Regulatory hurdle? Administrative contracts under Qatar’s New Arbitration Law

Qatar’s recently issued Arbitration Law No. 2 of 2017 (“Arbitration Law”), is the country’s first independent arbitration act and introduces a number of procedural changes with potential implications for arbitration agreements. The Arbitration Law provides new requirements in order for a dispute related to an administrative contract to be settled through arbitration. Article 2(2) of the Arbitration Law specifies that in order for an administrative contract to include arbitration as its dispute resolution mechanism, the approval of the Prime Minister or his delegate must first be obtained in this respect. This is similar to Article 34 of Law No. 24 of 2015 (“Public Procurement Law”), where parties can agree to an arbitration when a dispute arises subject to the approval of Minister of Finance.

Although disputes arising from administrative contracts may be resolved through arbitration, the Arbitration Law does not actually define the term ‘administrative contract’. According to Qatari Court of Cassation precedent, a contract is deemed an administrative contract if:

  1. one of the parties is a governmental/public entity;

  2. the subject of the contract is relevant to facilitating a public utility; and

  3. the contract contains exceptional terms that are not likely to be contained within a civil/commercial contract.

It should also be noted that the Arbitration Law has clarified that public and State entities may not resolve disputes between them through arbitration. Perhaps the broad use of the term ‘administrative contracts’ in the Arbitration Law, in contrast with the term’s definition in Qatari precedent and other local legislation such as the Public Procurement Law, could introduce ambiguity for parties engaged in what they perceived to be administrative contracts. As the Arbitration Law also applies to all ongoing arbitrations to date, it may be the case that in accordance with Article 2(2) permission may need to be sought from the Prime Minister or his delegate in order for the proceedings to continue thus potentially delaying the arbitration settlement.

Although the Arbitration Law seeks to clarify a number of ambiguities introduced pursuant to the previous legislative regime, the definition and categorisation of contracts as ‘administrative’ remains as elusive as ever. It may be that the issue will have to be tested before the courts before clarity in this respect can be achieved.

To learn more, contact the authors:

Michael Earley

Moonira Mamoon