Qatar Financial Centre Court Makes Ruling That Could Affect Turkish Businesses Operating in the Region

Background

The First Instance Circuit of the Civil and Commercial Court of the Qatar Financial Centre ("QFC Court") released a Note on Ruling (“Note”) on 17 March 2021, regarding a judgment it rendered on 21 February 2021.

The Note did not include any details pertaining to the merits of the dispute. However, the part released is quite remarkable, especially for anyone engaged in business activities in Qatar, as the QFC Court found that a dispute relating to arbitration between two non-QFC companies fell within the scope of its jurisdiction.

The Qatar Financial Centre ("QFC") was launched in 2005 to attract foreign investors. Of the incentives it provides, the most significant is a separate legal infrastructure available to foreign investors seated in the QFC. As per Article 8 of the “Qatar Financial Centre Law, Law No. (7) of 2005” ("QFC-Act"), the QFC Courts have jurisdiction over the following disputes:

c/1-Civil and commercial disputes arising from transactions, contracts, arrangements, or incidences taking place in or from the QFC between the entities established therein.

c/2-Civil and commercial disputes arising between The QFC authorities or institutions and the entities established therein.

c/3-Civil and commercial disputes arising between entities established in The QFC and contractors therewith and employees thereof, unless the parties agree otherwise.

c/4-Civil and commercial disputes arising from transactions, contracts, or arrangements taking place between entities established within The QFC and residents of The State, or entities established in the State but outside The QFC, unless the parties agree otherwise.

Article 1 of Law No. 2 of 2017 Promulgating the Civil and Commercial Arbitration Law (“Qatar Arbitration Law”), defines “competent court” as the Court of Appeal, or the QFC-Courts, giving the parties to a prospective dispute the possibility to opt out of local courts and opt into the QFC Court. As per Article 9 of Qatar Arbitration Law, a competent judge may order interim or precautionary measures in situations where an Arbitral Tribunal does not have jurisdiction or is incapable of acting effectively at the time.

The Decision

In its decision from 21 February 2021, the QFC Court ruled on an application made for an injunction in connection with an arbitral dispute. The initial dispute arose from a contract that was signed by two non-QFC parties, in which an arbitration clause provided “Qatar International Court and Dispute Resolution Centre in the Qatar Financial Centre, Qatar (“QFC”)” as the seat of arbitration and LCIA Rules as the rules applicable to the procedure. Until the decision, it was unclear whether the QFC Court had jurisdiction over disputes in which none of the parties to the dispute were QFC companies.

On 16 February 2021, one of the parties to the arbitration agreement applied for an injunction at the QFC Court, arguing that it was in the process of filing an arbitration request. On 21 February 2021, the relief sought was dismissed by the QFC Court, yet the court was satisfied that it had jurisdiction to deal with the request, even though none of the parties to the dispute were seated in the QFC.

Given the swiftness of this judgment, opting into the QFC Court should be considered by Turkish companies doing business in Qatar - even if they and their business counterparts are not seated in the QFC. The QFC Court, by its rapid response and highly qualified bench, can facilitate dispute resolution procedures in the country and reduce the time and resources companies have to invest in their disputes.

Conclusion

The decision is particularly important for Turkish companies engaged in the construction sector. With the culmination of several projects related to next year’s FIFA World Cup on the horizon, the prospect of an increase in applications for interim reliefs is high, making the QFC Court’s swiftness appealing.