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:
Specific laws and regulations have also been issued in relation to contracts involving state entities in Qatar:
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:
Employers in Qatar are typically as follows:
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 employer’s rights include:
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):
The contractor’s rights as set out in the Civil Code are as follows.
The contractor’s general obligations include the following (Articles 696 to 691 Civil Code).
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.
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:
This is in accordance with one of the following model types:
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:
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.
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:
For local offices of engineering consultancies, the office must:
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:
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:
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.
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:
Contractors:
Subcontractors:
Other parties:
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).
In addition to the above, specific certificates are required upon completion of the project. These include:
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.
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.
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:
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:
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:
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:
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:
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:
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 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:
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:
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:
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:
Pricing mechanisms may include:
Construction contracts generally include the following in relation to personnel:
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:
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:
While the specific provisions on IP rights and IP risks may vary depending on each project, they generally include:
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:
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.
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admin@marri-hage.com www.marrilaw.comAfter the World Cup 2022, Qatar saw and continues to experience a dynamic transformation, with new construction projects being introduced and a drive towards digitalisation and sustainable development. Qatar is also witnessing several developments aimed at enhancing the justice system. This article explores several key legislative reforms, in addition to legal developments and socio-economic trends within the construction industry.
Law No 4 of 2024: the “Judicial Enforcement Law”
The introduction of Law No 4 of 2024, known as the Judicial Enforcement Law, is a significant development and has been designed to enhance the justice system with a focus on digital transformation and on expediting litigation processes.
Notable provisions of this law include the granting of executive power to cheques, aimed at combating financial crimes such as dishonoured cheques. This addition to the legal framework could enhance financial stability within the industry and provide companies with a more robust mechanism to address financial disputes.
Through this law, a specialised court will be established, dedicated to the enforcement of judicial decisions and expected to enhance the efficiency of legal proceedings, resulting in quicker resolution of disputes. This is particularly crucial in an industry where timely resolution of conflicts can significantly affect costs and project timelines.
Law No 8 of 2023: the “Judicial Authority Law”
In May 2023, Qatar issued Law No 8 of 2023, promulgating the Judicial Authority Law. This replaces Law No 10 of 2003, establishing the “General Authority of the Court” within the Court of Cassation, and tasked with:
It also permits electronic judicial procedures, including trials and witness hearings, following specified guidelines set by the Council.
Law No 11 of 2022 Amending Provisions of the Income Tax Law
The amended Tax Law No 11 of 2022 introduces multiple changes to tax exemption eligibility. Private associations, foundations, charitable organisations and foundations of public interest (previously excluded from the Income Tax Law per Article 2 of Law No 24 of 2018) are now included. These entities enjoy tax-exempt status under Article 4 of the Tax Law, with requisite tax-related obligations such as registration and filing of tax returns.
The revised regulations also include a provision regarding dividends paid to Qatari projects for their operations outside Qatar. Such dividends may be exempt from taxation in Qatar, contingent upon equivalent business outcomes being taxed in the foreign jurisdiction.
Awarding of Prolongation Costs in Construction Projects by Qatari Courts
There has been a positive shift in the courts’ approach regarding prolongation costs in construction disputes. Previously, courts were hesitant to grant such costs and would cap awards at the contract price, regardless of contractual agreements. Recent developments indicate a more pragmatic approach, with courts showing a greater willingness to consider and compensate for project delays as well as encouraging greater compliance with contractual terms within the construction industry.
Mediation
There is a trend towards alternative dispute resolution by parties in contracts, especially within multi-tier dispute resolution clauses. Mediation is encouraged to be adopted by parties, as it provides a more cost-effective and time-efficient alternative to formal legal proceedings and for parties keen on preserving their business relationships, particularly after the introduction of the new mediation law (No 20 of 2021).
The Qatar International Court and Dispute Resolution Centre (QICDRC) also has a mediation panel that offers its services to individuals and businesses, regardless of their location, whether within Qatar or abroad. Qatar was one of the first countries to ratify the United Nations Convention on International Settlement Agreements Resulting from Mediation, which further emphasises its dedication to promoting mediation as a dispute resolution mechanism.
Socio-Economic Trends
Turning to developments within the construction industry itself, Qatar has been undergoing a post-World Cup shift since 2022, largely driven by the global wave of digital transformation and sustainability. This transformation is beginning to reshape how projects are planned, executed and managed, in alignment with Qatar’s National Vision of 2030.
Artificial intelligence and digital transformation
One significant aspect of these developments is the integration of digital technologies and artificial intelligence (AI). Qatar has made substantial investments in AI, with projections indicating significant growth in its impact across strategic sectors (including construction), and with initiatives such as the National Artificial Intelligence Strategy and the establishment of the Artificial Intelligence Committee. The new laws being introduced, including the Judicial Enforcement Law, are also starting to address electronic linkage, data digitisation and the leveraging of AI technologies.
According to the Ministry of Transport and Communication’s reports, the AI market size in Qatar was estimated at USD31 million in 2022, with an expected annual growth rate of 17.4%. By 2026, it is expected to reach USD58.8 million. Notably, the construction, energy and public sectors are projected to be the most significantly impacted by AI, and they hold strategic importance for Qatar.
The Ministry recently unveiled Qatar’s National Artificial Intelligence Strategy. This strategy is built on six key pillars:
This has the aim of steering Qatar towards a future driven by AI. In line with this strategy, an Artificial Intelligence Committee has been established within the Ministry of Communications and Information Technology, by Cabinet Decision No 10 of 2021. The Committee, comprising representatives from various entities (including the Ministry of Interior, the Ministry of Commerce and Industry, and the Qatar National Research Fund) is tasked with overseeing the implementation of Qatar’s AI initiatives.
Further, the Ministry launched the Digital Agenda 2030 aimed at fostering growth and development opportunities, with projections indicating the generation of QAR40 billion in economic output and the creation of 26,000 jobs by 2030. Comprising 23 strategic programmes, the Digital Agenda 2030 is structured around six core pillars:
Moreover, the Investment Promotion Agency Qatar (Invest Qatar) revealed a collaborative report with the Ministry of Communications and Information Technology titled “Smarter Qatar: Embracing Emerging Technologies and Innovation, Improving Lives, and Driving a Sustainable Digital Economy”. This report highlights initiatives aimed at seizing opportunities in the expanding global smart city market, which is expected to reach nearly USD7 trillion by 2030.
Given these developments, the National Cyber Security Agency has created guidelines governing the usage of AI both in public and private organisations in Qatar. These guidelines are applicable to entities currently utilising AI systems, services or products, or to those intending to deploy them.
Specifically, the guidelines address three major dimensions where cybersecurity intersects with AI.
Cybersecurity of AI
This dimension involves assessing and managing the information security risks associated with AI systems. It encompasses evaluating the security of various components, including:
AI in supporting cybersecurity
AI is utilised as a tool to enhance cybersecurity efforts, creating advanced tools for tasks such as threat detection, behavioural analysis, predictive analysis and response speed. These AI-driven cybersecurity tools augment traditional security measures and increase organisations’ defences against evolving threats.
Malicious use of AI
This dimension addresses the adversarial use of AI by malicious actors to perpetrate sophisticated cyber-attacks. Threat actors may leverage AI to orchestrate targeted attacks, manipulate data or breach security defences. Understanding and mitigating the risks associated with malicious AI usage is now even more important for safeguarding organisations’ digital assets and operations.
These guidelines are particularly important for contractors and construction companies, as major construction projects involve the collection, processing and storage of vast amounts of sensitive data. Implementing measures outlined by the National Cyber Security Agency would thus help companies demonstrate due diligence in safeguarding sensitive data and in mitigating cybersecurity risks, to reduce their exposure to potential legal liabilities.
The integration of new technologies such as AI into construction processes could bring an increased risk of data breaches, particularly where companies have not acquired a full understanding of their duties and responsibilities under the Qatari data protection laws (breaches of which can be investigated by the Cybercrime Department of the Qatari Public Prosecution). The guidelines thus aim to address these risks by providing recommendations for securing AI systems and protecting sensitive construction data from unauthorised access, cybercrimes or exploitation.
Environmental sustainability
In parallel with the foregoing, Qatar is also focusing on environmental sustainability, as evident by its initiatives; Qatari courts have now almost fully transitioned to paperless operations with the updated electronic case management system. This also aligns with the state’s commitment to reducing environmental impacts and embracing digital transformation across sectors.
The recent developments of projects such as Msheireb Downtown Doha and Lusail City are also seen as aligning with Qatar’s 2030 vision for a sustainable future, with the integration of smart technologies and energy-efficient practices.
The Public Works Authority (Ashghal) is promoting sustainability and material recycling as a goal within its corporate strategy. It has launched multiple initiatives, programmes and systems aimed at fostering environmental sustainability across all project stakeholders, including consulting firms, contractors, suppliers and workers. Such efforts are designed to create a culture of environmental responsibility and innovation, and the implementation of new methods throughout various project stages.
In pursuit of its commitment to environmental sustainability, Ashghal has focused on recycling materials used in construction, with over 11 million tonnes of recycled materials being incorporated into projects, representing a significant contribution to environmental conservation.
To enhance environmental performance monitoring, Ashghal introduced its Environment and Sustainability Monthly Report in 2019. This innovative tool enables accurate monitoring and reporting of construction materials and carbon emissions, to facilitate informed decision-making and accountability. Notably, this approach has led to a substantial reduction in carbon emissions from Ashghal’s Roads Projects Department endeavours in 2023.
Furthermore, Ashghal has strategically established three construction material recycling zones across Doha, to optimise resource efficiency. These facilities process and recycle construction waste materials (such as excavated material, reclaimed asphalt, concrete and demolition waste), mitigating the need for landfill disposal and reducing carbon emissions associated with transportation and material sourcing. It has made efforts in renewable energy integration by establishing the largest solar-powered electric charging station in the region.
Future projects
Amid Qatar’s ambitious National Vision 2030 objectives, an array of new projects and initiatives are underway: the Qatari government has launched the Transportation Master Plan for Qatar 2050 (TMPQ), which serves as a strategic roadmap for investing in land transportation infrastructure. It outlines the frameworks and future directions for the development of transportation networks across the country, and encompasses a range of initiatives and projects that cater to users of land transportation systems and networks up until 2050.
The TMPQ strives to strike a balance between the requirements of economic growth and environmental protection, thereby contributing to the reduction of climate change. There are also economic benefits to the plan, including:
This plan includes the development of over 60 national land transportation policies, which will further enhance the transportation services provided in Qatar. The TMPQ also presents schemes and projects that involve the development of:
The plan also includes the expansion of the main road network through 37 proposed projects, and the development of the main public transit network through 30 projects. Through the implementation of these plans and projects, the TMPQ aims to establish a sustainable transportation system that supports both the environment and the economy.
The construction industry in Qatar also continues to undergo significant transformations to prepare for the 2030 Asian Games. The infrastructure projects associated with the Asian Games include creating facilities that can be repurposed and utilised for various purposes in the long-term. This strategic approach ensures that the investments made will continue to benefit the country and its residents beyond the conclusion of these events.
Investments in infrastructure development are therefore expected to have a positive effect on the economy. The construction industry is expected to generate more employment opportunities, stimulate local businesses and attract foreign investment.
At this stage, the construction sector is expected to continue to expand under future projects, with plans to initiate projects worth QAR70 billion (USD19.2 billion) in 2024. These projects, launched by entities such as Ashghal and the Qatar General Electricity and Water Corporation (Kahramaa), encompass various sectors, including infrastructure development, road connectivity and sewage projects (among others).
With Ashghal planning approximately 116 public tenders valued at around QAR59 billion (USD16.2 billion) in 2024 alone, construction companies can expect increased demand for their services across a wide range of project types. These include:
Furthermore, Kahramaa’s allocation of QAR8.9 billion (USD2.4 billion) for 279 tenders in areas such as electricity networks, water networks and service departments underscores the range of opportunities available within the construction sector.
Sector-wise, the distribution of tenders highlights key areas of focus, with significant investments planned for electricity networks, water networks and service departments. This diversification presents companies with the chance to participate in projects aligned with their expertise and capabilities.
Meanwhile, the value of the 279 public tenders offered by Kahramaa for 2024 amounts to about QAR8.9 billion (USD2.4 billion) in three areas – ie, the electricity networks sector, the water networks sector and the corporations’ service departments sector.
The Director of Government Procurement Regulations has also provided insight into the distribution of tenders, revealing that approximately 85% of tenders are concentrated within five primary economic sectors, with the construction sector including 360 tenders.
With these developments and initiatives, Qatar appears to be making progress towards its National Vision 2030. The legal and construction landscape appears particularly promising, given the country’s efforts to commit to modernisation and sustainable development, and to adapt to evolving technologies.
Grand Hamad Street 810
Al Fardan Center Building 36, Floor 3
Old Ghanim 6
Qatar
+974 444 306 51
admin@marri-hage.com www.marrilaw.com