Construction 2024 Comparisons

Qatar is a civil law jurisdiction that relies on enacted laws and, in their absence, on Sharia principles. Judgments serve as guiding principles for lower courts when issued by the Court of Cassation.

Construction contracts are primarily governed by the following laws:

• the Civil Code (Law No 22/2004) – Articles 682 to 712 and Articles 324 to 336 on the assignment of rights;
• the Commercial Code (Law No 27/2006) – the obligations arising from a construction contract are commercial obligations, including Articles 406 to 413 on on-demand irrevocable guarantees;
• the Labour Law (No 4/2004); and
• the Wages Protection System, introduced by the Ministry of Labour in 2015. 

Specific laws and regulations have also been issued in relation to contracts involving state entities in Qatar:

• Law No 24/2015 on tenders and bids with state entities, issued on 13 June 2016, and amended by Decree Law No 18/2018;
• Ministerial Resolution No 16/2019, the Implementing Regulation to the Tender Law, amended by Cabinet Resolution No 11/2022;
• Law No 9/2005 amending certain provisions of Law No 1/2004, which governs contracts with the Public Works Authority (PWA);
• Law No 15/2004 on the establishment of the general authority for urban planning and development;
• Law No 12/2020 on the regulation of public-private partnerships (PPPs);
• Law No 19/2005 on the engineering profession;
• Law No 7/2007 on the resolution of administrative disputes; and
• Arbitration Law No 2/2017.

The laws and unofficial English translations thereof are available on the Al-Meezan Portal here.

Article 171 of the Civil Code sets out the principle of the binding effect of contracts. Hence, parties are free to agree on the terms of their construction contracts, provided they do not contravene mandatory provisions, public order or morality as set out under Qatari law. There are no specific formalities for the validation of a construction contract.

Standard forms of contracts are generally used by government entities, and each has its own forms, which are generally based on the FIDIC provisions and procedures, with amendments.

For governmental projects, most state entities have tailored their own contract templates for construction, engineering and procurement contracts. This is the case for the PWA, Hamad International Airport, Qatar Rail, Qatar Energy (formerly Qatar Petroleum), Kahramaa and Qatar Gas, in addition to other state entities.

Where a state entity is involved, construction contracts may qualify as administrative contracts. The Qatari Court of Cassation has held that a contract would qualify as administrative if:

• the contract is concluded between a private party and a state entity;
• it relates to performance of a public service; or
• it shows the state entity’s intention to use its public prerogatives, which are exceptionally granted under Qatari public law, by expressly including them or referring to the relevant applicable statutes (Qatar Court of Cassation, Civil and Commercial Circuit, Decision No 100/2016, dated 26 April 2016).

Employers in Qatar are typically as follows:

• government entities (such as the PWA, Qatar Foundation, Qatari Diar, Qatar Rail, Kahramaa, ministries, Supreme Committee for Delivery and Legacy, Hamad International Airport, Musheireb Properties, Qatar Energy, Qatar Gas and others); and
• private investors (Qatari nationals or foreigners), mainly for real estate development and industrial projects.

An employer’s obligations under a construction contract are generally set out under law, particularly Articles 692 to 700 of the Civil Code (relating to service contracts), and include the following.

• The performance of any acts that are deemed necessary for the completion of the works, upon notice from the contractor (Article 692(1)).
• Taking over the works once completed, upon notice from the contractor in accordance with trade customs. The employer’s failure to take over the works without a legitimate reason is deemed an acceptance of the works (Article 693). Exceptions to this provision are set out under Article 694 Civil Code.
• The contractor’s notification of any latent defects in the works within a reasonable period from the taking-over date, subject to being considered as having accepted the defects.
• Payment of the contractor’s fees for the works/services upon taking over, unless otherwise determined in the contract or trade usages, including partial payments for partially completed works (Article 689).

The employer’s rights include:

• completion of the project within the time periods and conditions of the contract, failing which, the employer has the right to terminate or continue the works at the contractor’s cost;
• provision by the contactor of materials and labour, as required for the completion of the works at the contractor’s cost, unless otherwise agreed; and
• rectification of any defects in the works, failing which, the employer is entitled to terminate the contract or to perform the works at the expense of the contract.

The following companies generally act as contractors in Qatar – they include local and/or international companies, depending on the complexity and types of the projects (airports, stadia, infrastructure, oil and gas plants, rail, hospitals, malls, hotels and energy plants):

• joint ventures between international construction conglomerates;
• joint ventures between state-owned entities and international construction conglomerates;
• engineering, architecture, planning, environment or project management consultancy firms;
• procurement companies;
• mechanical and electrical contractors;
• specialty contractors which focus on specific trades or specialised areas of construction; and
• design-build contractors.

The contractor’s rights as set out in the Civil Code are as follows.

• To be paid for completed works.
• To request performance by the employer of any acts that are deemed necessary for the completion of the works, failing which, the contractor would be entitled to terminate the contract without prejudice to its rights to compensation.
• To compel the employer to take over the works once completed upon notice, failing which, the employer is deemed to have accepted the works. Exceptions to this provision are set out under Article 694 Civil Code.

The contractor’s general obligations include the following (Articles 696 to 691 Civil Code).

• Completion of the works in accordance with the agreed terms and periods or, failing which, within a reasonable period as required by the nature of the works and the relevant trade usages. Any irremediable delays to the completion date would entitle the employer to terminate the contract.
• Provision of materials and labour as required for the completion of the works, unless otherwise agreed.
• Remedying any defects in the works upon notice from the employer.

The kind of company that acts as subcontractor depends on the scale of the project and the nature of the work that is being subcontracted (such as electrical and mechanical works, civil works/core and shell, waterproofing, plumbing and HVAC, carpentry and joinery, flooring, painting and decoration, steel and metal work, scaffolding, landscaping and other specialised trades). In certain projects, a member of the joint venture would also act as subcontractor for the joint venture.

As back-to-back subcontract models are widely used in Qatar, subcontractors have generally the same rights and obligations as those of the contractors towards the employer with regards to the subcontracted work, subject to the specific requirements of each subcontract.

Articles 701 and 702 of the Civil Code include specific provisions for subcontract agreements.

• Contractors are authorised to subcontract all of or parts of the work to a subcontractor if authorised under the main contract, but remain fully and exclusively liable for such work towards the employer.
• The subcontractor has a direct recourse against the employer with regards to any amounts owed to it from the contractor, within the limits of the value of any debts the employer has towards the contract at the date of the initiation of the lawsuit.

Subcontractors generally seek funding from financial institutions through financial facilities/tender bonds (advance payment guarantee and retention bonds) in addition to other facilities, against which they generally assign the proceeds of the project to the bank. These facilities are generally similar to those obtained by the contractors under the main contract.

There are two main financiers in Qatar: the government and the banks. Administrative contracts are financed by the government (eg, Ministry of Finance).

The Qatar Investment Authority (the sovereign wealth fund, with a portfolio worth USD360 billion in 2022) provides funding – generated mainly from gas and oil revenues – for strategic projects abroad.

For public-private partnerships (PPP), the state has determined the implementation of a partnership between the two sectors, including financing, through:

• diversifying sources of income;
• reducing dependence on oil and gas; and
• increasing direct foreign investments.

This is in accordance with one of the following model types:

• allocation of land through a lease or a usufruct right, for development by the private sector;
• build-operate-transfer (BOT);
• build-transfer-operate (BTO);
• build-own-operate-transfer (BOOT);
• operation and maintenance (O&M); and
• any other model adopted by the Council of Ministers on the proposal of the Minister.

For contractors, subcontractors and suppliers in the private sector, banks remain the main financiers in construction projects, in addition to a number of investment funds (private equity firms, infrastructure funds and real estate funds).

Regarding the relationship between the various parties – for example, in administrative contracts – the employer would generally fund the project, and the contractor and subcontractors would respectively obtain facilities from a bank against:

• an assignment of proceeds of the contract/subcontract;
• a personal guarantee of all the shareholders, against the facilities;
• a first-degree mortgage on assets; and
• a collateral in certain cases (though rarely).

Companies that typically act as a designer in Qatar must be licensed by the Ministry of Municipality and Urban Planning (MMUP) or the Qatar Financial Centre Authority (QFCA), and may be local, regional or international. They generally include the following.

• Architectural firms: these firms specialise in architectural design and may provide services such as conceptual design, detailed design and construction documentation.
• Design-and-build contractors: some construction companies offer design-and-build services, where they are responsible both for the design and the construction of the project. In such cases, the contractor acts as the designer as well.

Design consultants: these are independent consultants or firms that provide specialised design services for specific aspects of the project, such as interior design, landscape design or sustainable design.

Article 5 of Law No 19 of 2005 regulating the practice of engineering professions sets out a list of conditions for a person/entity to be eligible to join the register of engineers – including designers – and which is summarised below.

To enrol in the register of engineers, individuals must:

• be Qatari citizens or residents;
• hold a Bachelor of Engineering degree from a recognised institution;
• have full civil capacity; and
• pass technical ability tests.

For local offices of engineering consultancies, the office must:

• be owned by Qatari individuals or entities;
• employ engineers enrolled in the register of engineers with necessary experience; and
• designate responsible engineers according to set standards.

For international offices of engineering consultancies, the branch office must be a licensed branch of a main office abroad, supported by the main office, with a proven track record of at least ten years. The engineer in charge must:

• be registered in the Engineers Register;
• hold a relevant specialisation certificate; and
• have a minimum of ten years of professional experience.

Other engineers in the branch office must meet conditions outlined in implementing regulations.

The MMUP has introduced updated construction codes to align with international best practices, covering aspects such as building materials, structural design, fire safety and sustainability. By enforcing these codes, the MMUP aims to ensure that construction projects meet the highest standards of safety, durability and environmental responsibility.

Under the QFC, two special legal stipulations address the licensing of engineering/design consulting services within the QFC legal framework. Both stipulations are part of the Non-regulated Activities Rules Version 2 – October 2023.

For context, the activities permitted to QFC entities are either regulated or non-regulated activities. The former are generally financial services and are regulated by the QFC Regulatory Authority. The latter are the various engineering/design consulting services that form permitted activities falling under “professional services”, as provided under Schedule 5(G) of the QFCA Rules (Version No 17 – October 2023).

The Civil Code does not include a section on the rights and obligations of designers in construction contracts, which remain subject to party autonomy and the agreed terms of each contract. Where there is no specific agreement, the general principles of contract law set out under Articles 169 to 175 would apply.

In addition to the above, and in the absence of any agreement to the contrary, Articles 712 and 713 include specific provisions regarding the designer’s liability in construction matters.

If the architect/designer has only provided the design of a construction or establishment, they may only be held liable for the defects relating to the design they have produced, and may not be held liable for the manner through which it was executed (Article 712(1)).

However, if the designer/architect also undertook the supervision of the execution/performance, they would also be liable for any defects resulting from the manner in which the design was performed (Article 712(2)).

The contractor remains liable for defects pertaining to errors in design if such errors were apparent in accordance with trade usages (Article 713(1)) and for any design defects if the designer works for the contractor.

Article 711 of the Civil Code further stipulates a mandatory decennial and joint warranty on the part of the contractor and engineers for structural defects (including defects that would compromise the structure’s safety or risk its collapse) that cannot be set aside by agreement. This starts running from the taking-over date and is subject to a limitation period of three years from the date the structural defect is discovered.

The method for description of the scope of work varies depending on the type and size of the project, but is generally similar to the methods used in international contracts, and will likely include:

• tender documents and specifications;
• a programme of requirements (the functional and operational requirements of the project);
• specifications, which provide detailed technical information on the materials, products, systems and workmanship required for the project;
• performance specifications, which focus on the intended results and set out performance criteria that the project should achieve;
• a programme of works and method statements;
• drawings (including architectural, structural, mechanical and electrical drawings), which are graphical representations of the project design;
• a bill of quantities (BOQ), which is a detailed document that lists all the project’s components or items, along with their quantities and unit prices, and which assists in cost estimation and tendering;
• tender circulars and qualifications; and
• general and particular conditions of contract.

Qatari law does not have specific provisions on variations; these are generally negotiated and agreed on by the parties. The specific provisions within the Civil Code relating to contracts of services cover events where the performed works have exceeded the scope or the agreed price.

If the contractor’s fees were not agreed on, the fees for such work should be assessed based on their value at the time of contracting, as well as on the value of the materials supplied by the contractor and required for the works. These provisions may serve as a preliminary basis for the evaluation of variations as they are considered works, whose price was not determined in the contract (Article 699 Civil Code).

For remeasurement contracts, if during the progress of the work it is deemed necessary to considerably exceed the assessed measurements in order to perform the agreed design, the assessed expected increase in costs must be notified to the employer by the contractor, failing which, the contractor’s rights for the additional costs would extinguish. If the excess is substantial, the employer may terminate the contract, provided that it compensates the contractor for the works performed (Article 708 Civil Code).

For contracts in which prices are based on design, the contractor is not entitled to claim compensation for any variations to the design unless such variation is due to the employer’s acts as approved and agreed with the contractor (Article 709 Civil Code).

Although the law does not specifically tackle variations ordered by the employer outside the above-mentioned provisions, the contractor may claim additional compensation based on the above-mentioned articles or general principles of Qatari law governing compensation laid down under Articles 256 to 263 of the Civil Code. In doing so, the contractor should prove that the additional works were requested by the employer or caused by the employer’s fault/breaches (such as delays) and the resulting actual costs.

Time-related costs are part of the damages claimed due to events that were not caused by, or that were outside the control of, the contractor. In this case, and in the absence of any other stipulations in the contract, the contractor may claim such costs as damages under the general principles of the Civil Code (Articles 256, 263 and 268), trade usage and the principle of good-faith performance of contracts.

The responsibilities regarding the design are usually determined and agreed on between the employer, designer, contractor and other parties, in their respective contracts.

Article 713 of the Civil Code provides that contractors are only liable for defects in the works and not for those in the design, unless the design errors were of such nature that they could not have gone unnoticed by the contractor as per trade usages.

The designer is usually responsible for its designs, and for its compliance with relevant applicable laws and safety measures.

The above-mentioned provisions are not mandatory, and parties remain free to agree on design obligations, which may include the following.

• In standard construction contracts and unless specified otherwise, employers are responsible for the design, which is secured through separate contracts with design companies. In this case, the contractor has no design obligation but is still required to review the design and highlight any notable errors.
• In design-built contracts, the design is allocated to the contractor, which generally secures it either directly or through engineering and architectural companies that it contracts with for this purpose. In this case, the design is the responsibility of the contractor, which will have the right of recourse against its own designer.

The specific allocation of work can vary depending on the terms negotiated in the contract agreements and the nature of the project, but would generally include the following.

Employers:

• project planning and design (unless it is a design-built contract);
• obtaining permits and approvals;
• providing project documentation;
• tender phase;
• financing the project; and
• project supervision.

Contractors:

• project execution;
• project management;
• safety and compliance;
• procurement and material supply;
• quality control and testing; and
• co-ordination between different subcontracts.

Subcontractors:

• specific work packages depending on the specific trades, such as electrical, plumbing, HVAC, carpentry or other construction-related tasks; and
• co-ordination with the contractor.

Other parties:

• consultants and design professionals – architects, engineers and other design professionals are responsible for providing design services, technical expertise and advice during the planning and design stages of the project;
• regulatory authorities, such as municipalities and governmental bodies, to enforce compliance with building codes, regulations and standards;
• insurers, which provide third-party compensation/insurance; and
• financial institutions, which provide bonds and financial facilities.

The employer is generally the party responsible for site access, and for geotechnical and ground conditions (including soil risks), unless the related defects were detectable at the time of contracting and accepted by the contractor. For this purpose, the employer is generally responsible for obtaining any permits to secure safe and authorised access to site (including road construction, civil defence, road and traffic permits, and others).

Nonetheless, the ultimate responsibility in this regard depends on the terms of each contract, which may shift to the contractor – as is often the case in turnkey contracts.

Specific permits are required in Qatar based on the nature and scope of the project, local regulations and the location of the construction site, and include the following (prior to commencement).

• Building or construction permits or licences, which are required for any new construction, renovation or extension projects. These are generally obtained from the local municipalities.
• Environmental permits, which may be necessary for projects that have potential environmental impacts, such as those involving significant earthworks, wastewater discharge or hazardous materials.
• Civil Defence approval, which is required to ensure compliance with fire safety regulations and emergency response measures.
• Road closure permits, where construction activities require temporary road closures or disruptions.
• Archaeological permits, which are required in cases where construction activities are planned in areas of archaeological or cultural significance.

In addition to the above, specific certificates are required upon completion of the project. These include:

• fire safety approval from Civil Defence;
• certificate of completion from the Ministry of Municipality and Environment;
• building registration with the concerned municipality;
• utility connections (Kahramaa, Qatar Cool and others); and
• industrial plants.

Engineering consultancy firms in Qatar are required to obtain a licence from the engineering committee in accordance with Law No 19/2005 on the engineering profession.

Contractors are generally responsible for maintenance after performance of the works and taking over for a contractual period (defects liability period), usually for 400 days. Once the defects liability period is over, the maintenance responsibility shifts to the employer.

Maintenance generally includes regular inspections, cleaning, lubrication, minor repairs and upkeep of the facilities to preserve their proper functioning, appearance and longevity. It also includes preventative maintenance such as servicing equipment, conducting regular inspections and implementing maintenance schedules.

Separate maintenance contracts outlining the specific terms and conditions for ongoing maintenance may be entered into between the employer and the contractor in large-scale projects (such as heavy plants) or with third parties.

Generally, the employer deals directly with operations and finance. Nonetheless, in specific cases, especially in EPC/turnkey or PPP contracts, such functions may be assigned to the contractor.

Generally, the testing and commissioning process is set out in the contract. Taking over or practical completion only occurs when testing is successfully completed. In certain types of contracts, testing may be required even after completion, during what is commonly referred to as the trial operation period.

Article 696(1) of the Civil Code expressly refers to practical taking-over of the works, and provides that, once the works have been taken over by the employer, whether practically or contractually, the contractor’s liability for apparent defects ceases.

The practical completion also triggers the time limit for latent defects, which should be notified to the contractor within a reasonable period as per the applicable trade customs. The employer is required to take possession of the works following a formal notice from the contractor to this effect. The employer’s refusal to take possession of the works without just cause amounts to an acceptance of the works (Article 696(2) of the Civil Code). However, the parties remain free to agree to different terms and effects for the completion of the works.

Article 87 of the Commercial Code provides that the limitation period for rights arising from commercial acts between merchants, including construction contracts (which are considered commercial acts if concluded by a professional under Article 5(16) of the Commercial Code), is ten years from the date on which such rights have become due. Accordingly, provided that defects are duly notified as per the provisions set out further below, the employer’s rights to compensation are subject to the decennial limitation period mentioned above.

The Civil Code provides for the following three categories of defects.

• Apparent defects – defects that can be easily detected through a routine inspection of the works. Under Article 696(1) of the Civil Code, a contractor’s liability for such defects ceases on the date the works are taken over by the employer without reservation.
• Latent defects – defects that cannot be reasonably discovered at taking over. Article 696(2) of the Civil Code states that a contractor will be liable for latent defects discovered after taking over, provided that the employer notifies it of such defects within a reasonable period thereafter, failing which, the employer is deemed to have accepted these defects and loses its entitlement to compensation for these defects. As for materials, Article 684 Civil Code provides that a contractor’s liability for any defects in the materials is subject to the seller’s general warranty for sold products as set out under 432 et seq Civil Code.
• Structural defects – Article of the 711 Civil Code provides for a specific mandatory decennial and joint warranty on the part of the contractor and the engineer for structural defects (including defects that would compromise its safety or risk its collapse). Under Article 714 of the Civil Code, the limitation period to file a lawsuit for decennial liability is three years from the date of discovery of the defect.

Defects Liability Period

Construction contracts generally include a period of time during which the contractor has the right, and also the obligation, to return to the site to rectify any defects in the works at its own expense. This period is commonly known as the defects liability period, rectification period or maintenance period, and generally extends for a period of 400 days from provisional taking-over or practical completion of the works.

The method usually used in general contracts to establish the price is the lump sum contract, and normally the lowest bidder is awarded the contract provided they meet all requirements and qualifications. Some contracts have provisional sums. For the PPP method for pricing, please see 2.4 The Financiers. 

Some contract prices are based on design and remeasurement (see 3.7 Maintenance), and a few private contracts are based on cost-plus pricing.

The method of payment usually consists of an advance payment of 10% to 20% of the contract price against a bank guarantee to be monthly amortised, and monthly interim payment certificates linked to progress, concluding with the final account, final payment certificate and release of the retention money.

The indexation of prices is commonly used in construction contracts to mitigate the risk of large price fluctuations, particularly in contracts with long durations. Indexation mechanisms are intended to help parties manage inflation and market changes by linking contract prices to an agreed-upon index, such as the Consumer Price Index (CPI), producer price indices or specific industry indices.

The risk of large price fluctuations is typically divided between parties through negotiation and contractual agreements. The following are some common approaches.

Fixed Price Contracts

The contractor agrees to complete the project for a predetermined, fixed price. Any cost increases or decreases are borne by the contractor subject to special considerations for unforeseen circumstances.

Cost-Plus Contracts

The contractor is reimbursed for the actual costs incurred during construction, plus a predetermined fee or percentage of costs. This arrangement shifts the risk of price fluctuations to the employer, who bears the responsibility for any cost increases.

Price Adjustment Clauses

These clauses allow for adjustments to contract prices based on changes in specified indices, such as inflation rates or material costs. Price adjustment mechanisms can be tailored to allocate risk between parties based on their preferences and market conditions.

Shared-Risk Contracts

Some contracts may include provisions for sharing the risk of price fluctuations between the parties. For example, the parties may agree to a formula that divides cost increases or decreases between them based on predetermined ratios or thresholds.

The allocation of risk of price fluctuations further takes into consideration market conditions, project complexity and the bargaining power of the parties involved. For example, recent global events, such as the COVID-19 pandemic, the Ukraine war and changes in legislation such as Qatar’s Minimum Wage Law have led to significant increases in construction costs, and these were addressed on a case-by-case basis, in the absence of any mandatory legislation that provides for compensation to the affected party.

Contractors are usually entitled to an advance payment guarantee of 10% to 20% of the contract price against a bank guarantee to secure their cash flow; such amount will be amortised in the monthly interim payment certificates. Subsequent payments are generally made on an interim basis through monthly progress payment certificates.

As contracts are binding under Qatari law, any provisions for late payment or non-payment of certified payments can be implemented; contractors are generally required to proceed with the works notwithstanding any delay in payments or pending claims in their contracts.

In the absence of such provisions, the following remedies at law are available for a contractor.

• Filing a substantive claim before the courts or arbitrators (depending on the dispute resolution agreement).
• Applying for a preventative attachment order.
• If it holds an executory deed or instrument, the contractor may have recourse to the enforcement judge, in order to issue an attachment order against the employer or its creditors and to enforce its payment right thereon (Articles 408 Procedural Law). In this regard, it should be noted that, under Article 1185 of the Civil Code, the contractors and architects that were instructed to build, reconstruct or repair buildings and other establishments are considered privileged creditors with regard to these constructions in accordance with the terms set out therein.

Typical means of invoicing may vary depending on the specific contract terms and the parties involved. However, the most common means of invoicing are through interim payment applications, where the contractor submits periodic invoices, usually on a monthly basis, reflecting the work completed during that period. These applications are accompanied by supporting documentation, such as progress reports, measurement sheets and records of materials used. The employer or the employer’s representative reviews the application for the purpose of its certification. Each interim payment generally includes the amount of retention monies and recovered advance payments, where applicable.

Once the interim payment is certified, it is issued in the form of an interim payment certificate, which the employer is required to pay within an agreed period from the date of its certification.

Disputed applications or payments are generally subject to a specific procedure provided for in the contract.

As mentioned in 5.2 Delays, programme planning depends on the party responsible for design. The detailed programme of work is then generally required from the contractor.

Article 687 of the Civil Code requires the contractor to complete the works within the agreed period or, if no period is agreed, within a reasonable period as required by the nature of the works, taking into consideration trade usages. If the contractor fails to perform the works as per the terms of the contract, Article 688 of the Civil Code requires the employer to issue a notice underlining the defects in performance and setting out a deadline to rectify them. If the deadline elapses without the contractor rectifying such defects, the employer may request the termination of the contract or its completion at the expense of the contractor.

In addition to the above, under Article 689 of the Civil Code, the employer may terminate the contract prior to its term if:

• the contractor is in delay, whether in the commencement or in the performance of the works, which would necessarily affect the completion of the works within the prescribed time period;
• the contractor’s actions show its intention to not perform its obligations; or
• there exist any acts that would render performance of the contractor’s obligations impossible.

Aside from the applicable legal provisions, construction contracts typically set out the procedure to be followed by the parties if delays occur that would affect the date of completion of the works, which differ depending on whether the delays are due to the employer, the contractor or an external cause.

As the party that is performing the works, the contractor is generally considered as having the necessary information to assess and alert the employer of any delays that would affect the completion of the works, even where these are not attributable to the contractor. The procedure generally applies where there is a critical delay and/or where a delay is likely to affect the completion date or results in additional costs.

In these instances, and whenever it becomes aware of any delaying events, the contractor is required to send a notice within a prescribed time that varies from one contract to another, irrespective of the nature of such events. Failing the timely issuance of such notice by the contractor might lead to banning the latter from its right to an extension of time, as well as to any resulting costs. These clauses are commonly known as time-bar clauses. The notice is generally followed by a substantiation requirement to provide, within another prescribed time limit, the particulars of its claim, whether for an extension of time or additional costs.

While there is no clear position in case law as to the enforceability of time-bar clauses in Qatar, it remains the case that such clauses lead to imposition of a shorter time limit on the contractor’s right to claim compensation than as set out by law (15 years for civil claims and ten years for commercial claims). To this extent, they might be considered as contravening the provisions of Article 418 of the Civil Code, which are mandatory.

Finally, concurrent delays occur where two or more delay events occur at the same time; one as an employer’s risk event, the other as a contractor’s risk event. In this case, concurrent delays do not become an issue unless both are recorded on the critical path.

Under such circumstances, parties may agree on the procedure to assess concurrent delays and their effects on the parties’ rights, and may choose that either:

• the risk is ultimately to be borne by the party having caused the delay with greater magnitude; or
• that when concurrent delays occur, the contractor would be entitled to an extension of time without the associated costs.

In the absence of such agreement and in the event of a dispute, parties often have recourse to experts that would perform the relevant analysis and closely examine the cases of concurrency, to properly identify the responsibilities for delays and to allocate proper entitlements.

As mentioned under 5.2 Delays, Articles 688 and 689 of the Civil Code grant the employer the right to either terminate the contract or complete the works at its expense if the delays referred to in these Articles occur. 

In addition to the above, the following remedies can be granted.

Liquidated Damages

Construction contracts often include liquidated damages provisions as a form of agreed compensation under Article 263 of the Civil Code, which establish a predetermined amount of damages that the contractor must pay to the employer for each day of delay beyond the agreed completion date, generally capped at 10% of the contract price.

Nonetheless, liquidated damages cease to apply and can be set aside if the contractor proves that the employer did not incur actual losses (Article 266 Civil Code). This Article, which is mandatory, also grants the courts the power to reduce agreed compensation if it was excessive or if the related obligation was partially performed.

On-Demand Bonds

Construction contracts often require contractors to provide bonds (against advance payment, performance, retention) as a form of financial security. In the event of delays or non-performance, the employer may call upon the performance bond to secure compensation for the breach (Articles 406 to 413 of the Commercial Code).

Extensions of time are requested in accordance with the procedure set out in the contract, typically through a notice of claim, which should be submitted within the prescribed time limit (see 5.2 Delays). The grounds for such extension would usually be for any delays that are not caused by the contractor, or that are not concurrent with delays caused by the latter.

The extension-of-time process in construction contracts necessitates adherence to contractual procedures and time-bar provisions for similar claims. This involves clear communication, thorough documentation and adherence to procedural requirements, to ensure fair resolution of delays and of disruptions to the project schedule.

Typically, the extension of time is established, measured and proven through a systematic process outlined in the contract documents. The contract specifies procedures and criteria for granting extensions, including defining events that entitle the contractor to an extension, such as unforeseen site conditions or delays caused by the employer or other contractors.

The contractor is usually obligated to promptly notify the employer of any events that may entitle them to an extension, and to provide supporting documentation for their claim. This documentation may include daily site reports, correspondence, meeting minutes and photographic evidence.

Parties (often with the assistance of contract administrators or project managers) assess the impact of the event on the project schedule by analysing the critical path and identifying delays. The employer evaluates the contractor’s claim based on contractual provisions and supporting documentation. If warranted, the employer issues a formal extension-of-time instruction specifying the duration and conditions of the extension.

In cases where parties cannot agree on the entitlement or duration of the extension, dispute resolution procedures outlined in the contract (such as expert determination or arbitration) may be invoked.

Force majeure is a civil law concept, by which the occurrence of specific events under specific circumstances would exempt an obligor from liability if such events have prevented it from performing its obligations. While the Civil Code refers in a number of Articles to force majeure and distinguishes it from “external events”, it does not define it (see, for example, Article 204 of the Civil Code).

It is therefore recommended that the parties define force majeure in their contract. Where force majeure is not contractually defined, it has been narrowly construed by the Qatari Court of Cassation and considered to occur when it cumulatively meets two conditions: “unforeseeability and irresistibility” (ie, could not have been prevented by the obligor) (Qatari Court of Cassation, Civil and Commercial Circuit, Judgment No 134/2015, dated 25 May 2015).

Where a party has not performed its obligation because of force majeure, it is exempted from liability, whether in relation to performance or to compensation, for any damages incurred by the other party as a result of such non-performance (Articles 188 and 204 of the Civil Code).

Where a contract includes bilateral obligations, if the performance of an obligation has become impossible for external reasons, such obligation extinguishes and so does any reciprocal obligation. The contract is then deemed terminated de jure (Article 188 of the Civil Code).

The consequences of the occurrence of an event of force majeure include:

• suspension of performance until the event ceases;
• extension of time, allowing the affected party additional time to complete the work, whether with or without additional cost;
• reduction of the obligation to a reasonable level (Article 171(2) of the Civil Code);
• exemption from liability for any damages resulting from the non-performance or delay caused by such event;
• contract termination where the event significantly impacted the ability to perform the contract; and
• contract renegotiation to accommodate the impact of the event, such as adjusting the timeline or reallocating responsibilities.

Article 171(2) of the Civil Code gives the judge the power – in light of the circumstances and while balancing the parties’ interests – to reduce the scope of the obligation to a reasonable limit. This provision is mandatory and cannot be set aside by agreement, where unforeseen exceptional circumstances have occurred and rendered the obligor’s performance financially burdensome.

This typically applies to unforeseen circumstances during the performance of the respective obligations in a construction contract, such as:

• unforeseen ground conditions;
• shortage of material or labour; or
• innovative design conditions that have not been previously tested.

Generally, such events are considered risks ultimately borne by the employer. Nonetheless, given the mandatory nature of Article 171(2) of the Civil Code, even where the parties agree to maintain the obligor’s liability in these events, the contractor would still be entitled to avail itself of the provisions of Article 171(2) of the Civil Code.

Disruption is a technical concept that does not expressly feature in the Civil Code. Nonetheless, the parties are free to define it in their contract. Usually, construction contracts include disruption clauses.

To the extent that disruption relates to an event outside the control of the parties and resulted in the impossibility to perform the obligations, it falls within the meaning of “external events outside the control of the parties” of Article 188 of the Civil Code.

Where such disruption could not have been foreseen and has rendered the performance substantially more onerous, the contractor could request to reduce the obligation or claim compensation for the additional costs (Article 171 of the Civil Code).

Various steps may assist in establishing and measuring disruption and its effects:

• the disruption’s criteria as expressly set out in the contract;
• the substantiation and particulars submitted by the contractor to the engineer or the employer, as the case may be;
• impact analysis, which assists in measuring disruption and involves evaluating the cause, extent and consequences of the disruption on the project schedule, productivity and costs;
• documentation and contemporary records; and
• technical delay expert analysis.

Contractual exclusion of liability is recognised and enforceable in Qatar to the extent that it does not contradict mandatory liabilities at law (such as fraud, gross negligence, or illegitimate acts and decennial liability), which cannot be set aside by agreement of the parties.

Hence, Article 259(1) of the Civil Code allows the parties to exclude the obligor’s liability resulting from its failure to perform its contractual obligations or from delays in performance. Such exclusion does not include liability in the event of fraud or gross fault, which cannot be excluded. Article 259(2) of the Civil Code also allows the debtor to exclude its liability for fraud or gross fault committed by those assisting it in the performance of its obligations. This provision could serve as a basis for the contractor to exclude liability for its subcontractors’ fraud or gross fault.

Article 715 of the Civil Code considers as null any condition to exclude or limit the liability of the engineer or the contractor from the decennial liability.

The expressions “wilful misconduct” and “gross negligence” do not feature in the Civil Code, which refers to “fraud” and “gross fault” as previously mentioned in 6.1 Exclusion of Liability.

The Civil Code does not provide for a definition of these concepts within the context of exclusion of liability. Nonetheless, Article 134 of the Civil Code defines fraud in the context of defects that would vitiate consent, and considers this as occurring where consent was given as a result of manoeuvres aimed at misleading a party into contracting.

In defining the act of fraud, the Qatari Court of Cassation has set out a general definition of the concept of fraud in contracts as follows:

“[A]ny acts or methods aiming to deceive a contracting party by impairing its consent or preventing it from making a sound and informed decision. Mere lying is not sufficient to constitute fraud unless it is clearly demonstrated that the deceived party was unable to uncover the truth beyond the lie. If the deceived party could discern the truth, then fraud is not recognised.”

Gross fault is not defined within the law, but is considered in civil law countries, including Qatar, as that fault which should not be made by the least cautious or the most negligent. It shows a party’s failure to take the minimal care, which would have avoided such fault.

The Civil Code recognises the parties’ right to limit liability under Article 267 of the Civil Code, which states that, if the agreed compensation amount is exceeded, the creditor cannot claim compensation for the excess unless it proves fraud or gross fault by the debtor. Generally, construction contractual limitations on liability, including liquidated damages, are valid and enforceable, except for wilful misconduct and gross negligence.

Indemnity clauses aim to compensate the indemnified party for any losses incurred as a result of the liability it may hold towards third parties following the indemnifier’s default. In the context of subcontracting, the subcontractor may be required to indemnify the contractor for damages resulting from their default and which have affected the main works. These clauses play a crucial role in allocating risk and ensuring that the responsible party bears the ultimate financial burden.

In construction contracts, it is common to include the obligation for the contractor to provide several types of bonds to the employer as a guarantee of its contractual obligations. These typically include:

• bid bonds, which guarantee that the bidder will commit to the contract once awarded the bid;
• an advance payment guarantee, generally amounting to 10% of the contract price and guarantying recovery of the advance payment (these are generally released or reduced once the advance payment is recovered through interim payments);
• performance bonds, generally amounting to 10% of the contract price and aiming to guarantee performance (these are generally released after taking over or final completion);
• retention bonds, which may replace retention (employer’s holding 5% to 10% of every payment); and
• maintenance bonds, which aim to protect employers from defects in the works.

In Qatar, bonds often take the form of “irrevocable and on-demand” letters of guarantee issued by the contractor’s bank and provided for in Articles 406 to 413 of the Commercial Code. Article 409 requires the bank to pay the employer the amount of the bond upon first demand, irrespective of the status of the employer’s relationship with the beneficiary.

Under Qatari law, the following are required for a valid guarantee:

• the guarantee must be in writing;
• the guarantor must be solvent and a resident of Qatar – if the guarantor becomes insolvent or leaves Qatar, the debtor must provide a new guarantor or sufficient security; and
• the guaranteed amount cannot exceed the debt, and the terms of the guarantee cannot be more burdensome than the conditions of the guaranteed debt.

The agreed terms and conditions of the guarantee will govern its validity and enforceability.

Given the risks encountered in construction projects, insurance requirements are generally negotiated and included in the contract. The contractor is the party that is contractually required to take out and maintain insurance coverage for risks encountered during performance.

Insurance products in Qatar offer contractors coverage for a wide range of risks, including:

• workers’ compensation, which includes coverage for workers’ compensation and employers’ liability – this insurance is essential given the provisions of labour law, which grants employees and their families compensation rights in the case of work-related disability or death;
• damage to third-party property;
• loss of anticipated or potential income in the event of physical loss or damage during construction projects;
• professional indemnity; and
• fire incidents.

The scope of coverage can be negotiated between the insurer and the insured to include additional risks. However, insurance typically excludes delay damages caused by environmental hazards, such as the runoff of toxic liquids onto adjacent lands.

Architects and engineering consultancy offices licensed in Qatar are required to have a professional indemnity insurance and an indemnity coverage for their personnel and employees (Executive Regulations of Law No 19 of 2005).

Qatar has enacted the Healthcare Services Law No 22 of 2021, which includes a mandatory supplemental health insurance provision that requires employers to provide health insurance for non-Qatari employees and their families, as well as for foreign visitors, for the duration of their stay. However, this law entered partial effect on non-residents only as of the date of this publication.

In Qatar, two regimes are provided for in law:

• liquidation (Articles 540 to 545 of the Civil Code, and Articles 304 to 321 of the Commercial Companies Law); and
• bankruptcy (Section 6 of the Qatari Commercial Code, Article 606 et seq of a mandatory nature) – bankruptcy necessarily takes the judicial route and can only be declared by court order.

Construction contracts usually provide for the right to terminate if the other party becomes insolvent or bankrupt, without providing a specific definition thereof.

Bankruptcy is defined as the event “where a merchant stops paying his or her commercial debts at maturity due to its disrupted financial status”. As to the requirements for a creditor to initiate bankruptcy proceedings against its debtor, such creditor should:

• hold a debt that is imminently due, payable and undisputed (even if guaranteed); and
• provide evidence of the debtor’s failure to pay.

Courts have accepted voluntary liquidation of companies (as opposed to declaring them bankrupt) upon a lawsuit filed by the shareholders due to the company’s inability to pay its debts or honour its financial obligations, or due to the failure of the company to complete its projects based on the provisions of Article 291 of the Commercial Companies Law.

Qatari law does not specifically address the allocation of risk in construction contracts. These are generally determined and agreed on in the contract through the allocation of risks between the parties, namely in the event of force majeure and unforeseen circumstances.

Failing any such stipulations, the risks that would affect the performance of the obligations, namely force majeure and extraneous events, are set out and will be deducted from the law as stated in the Civil Code (see 5.5 Force Majeure).

Shared risks in construction contracts are generally assessed and priced based on factors such as:

• the likelihood and severity of the risk;
• project complexity;
• market conditions; and
• the bargaining power of the parties.

Pricing mechanisms may include:

• contingency allowances – funds set aside to cover unforeseen risks or events;
• risk premiums – additional compensation provided to the party assuming a higher level of risk;
• lump sum allowances – fixed amounts allocated in the contract for specific risk events or contingencies; and
• insurance and bonds – transfer of risk through insurance policies or performance bonds, where the cost of insurance premiums or bond fees may be included in the contract price.

Construction contracts generally include the following in relation to personnel:

• working hours and overtime, usually reflected in time sheets;
• workmen compensation insurance;
• termination provisions;
• replacement and substitution; and
• health and safety requirements.

Outside construction contracts and in relation to the relationship between the contractor and its employees, Qatari labour law – which secures employees’ basic rights – is mandatory and cannot be set aside by agreement, but can, however, be improved. This includes:

• end-of-service benefits;
• notice period;
• annual leave and sick leave;
• work-related injuries and health risks; and
• related compensation.

Construction contracts in Qatar must comply with these provisions, ensuring the protection of workers’ rights and adherence to labour standards.

Qatar issued Law No 22 of 2021 regulating the health services in Qatar, with effect from 4 May 2022, and which provided basic health insurance coverage for Qatari nationals and foreigners, whether resident or visitors. This law repealed all former laws governing health services, and prescribed a minimum level of coverage with insurance companies registered with the Ministry of Public Health. As of the date of this publication, such law has been implemented for visitors of Qatar and not its nationals and residents, and is awaiting the publication of detailed implementing regulations.

Article 701 Civil Code authorises contractors to subcontract all or part of the works, usually with the employer’s prior approval, unless the terms of the main contract state otherwise and/or provide for nominated subcontractors, or unless, given the nature of the work, the contract was concluded ad personam. This Article (and the contract) stipulates, however, that the main contractor remains liable towards the employer for its subcontractor’s work.

Intellectual property (IP) provisions address ownership, use and protection of IP rights in relation to the project, and, in certain cases, have specific laws and benefit from protection in Qatar (“Registration of IP rights”).

Depending on the contract, they usually include:

• copyrights (such as blueprints, project drawings, technical designs, written materials, photographs and project design);
• design patents and utility patents (protection of newly invented construction process, material, business method and/or equipment that gives its owner a competitive advantage);
• trade marks (such as joint venture names, business names and project names); and
• trade secrets (which protect the confidential business information and methods).

While the specific provisions on IP rights and IP risks may vary depending on each project, they generally include:

• ownership of design and engineering works (including architectural drawings, plans, specifications and other related documents) which will remain with the party that created them or be transferred to the employer upon completion and payment;
• use, licensing and the method of transfer of the IP right;
• confidentiality and non-disclosure clauses or other confidentiality measures to protect the corresponding rights attached to them;
• details of categories of IP that are protected, the extent of the protection and the right to use it to identify situations of infringement;
• indemnification for IP infringement; and
• a dispute resolution clause.

Articles 241 et seq of the Civil Code provide for the remedies available to a party in the case of breach of contract, and primarily set out the principle according to which an obligor should be ordered to specifically perform in the case of breach, following a notice to this effect. Compulsory performance can only be sought through a court judgment following a lawsuit before the competent judge.

Where the obligation requires the performance of a service, Article 251 of the Civil Code authorises the creditor to seek a court order to have the obligation performed by a third party at the obligor’s cost, except in emergency cases where the creditor is exempted from obtaining such court order.

If, given its nature, the obligation cannot be performed in nature, or if the obligor is in delay regarding performance, the creditor may request compensation for actual losses incurred as a result of the delay or non-performance (Article 256 of the Civil Code).

The creditor may also request termination in the event of breach, or where the other party fails to perform its reciprocal obligation under specific conditions set out by the law or in the contract (see 9.6 Termination).

For a party to be able to enforce any of the above-mentioned remedies, it is required to obtain a final judgment from the substantive competent court, unless the contract expressly provides for the right to terminate without the interference of the court.

If urgent measures are required, a party may also apply to the emergency judge for an interim measure of protection in order to prevent or resist an imminent danger. The requirements for such application are strict in that the applicant should prove an imminent danger to property or livelihood, and as such it can only be granted in restrictive cases.

Subcontractors are granted the right of direct recourse against the employer if the contractor fails to honour its payment obligations of amounts due to the subcontractor, within the limits of the value of any debts the employer owes the contractor at the date of the initiation of the lawsuit (Article 702 Civil Code).

Articles 265 to 267 of the Civil Code allow parties to agree on monetary compensation for delayed or non-performance, provided the underlying obligation is non-monetary. However, if the debtor can prove that no losses were suffered, the agreed compensation does not become due and payable. The judge also has the authority to reduce the agreed compensation if it is deemed excessive or if partial performance has occurred.

Under Article 267 of the Civil Code, the employer is prohibited from seeking a higher compensation if actual damages exceed the agreed amount, making the agreed compensation the sole remedy for damages resulting from non- or delayed performance. However, this does not apply if the creditor proves fraud or gross fault by the debtor.

Article 259 of the Civil Code allows clauses that limit or exclude liability, except in cases of gross fault or fraud. While liquidated damages may be the exclusive remedy for delay-related losses, the employer can still seek compensation under the Civil Code for other breaches, unless the contract explicitly excludes it.

To the extent that liability can be excluded or limited contractually under Qatari law, exclusive remedy clauses may be enforced (see 5.2 Delays and 6. Liability).

Liability for damages may be excluded to the extent it does not relate to fraud, gross fault or illegitimate acts under Qatari law. Exclusions may include direct damage, lost profit or other moral damages (see 6.1 Exclusion of Liability).

Retention and suspension rights are commonly used to provide the employer with recourse in the case of defective work, non-performance or other breaches by the contractor. These are not prohibited under Qatari law.

Generally, contracts grant the employer the right to withhold 10% of the contract price until a specified time. Out of this amount, 5% is released to the contractor upon completion, while the remaining 5% is released at the conclusion of the defect liability period.

Unless agreed otherwise, Article 191 of the Civil Code enshrines the civil law principle of exceptio non adimpleti contractus, according to which a party may suspend performance if the other party fails to perform its reciprocal obligation. For a party to avail itself of this principle, the opposing party should have failed to perform an obligation that is immediately due and that is considered reciprocally linked to the obligation it wishes to suspend.

Under Qatari law, unless otherwise expressly stated in the contract, termination can only be achieved through a court order.

Under Articles 707, 183 and 184 of the Civil Code, a construction contract can be terminated either fully or partially for convenience (termination at will) due to default or impossibility to perform:

• in the case of termination at will, the employer is obligated to compensate the contractor for incurred costs, completed works and lost profit (Article 707(1) of the Civil Code);
• in bilateral contracts, if one party fails to fulfil a fundamental obligation, the other party has the right to demand performance of the contract or its termination (Article 183);
• if the performance of obligations becomes impossible due to reasons beyond the control of the parties, the contractor is entitled to demand compensation for incurred costs and earned fees, up to the limit of the employer’s benefit (Article 171(1) of the Civil Code);
• the employer has the right to request termination of the contract or completion at the contractor’s expense if the contractor fails to perform the works in accordance with the contract terms, despite being notified (Article 688); and
• the employer has the right to terminate the contract if the contractor is delayed in fulfilling its obligations to such an extent that it becomes impossible to complete the work within the agreed timeframe, or if the contractor demonstrates an intention to not perform (Article 689).

The contractor has the right to terminate the contract and demand compensation if the employer, despite being notified, fails to take necessary actions required for the progress of the works (Article 692 of the Civil Code).

The following institutions are competent to adjudicate disputes:

The newly established Trade and Investment Court (Law of 21 of 2021) (first instance, appeal and cassation) is competent.

The civil and commercial courts (administrative circuit) retain jurisdiction for disputes relating to construction contracts of an administrative nature. A circuit is also established within the Court of Appeal for arbitration-related applications (arbitrator’s appointments, challenges, setting aside awards).

The Qatar International Court and Dispute Resolution Centre of the Qatar Financial Centre (QICDRC), which is an onshore Qatari jurisdiction, retains competence over disputes between companies established within the QFC (as per the provisions of Article 9 of the QFC Court’s Regulations) as well as over disputes within and against the Qatar Free Zone Authority (QFZA). The QICRDC is competent in arbitration-related matters where the parties have chosen the QFC as the seat of arbitration or have chosen this court as the competent court under Arbitration Law No 2/2017.

The Claim and Compensation Committee (CCC) established in 1996 (with subsequent multiple legislative amendments, most recently in 2020) under the Ministry of Finance reviews compensation applications by contractors arising from construction contracts and involving a government entity whose decisions are not legally binding nor published. The contractor has the option to accept the decision or to seek a court judgment or arbitral award depending on the dispute resolution agreement.

The new Enforcement Court was established by virtue of Law No (4) of 2024 issued on 4 April 2024 and promulgating the Judicial Enforcement Law. The new law incorporates legislative measures intended to be effective to expedite the enforcement of judgments and executory deeds. The new law expressly grants cheques the power of executive instruments, enabling beneficiaries to collect amounts in cases of insufficient funds. It also grants registered or authenticated property lease contracts executive authority regarding property evacuation post-contract, in both cases without initiating primary substantive legal proceedings. Finally, it grants the enforcement judge the power to accelerate the enforcement proceeding and to impose penalties in the case of obstruction of enforcement.

Mediation is an optional procedure that parties can choose for resolving their disputes, as there are no legal limitations preventing its use. It can be found as a pre-arbitration step in certain dispute resolution clauses included in construction contracts in Qatar.

Law No 20 of 2021, on Mediation for the Settlement of Civil and Commercial Disputes, was issued on 18 October 2021, to regulate mediation agreements; already on 12 September 2020, Qatar ratified the Singapore Convention on Mediation, which aims to facilitate the recognition and enforcement of mediation settlements.

The QICDRC provides for mediation services through its mediation rules, while the Qatar International Conciliation and Arbitration Centre (QICCA) offers conciliation services through its rules issued in 2012.

Arbitration agreements pertaining to private contacts or administrative and public contracts are recognised under Law No 2 of 2017 – which applies to arbitrations seated in Qatar or to the recognition and enforcement proceedings of foreign awards in Qatar, provided they do not contravene Qatari public policy or morals (Article 28). For administrative contracts, the approval of the Prime Minister (or his designated delegate) is required.