the case may be.
The first paragraph defined the arbitration agreement as an agreement between the parties who have legal capacity to refer to Arbitration, to decide on all or some disputes that have arisen or that might arise between them in respect of a defined legal relationship, whether contractual or non-contractual.
An agreement to arbitrate may stand as an independent document, or be in the form of an arbitration clause within an agreement. (3)
A standalone separate Arbitration Agreement
A separate arbitration agreement can be formed in addition and reference to the contract signed between the parties.
An Arbitration Clause
An arbitration clause can be formed in the contract signed between the parties as to the section of the agreement that deals with the rights and options of the parties in the event of a legal dispute arising out of the contract. An arbitration clause is construed as an arbitration agreement.
As per art 7 (2) the Arbitration Law prohibits arbitration in respect of the disputes that are incapable of being reconciled. It appears that arbitration must not be used as a mechanism for resolution in disputes which are personal in nature, such as those relating to marriage, incapacity or guardianship, criminal disputes, personal status matters, bankruptcy cases and those contrary to public policy (that is, disputes relating to gambling, drugs, or prostitution). Further, the Arbitration Law expressly prohibits public sector entities from arbitrating disputes arising between themselves.
A fundamental requirement under the third paragraph of Art 7 is that an arbitration agreement shall be in writing otherwise it shall be invalid.
An arbitration agreement can also be inferred from the exchange of letters, telex, telegrams, or other means of telecommunication, which provide a record of the agreement between the parties. In short, an agreement can be construed from the correspondence of the parties where there is a clear and unequivocal intention to refer the disputes to arbitration. This mean that the draft agreement exchanged by email between the parties can be construed as a valid arbitration agreement.
An arbitration clause contained in a separate contract can also be incorporated in a contract being drafted. Any reference to a document containing an arbitration clause shall also be construed as an arbitration agreement provided that the referred contract is in writing and the reference is made with the intention to make that arbitration clause the part of the contract. The reference shall be clear and must indicate the intention of the parties to incorporate.
The Arbitration Agreement shall not expire with the death of one of the Parties, and may continue to be implemented by or against the persons who represent the said Party, as the case may be, unless there is a legislative provision that stipulates the termination of substantive rights or obligations due to death, and unless the parties agree otherwise.
Even though the Law n°2 of 2017 has left the field open with a plethora of ways to form an arbitration agreement, it is always recommended as a standard practice to choose to have an arbitration clause in a contract itself.
Conclusion
It is evident that the importance and signification of arbitration in commercial agreements have increased substantially in the past few years.
Given the importance of arbitration in resolving commercial disputes, it has become very important for the arbitration agreement to be organized in a precise and detailed manner i.e., an effective arbitration agreement.
Parties choose arbitration as the preferred method of dispute resolution because it has the advantage of being private and confidential. It also has the ease of being enforced in other jurisdictions when compared with judgments in foreign courts, where assets are located in other jurisdictions.
Having a detailed and thoroughly drafted arbitration agreement could assist in increasing the efficiency of arbitration proceedings. Poorly drafted arbitration agreements could cause disputes between parties and inevitably lead to increased cost and significant delays in resolving disputes under their underlying contracts. This may mean that disputes are referred to the local courts if the arbitration agreement is treated as invalid or unenforceable, which may provide an unsatisfactory outcome for the parties. (4)
The list of principles that should be incorporated in an arbitration agreement are as follows (2):
1. The arbitration agreement must be in writing. Although it is always preferable to draft clear and unambiguous clauses.
2. The parties shall agree to refer any dispute (present or future) arising out of a contract to a private tribunal.
3. The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it.
4. The parties must agree to be bound by the decision of the arbitral tribunal.
5. The intention of the parties to refer the dispute to a private tribunal must be unequivocally reflected.
6. There must be ‘consensus ad idem’ between the parties i.e., they should agree to the same thing in the same sense.
7. The words shall contemplate an obligation and determination on the part of the parties to invoke arbitration and not merely a possibility. For example, use of the words such as “parties can if they so desire, refer their dispute to arbitration” or “in the event of any dispute, the parties may also agree to refer the same to arbitration” shall not be construed as submission to arbitration.
8. The agreement clauses shall not in any way specifically exclude any of the aforementioned essentials. For example, a clause permitting the tribunal to decide a claim without hearing the other side.
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- 1-https://uncitral.un.org/en/texts/arbitration/contractualtexts/arbitration.
- 2-https://blog.ipleaders.in/arbitration-agreement-primer-checklist/ Arbitration agreement: a primer and a checklist.
- 3-Commercial Arbitration: Qatar. Matthew Walker, Burak Eryigit, Claudia El Hage and Amale El BabaK&L Gates LLP. Global Arbitration Review.
- 4- https://www.dentons.com/en/insights/articles/2022/march/21/drafting-an-effective-arbitration-agreement-in-qatar Drafting an effective arbitration agreement in Qatar.